[1] https://www.chicagofed.org/research/data/nfci/current-data
Highly regarded finance guys aren't podcasters or media personalities. If the guy could predict the direction of the economy, he'd be a trillionaire living his best life. Not peddling silly books and hosting podcasts. But then again, jim cramer has a following. How do explain that other than the masses are naive.
> His reasoning is that the regional banks are being extremely tight with lending right now, and by the fourth quarter many small/medium businesses will have trouble staying afloat due to the lack of financing.
He is just parroting nonsense he saw on cnbc or read in a newspaper or on social media. Just like every grifter out there. Do you really think he has inside connections to all the regional banks? To the FED?
Dave Ramsey once said anyone should be able to get a 12% return in a mutual fund. What?? Jim Cramer's constantly picking stocks and is about as good as a drunk monkey with a dartboard.
Everything Clark Howard has said that I've looked at doing, I've vetted and researched. Sometimes he gets it wrong, but I believe he is an honest actor and just trying to help people "Save money, Spend less, and avoid getting ripped off."
Honestly, nobody knows, but I put more weight on his take than most.
The $1.6 billion Scion spent betting against the market represents 93% of the fund's entire portfolio.
This is a reversal from the bank buying spree Scion went on in the first quarter before economic stress led to the dissolution of multiple mid-sized banks.
The S&P 500 and Nasdaq have actually had strong years so far in 2023, climbing 17% and nearly 40%, respectively.
they're called bulls for a reason - they're not the brightest, but you gotta be sure to either join 'em or get the heck out of the way while they're in control!
Shorting means selling without owning (borrowing) the underlying stock, and paying a borrow fee for as long as you hold the position.
Buying (being 'long') a put means paying money up front (the premium) for the option to sell a stock (doesn't matter if you own it or not at the moment) before a certain expiry date.
Typically you would be more likely to hold a short position longer than you'd roll over options, as far as I understand. But it's not clear cut and generalisable because the fee structure is different.
Also buying puts you have no risk if the stock rises - you're out the premium but you were anyway. If you sold short, it's getting more and more expensive to cover if you want to give up on the bet (and borrow fee probaby rising too, so also increasingly expensive to hold).
As for the convexity, assuming the puts he's buying are out of the money, his total position increases in $ value as it becomes in the money and vice versa. The opposite is true with an outright short.
Puts = fixed upside, fixed downside, spend money/does not need additional collateral.
The option version of an equity short is something like buy ATM out and sell ATM call.
Michael Burry of ‘Big Short’ fame expects another ‘inflation spike’ after recession rocks U.S.
" Cassandra B.C. @michaeljburry · Inflation peaked. But it is not the last peak of this cycle. We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition. Fed will cut and government will stimulate. And we will have another inflation spike. It's not hard.
"
None of these predictions were right.
The lesson here is always do your own homework. Or get a trusted financial advisor.
p.s since his twitter handles are ephemeral I saved the tweet that was attributed to him.
No, because you will be wrong and your financial advisor will be wrong too.
The better lesson is: don't try to outsmart or time the market.
The prediction, stripped of timing, is nothing. “Someday, there will be a market crash” is almost certainly true, but means nothing.
Here's an account dedicated to preserving his Tweets: https://twitter.com/BurryArchive
> To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties.[20]
* https://en.wikipedia.org/wiki/Paul_Samuelson#Aphorisms_and_q...
> “Markets can remain irrational longer than you can remain solvent”
I'm not an stock options hedge fund trading expert, does he not have to report the expiry date? These have an expiry date right? Or is it some type that doesn't expire?
Equities are wildly divorced from real value and have not had any major broad-based corrections for quite a while in my estimation. Like since before 2019.
The $1.6b number comes from listings of:
$738,840,000 for QQQ Puts.
$886,560,000 for SPY Puts
Which is calculated based on the closing value of the underlying stocks on June 30th. Option contracts are for 100 of the underlying security, so 2M reported shares is 20k options.
$886.56M = $443.56 * 20k * 100
If the value of the options contract is $1, the positions for both securities could be replicated for $40,000 total risk.
It doesn’t tell the reader anything about the expiry date or the value of the premium paid, which would be actually useful information.
If someone wanted to, they could guess the size of the risk based on the immediately previous 13F filing and comparing what was sold off, but that would be based on too many assumptions to be super useful either.
[1] https://www.sec.gov/Archives/edgar/data/1649339/000090514823...
Except for retirement savings, I’m almost entirely out of stocks… not so much because I think it’s downhill from here for a while, but more because my high yield savings account is giving me about 5% APY guaranteed.
There is no way that the stock market would experience a massive crash without some serious massive-scale cheating. If this is an extinction-type event, some banks would go rogue and come up with new (possibly illegal) ways to start printing money to prop up the stock market... Given the complexity of the monetary system and correspondent banking, they could keep this going for a while. I mean there are thousands of institutions involved and countless ways to corrupt the system.
Our modern system is all made up of centralized databases with thousands of participants trusting each other; trusting the data that all those thousands of distinct centralized systems are reporting and treating them as if they were a cohesive whole... That's our monetary system; thousands of databases managed by different people who trust each other based on what each others' systems are reporting with no way to verify any of those systems.
