[quote author="blackvault_cm" date=1225347304]<blockquote>Isn't it odd that this sudden interest in trading all starts after, well, most of the easy action was already played out? </blockquote>
I didn't know day trading since 1999 as a FULL TIME JOB is considered as a "sudden interest in trading". </blockquote>
No no, I didn't mean you or anyone else here actually started daytrading today or last week. I mean, in general, in the past.. two years? since I've been watching this forum there was never as much interest on the board around daytrading as today. Personally, I regard it as a contrarian indicator in general. I'm now hearing new expressions like "short & hold" and I see people considering buying SKF as a core holding in their 401Ks. So much money was made by the correct bears on the short side that in my view this is turning into a shorting bubble.
[quote author="blackvault_cm" date=1225347304]<blockquote>I mean, the easy money for bears was made in September and early October. Any money made by bears these past two weeks was definitely not "easy"
. </blockquote>
As far as easy money...there is no such thing as easy money. Maybe easy to click a button that says BUY or SELL, but doing it to the extent that you profit isn't easy.</blockquote>
What I mean is back in August the market was still trading in a much tighter range and, in my opinion, the extent of the real estate losses and the impact on the economy was still very much underestimated. The VIX was way lower. You could quietly and discreetly buy puts in a variety of banks, establish shorts with reasonably tight stops, and sit tight for a while. In the event of a selloff you could count on a) good overhead resistance limiting your risk b) VIX explosion pumping your puts.
In the current environment your stops are guaranteed to be hit unless they are as wide as a hangar door. You can't buy puts for more than a couple days as the extreme volatility premiums will melt the puts like snow. Not to mention we've already crashed 20% in a month now. Anyone shorting for the longer intermediate term is trying to bank on two crashes in succession. We fell so fast there's not that much resistance above if the market wants to go back up for quite a bit.
I'm not saying the money was "easy" before - but this is orders of magnitude harder to navigate, for anyone. Somebody shorting in August was banking on making money simply on the fact that things would be somewhat worse than expected. Somebody shorting in October is going full out and saying this will be the Great Depression and this "is just the beginning". All things being equal, the odds of the former were always greater than the odds of the later, even now.
<blockquote>I'm seeing so many people (not here) that have recently started daytrading their IRAs... This can't end well, one way or the other.</blockquote>
<blockquote>The best part of the IRA is that you can day trade. Why can't it end well? You suggest I buy MSFT, XOM, PG, GE and sit for 5,10, 30 years? If you don't cycle your investments whether it be personal account, IRA, or whatever...you're the loser there.</blockquote>
Again, I'm not saying you, personally, will not end well. I am saying people with no prior experience in daytrading are picking it up - just like people with no prior experience in flipping houses did in the real estate bubble. Sound familiar? It should be pretty obvious that you can't have a sound market mechanism if 300 million people start flipping stocks left and right based on arbitrary guess about where stocks will be headed tomorrow. Should be pretty obvious as well that most people have dayjobs, and most would not be able to react during turns. I don't know if that makes us a nation of losers as you're implying, but the fact of the matter is daytrading is a zero-sum game and is not a sound retirement planning strategy for the whole of the population. Perhaps no one is entitled to retirement in your view, and retirement is a flawed concept. I can see some truth in that.
The whole reviling of buy & hold will probably die away once this market resumes some semblance of normalcy. Everybody is just focused on the now, now now.
And, daytrading in an IRA isn't the best thing in my opinion because margin isn't allowed, and it takes three days for the transactions to settle. It's like someone trying to push the buy/sell buttons by trying to outguess where the market will be three days from now, based on some intraday pattern they see now. Doesn't make sense.
<blockquote>I'm sitting happy on the gains form the covered calls I sold. Capped gains, but the calls have a loooong way to go before I even show up any kind of loss on my end (-30% drop on the underlying from here). Slow & steady wins the race.</blockquote>
<blockquote>Covered calls are an excellent strategy, I use it all the time when the market is flat and dead. This is not that time.
This kind of volatility we have comes in very rare moments and I mean very rare.
Don't worry. The time is coming where this market will be dead flat for 10 years once inflation starts zooming our way. That will be the time to sell covered calls...Not now.</blockquote>
That's fine, we have differing strategies, and as I'm sure you'll understand after having thought this through for quite some time I'm not going to change strategy based on a one comment in a forum
. I for one would not bet on a crash after another crash. I also don't really think this will start a new bull market, though there is some upside here imho. In my view the time to sell options is when the VIX is pumped up to the gills, not when it's flattened back down. Besides, the calls are on specific securities I wouldn't mind being "stuck" with at lower prices. It's a different viewpoint.
