short the dollar? a bit late but sure if you have to!

The train has left the station a bit but it would be interesting to see what other countries do.
USDJPY has sold off by 2 to 3% over the last few days. The EURUSD has also rallied similar amounts.

I would perhaps go long the momentum for a bit but not too crazily....
Will think about it more and post.

I am more worried about the long term inflation...

Money market funds are getting the money

The money market funds macro-group (+$121.6 billion) was the only macro-group attracting net flows in November, while stock and mixed-equity funds handed back $26.4 billion and bond funds
witnessed $16.7 billion of net redemptions.

- Large-cap funds (-$4.7 billion) continued to be the flows pariah of the U.S. Diversified Equity (USDE) funds group, despite posting better returns than the other capitalization groups during the month.

- In November the Mixed-Equity Funds macro-group (-$4.6
billion) suffered only its fourth monthly redemption since July 2002. The mixed-asset target horizon funds group (+$1.9
billion) could not make up for the net redemptions witnessed by the mixed-asset target allocation funds group (-$5.5 billion).

- In November the World Equity Funds macro-classification recaptured the claim to shame of having the largest net outflows of Lipper's major equity macro-classifications, handing back $11.2 billion.

Auto Companies

My thoughts are these wranglings are going on because all the parties concerned feel that the companies WILL be rescued any way....
However, investors didn't fall into as much of a panic so far today...VIX has mostly fallen today from 59 levels to 55...
Let's wait and watch...

Short BRL?

One of my friends from Brazil sent me this note on the Brazilian Real... This short BRL trade may be worth doing simply as a hedge against your long stock positions...
Capital Flows out of BRL
1. the process of portfolio realignment is not over... capital is fleeing and this process is correlated with bad news there (investors taking money out to cover theirs obligations abroad or just to buy safer assets in other places)
Commodity Prices
2. Price of commodities (main Brazilian exports) is going down, which is also reflecting on balance of commerce (this effect tends to be greater than benefits to increase the volume of goods exported - given that the world is not buying so much). This means that the adjustment on the balance of commerce will be slow, and for the next year, the balance tends to be negative...Also, the balance of commerce is sensitive to Embraer exports (aviation company), which, under the current scenario, has not received many requests.

Central Bank
3. The Brazilian Central bank has signed that it will not increase interest rates (which attract foreign investors) since inflation is under control . Although the rate is high - 13.75% - this is not historically very high (we had long periods recently with the basic rate in 17-20%). In the last meeting of the monetary policy committe the rate was mantained and the head of the Central Bank indicated that changes in the near future, if any, will be downward (also, there is a lot of political pressure from politicians afraid that we go through a recession...)
My comments: The investors may still flock to the Real for the high interest rates if they don't cut too aggressively and it seems that they will survive the crisis. My view on short Real etc. is predicated upon the slowing down of growth for the short term.

Trade: I would go short the BRL preferably thorough some sort of a barrier option which will be a cheap punt. One can also go short via regular options but that will be quite expensive with the volatility. Now is the time to go on Oanda online and bet on barriers

BAD BAD Day ahead

Today is going to be a BAD day in the financial markets…. Bail out rejected and a massive securities fraud by ex NASDAQ Chairman up to 50 Billion dollars it seems…..


Note on Market Movements

• USDJPY is close to breaking 90. USDBRL has climbed to 2.39 as opposed to 1.6 levels in September 08! ( Meaning Brazilian Real has fallen…)
• NZDJPY – the most popular carry trade has fallen from 90 this Jan to below 50… I wonder how it will do today..
• S&P futures are showing a 4% fall today… VIX is at 55.98 and I think it will go above 60 again. Expect Bond prices to rise like crazy again. Wonder where we go from 0% yields on T Bills….
• I couldn't get short financials in time... BLAH but it is a good trade if you are short!
  

Trading Performance

I will be a bit coy about the numbers. However, my portfolio is small and I have done quite well with my investments in the short market positions. The issue many people will raise is that it is not a "REAL PORTFOLIO" since I may be excessively risk taking in a bragging rights portfolio. So I won't release the exact numbers until I am able to make this portfolio into a "real one" by graduate student standards :)...
Personally, I am just trying to trade it professionally and my views are my views.

- Current views/Positions I want to have:

I am trying to buy some puts on all financials (yes, again)

I am trying to buy "cheap" Jan 20th putts and Feb 09 puts on the S&P 500 since I think this is a trending down market with nice tradable "range" it pays to enter low bids and when you get filled to trade them.

I am especially interested in buying puts on Capital One Financial, Discover and most other credit card companies- If I really believed in the position, I would sell calls on them to fund the puts but I don't want to be short vol in this market

I want to buy Walmart as I think the recovery is a long way off and all the cheap stores will do quite well.

Maybe time to look at infrastructure etc.

in 6 months time, we start buying financials and Gold...

in 6 months/12 months, I start going long India massively...as I have said before, great exchange rate and great prices. When the world economy recovers, India and China will be ahead....

Bailing out Detroit SUCKS - Welcome USSA

USSA?
I understand the political need to get reelected. However, Hayek, the famous political economist would turn in his grave to watch the USA get back to pre Thatcher Britain. The Govt. will manage car companies, banks, decide the products, decide the pay and so on and so forth. These actions, are even more quickly marking the "top" of the American supremacy.... What has made us great is fostering competition and innovation. The United States of Socialist America is a terrible idea- it has almost never worked.

Bailing out financial institutions, I understand- else the rest of the economy grinds to a halt as financial intermediation is stopped and the risk premium really shoots up. If all the mortgage, credit card and other financial companies fail then innovation is stifled. However, TAKING our money and putting it in a place not known for innovation is quite counterproductive. Interestingly, we are not treating the other car companies (BMW, Toyota etc.) as the "same"- something we punish Japan for.
Managing Detriot's "bankruptcy" such that none of the bond holders would be hurt, in my mind would have been wort considering. Let the equity holders decide who runs the company- stop the CDS market from freezing if you want by protecting the bonds (if we are being consistent with let's protect financial intermediaries....).
Now there will be unusable DEMOCRATIC cars....


Blah....

Hedge Fund Performance- Managed Futures is doing well

Early estimates indicate the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) will finish down approximately 0.71% in November (based on 69% of returns received).

The overall hedge fund industry is expected to post modest losses in November, which is welcome news after two of the lowest months of performance on record. Continuing downward trends in US Treasury yields, commodity and currency markets led to positive performance for the Global Macro and Managed Futures sectors and helped mitigate the losses from other sectors. While several sectors capitalized on the month-end equities rally in which the S&P saw its largest weekly gain since 1974, the move does not appear to have been a main driver of performance due to its short duration.

Managed Futures was the best performing sector in the Broad Index, finishing the month up an estimated 3.21% (with 90% of funds reporting). In addition, three other sectors appear to be ending the month in positive territory, including Dedicated Short Bias, Equity Market Neutral and Global Macro.

Commodity and Interest Rates Head Lower

The continued commodities bear market benefited the Global Macro and Managed Futures sectors as short positions in the commodities sector led to gains for the month. Oil prices dropped below $50 a barrel from October highs, and were down almost $100 a barrel from previous levels this summer.

Yields on 10-Year Treasury Bonds dropped to record lows, falling below 3% in November. Some analysts currently forecast a further decline in yields if the U.S. Federal Reserve lowers interest rates in December as expected. If Federal Reserve efforts to improve market conditions by providing liquidity for asset-backed securities through the Term Asset-Backed Securities Loan Facility (TALF) are successful, a possible investment shift from treasuries to other securities could begin to create opportunities in the Relative Value sectors as well.

Next 6 months view- still short

Recently my view on the S&P had been that it
would bounce around between 800 to 1000 with some downside drift. I still hold on to that view except I am a bit more bearish now. The other shoe consisting of the real side of the economy hasn't dropped.

More gloomy views

I expect anybody competing with Home Equity Loans lines of credit, student loans, credit cards, Installment loans to post much bigger defaults numbers since credit was so cheap over the last few year and the lenders must have lent to the same group of customers with the same reckless abandon.... 0 % financing etc.

Credit Cards: I expect more credit card firms to go bankrupt. When I scan the credit card firm numbers it seems there are "trading losses" that are quite large in magnitude... for example it seems Capital One Financial had losses on the order of 3 Billion this quarter from trading but overall made 1 Billion dollars... this is worrying...

Commercial Real Estate: Dennis Gartman, in his letter, talks about how he expects bad times to come for commercial real estate... malls etc. and I agree. With many stores closing a lot of the malls will become unprofitable and commercial real estate will suffer tremendously.

Private Equity: A lot of private equity funds will have problems raising money, or closing, or even GETTING the money they have been promised. Additionally, the portfolios they had with high leverages and high multiples on these land deals- hotels, entertainment, restaurants etc. are all rapidly becoming worthless. These are the "shadow lenders" in the economy. When the cheap credit goes away they will suffer a lot and it will take time before the extent of suffering is made public and known.

So I expect some sort of a meltdown from the real recession on the above mentioned parts of the
economy...

However, let's hope I am totally wrong....
My trading Performance:
I am toying with putting up my trading performance for this year on the web. My positions are small but I run them seriously. If anyone's interested or has a view on if I should put up my trading numbers please let me know via the comments section

cheers

Waiting for "Black Friday" numbers

I don't have a clue about what the "Black Friday" numbers will look like. Sure the consumers want to buy less, but the stores, who know the consumers' reluctance to open the purse strings, are constrained for liquidity. These stores have to get rid of inventories and also face liquidations. Thus it is possible that the sales numbers may paint a falsely positive picture of the economy. It is also possible that the numbers are terrible.....

Anyway, below are Mr. Dennis Gartman's Rules of Trading. It is interesting to see how many are "momentum" related. Also, there are some self contradictory ones here :) .... I will wait for the astute readers to point that out. Overall, these rules are still worth a read..

Trading Rules (by Dennis Gartman)

1. Never, Ever, Ever, Under Any Circumstance, Add To A Losing
Position... Ever! Adding to losing positions will lead to ruin. You can count
on it. Ask the Nobel Laureates in Economics at Long Term Capital! (Disposition Effect)

2. Trade Like A Mercenary Soldier: As Jesse Livermore said, it is not
ours to be bullish or bearish, but to be right.

3. Mental Capital Trumps Real Capital: Capital comes in two types;
mental and real. Holding losing positions costs measurable real capital, but
immeasurable mental capital. (Very very true)

4. We Are Not A Business Of Buying Low And Selling High; We are,
however, a business of buying high and selling higher. Strength begets
strength, and weakness further weakness almost always. (Momentum)

5. In Bull Markets One Can Only Be Long or Neutral, and in bear
markets, one can only be short or neutral. This may seem self-evident, but
very few understand it, and fewer still embrace it. (Don't try to catch a falling knife as they say. Interestingly Mr. Gartman himself has been trying to catch the proverbial knife in the recent equity market..... He has declared the bear market to be over several times.)


6. "Markets Can Remain Illogical Far Longer Than You Or I Can
Remain Solvent." J.M. Keynes. Illogic does often reign, and it is our duty
to learn to handle it as best we might.

7. Buy Markets That Show The Greatest Strength; Sell Markets
That Show The Greatest Weakness: Metaphorically, when bearish we
need to throw rocks into the wettest paper sacks, for they break most
easily. When bullish we need to sail the strongest winds, for they carry
the farthest.

8. Think Like A Fundamentalist; Trade Like A Chartist: The
fundamentals may drive a market and need to be understood, but if the
chart is not bullish, why be bullish? Trade when the technicals and
fundamentals, as you understand them, run in concert, one with the other.
(This is what separates theoretical economists from traders)

9. Trading Runs in Cycles; Some Good; Most Bad: In "good times,"
even errors turn to profits; in "bad times," the most well researched trade
will go awry. This is the nature of trading; accept it and move on.
(Interesting idea- Most traders have a style that can be linked to a mechanical trading strategy and sometimes those strategies do badly and sometimes well...)

10. Keep Your Technical Systems Simple: Complicated systems breed
confusion; simplicity breeds elegance. The great traders we've known
have the simplest methods of trading. There is a correlation here!
(definitely agree. Yet paradoxically you must seek complex markets to play in since there is a definite complexity premium)

11: In Trading/Investing, An Understanding Of Mass Psychology is
Often More Important Than An Understanding of Economics: Simply
put, "When they are cryin', you should be buyin'! and when they are yellin',
you should be sellin'!" This is psychology at work and its most elegant.
(Elegance is questionable but the risk premium story is intact. More amusingly, this contradicts the first few rules about momentum)

12. It Takes Buying And Lots Of It To Put A Market Up; It Takes
Only A Lack Of Buying To Put Any Market Down: Gravity is an amazing
force of nature; it is even more amazing in the world of investing.

13. There Is Never Just One Cockroach: The lesson of most markets
is that bad news follows bad... usually hard upon and always with
detrimental effect upon price, until such time as panic prevails and the
weakest hands finally exit their positions.
(fair enough as seen now)
14. Be Patient With Winning Trades; Be Enormously Impatient with
Losing Trades: The older we get, the more small losses we take each
year... and our profits grow accordingly.

15. Fear Turns To Greed At Break Even... And Vice Versa: Know
this; understand this; accept this and deal with it.
(Again very true... controlling emotions while trading is about 80% of it)

16. Do More Of That Which Is Working and Less Of That Which Is
Not: This works in life as well as trading. Do the things that have been
proven of merit. Add to winning trades; Cut or eliminate losing ones. If
there is a "secret" to trading (and of life), this is it.

17. All Rules Are Meant To Be Broken.... but only very, very
infrequently. Genius comes in knowing how truly infrequently one can do so
and still prosper, but when one must, one must!

Hedge Fund Performance Oct 08

Fund Type	Oct. 2008	Sep. 2008	YTD
Hedge Fund Index	-6.30%	-6.55%	-15.54%
Convertible Arbitrage	-12.59%	-12.26%	-29.59%
Dedicated Short Bias	9.66%	-6.08%	13.38%
Emerging Markets	-13.63%	-8.93%	-29.24%
Equity Market Neutral	-1.83%	-1.41%	-0.19%
Event Driven	-5.09%	-5.75%	-13.92%
Distressed	-5.66%	-5.18%	-14.11%
Multi-Strategy	-4.77%	-6.17%	-13.97%
Risk Arbitrage	-3.06%	-3.49%	-4.77%
Fixed Income Arbitrage	-14.04%	-6.80%	-23.99%
Global Macro	-5.13%	-6.63%	-7.10%
Long/Short Equity	-7.13%	-7.81%	-19.46%
Managed Futures	4.96%	-0.57%	11.99%
Multi-Strategy	-6.94%	-7.35%	-18.68%

Investors Seek Refuge in Money Market Funds in October, Adding a Net $38.4 Billion to the Funds Business

- The money market funds macro-group (+$169.1 billion) was the only macro-group attracting net flows in October, while stock and mixed-equity funds handed back $86.3 billion and bond funds
witnessed $44.4 billion of net redemptions.
- Large-cap funds (-$16.2 billion) continued to be the outcasts of the U.S. Diversified Equity (USDE) funds group, while small-cap funds (-$3.5 billion) managed to avoid the large losses witnessed by the other capitalization groups.
- In October the Mixed-Equity Funds macro-group (-$19.4
billion) suffered only its third monthly redemptions since July 2002. The mixed-asset target horizon funds group (+$0.9
billion) could not make up for the unprecedented net redemptions witnessed by the mixed-asset target allocation funds group (-$18.4 billion).
- In October the World Equity Funds macro-classification
(-$24.1 billion) suffered its worst monthly drawdown in over ten years, surpassing the previous month's record decline of
$20.8 billion.

What is the "right level" for equities?

What can the academics say besides - we don't know what the price should be. The MARKET decides that.

Short Answer: S&P around 600 won't be surprising and around 700 is fair value.

I thought about our most sacred academic cow of equity market ratios and wondered what it would tell me. The D/P ratio. Here D means the Dividend Yield and P is naturally the price. So this ratio measures the "yield" if you will of investing in equities. Obviously if prices increases the yield falls and vice versa.

Where is this D/P ratio these days? Has it come back to the historical average of around 4% or is it still low? If we want to come up with a target for the S&P I think we could do worse than saying this is the level of S&P that gets us a D/P ratio of 4%. That number has a pretty long history.... Roughly speaking it seems the level on stocks should be from 700 to 800 ( for a ratio of 4.5% to 4%). Naturally, in a scenario like the current one, the pendulum swings too far to the other side to give it a reason to rally! so say D/P swings to 5% - 6% not unnatural after such a risk inducing event. then we see the levels of around 580.
So my fellow student Manuel's idea of going in at 600 is not bad.

My highly complex quantitative rule of what price to offer for assets in distressed times: After many regressions and highly complicated maths, I have come up with my wonderfully quantitative rule of what price to offer when there is SERIOUS trouble around. The rule is 1/3rd. Just offer 1/3rd of what the value was. You will offer more for finance firms :) but overall for the S&P you would be doing fine.... Remember you are making a bid and letting the market COME to you. No rush to spend your valuable money in times like this.... I think you should use the strategy on cars, houses as well... If you are in a developing country then it the rule is 1/4th :)

D/P chart
http://www.newyorkfed.org/research/directors_charts/ipage20.pdf

Interesting how commentators that I read are remarking on how the yield on equities has exceded the yields on the 10 year bonds after many years. However, no one is thinking of what the historically HIGH D/P ratios are... We are thinking of average D/P and then will act surprised when it is broken. No one cried wolf when the D/P ratio was 2.5 earlier...

My idea: It would be better to invest in India/China than the U.S. once this crisis is over
I thought about investments a little bit and it occurred to me that when the market starts recovering in the next 3-6 months or so ( if it does!) then I should invest in India or China. The exchange rate is quite favorable ( drop of 25-30% vs. the dollar from 39 to 51, and if the market recovers India's stock market that has gone down about 62% to 63% of what it was- from 21000 to 8000! these emerging markets have HIGHER betas and will recover more quickly. I believe their economic story anyway...Maybe I can figure out their D/P ratios...

If I could buy BRIC notes in the next 6 months I would. No need to rush in. Decide the price you want to OWN the thing at and leave a bid and let the market come to you.

My own trading:
I sold out of my S&P puts way too early- made a profit still but could have made more.... This is what happens when you don't have a crystal ball AND not enough contracts to average :).

Are we on track to becoming Japan? Please post some comments

Low nominal rates of interest

Want to "rescue" firms that have all become too big or too important to fail

Likely to have an interventionist government

Stock market over the last 10 years is flat/lost money in NOMINAL terms (In real terms i.e. when you take the time value of money or the interest rate into account, it has lost a lot of money)

These are some of the concerns I have. I need to think about this more deeply and figure out what the right things to look at are. I do think we have better corporate governance than Japan does,are quite risk taking as a country and our culture are quite different. However, the possibility of a long and gradual road to recovery cannot be ruled out.

If any of the visitors or readers has any comments/views/suggestions on whether we are in danger of becoming Japan and what are the key metrics to examine, please post some comments.

thanks

Soros makes sense

Below are some of Mr. Soros's views and I have to say I find myself in considerable agreement with almost all of the points he makes.

My explanation for why there will be recession:
Time to delever: The basic idea behind this is that it took 3-5 years for various financial institutions in the LOW volatility cycle to lever up (as volatility decreases, financial institutions lever up to make higher returns since lower volatility typically means lower spreads on illiquid and hard to value assets which is how most people make money. Also the "risk" seems lower so institutions can gamble more)So it will take time to UNlever.

Consumers delever too when they are losing jobs AND can;t get credit card lines Just as banks levered up, consumers levered up to with the savings rate dipping to 1% or so from 7%. Thus there will be considerable "systematic" and systemic pain. Systematic pain/risk means ALL people suffer together. Hence we will have a recession.

I continue to hold my short position that I put on when the S&P reached a 1000 and Mr. Obama got elected.

Mr. Soros's comments text from yahoo

Reuters
Soros says deep recession inevitable, depression possible
Thursday November 13, 11:01 am ET

WASHINGTON (Reuters) - George Soros, chairman of Soros Fund Management, testified at a House Oversight and Government Reform Committee hearing on Thursday. Highlights:

* Said "a deep recession is now inevitable and the possibility of a depression cannot be ruled out."


* Said hedge funds were an integral part of the financial market bubble which now has burst.

* Said hedge funds will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50-75 percent.

* Said Fed, Treasury Department and the SEC must accept responsibility to prevent market bubbles from growing too big in future.

Said impossible to prevent market bubbles from forming, but they can be kept within "tolerable bounds."

* Said financial engineering should be regulated and new products approved by regulators, and that such regulation should be a high priority of the new Obama administration.

* Said a recent IMF credit facility not large enough to stabilize markets.

Closed End Funds get hammered - worst since 1987

The credit crisis and thoughts of a global recession hammered closed-end funds (CEF) in October, leading to their worst one-month decline since 1987, with the average equity CEF declining 21.47% and fixed income CEFs handing back 9.66% of their value for the month.
- On the stock side Mixed-Equity Funds (-17.66%) mitigated
losses better than its Domestic Equity Funds (-21.83%) and
World Equity Funds (-23.15%) counterparts.
- For the month only 13 funds were able to post plus-side returns, leaving 666 funds underwater and one at the breakeven mark.
- The Real Estate Funds (-38.07%) classification posted the worst return in the CEF universe.
- In October the median discount for all CEFs narrowed 445 basis points (bps) to 11.61%, still well above the 12-month average of 8.70%.

Jobless rate at 6.5%

The non-farm payrolls number was bad: 240,000 job losses and the unemployment rate up from 6.1% to 6.5% (from last month). Ford lost about $1.50 per share while the analysts expected about $0.90- $1.0 However, we see a jump up in the stock market this morning that I am inclined to say is a "technical correction." I think everyone and their mom had a short trade on the non-farm payrolls, especially after the ADP report that guesstimates the non-farm payroll numbers. Overall, there is no doubt, we are in for a big recession - worldwide. I will be watching to see if the market closes above 960 levels today.... If not, I will continue to assume it is a technical correction and remain convinced about my short view

Watch Out for Non Farm Payrolls

The non-farm payrolls number that indicates how many jobs were lost/created is something the Fed looks at quite seriously. Tomorrow at 8.30 am EST, we will know what that number is via Bloomberg or yahoo news. If the number is "bad" i.e. more jobs than expected are lost then naturally the stocks will fall figuring a recession. I have been short of the S&P via the 750 strike Dec 08 contracts and look to sell into the heightened feelings of gloom if any. If the NFP number is "good" then I will happily thank the Gods for sparing this economy and wait for the next time the general population panics. Also, Friday is a bit of a nasty day for these releases since no one wants to go home with naked short positions in a falling market people panic a lot if the number is bad.

Owning Gamma (or abusing terminology short dated volatility) is paying these days. The level of volatility we see right now is high and persistently so- FX volatility has tripled from mid 2007 levels and so has equity vol. I think commodity volatility has also doubled/tripled- look at oil falling from $120/$130 levels to $60/$70 levels.

Good Luck tomorrow

Why the Fed can't prevent a recession and why I am still short

The gap between what the Fed provides the banks and how the banks provide money to the consumer is becoming bigger and bigger. The Fed rates are cut but they are overnight lending rates and hence the banks are borrowing more cheap money AND hoarding the liquidity provided from other sources the Fed.
In other words, banks which are supposed to lend CONSUMERS money to grease the flow of goods and services are NOT doing that since they are afraid they will go out of existence. It is perfectly rational for banks to do so. Additionally, the banks are concerned that people who have lost their jobs, have seen the value of their houses drop a lot, have no health insurance, and have to send kids to college will not be the best parties to lend to....
So the bank has to charge such people a higher rate of interest AND lend them less money....

All this above is the reason why the real economy will suffer quite badly. Also, there are many illiquid assets, the effect on which is not felt quickly. The losses are NOT all fully realized. So I think there will be more pain to come.

How to Trade this?
I like buying puts - Dec 08 750 strikes. May consider selling 1150 calls to fund it ( same maturity). The way I like to do it is to put in a limit order and wait for the market to reach my price. If I don't get it at the price I wanted I don't trade since I don't have enough time to monitor...

Mr. Kipling

This seems oddly fitting ....

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream--and not make dreams your master,
If you can think--and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings--nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And--which is more--you'll be a Man, my son!

the worst 81% return in a day of my life

So I have been short the S&P for a while betting on the fact that volatility will shoot up massively and increase the values of highly leveraged puts. ...This is indeed what has happened... VIX, the volatility index has jumped to levels unheard of ( at 63 as compared to sub 10 in 2007 and levels of mid 20s most times) and I made a big return. However, my HUMAN CAPITAL is tied to the market and I am REALLY worried about a recession now... 7% index drops in U.S. markets on successive days are jumps no one had really modeled before.
This is the environment when GAMMA pays even though it is expensive i.e. better to be LONG options than short....

volatility, jump risk, inflation and fear premia are back