Category Archives: Speculation

The Butterfly Machine

There’s a phenomenon called the Butterfly Effect.  One common quotation is “It has been said that something as small as the flutter of a butterfly’s wing can ultimately cause a typhoon halfway around the world.” Today I am here to tell you that for that to be true, the entire world would have to be […]

Mantra: Interest Rates Have to Rise, Interest Rates Have to…

I thought of structuring this post like a fictional story, but I couldn’t figure out how to make it good enough for publication.  Well, truth is often stranger than fiction, so have a look at this Bloomberg article pointing at a 37% loss in the ProShares UltraShort 20+ Year Treasury (TBT). A few points to start […]

Volatility Can Be Risk, At Rare Times

There is a saying in the markets that volatility is not risk. In general this is true, and helps to explain why measures like beta and standard deviation of returns do not measure risk, and are not priced by the market. After all, risk is the probability of losing money, and the severity thereof. It’s […]

The Shadows of the Bond Market’s Past, Part II

This is the continuation of The Shadows of the Bond Market’s Past, Part I.  If you haven’t read part I, you will need to read it.  Before I start, there is one more thing I want to add regarding 1994-5: the FOMC used signals from the bond markets to give themselves estimates of expected inflation.  Because of […]

Not Apt, Not Teed Up, Not Going

Okay, let’s run the promoted stocks scoreboard: Ticker Date of Article Price @ Article Price @ 6/27/14 Decline Annualized Splits GTXO 5/27/2008 2.45 0.022 -99.1% -53.3%   BONZ 10/22/2009 0.35 0.001 -99.8% -72.8%   BONU 10/22/2009 0.89 0.000 -100.0% -85.1%   UTOG 3/30/2011 1.55 0.000 -100.0% -92.3%   OBJE 4/29/2011 116.00 0.069 -99.9% -89.7% 1:40 […]

On Current Credit Conditions

This should be short.  Remember that credit and equity volatility are strongly related. I am dubious about conditions in the bank loan market because Collateralized Loan Obligations [CLOs] are hot now and there are many that want to take the highest level of risk there.  I realize that I am usually early on credit issues, but […]