10 month moving average is just data snooping. I could show you any random walk, and from one of 6 month, 8 month, 10 month, 12 month, 14 month, 16 month, 18 month moving average, crossing one of them would appear to be a good predictor on that particular random walk. It would also be completely meaningless.

And it's not just moving average that suffers from this. In fact there are some many signals and valuation/rate/economic metrics to choose from that even 7 out of 7 is suspect because of the data snooping.

How do you answer that charge?

And you don't have seven out of seven. Your claim seems to be that you have a coin flip for predicting ability. It looks like bull**** dipped in gold and sold as candy.

Lol I don't disagree with anything you wrote. The only way to answer such a charge is to be an honest researcher: write down and think about your ideas before even looking at the data (even this is really hard to do, i.e. where do you get you get ideas from? They better not be from looking at the data!) - and when you test an idea out-of-sample, be careful not to make super strong inferences that aren't warranted.

Eh I never claimed anything (I originally posted the spread chart without comment). Big difference between X "predicting 7 out of 4" versus "predicting 7 out of 7." My writing "7 out of 4" was meant to be cheeky; I'm basically agreeing with you (but perhaps I'm not being totally clear).

Said differently, such indicators have massive Type I errors.

Yeah I enjoyed the humor and your position. Still, there's a meme going around right now that somehow yield curve inversion predicts something. If you don't think it has any credence whatsoever, why post it? I mean, if you agree it's worthless, may as well post this:



which is far more entertaining and about as relevant.

Do people really follow general investment newsletter authors?

They know nothing. They charge fish annual or quarterly fees for their ramblings. There's almost never usable or actionable information. Just look at that guy's twitter.

I'm long every-damn-thing, but that guy is trying to trademark the term melt-up.

Tooth so far 3 big win days and 2 small loss days for day trading those pot stocks. Biggest problem I see is that I only have a (perceived) edge in extreme volatility. I'm absolutely useless without it. So I don't think I'll be able to do this as much as I'd like. But on days when the volatility is high I'm going to try to make the best of it.


Anyone follow the Lithium correction? Pretty good. Opportunity there too.

I think you're solid at understanding volatile systems. And it's not bad that "you're absolutely useless without it". That's what trading is when you find giant edges and don't suck at trading - 99% of the time you're on the sidelines, waiting for the free money to arrive. It's a good thing.

Bought RIOT 1/19 $24 puts at $4.70.

Forgot to post my closing trades last week:

Oops these were actually $22s, sold at $0.20.

Sold at $6.20.

10 months sma is just an over-optimization, not data snooping. Anything from 6-12 month sma works, which is an indication that momentum is robust.

Momentum has been tested on every market and it has worked in every market, which is an additional indication that it is robust.

The question is whether the market has adapted (aka, it won't work in the future) to eliminate the excess return since momentum isn't exactly a secret.

Well, that's not what I was mentioning. Here they are. The 10 yr and 3 month was the best. The impact on the economy the Federal Reserve has with rates is the most fundamental and important thing to look at. Looking at one thing alone like valuation is pointless because we don't know the future. Looking at the curve alone is not guaranteed but it's been a good signal. I figured Chimp was looking at the strong uptrend and probably valuation but this so called "overvalued" market is acting a lot like 1995 or 1996 as far as the consistent rise.

I'm skeptical of using yield curve inversion as an indicator. At this point everyone and their mother knows about it. Once the yield curve inverts (and that's a big if at this point) is the sell-off going to start? Why hasn't it started already since it's so obvious?

The US has had a recession about a year after inversion more often than not.

Inversions in other countries haven't led to recessions.

Probably nothing to see since it should work across countries if there is anything to it.

For many, many years when someone I didn't know asked me for one stock recommendation I would auto-shove 'Google.' They'd heard of it and I didn't have to waste time explaining to normies and you can buy all you want without moving the price and they had the biggest moat I could think of with excellent mgmt. Probably did that for about 7 years straight and definitely a few years before that.

I'm officially changing my pick for 2018. It's BlackRock. [Ignoring normies who haven't heard of it because most people here have]. They have a massive moat. Secular trends are in their favor. They have a top 3 CEO. The biggest player you can buy. I recently added to my position after [stupidly waiting] it doubled. You want a stock that will double again in 5 years or less? BLK.

Inb4 'no one cares.'

Not really a stock pick but for me it's RSX, (or whatever instrument you think gets you the most efficient exposure to Russia large caps). Unhedged to USD, it's already up ~+10% YTD but still has plenty of room to go.

Basically just posting this so I can quote it on Dec 31 this year, not that anyone will care.

Lot of earnings this week

From the 2017 thread, this was an interesting one. Nothing unreasonable, but you have to be very careful when you think the market is offering you something amazing.

tooth:
me:
tooth:
me:
tooth:

I'm sure glad those NFLX puts were such a great bargain boys. Easy multi bagger!

They were a bet on the coming earnings and didn't capture two earnings. They were however a huge bargain if they did. They were still a strong bargain if they didn't.

They were very good value at the time, hugely +EV. Netflix at $200 (when I recommended the $175 puts):

- Beat expectations by a huge amount
- Fell from $200 despite the above and despite this period being a raging bull market
- Ended up in the low $180s (-8%) despite both of the above.

Basically, everything went wrong that could go wrong and you could have gotten out at a nice profit. If you don't recognize that's a hugely +EV bet, you shouldn't be trading.

This is like the opposite of an example of a bad call. An example of bad call would be me thinking the economy didn't have the steam some months ago to keep ripping higher. Should have had more faith in Trump's extensive deregulation and tax cutting efforts.

Hell, I've even made bad calls on NFLX. It's amusing as hell you pick the one that's an excellent call.

Guys, calm down, I didn't post that to rip on anybody, I don't participate in the egofest part of this thread


We were talking about handicapping earnings dates, and we both ended up agreeing that by buying Jan options you were probably capturing earnings. Netflix ended up announcing earnings today, obviously one day too late to capture that value.

I would debate this point. If you are buying options where the market is pricing in earnings - especially for a tech/growth name - it is highly unlikely to be a +ev bet conditional on earnings falling outside the expiry. If it was a good bet even without earnings and you felt earning were 90% likely to be in that expiry you would be crazy not to put on the bet for big size.

http://thehill.com/policy/energy-env...-panel-imports

Should be a fun day tomorrow in the solar stocks

It's just a tease because we all know TS has been bearish on NFLX for years. Personally I've played it from both sides over my time trading so by default I've lost alpha doing so. Not a fan of buying puts outright to speculate or hedge, would much prefer to spread out a bearish bet in a name like NFLX that consistently has a higher IV than most. The idea was to encompass both earnings so you can use that lack of decay in the Jan 26s or later before that second ER to bet/hedge and imo produce better returns in the long run. That's the strategy I've been using personally as I keep rolling up call spreads 3-6 months out.

Company keeps crushing it on sub adds which seems to be all the market cares about for now.

I understood your point and I rejected it then went on to other things.
It seems like an eminently reasonable point and applies sometimes but bad mispricings in low vol environments are common.

I mean, what would the correct pricing have been had it captured two earnings? What would Jan 26 have been, had they existed at the time (they didn't)?

The past year has been extremely unusually low volatility, making these bets less juicy than normal. Trump broke the 2009-2016 market and put it into one of the lowest volatility, strongest and most stable upward runs in history. $7.8 trillion - 40% of GDP!! - was added in one year.
Potential % return is the third most important factor in bet sizing for me.

buddy is pushing me to buy some vrx. thoughts?

Need a thesis for thoughts. It's one of those things where there isn't an obvious play. Huge debt, lots of problems, possibly not viable enough business model long term to overcome debt, glimmers of sunshine amidst it all.

something about fda approving some drug and hype around it. not really sure but this guy kills it (or at least appears to) and I told him to let me know next time he made a big bet on something.he picked it up at 16 and still holding.