RE: RE: RE: RE: RE: Index removalI feel that there is an excessive amount of company risk in todays market conditions..... i have learned the hard way is that trying to pick specific stocks in a bear market does not seem to be effective - save it for a bull market when marginable performance matters.
My thought with new money is to play the commodity versus companies right now - then roll the money into stocks after the first 20% gain on the commodity. Hard to believe the commodity oil price stays low if the USD begins its predictable decline.
1. Having said that I do love the bankers story simply because the in a worst case (which hopefully was friday), they can perserve the balance sheet staying cash neutral at $40 oil - and have the reserve life to wait this out.
2. Its not marginable stock so the level of risk you can take on this stock is limited by your initial investment - so if the stock trades up or down in the day it doesn't really matter because once the trend turns higher we are gonig to be in business.
3. Upside to downside risk of oil at this price is great in favour of upside.
4. News headlines are incredibly bearish so optimism is near a bottom (said that many times now though)
5. The VIX was down -17% on the week, following its -9% week over week fall in the week prior, taking its 2-week crash to -26%. This is why the shorts are being squeezed most materially where they were making most of their money in the months prior - small caps.
This week alone the Russell 2000 had a +3.8% move. With the larger cap Dow being a proxy for "liquidity", and closing down -0.6% on the week, the real liquidity needed in the US market place was that for the shorts to cover in illiquid small cap shorts.