Another Week, Another Warning
As the cyclical bull market that started in March 2009 has ground on, it seems that every week we’ve had warnings about its imminent end. On Friday, Market Watch columnist Michael Sincere weighed in with “Seven Signs We’re Near A Top”. To save you a click, here is a sample of Mr. Sincere’s analysis: (more…)
This is a terrific top – - so much so, I’m both short the stock and long the June puts.
In a post last week (“Priceline’s Wild Ride”), Tim noted that Priceline (PCLN) was up 7400% since its 2003 nadir. In this post, I’ll go over how an investor can build a hedged portfolio around a position in Priceline, and show an example of one. Let’s quickly review some of the basics of hedged portfolios, and then see how we can go about creating one around a Priceline.com position for an investor with $1,000,000 to invest, who wants to maximize his potential return while limiting his downside risk to a drawdown of no more than 17% in a worst-case scenario. (more…)
Earlier this month, when we introduced Portfolio Armor‘s new portfolio construction tool on Slope (“A New Approach To Portfolio Construction”), I mentioned that the tool uses an analysis of historical returns as well as option market sentiment to calculate expected returns for the approximately 3,000 securities in its universe. This week, one of those expected return calculations turned out to be eerily prescient, so I thought I’d pull back the curtain a bit on it. (more…)