OMG, I hadn't looked at OPEN for a while now. P/E of 157, I take it they have a cure for cancer forthcoming. Wait, wait, wait!!! This just in: http://money.msn.com/top-stocks/post.aspx?post=1b644acc-208d-4aa8-8831-0e0097bd8ca9 That's it, folks, we've truly reached the top, short at will EDIT: "Netflix investors were cheered by Tilson's change of heart, pushing the stock up more than 3% today to $231.20." Translation: "Tilson covering his massive short position pushed the stock up more than 3% today."
Pfff, look dudes there will be no hyperinflation. Once the QE ends the Bernank isn't going to be able to convince his FOMC buddies that it's such a swell idea to print MOAR MOAR MOAR MOAR MOAR!!! like Bennie B wants to keep his little rigged casino running. There are some real dangers to this stuff and it's still my fundamental believe you can't fix the economy with hot money. I'm 100% austrian but I also don't believe it really matters which idea you follow, the outcome is the same: a deflationary cleansing of the system. 2008 was a nice beginning and the deflationary spiral would have resumed in 2010 if it wasn't contained by the Bernank who unleashed a speculative rally. This will not end well. (No I didn't lose anything during 2008, I'm not at all bitter over any of that, I'm just your local friendly permabear)
That's a juicy looking short opportunity, I gotta say. It would have to be profitable to just keep buying DOTM put ratio spreads (sell nearer puts, use the money to buy more farther out ones than you sold: the advantage is that they're cheap to get into, but have unlimited profit potential if the thing really craters at some point) for the next year or two until something happens. Pay out the commish and bid/ask spread for a while, and then when the inevitable cratering hits, rake it in. I think I'm going to spend a little time this weekend looking at this.
Could you explain this trade to a novice trader like me? How is it unlimited? If I sold nearer puts and purchased farther OTM puts, then the market sold off heavily, I'll make money on my long puts but won't I have to pay off my short puts? Isn't this limited?
I predict hyperinflation myself. The problem is something like hyperinflation will not provide prior warning. It will be akin to the housing bubble. Remember how during the housing bubble was continuously inflating everyone kept cheering on the bubble, everyone was very comfortable with this ever growing bubble. During this evergrowing housing bubble no one thought there was an end, securitization of mortgages was an all time high, people loading up on structured CDOs like a meth addict chasing another hit. During this bubble phase no one dreamed of LEH,FRE,FNM,BSC collapsing or requiring a backstop. Even GE was near death. The whole thing hit rapidly and hard and almost brought this country to the brink. Hyperinflation will be the same thing, the pundits, the investment community in general will laugh it off as a crackpot theory. But it will happen and it will be a rapidly ravaging beast that will go out of control in the blink of an eye. Do not expect a prior warning.
Not even in your wildest dreams you will see hyperinflation with this velocity of money: http://research.stlouisfed.org/fred2/series/MZMV Actually, the danger of deflation is alive and the FED is not doing enough to stop it because a lot of idiots scream about QE for their own agenda and they do not care if 15% of the population is out of work because they "live and let die".
Unemployment is high because we are much more efficient at producing output with less humans required. Think of farming, it took lots of labor in the early 20th century and now you have combines and other machinery that replaces what used to require lots more human capital. We just need less Humans to produce the same output that we were able to generate 20-30 years ago. The other problem is people are living longer and healthier and with the lack of widespread plagues or wars to cull the excess human population you should expect to see number of unemployed people to increase. Especially since we are also outsourcing more and more work outside the US where labor is significantly cheaper. All this requires more borrowing and more money printing to pay our growing debts to foreign creditors. Eventually we will reach a tippingpoint. Velocity of money is low because banks and other financial entities + corporations are hoarding cash and not spending it. At some point they will get spooked and start spending it if they fear cash will become a liability. Then expect a huge spike in velocity of money.