Tuesday, April 28, 2020

Expert who called the 2008 crisis says the signal to sell stocks is coming soon - MarketWatch

Expert who called the 2008 crisis says the signal to sell stocks is coming soon - MarketWatch: However, former Goldman Sachs hedge-fund manager Raoul Pal said the dollar was the world’s “biggest problem” and that the signal to sell equities was coming soon.

He said the narrative that the Fed printing money would causes a dollar collapse was “very wrong.”

The chief executive of Global Macro Investor, who predicted the 2008 financial crisis, said: “You see the biggest problem the world faces is the dollar. We are in a vicious doom loop where slowing growth causes the dollar to rise, which causes slower growth, which causes the dollar to rise, as all borrowers play musical chairs to get access to the dollar to service debts.

“Dollar swap lines, QE, jawboning, etc. have done nothing to stop this,” he added in a post on Twitter.

He said no printing of money — by the Federal Reserve — would solve what he described as a “structural” problem. “All attempts to create more money to solve the dollar standard issue tend to devalue all fiat versus gold. Gold is rallying on debt deflation probabilities.”

Thursday, April 2, 2020

Risks of Legging In

Tom writes:

I was trading Iron Condors in the EUR/USD in 2008.

I had just started a new position and I got the calls on and the short puts, but the long puts didn't fill. It was the end of the day so I figured I would get them filled in the morning.


If you weren't following that currency pair, you might not be aware that the EUR/USD moved down seven standard deviations in a single day.

Because my long puts were not in place yet, I had a terrible loss.

I considered this a great learning opportunity. Here are a few lessons:
  • I vowed never to partially fill a defined-risk trade without the long puts in place again.
  • If I trade at the end of the session, I make sure I have no unintended short options.
  • I am more aware of the true risk I am taking. I don't over leverage SPAN margin.
  • I learned the value of having a portfolio hedge in place
See aeromir.com for more.