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It's been a while since we checked in with the single most hated company on the planet, Goldman Sachs.
Here's a fun fact – – if you had the insight to put your life savings into GS over a decade ago, you would now be wallowing in a return of just about 0.00% for getting in bed with The Squid.
I guess the partners and employees do a lot better with this despicable place than the shareholders do. Here's a percentage chart for you:
Hedging costs of Leading ETFs — in late June and now
Hey fellow Slopers,
In looking back at the hedging costs of the most widely-traded ETFs toward the end of June versus the same basket of ETFs on Tuesday, I figured they'd all be more expensive to hedge now. That turned out to be true of 9 out of 10 of them: the only one of those ETFs that is cheaper to hedge now is the iShares MSCI Japan Index (EWJ).
The two tables below show the costs of hedging EWJ and the other 9 ETFs against greater-than-20% declines over the next several months, using optimal puts, as of June 23rd (when the VIX S&P 500 volatility index was at 19.29), and as of October 18th (with the VIX at 31.56). First, a reminder about what optimal puts are, and why I've used 20% as a decline threshold; then, a screen capture showing the current optimal puts to hedge the one ETF with lower hedging costs now than in late June (EWJ).
To those that went long after the bear trap since last week, congratulations because we tore the bears to shreds. (Editor's Note – AHEM) I don't know how many traders on other forums and their twitters, kept adding to their 3x leverage ETF shorts since last week, and getting absolutely crushed… Anyways enough of the rant because they might soon be right. In fact although I enjoyed all of last week and Monday's trading, any signs of a breakdown and I am out of my position.
I guess we should all get ready for this kind of thing as the system falls apart.
after clicking "Continue to Online Banking….."
I must say, many of the individual financial issues (GS, BAC, JPM, etc.) look so horribly sold-off that it seems not out of the question that a powerful rally could ensue. Below is the ETF for financial stocks. If it gets its footing, it could be in for a nearly 20% push higher from current levels.
Of course, the market has so many cross-currents right now, the above could just as easily break support at 12 and plunge to God-knows-where.
For myself, I am so disgusted and jerked-around by the Euro obsession and the looming Fed news next week that I have trimmed back my portfolio risk to a bare minimum. This environment is simply too schitzo for me to feel comfortable with any meaningful amount of risk.
