A mistake I made here, the 87 crash was worse than the paper author made it out to be because one of the periods the author said was worse than the crash was the period pre-87 crash (so part of September and early Oct 87) which to me, is pretty much the same thing. If someone blows up pre-crash or during the crash of the same quarter, to me that's the same thing. Furthermore, the margin clerks were active liquidating people and market prices were ridiculous at the time (I believe the VIX equivalent went to the hundreds). So in terms of intraday prices (as opposed to settlement prices as used by the author), the actual crash experience was much worse than it appeared. Still, 98 early 90's and early 2000's were pretty nasty to put sellers as well. But they don't get much attention
The margin call issue is probably why Taleb says that anyone selling options, without offsetting positions, need to have a minuscule book and why market makers don't get involved in big directional positions. The backtests often miss that risk (who assumes the VIX can go to 200?). Niederhoffer was the king of the backtest and got liquidated in 98 and then claimed conspiracy. Well, its up to him not to put himself in a position where such thing can happen
I found some data on the VXO to see what vol did back then. This is the VXO intraday high only (so it represents the 'margin call' risk)
http://www.zerohedge.com/news/2017-06-28/goldman-looks-policy-error-fed-finds-something-unexpected Hatzius doing a great job as usual
Martin Skreli strikes me as someone who has made a lot of money off convexity bets while seemly not understanding it. It appears that he got wiped out more than once shorting bio stocks. The OREX trade being the biggest one (which lead to his current fraud trial) In his videos he routinely will make bearish statements about convexity companies and not sound unsure about them. And the least surprising thing about all of this? He was born and raised in New York Its no wonder Buffett felt the need to live and work in Omaha, a lot of the time, these things are contagious
http://www.coindesk.com/celebrity-investor-mark-cuban-participate-first-ico/ Cuban is investing in this ICO but he is conflicted. He invested in the company (through regular shares) back in 2015, he wants to hype up the ICO so that perhaps the company can raise more money. I was looking around in their website and I'm not quite sure what his thesis is. Still, I might put some money into this just in case
Daal, congrats on being around and keeping up with you journal for so long. I have tried over and over again and I just can't do it. I guess it takes a stronger desire to keep up a blog, journal, etc. than I have. Kudos The Ever Giving Kudos VIPER
Thank you. Writing to myself bores me, it takes huge effort for me to write something that I think it will take months/years for people to read, so I avoid it like a plague. This journal offers me a way to get some people to read it right away and I find that more motivating, gives me more focus and inspiration. That's why I keep it up
Since the 2009 low the S&P500 total return index is up almost 300%. I'm sure a lot of people sold back then trying to avoid a further 20-30% loss, as a result they missed out on a 300% gain. They could only be right in limited amounts but they could (and were) wrong exponentially. This is why pessimism is dangerous in the stock market I'm writing an article about exactly that and the whole NY vs SF (Wall Street vs Sillicon Valley) mindsets and how to be a better and more balanced investor. Its in portuguese and its almost finished. But I do plan to translate it to english and publish it somewhere, probably in the 2+2 Magazine and eventually (when I get back the copyrights) on Seeking Alpha