I woke up to see the stock over 900. Half asleep couldn’t think clearly before the market closed. I placed a short for the open $20 below the close but no luck, eventually got set when I woke an hour before the close at $750. Telsa just announced they have closed their China stores because of the virus - that should go down well! Meantime Australian market holding up well. Reinitiated shorts. If any market should be pumped it’s the Chinese dependant Australians
FX - I was going to ask if you spread trade. I didn’t know how you could stomach those moves unless you have a big capital base. Gave me the ?hits that Australia outperformed the U.S. up until the last few sessions. Closing out the last of S&P long now. I am no hero I have taken it up the cyber pass with short SPI but happy to keep it running now. This market is reminding me of 1999 - stupid valuations on so called gig stocks. APT.ax $10 bil company no profit!
Thu saw a rebound from the impact of the coronavirus, investors were betting on a successful containment of the virus, still, some strategists warn it may not be over. JPMorgan strategist Nikolaos Panigirtzoglou said "Despite this week’s equity market rebound we are reluctant to chase short-term momentum at this point as there is a significant risk of an unexpected re-acceleration of new coronavirus cases." Something worthy to note is that a recent Bloomberg survey of top CEOs found that 4 out of 5 are selling shares in their companies ahead of 1st quarter reporting.
There is a growing number of professionals joining the choir singing the chorus "I DO NOT LIKE THIS MARKET". David Kotok, cofounded of Cumberland Advisors, is the latest addition, he blames the central bankers for their "one size fits all" attitude of increasing liquidity to fix whatever is the crisis of the month. He also said that markets have prematurely discounted the longer-term effect of the coronavirus
I'm patient, I hedge and I do keep a capital buffer in reserve. Jim Simons' of Medallion principle is applied... "Have a clear view, let the objective reach whether it takes a moment or seasons" Indeed markets can remain irrational for longer than one might expect, however, markets are also efficient (eventually). Manipulation and intervention, even that of central banks, is temporary... markets will always return to fair value based on economic factors. {I'm referring to the Incecies, individual stocks used to be the same but no more, they are now a different game... as proven by fund managers that seldom can beat the index}
Here's something that makes you wonder how transparent China is on the coronavirus... the doctor that tried to sound the alarm back in December was muzzled and put in jail. With such a story, can we be confident that China is telling it as it is? I fully agree with the assessment of JPMorgan's strategist and David Kotok, we haven't seen the end of the effects of the coronavirus and markets are wrong in discounting its effects now.
Did Simons say that? While it may be one of his principles, I believe most of their trading was short-term by nature. Your perception of where the market should be (fair value) and where it actually is seems to contradict the efficient market hypothesis. Yet, you believe the markets are efficient, eventually. It's true that markets tend to react fast on new information, frequently overreacting, but I for one do not think markets are efficient. There's just too many flaws and assumptions in that hypothesis.
"eventually" is the operative word. Take current new highs as an example... Factories in China were closed for the week-long NY festivities, so US companies reliant on the China supply line pre-ordered extra parts, supplies, etc. When the factory closure was extended, first by a week then indefinitely, markets ignored this as they saw no closure of assembly lines and no lay-off at US companies and presumed the coronavirus has no effect on earnings, the 4th quarter growth was extrapolated into the 1st quarter and beyond so the bulls euphoria continued. Reality will eventually hit and markets will efficiently adjust to fair value, probably overshoot to the downside, again "confirming" your hypothesis of inefficiency (now on the downside) untill the March quarter reporting kicks-in and market efficiency will again drive them to fair value. It is a cycle of bulls and bears dominating sentiment in turn but in between the market efficiency will push or pull to get to fair-value. Day traders don't care whether prices are fair or not, they simply trade the current trend mostly for $500 peanuts per day, longer-term traders trade the sentiment against fair value for $60k coconuts per month. I'll re-post the table showing the effects of previous virus emergencies and repeat that China is now 14% of the world economy plus the death toll of the coronavirus has now exceeded that of SARS. Until a vaccine is available, no factory manager will force its workers to face a 2% mortality probability. it's rather naive to think that 14% of the world economy can shut down and the rest of the world remains unaffected. On the best-case scenario, a 7% correction can be expected, in the worst case, a 15% to 20% sell-off would be reasonable.
If so, aren't you really saying that the markets are inefficient most of the time? And if so - are markets really efficient then? And what is fair value? Is fair value your idea of where the markets should be based on some fundamental analysis? Surely - one can find some other fundamental analyst who have a different perception of fair value than you. If the markets are efficient, then everyone have the same information, interpret it equally and act on it equally and rationally. Not sure what the purpose of this paragraph is and it's not even correct. Simons, who you've brought up a few times now, mostly did short-term trades in their main fund. They eventually started a long-term fund based on fundamentals/long term trends and it underperformed their main fund by a wide margin. We shall see. Like I've said to many others for the last year or so - I hope you're right, but fear you may be wrong.