This is a stock market blog about portfolio management,foreign stocks, exchange traded funds and the occasional musing about my firefighting experiences. The point here is to share process

It Was A Bad Week For Volatility

My latest post for Alpha Baskets takes a look at the recent crash….and snapback.

The dip/correction/crash of the last couple of weeks has provided a useful litmus test for certain alternative strategies, it has reminded us how risky some of the more complicated strategies can be and reminded us that equities are not a one-way trade; after nine years of going up, maybe after peaking at 2872 the path to 3000 on the S&P 500 or even 4000 includes a trip down to 2000 first.

And please remember to check out my page at TheMaven.




Volatility Is Back in Town and It’s Angry

The weekly Market Update is posted at Alpha Baskets is posted an includes the following;

The CBOE Volatility Index took center stage last week with very dramatic action Monday and Tuesday. Monday, the VIX jumped over 100%, bringing an end to the one way nature of the short volatility trade. VIX had been going down for so long that a couple of the exchanged traded products became very popular for their massive gains. You may have heard the story of a Target employee to turned his life savings into a $13 million fortune by shorting the VIX via one of the ETPs. On Monday the VelocityShares Daily Inverse VIX Short Term ETN, one of the two big ETPs had an event acceleration, effectively terminating the product. Per the prospectus, a single day rise in VIX of 80% would allow the issuer to cancel the product, which they are choosing to do. There were other funds to similarly blow up and there were estimates floating around of several trillion dollars in various short volatility trades that all blew up at once and that amount was enough, some say, to contribute to the decline in equities.

And from my page at TheMaven, the WSJ tried to blame risk parity for the recent decline and while I don’t want to allocate to risk parity I think there are some things to learn from it.



The Ides of…February?

The weekly Market Update is posted at Alpha Baskets and includes the following;

We would take a moment to remind investors that as of Friday, the S&P 500 has traded back to where it was in mid-January and is still up on the year. As noted, it is up more than 3% in 2018. At Friday’s close it was 3.9% from its all time high. At that level it is down a little and although it has been a while since it went down at all it is worth remembering that down a little goes with the territory of engaging in markets. All advisors have some sort of strategy they implement for their clients. That strategy is less important when the market is going higher causing no emotional concern, days like Friday is when that strategy becomes crucial for clients’ long term financial success. It is unlikely that too many advisors’ plan calls for dumping large amounts of stock after a bad week and while you know that, clients might need the reminder.

Over at the Maven I covered last week’s market action in a little more detail. I also deconstructed the new ETF from The Motley Fool.

Over the weekend I went to the Parker 425 Desert Race, it’s part of the same series as the Mint 400 that I have gone to and posted pictures from over the last couple of years. I am just getting started going through the pictures but here a couple from Potts Racing in the pit area before the race started. The pictures are of a service truck of sorts. Most of the better funded teams have a semi or very large motor home but this one looks like the heavy trucks that race at the Dakar Rally. I thought it was pretty neat.