Frogs From the Sky

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Sand Hill Road winds its way from Palo Alto through Portola Valley and into the wealth-drenched foothills of Woodside. It is globally known as the Main Street for venture capitalists. For me, however, it has a different purpose: it’s the way I get my chicken food. Portola Feed is a pleasant 15 minute drive, and it only takes that long to really feel like I’m in the country again.

After the close on Thursday, finishing another psychotic day in a three week period unlike any seen in human history, I was relieved to pile all my dogs into a car and drive in complete silence. This time of year is when the drive is prettiest. The grass is lush, green, and never-ending. Wildflowers saturate the surrounding hills. With my windows down, I could pick up the distinct scent of a campfire, which evoked many fond memories from my childhood.

How far this all seemed from the world of flashing numbers, spreadsheets, charts, and monetary analysis. No talk of viruses. No reports of more school closures, empty stadiums, and worldwide fear. Just a curving road, wind blowing through the open windows, and a clear blue sky, urging me to let the tensions and regrets of the month drift outdoors.

As I headed home, I stopped by a restaurant to grab a drink and start this post. It was just like every other restaurant in town. It’s as if we’re living in a post-apocalyptic era.


You would think that something I’ve been waiting over a decade to happen would have me tap dancing on the rooftop. It isn’t. I’m not tap dancing for plenty of reasons. One, it isn’t safe. Two, as you well know by now, ten years of terror compelled me to close positions far, far away from the most profitable points. And three, I did not – – nor, dare I say anyone on the planet – – anticipate a nearly 10,000 point collapse in the Dow in the span of a single goddamned month.

This isn’t the kind of thing that happens from time to time. We can’t point to this and say that it happens once every few years. Or every few decades. Or every few centuries. This is unprecedented. And, in my opinion, it’s worse than 9/11, and it’s worse than the financial crisis. And it’s just beginning.

To be sure, this mayhem has been profitable and confidence-building for me. My “just for fun’ options account was down to a few hundred bucks, savaged, as it was, by the always-going-up market. A handful of well-placed trades have elevated it to $20,000 in a matter of weeks. And this was done, incidentally, with completely ham-handed trading. For the love of God, I dumped my GDXJ puts at 13.25 today and patted myself on the back for my genius. It was $16 by the close.

My trading life has multiple facets. I have a personal trading account. A hedge fund trading account. My tastytrade show. Engineering development of Slope. And, of course, the content of Slope itself.

As such, I have to manage my emotions to be effective. This constant self-monitoring usually works all right, although on occasion, like yesterday, it goes off the rails. At one point yesterday, I felt so confident, I actually bought QQQ and SPY puts that expire Friday. Shortly after I did, I realize, “Wait a second, that’s gambling. You don’t buy options with two freaking days left. You usually buy stuff with at least two months! Get out!” So I did. At a loss. I can only imagine how many hundreds of percent they went up today. It was gambling. But the bet would have paid off huge.

But the real emotional damage – – and I know I’m not the only one similarly afflicted – – is from the warped nature of the past eleven years. The Fed has been totally, utterly, and completely in control………..until. just a few weeks ago. I didn’t used to have the expression, “We have them by the hip.” I stole it from Master and Commander. But I liked the sound of it, so after the emergency 50 bps cut a weeks back failed, that’s the phrase I used. It seemed fitting.

How true that turned out to be. Because, for the love of God, if the Fed can announce a $4 trillion (that’s $4,000,000,000,000) Bazooka, and it’s good for lifting the market for all of about eight minutes, what else can they possibly do? The freakish thing is that I actually want them to do something at this point. Yes, it’s gotten that bad. Even Tim is wanting the Fed to get this right.

And why? Because of my call options? Well, yeah, to some degree, although they aren’t big positions. The main reason is to create the scenario I laid out for my Gold/Diamond members earlier today in my Broad and Crude post.

I don’t think I’ve ever charted so well in my life. I don’t think there’s ever been a time I’ve picked out so many fantastic short positions in my life. But I’m not celebrating. I’ve only caught a fraction of this move. I can only hope my readers and, more especially, my subscribers, have been thriving with my chart ideas. We are never going to see anything like this again in our lives.