I was talking to someone today and he was adamant the bull market started in 2015 and will go on for 5 more year at minimum.
The reasons are:
strong and increasing earnings
low unemployment
inflation in check
economy is strong
The first is a valid reason, the rest is actually wrong reasons to assume bull market.
Weird. That’s not how we measure the start/age of bull markets though. And the metrics cited are all fabricated (earnings are made up, inflation is higher, unemployment is higher, economy is not strong ask Trump voters. The system drones are lying to keep the bubble from deflating, same as in subprime.
Shrug, I’m just laying out what the two involved parties said they would do.
If they actually did that, yes the 10yr bull market would almost certainly pop, the 80yr macro cycle might pop (Strauss-Howe), and the 400yr Ameri-cycle might even pop. The bubble is blown, it’s just sitting there ready for someone to poke it. Trump?
[I already bought SPX puts years ago, haven’t expired yet, yes expensive]
You do this with your own money? Does your wife let you gamble like this?
It’s everyone who is levered long SPX that is gambling. Long way down, kids…
There is no way this guy is married.
The federal funds rate influences the short even of the curve significantly. It only impacts the long-end of the curve if investors feel there is more room in the economy/want a premium over inflation to expand therefore demand a spread from ST to LT. If it inverts, that implies investors believe short-term that rates are either going higher than the long-term expectation or that growth now is higher than what we should expect in the future (implied per long-end). In this current market environment, I strongly feel the latter is influencing the curve dramatically.
The last fed statement showed the belly/long end of the curve declining while short term rates increased with more weight on the short-end.
In short, no rational investor should expect to receive a better rate on the short-end than what they would otherwise receive on the long-end. Remember the guy buying 10+ year debt at a fixed rate is taking on a significant amount of duration and uncertainty risk vs. the guy buying a 3-month t-bill.
Only important to note that while consumer lending has slowed, that doesn’t mean the existing debt pile vanished. A lot of consumer debt is based off the prime rate + a spread or LIBOR + spread.
Both prime and libor are up and rise with expectations of further federal fund rate increases.
buying puts imo is a pretty terrible idea. timing market downside is tough. earnings can continue to grow for a very long time making valuation cheaper even as prices rise. for example the forward multiple for spy is 16x now from 19x in this cycle’s peak around late 2017 and 15.5x in 2007 prior to the earnings crash. the issue is earnings have been rising for a pretty long time now for various factors. the recent fall in valuation from an eps perspective is due to trump tax cuts (which hides the valuation run up).some of these earnings are through financial engineering aka borrowing to buyback stock and looking at it from an eps perspective (stock is actually riskier, and more expensive from a takeover perspective). lastly margins cannot continue to go up forever, the share of corporate margins have been rising for forever now and are extremely elevated since the 1950s.
add that wages havent been rising. unemployment is extremely low. rates are expected to rise. and this is all recipe for disaster. so a lot of these signals have been present and are getting worse! but would i buy a put? nah cuz bull runs can go for an extremely long time (i’ve looked at every cycle in markets history and the longest was roughly 20 friggin years), and premiums are a biatch and expire in 2 years at most? lol nah id pass on that grass. id rather hold cash.
You can trade other derivatives against puts.
…I know that may come as a shock to a CFA forum.
Purealpha is secretly Nassim Taleb.
Haha 
Question is, what is the expiration date on these?
End of this year.
Maybe we’ll still get a crash with the revival of the Cold War. Hard to want to renew if not. I mean I don’t think the US can make it thru yr12 of the bull, but also I don’t really want to pay another premium.
^^ year 12 of the bull?
Isn’t 2018, the 9th year and 4th month into the bull market??? The market low was March 2009…
i think he’s referring to his 12 year period of bull
so we should short PA?
Whatever he recommends, you know what to do…
#opposite
Yeah, we are now in the 10th year of the bull, one could buy an expensive 2yr put betting it won’t survive the 12th year. But that’s expensive, and the system is SO DESPERATE to keep the ponzi propped up as they know this could be the last bull…I’m thinking of just staying out of the US all together.