Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Liberation Day

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Today is the last day of the quarter. For me, who manages a small hedge fund, that is terribly exciting, because I don’t have to wring my hands with worry about guarding my Q1 results. I’ve got an amazing quarter under my belt, and, frankly, I don’t have to worry about messing it up. I feel far, far more enthusiastic about getting aggressive by day’s end than I did even yesterday.

And what a quarter it has been. Surely in the long history of United States financial markets, if this isn’t the most amazing quarter in that entire span, surely it ranks in the top four. What I’ve had the privilege of enjoying just this month includes:

  • Some of the best trading of my life;
  • Far and away the biggest surge of subscribers ever, in the midst of celebrating Slope’s 15th birthday;
  • Some amazing product/feature breakthroughs on the site.

And we’re only one-forth of the way into the year!

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Valuing the S&P 500: Pre and Post-Virus

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In a previous article, I presented a rough approximation to help illuminate how the Covid-19 outbreak might affect the value of American stocks as represented by the S&P 500 Index.  Here I take a deeper drive and provide a full spreadsheet model.  In the model, the virus has two fundamental effects.  First, it depresses earnings next year and second it prevents earnings from ever meeting pre-virus expectations.  The best way to see how this works is with reference to the graph below.

value of the S&P 500
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China and Australia Indices: An Abnormal Divergence

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As can be seen on the following monthly comparison chart of China’s Shanghai Index (SSEC) and the Australian 200 Futures Index (AUS200), their price swings began to markedly and, abnormally, diverge from December 2017 to present day.

While the AUS200 continued to make new swing highs, the SSEC failed to do so.

The AUS200 has plummeted and has now made a new swing low, while the SSEC has not…yet.

We’ll see if this significant weakness in the AUS200 is a harbinger of much further weakness to come in the SSEC in the next few days/weeks.

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