If you bet against Europe, you missed a big one
Bearish investors positioned for complete failure of the EU summit blew it.
First, a proposition. Let's say I was bearish going into the EU drama session last night, meaning that my book was net short, classically meaning that I would make money if the market went down and would expect to lose if it went higher.
If I wanted to be honest with myself -- and believe it or not, that's not always easy for a hedge fund manager -- I needed to see a total collapse of the talks. That was the home run. That's where I would have distinguished myself among my peers. That's what I would have told my staff I was betting on.
The "collapse" did not come about. So, intellectually, I was wrong.
Unfortunately, saying you are wrong out loud is considered a colossal sin. I know this. Believe me, if I never admitted I was wrong, I would be chastised and pilloried much less than I am. But if someone admits he is wrong, the critics say, "Even he admits he is wrong," and then they blanket everything with that self-assessment.
In reality, though, of course, it was a wrong bet. Consider it in sports: You bet run, they passed, they got a touchdown.
So what do you do if you can't say you are wrong -- and what do you tell your staff? Two different things. Publicly, you do what I saw some manager on Bloomberg do Thursday morning. He spewed the negative litany:
- Not enough money. We were looking for 2 trillion euro and got 1 trillion.
- The devil is in the details, and we don't have the details.
- Fifty percent haircut means 120% of GDP for Greek bonds, which is still wildly unrealistic.
- It is just a plan for a plan, and that means nothing.
Here's the rough part of that analysis. It could conceivably be right. It might actually be the case. But at Thursday's open at least, you are going to have a gigantic loss while the long-only funds are going to have a gigantic gain, so it is truly intellectual sour grapes.
However, you have to stick to your story or look like a total buffoon.
Nevertheless, let's just distinguish for the moment between good investing and bad investing. A good investor should have placed a bet that some deal would go through, and he's in a place now to reach the conclusion that it isn't enough, and he can start selling into the rally.
In fact, a great investor would be someone who didn't believe for a minute that a deal could be reached of any real gravity but bet that the market would love any deal with a trillion-euro fund, and that was well within the probabilities. That fund manager would have been 200% long going into last night's close. He would then take off half that long position at the opening and then, throughout the day, work his way toward a more market-neutral position if the market kept climbing.
Ideally, it would be terrific to be about 50% long at the end of the day if the market ends up 2% to 3% higher.
That's how it would be if you got it right.
Frankly -- and let's be really brutal about it -- if you weren't hugely long going into Thursday, you missed a big one -- and I would rather hear from someone else.
jimmy you should have been ranting a raving yesterday letting your, so called cramericans in on a little move . you forecast like the fat man with bad breath that always late to work , Hell jimmy my chid can read the news . you overrate you self , 2 days ago I bought ( byd, mpel, hov,bzh,xlf , kmgb) I might sell them at the close go jimmy go hausta nunca ,
what did the market do this morning? i am too uneducated to figure it out
please help me with your rigor and knowledge so that i too will know that
the market rallied today
WAKE UP has you pegged for the ape that you are
This week, Netflix's horrible drop from $110 to $76 didn't create a buying opportunity in his eyes and the stock had more room to drop. It's up $3.40 a share since.
Today, he would absolutely sell into this rally. Of course he would. He stated Tuesday that the recent rally was a bit overdone and that he would definitely take some off the top. I would argue that the summer decline was grossly exaggerated and stemmed from fears that were overblown. While corporations, as a whole, were beating expectations in the 2nd quarter, markets were plunging.
Well Jimmy Boy you did again, you manage to be the most entertaining act out there and I mean OUT THERE!!!!!!!
@leftcoastJennie , cmc was a buy on the 3rd of the month and a sale 0n the 24th, easy money
if your foolish blowhard self, keeps following jimmy, you wont like him much longer , your in the wrong business , give your chump change to a pro , just trying to help a fool from being stupid
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As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
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