unh_hockey
pain is temporary pride is forever
Re: Business, Economics & Tax Policy 6.0: Nope, it only found woven strands
don't worry about it. you are in good company.
The economy is mostly told with lagging indicators - very few are leading from my research. For example, even months before the Oct 29 crash, everything in the economy was humming right along according to the data at the time. The markets are more forward "thinking", which is why predicting them is impossible. For a while, the Trump tax cuts led way to an optimistic outlook...companies would add to their bottom line! Now that this sentiment has passed us by, its something else to fixate on. Selloffs are a natural course for markets, because fundamentals always change. But we can't know why large groups sell - is it because equity is overpriced, or is it because bond yields are becoming more attractive? I do not know the answer to that.
The vix is a bit misunderstood. One of my old co workers traded xiv for a while, and even had a business set up around it ( he quit due to problems with the other co founder). So I understand their primary thesis which was simply to short volatility when the VIX exceeded certain thresholds. VIX itself is simply a ratio of puts /calls - the more puts being purchased the more "fearful" the market was. More important than this ratio is how the term structure is laid out. If it was in backwardation, you should not be short vol (and out of XIV)- it is in contango you should be long xiv. backwardation tells you that the closer vxx futures are selling for more, this is the market panic. Want to see it? Log onto your broker, search for "SPY" and check out the option chain for the close to the money calls and puts. (I didn't check out of the money) The spreads between the bids and asks for calls and puts are as wide as the Mississippi. More people are loading up on puts, and the prices of calls are way down. This is the essence of vix, in my still limited experience. vix is like a second derivative of sorts, so it can't stay high for long.
at the end of the day, its hard, if not impossible to try to predict anything, like you said. I personally like understanding whats going on so that when these weird events happen, one can have a basis for why its happening. That said, there is certainly something iffy with xiv/svxy and will be curious to see what comes out of it.
don't worry about it. you are in good company.
The economy is mostly told with lagging indicators - very few are leading from my research. For example, even months before the Oct 29 crash, everything in the economy was humming right along according to the data at the time. The markets are more forward "thinking", which is why predicting them is impossible. For a while, the Trump tax cuts led way to an optimistic outlook...companies would add to their bottom line! Now that this sentiment has passed us by, its something else to fixate on. Selloffs are a natural course for markets, because fundamentals always change. But we can't know why large groups sell - is it because equity is overpriced, or is it because bond yields are becoming more attractive? I do not know the answer to that.
The vix is a bit misunderstood. One of my old co workers traded xiv for a while, and even had a business set up around it ( he quit due to problems with the other co founder). So I understand their primary thesis which was simply to short volatility when the VIX exceeded certain thresholds. VIX itself is simply a ratio of puts /calls - the more puts being purchased the more "fearful" the market was. More important than this ratio is how the term structure is laid out. If it was in backwardation, you should not be short vol (and out of XIV)- it is in contango you should be long xiv. backwardation tells you that the closer vxx futures are selling for more, this is the market panic. Want to see it? Log onto your broker, search for "SPY" and check out the option chain for the close to the money calls and puts. (I didn't check out of the money) The spreads between the bids and asks for calls and puts are as wide as the Mississippi. More people are loading up on puts, and the prices of calls are way down. This is the essence of vix, in my still limited experience. vix is like a second derivative of sorts, so it can't stay high for long.
at the end of the day, its hard, if not impossible to try to predict anything, like you said. I personally like understanding whats going on so that when these weird events happen, one can have a basis for why its happening. That said, there is certainly something iffy with xiv/svxy and will be curious to see what comes out of it.
