Time flies when you're not updating your blog!
Well this is embarrassing, but in hindsight not all that unexpected... It's been almost a full year since my last blog post (not that anyone's reading). Oh course, the reason I created this blog in the first place was not for readership per se, it was for myself (As an aside, there are precious few media sources that aren't beholden to some self-serving interest, luckily most blogs seem to resist this M.O). I am determined to keep this blog going, if only to serve as an entertaining retrospect upon my mid-twenties, woefully mis-informed self some years down the road. I'm sure I will get a good laugh out of my entries looking back at age 45.
While I don't want this blog to become a dear diary, some recollection of this past year's events (both personal & market-related) will be useful:
- 69.6%!!!! that's the 1 year total return of the SPY ETF which tracks the S&P 500 index. Pats on the back all around Mr. Market - -Crisis averted! Great for my 401/k which is 60% invested in equities. Note: I started marginally increasing my equity exposure in March 09, but to say I made I smart decision would be a mischaracterization.
- I failed the CFA level III exam- Actually it's more of a relief that there still is justice in the world. I was woefully unprepared for this exam. My writing skills were not where they needed to be (more blog entries??) and I did not even get to all of the questions in the curriculum. This year I am already better prepared with a schedule that I am following and a plan of attack.
- I am beginning to encounter more difficult (dare I say life-altering) decisions as they relate to finances & family. While I personally am on solid ground financially, I am starting to worry about my parents, who are now in retirement, and my sister who is branching out on her own with a new business. I foresee a lot of expenditures for them both, on what is a dwindling asset pool, levered up with debt. I'm not really sure how to approach the problem. Do I slowly fix one thing at a time or do I go "big bang" and try to push my father to consolidate all financial activity at once (he has something like 8 credit cards, 10 brokerage accounts & 4 business loans). Should anything happen to him, my life as I now it would be interrupted for at least 6 months as I would have to sort through the family finances. Not to mention the grief that my family would endure. This is the thing that worries me the most right now.
- Related to the last two issues, I have begun researching topics such as estate planning, life insurance, & personal financial planning all of which have captivated me. I find them very interesting and may want to pursue them as a career in the future, although hedge fund accounting can be very "interesting" at times (think Oct. '08!!).
Now that I have those out of the way, it's time for some thoughts about the current environment (don't mention Greece, don't mention Greece, don't mention Greece). Related to my first musing on the total return of SPY since March 09, all I can say is (and in the voice of an Italian gangster) - - C'moooooooooonnnnnn Man!! I don't buy it one bit.
Consider:
- Housing prices are still falling (I drove down the lake Michigan lakefront today and was alarmed to see so many for sale signs. Are these home-owners sick of living here or are they being forced to sell into a sinking market? Obviously the latter. Of course that many For Sale signs also increases the amount of hidden inventory of homeowners that would like to sell, but don't want to sell in such a bad market. This is not getting better any time soon.
- Consumer spending is tepid. Retail store expansion has been based on a set level of annual growth for the past 20 years; that level of consumption has been permanently impaired. Overcapacity is now built into the system. that have expanded too rapidly are now faced with the double-wammy of decreasing sales and discontinuing operations.
Where are we headed - an uneducated guess.
- Market consolidation, back to 1,000 on the S&P. Stimulus momentum will begin to run out in 2Q10 investors will finally "understand" this was not a typical recession.
- The tax man cometh - (I'm sure I stole that from somewhere) Taxes are on the rise and so is investor uncertainty. Muni bonds will likely generate a lot of interest in the next 6 months as investors anticipate the rise.
Alright. That's all the writing I have in me this Sunday night. Time to kick back with the girlfriend and a bottle of 312 Ale and catch the last 15 minutes of amazing race. Then curl up with the level III curriculum...
Good night,
Mike
Sunday, March 07, 2010
Wednesday, March 25, 2009
Web 2.0 and the social networks - If I were Mark Zuckerberg...
Let's face it (pun intended?), Facebook is a force to be reckoned with on the world wide web. Problem is, the firm is not profitable and the corporate strategy seems to be more of the same. Facebook needs to start using the leverage of its 100 million unique users a month and try to enter new markets where competitors have a strong, but not dominant foothold. Its the web era after all and there is only one true economic moat - your user base. Checkmate Facebook.
So with that in mind, here's what I would do if I were Mark Zuckerberg:
Buy LinkedIn, integrate it into the facebook platform (i.e. single login and user-interface), but let the user maintain/create a professional profile which can be segregated from the "casual" profile. In essence the user would be able to toggle between casual and professional profiles and allow the 2 different profiles to selectively share information (such as hobbies, employment history, pictures etc).
Why on Earth would I want my personal information to be at the same site as my professional profile?
I believe that much of this information is relevant to both. Why do I have to constantly retype my basic profile at Facebook, LinkedIn, Xing, Twitter etc. when 70% of the information is the same between all 3. Same goes with contacts. I hate having to constantly look up my contacts anew each time I create a new profile at a new social networking site. Not to mention having to login and out of 5 different accounts on a daily basis, just to keep information current.
What's in it for Facebook?
How about a new demographic group to target? And one with more purchasing power. I would guess the average age of Facebook users is 17-20 years. These users will soon be graduating from high school/ college and guess what, will look for a job. Does Facebook really want to lose attention as these your professionals start ramping up their careers (and winding down their Facebook accounts?) As a junior or senior in college starting my job search, wouldn't it be a natural extension to create my professional profile with a user-interface that I use practically every day? Then, with my professional profile created, start browsing for jobs posted by hiring firms. So now we have created additional/enhanced revenue streams in the form of:
What about data security? I don't want a prospective employer to see me with a beer bong in hand!
The idea is to create a fire-wall between the two profiles that lets the owner specify exactly which information can be shared between the two profiles and WHO has access to one the other, or both. I think Facebook already has a good handle on these security issues, but obviously enhancements would need to be made.
Envision the following scenario:
Derrick and I are high school friends that go to college in different cities. We are also Facebook friends. One day I see Derrick has created a professional profile on Facebook, so I click on his "restricted" profile (since we are not yet contacts on the "professional" site). I then create my own professional profile and request that he add me to his contacts. After being added as one of Derrick's professional contacts, I see that he is joining an intern program this summer at Dunder Mifflin Inc. I click on the company and I am taken to the firm's profile page and a list of job openings.
Bottom line, there are too many social networking sites and none of them have reached their profit potential. It is time to consolidate or let the weak die. Why not offer both a social & professional networking site on a shared platform, but with segregated information that is determined by the user? I see a win-win for consumers and business.
Of course why buy when you can make? But I think LinkedIn has already gained critical mass and would be difficult to supplant as the #1 social networking site (sorry Xing.com!).
My 2 cents for the evening.
Let's face it (pun intended?), Facebook is a force to be reckoned with on the world wide web. Problem is, the firm is not profitable and the corporate strategy seems to be more of the same. Facebook needs to start using the leverage of its 100 million unique users a month and try to enter new markets where competitors have a strong, but not dominant foothold. Its the web era after all and there is only one true economic moat - your user base. Checkmate Facebook.
So with that in mind, here's what I would do if I were Mark Zuckerberg:
Buy LinkedIn, integrate it into the facebook platform (i.e. single login and user-interface), but let the user maintain/create a professional profile which can be segregated from the "casual" profile. In essence the user would be able to toggle between casual and professional profiles and allow the 2 different profiles to selectively share information (such as hobbies, employment history, pictures etc).
Why on Earth would I want my personal information to be at the same site as my professional profile?
I believe that much of this information is relevant to both. Why do I have to constantly retype my basic profile at Facebook, LinkedIn, Xing, Twitter etc. when 70% of the information is the same between all 3. Same goes with contacts. I hate having to constantly look up my contacts anew each time I create a new profile at a new social networking site. Not to mention having to login and out of 5 different accounts on a daily basis, just to keep information current.
What's in it for Facebook?
How about a new demographic group to target? And one with more purchasing power. I would guess the average age of Facebook users is 17-20 years. These users will soon be graduating from high school/ college and guess what, will look for a job. Does Facebook really want to lose attention as these your professionals start ramping up their careers (and winding down their Facebook accounts?) As a junior or senior in college starting my job search, wouldn't it be a natural extension to create my professional profile with a user-interface that I use practically every day? Then, with my professional profile created, start browsing for jobs posted by hiring firms. So now we have created additional/enhanced revenue streams in the form of:
- a new (wealthier) demographic group - LinkedIn
- expanded ads to include employment - monster.com
- possible premium content on the "professional" side. (think Ladders.com)
What about data security? I don't want a prospective employer to see me with a beer bong in hand!
The idea is to create a fire-wall between the two profiles that lets the owner specify exactly which information can be shared between the two profiles and WHO has access to one the other, or both. I think Facebook already has a good handle on these security issues, but obviously enhancements would need to be made.
Envision the following scenario:
Derrick and I are high school friends that go to college in different cities. We are also Facebook friends. One day I see Derrick has created a professional profile on Facebook, so I click on his "restricted" profile (since we are not yet contacts on the "professional" site). I then create my own professional profile and request that he add me to his contacts. After being added as one of Derrick's professional contacts, I see that he is joining an intern program this summer at Dunder Mifflin Inc. I click on the company and I am taken to the firm's profile page and a list of job openings.
Bottom line, there are too many social networking sites and none of them have reached their profit potential. It is time to consolidate or let the weak die. Why not offer both a social & professional networking site on a shared platform, but with segregated information that is determined by the user? I see a win-win for consumers and business.
Of course why buy when you can make? But I think LinkedIn has already gained critical mass and would be difficult to supplant as the #1 social networking site (sorry Xing.com!).
My 2 cents for the evening.
Wednesday, February 25, 2009
Hope: not a good investment strategy
Anyone that listened to chairman Ben Bernanke's testimony today and now feels better about our country's economic situation; god have mercy on your soul. Today I saw what was truly a dead cat bounce - short covering coupled with a few longs piggy-backing off of a glimmer of hope provided by Mr. Bernanke. A hope that maybe, just maybe, if everything goes according to plan we'll pull out of this recession in the latter half of 2009.
If the average investor were to assign a probability to the possibility of the country exiting recession by the end of this year what would it be? Well, clearly that probability was lower than Ben Bernanke's own number or else how do you explain a 3% increase in the broader markets. But what new information did we receive today? A look at the data:
By the way, my own probability guess: 25%
Anyone that listened to chairman Ben Bernanke's testimony today and now feels better about our country's economic situation; god have mercy on your soul. Today I saw what was truly a dead cat bounce - short covering coupled with a few longs piggy-backing off of a glimmer of hope provided by Mr. Bernanke. A hope that maybe, just maybe, if everything goes according to plan we'll pull out of this recession in the latter half of 2009.
If the average investor were to assign a probability to the possibility of the country exiting recession by the end of this year what would it be? Well, clearly that probability was lower than Ben Bernanke's own number or else how do you explain a 3% increase in the broader markets. But what new information did we receive today? A look at the data:
- Case/Schiller home price index -18.55% (worse than expected)
- Consumer confidence 25 (worse than expected)
- Home Depot earnings $-58 Mil. loss (better than expected)
- Target earnings down 41% (worse than expected, credit losses mounting)
By the way, my own probability guess: 25%
Friday, February 06, 2009
Mental Note to self: Market on verge of critical inflection point next week.
With the lingering questions on the stimulus bill likely to be resolved soon, wall street is going to have to digest an enormous amount of market-moving information in the next 2 weeks as we finally get answers to the following questions:
1) How much money will ultimately be spent and where. Expect this to cause large sector rotation as traders solidify expectations on what industries are receiving cash.
2) Suspension of Mark-to-Market accounting - A bad idea as this will just allow banks to postpone the disclosure of insolvency. In any case, expect financials to rally on this news shareholders cheer less transparency.
3) Earnings - While not as meaningful as this week, the likes of NVDA, CS, KO, PEP and some big retail names are reporting next week.
With the lingering questions on the stimulus bill likely to be resolved soon, wall street is going to have to digest an enormous amount of market-moving information in the next 2 weeks as we finally get answers to the following questions:
1) How much money will ultimately be spent and where. Expect this to cause large sector rotation as traders solidify expectations on what industries are receiving cash.
2) Suspension of Mark-to-Market accounting - A bad idea as this will just allow banks to postpone the disclosure of insolvency. In any case, expect financials to rally on this news shareholders cheer less transparency.
3) Earnings - While not as meaningful as this week, the likes of NVDA, CS, KO, PEP and some big retail names are reporting next week.
Thursday, January 29, 2009
The Fed's "WAR OF THE WOR(L)DS"
Like many in the investo-blogosphere I eagerly devoured David Merkel's "FOMC Statement, Redacted Version" today. I am very grateful that someone has taken the time to do this on a regular basis as it saves a lot of time compared to reading the 2 statements side by side. Maybe its just me being "fed up with fed-speak" (sounds like a good WSJ article name if it hasn't already been used!), but it seems that our thesaurus-loving friends at the fed are really trying to engage in more of an "anxiety-easing" policy than a QE policy at the moment. Now that interest rates tools are sayonara the fed has really stepped up its newest weapon against all things deflationary before QE becomes the proverbial kitchen sink: a war of words.
Yes of course Greenspan made this method famous and Ben Bernanke, being the astute pupil that he is, certainly paid attention to Greenie in English class all those years. But until this most recent statement, I didn't really get the vibe from the Bernanke-led fed that they were trying to "game the system" by fooling us with vagueries and empty statements. I thought he was a straight-shooter a la Mr. Bush?
Here are selected excerpts from this meeting's statement and my interpretations of those statements given their change in language vs. last meeting.
They write:
The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
I read:
We sure hope the market turns around by the end of this year, but we don't think it will
They write:
The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.
I read:
So last time you were evaluating it. This time you're ready. God the suspense is killing me! Either you are already doing it, but want to maintain the illusion that the tool is still available OR you don't want to commit until we have shed another 5% in GDP growth.
They write:
the Committee expects that inflation pressures will remain subdued in coming quarters.
I read:
Look we've made progress! The first derivative of deflation has slowed. I already have next meetings statement prepared: "Inflation pressures have normalized and will gradually revert back to long term historical averages"
Let's stop the madness of Greenspan! Let's work off some debt/leverage for another year and gradually restore confidence in the banking sector. Confidence that they are making loans that they will eventually get paid on... I don't see how lowering long term rates in the near term is going to spur a sustainable increase in loan activity unless lending standards are relaxed (which they won't be). Who is on the sidelines right now waiting to buy a new house based solely on the level of 30 yr fixed rates? Aren't these just the refi- people?
My 2 cents.
Like many in the investo-blogosphere I eagerly devoured David Merkel's "FOMC Statement, Redacted Version" today. I am very grateful that someone has taken the time to do this on a regular basis as it saves a lot of time compared to reading the 2 statements side by side. Maybe its just me being "fed up with fed-speak" (sounds like a good WSJ article name if it hasn't already been used!), but it seems that our thesaurus-loving friends at the fed are really trying to engage in more of an "anxiety-easing" policy than a QE policy at the moment. Now that interest rates tools are sayonara the fed has really stepped up its newest weapon against all things deflationary before QE becomes the proverbial kitchen sink: a war of words.
Yes of course Greenspan made this method famous and Ben Bernanke, being the astute pupil that he is, certainly paid attention to Greenie in English class all those years. But until this most recent statement, I didn't really get the vibe from the Bernanke-led fed that they were trying to "game the system" by fooling us with vagueries and empty statements. I thought he was a straight-shooter a la Mr. Bush?
Here are selected excerpts from this meeting's statement and my interpretations of those statements given their change in language vs. last meeting.
They write:
The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
I read:
We sure hope the market turns around by the end of this year, but we don't think it will
They write:
The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.
I read:
So last time you were evaluating it. This time you're ready. God the suspense is killing me! Either you are already doing it, but want to maintain the illusion that the tool is still available OR you don't want to commit until we have shed another 5% in GDP growth.
They write:
the Committee expects that inflation pressures will remain subdued in coming quarters.
I read:
Look we've made progress! The first derivative of deflation has slowed. I already have next meetings statement prepared: "Inflation pressures have normalized and will gradually revert back to long term historical averages"
Let's stop the madness of Greenspan! Let's work off some debt/leverage for another year and gradually restore confidence in the banking sector. Confidence that they are making loans that they will eventually get paid on... I don't see how lowering long term rates in the near term is going to spur a sustainable increase in loan activity unless lending standards are relaxed (which they won't be). Who is on the sidelines right now waiting to buy a new house based solely on the level of 30 yr fixed rates? Aren't these just the refi- people?
My 2 cents.
Saturday, January 17, 2009
Short-termism Redux:
Sunk Costs, Escalation Bias and Satisficing Markets
It has become more clear to me since the market crash in October that those in Washington who are making decisions on our behalf are suffering from chronic escalation bias; the premise that once aid has been distributed to an ailing financial institution and the proverbial "intervention" line has been crossed, the government (read: treasury) must see their investment through to the end or risk its collective reputation. This logic flies in the face of what every business student in America - and throughout the world- is taught in corporate finance 101: sunk costs should play no role in future decision-making. I can even vaguely recall a picture in my corporate finance books illustrating a sunk cost: I think it was a crudely drawn diagram of a truck leaving a gas station. Sounds pretty basic.
Alas, the human mind likes to play tricks on even the "brightest" minds of our time. And so we see billions of dollars being sprayed around sporadically every couple of weeks (days?)aimed at flare-ups while a forest fire rages in the background. Analogies aside, i'm obviously making reference to a few of the "chosen" banks that the government has decided to save (and save again). And yet, how did it get to this point? How did this hodge-podge of bailouts, guarantees, and emergency loans come about? Did the Government really think that "one more bailout" would finally stem the tide of asset erosion-- the self-reinforcing downward spiral of deleveraging? We don't know the thought process of those in charge - everything that they say in public is propaganda, and for their sake it has to be. Heaven forbid Bernanke say the d-word at a fund-raising dinner, only to have the Nikkei drop 10% before he can finish his sentence.
It was a perfect storm of satisficing decision-making coupled with the desire to preserve one's own reputation amid a relentless media. The result: our regulators, elected-officials and their ilk can no longer make rational, prudent, pragmatic decisions in the best interests of their constituents: American citizens. It's time for new leadership.
Tuesday at noon we will welcome a new President. It's the first step to curing the psychological "hangover" (hat tip: dubya) that has been plaguing our decision-makers for the better part of two years. Our new leaders- and by extension, we -must be vigilant however; consensus will be easily found, but it should not be sought. There are some hard decisions that will need to be made and some people will get hurt. But for now let's bask in the promise of a renewed hope for our country. Congratulations America, now let's get to work.
references:
http://www.informationarbitrage.com/2008/11/the-plague-of-short-termism.html
http://en.wikipedia.org/wiki/Sunk_cost
Sunk Costs, Escalation Bias and Satisficing Markets
It has become more clear to me since the market crash in October that those in Washington who are making decisions on our behalf are suffering from chronic escalation bias; the premise that once aid has been distributed to an ailing financial institution and the proverbial "intervention" line has been crossed, the government (read: treasury) must see their investment through to the end or risk its collective reputation. This logic flies in the face of what every business student in America - and throughout the world- is taught in corporate finance 101: sunk costs should play no role in future decision-making. I can even vaguely recall a picture in my corporate finance books illustrating a sunk cost: I think it was a crudely drawn diagram of a truck leaving a gas station. Sounds pretty basic.
Alas, the human mind likes to play tricks on even the "brightest" minds of our time. And so we see billions of dollars being sprayed around sporadically every couple of weeks (days?)aimed at flare-ups while a forest fire rages in the background. Analogies aside, i'm obviously making reference to a few of the "chosen" banks that the government has decided to save (and save again). And yet, how did it get to this point? How did this hodge-podge of bailouts, guarantees, and emergency loans come about? Did the Government really think that "one more bailout" would finally stem the tide of asset erosion-- the self-reinforcing downward spiral of deleveraging? We don't know the thought process of those in charge - everything that they say in public is propaganda, and for their sake it has to be. Heaven forbid Bernanke say the d-word at a fund-raising dinner, only to have the Nikkei drop 10% before he can finish his sentence.
It was a perfect storm of satisficing decision-making coupled with the desire to preserve one's own reputation amid a relentless media. The result: our regulators, elected-officials and their ilk can no longer make rational, prudent, pragmatic decisions in the best interests of their constituents: American citizens. It's time for new leadership.
Tuesday at noon we will welcome a new President. It's the first step to curing the psychological "hangover" (hat tip: dubya) that has been plaguing our decision-makers for the better part of two years. Our new leaders- and by extension, we -must be vigilant however; consensus will be easily found, but it should not be sought. There are some hard decisions that will need to be made and some people will get hurt. But for now let's bask in the promise of a renewed hope for our country. Congratulations America, now let's get to work.
references:
http://www.informationarbitrage.com/2008/11/the-plague-of-short-termism.html
http://en.wikipedia.org/wiki/Sunk_cost
Tuesday, October 14, 2008
Mr. Market has a case of the Muundays...
Do you remember back in college, or maybe at your first job, when you could take off early on Friday and just not show up at all on Monday and no one gave a damn? Well, it looks like for a lot of investors, 3 and a half day weekends are the key to avoiding volatility in 2008. Note: I wanted to name this entry Monday-Bloody-Monday, but that was before we had a 900 point rally (wtf?) by the Dow.
A look back at history this year (yes, our children will be reading about this in history books someday) turns up a myriad of market changing events that all occurred over a weekend and which were subsequently digested by the markets on Monday: Bear Stearns, Fanny/Freddy, Lehman, Fortis, TARP. I wanted to see what amount of volatility, and more importantly, what returns an investor would experience had they engaged in such investment truancy. Indeed, my analysis shows investors could have outperformed the market by nearly 10% by selling on Friday and re-purchasing the index on Monday's close.
My first step was to analyze the standard deviation of returns on the S&P 500 index. I downloaded year to date closing prices for the S&P 500 index and used daily log returns to calculate an annualized standard deviation of 31.7 (250 day/year). This is already double the 30 year average standard deviation for the index! If I filter by just Mondays, this number goes up to 45 or nearly 3x the 30 year average!
Next, I looked at the compounded returns of the index vs. a dummy index that "sells" on Friday. The results were very surprising. For most of the year, the indexes tracked each other very closely, then in mid-September there is a drastic divergence. While the index is down 30% YTD, the dummy index is 10 percentage points better at down 20%. If we remove today's 900 point wtf-rally (I'm going to continue to call it that until I see another 11% daily rally in my lifetime), the outperformance is even more stark at 17 percentage points for the ex-monday index. On the whole Monday's have produced both higher volatility and lower returns for 2008.
Do you remember back in college, or maybe at your first job, when you could take off early on Friday and just not show up at all on Monday and no one gave a damn? Well, it looks like for a lot of investors, 3 and a half day weekends are the key to avoiding volatility in 2008. Note: I wanted to name this entry Monday-Bloody-Monday, but that was before we had a 900 point rally (wtf?) by the Dow.
A look back at history this year (yes, our children will be reading about this in history books someday) turns up a myriad of market changing events that all occurred over a weekend and which were subsequently digested by the markets on Monday: Bear Stearns, Fanny/Freddy, Lehman, Fortis, TARP. I wanted to see what amount of volatility, and more importantly, what returns an investor would experience had they engaged in such investment truancy. Indeed, my analysis shows investors could have outperformed the market by nearly 10% by selling on Friday and re-purchasing the index on Monday's close.
My first step was to analyze the standard deviation of returns on the S&P 500 index. I downloaded year to date closing prices for the S&P 500 index and used daily log returns to calculate an annualized standard deviation of 31.7 (250 day/year). This is already double the 30 year average standard deviation for the index! If I filter by just Mondays, this number goes up to 45 or nearly 3x the 30 year average!
Next, I looked at the compounded returns of the index vs. a dummy index that "sells" on Friday. The results were very surprising. For most of the year, the indexes tracked each other very closely, then in mid-September there is a drastic divergence. While the index is down 30% YTD, the dummy index is 10 percentage points better at down 20%. If we remove today's 900 point wtf-rally (I'm going to continue to call it that until I see another 11% daily rally in my lifetime), the outperformance is even more stark at 17 percentage points for the ex-monday index. On the whole Monday's have produced both higher volatility and lower returns for 2008.
What to make of this? If I said that all investors should categorically sell on Friday and buy on Monday I would be doing a favor to no one but your broker. This SMALL sample of data is bound to revert to the mean when the market calms down. Also, it is only natural that Mondays are busier days in the market as nearly 3 days worth of news must be "priced" by the Market at the open. What I hope to do is expose my own (and your) psychological biases towards market timing and expectations. While this may be a good trade ex-post and before trading costs, I doubt it is likely to yield sustainable alpha for the future. Any attempt to arbitrage this strategy would be akin to picking up pennies in front of a Bulldover driven by Hank himself (Hope you didn't load up on SDS before lunch on Friday). News is random, what is important in times like these is resolve and a good asset allocation strategy.
long: weekends
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