Turning the TLT Tide

Media Tentacles

 

It’s funny how the financial media works. Since Thanksgiving, give or take a few days, we had nothing but positivity coming out of the tube when it came to the Markets. The actual data, the real stuff, like the unemployment numbers were horrific but the Markets shrugged it off and so did the talking heads on television. We were, and will still be, bombarded by the most annoying question of the quarter and most likely next year: “Did we make a market bottom?” Well, did we? Huh? Let’s get the guy who was the bull on six months ago to call the bottom .Who really knows? Nobody, that’s who.

Yesterday’s selling, profit taking or whatever was that little wakeup call that said “look, it’s not over.” It’s definitely not over. What has caught my attention as well as the attention of a lot of other investors out there is the Treasuries. Just Google the words “treasury bubble” and see how many articles you get. I had very small positions in TLT and TLH in another account that I could not resist cutting them in half. How many more people are doing the same? Just like the JB Income and Growth account, I’m letting the cash sit aside for another rainy day.

What does the possible Treasury bubble mean? There’s roughly a 50/50 contrarian correlation on the SP500 and TLT charts. That is, during certain peak dates on both charts, they singled a reversal. This time around, there is no correlation. The TLT is busting the charts (literally) while the Markets were going up. Initially, my target to buy some January puts was the 115/120 range but without a release in steam and a break in the trend, it just looks like we could see 125. I may just buy the TBT, which is the etf short, so I could average in and not worry about a short options month like the January 2009 for the TLT to correct. It might just be really interesting when it does. If the correlation hold true this time, we could just see a big stock market bounce. Or not.

I started to make my little buy or focus list again yesterday and it had oil written all over it. It’s a wonderful thing to see gas prices below $2 a gallon and oil at $36. I don’t foresee a huge demand that would cause another super run or spike to the $150 level happening as quickly as the last one but it’s nice to now, if you get long, that there’s only so much oil left in the world to fuel or transportation needs and even if the car manufactures produce a oil alternative vehicle tomorrow, not many people can afford or are getting the credit to buy one. It’s as simple as that. Therefore, my list includes DIG (great yield too) and the USO.

On a final note, as I was driving home, I listened to a great opinion segment on NPR. Yes, I listen to NPR and I’m not a senior citizen. The subject was on Obama and how he’s wrapping up his administration picks so quickly. The commentator pointed out that he is missing one important new category and that is the Office of Common Sense. This would be the government agency in charge of waking up the middle class from the illusion that are in middle class territory and force them to realize that their economic status and more important their habits must change or going to change whether they realize it or not. I like that.

Balance

Balance

“In jealousy there is more of self-love than love.” -Francois de la Rochefoucauld

I was going to write about and focus on being jealous in the wake of a mediocre performance in trading yesterday. I call it mediocre because I can compare my performance (based on P/L) to that of my colleagues. The difference was 10 to 1. That hurts. This means, the guys I literally sit next to made up to ten times more money than me. I know. Boo hoo. Bring out the world’s smallest violin. I have to talk about it though because this sort of thing not only happens on a trading desk but everywhere else in life.

Take a look at today’s professional athletes for example. More specific and closer to home, let’s look at pro surfing. There are so many professional surfers out there that do mind blowing things in small to ultra large surf. These guys are super athletes in my book. That is, they are focused, fit and consistent. Andy Irons is one such surfer from Hawaii. He is a three time world champion and fits the bill as a super surfer. It’s hard to imagine that there is a shadow cast over him that goes by the name of Kelly Slater, the nine time world champion. However, there it is, a three fold gap that puts Andy way back in the spot light by comparison alone. This may sound silly and maybe juvenile but I kind of understand what it feels like to be Andy. I mean the comparison the thing. Here’s the catch though. If you had to ask who was doing the most of the comparing in Kelly v. Andy, I would guess, beyond a shadow of a doubt, that it was Andy. That holds the same with me. I am who I am and in light of the situation and where I’m at and whatever is going on my results are based on where I fit in. What I’m trying to convey is that the whole comparison, jealousy thing is all in my head. If it was in the other guy’s head that would just make him an ass and if that was the case, I’m not jealous of an ass.

This is where balance comes in and just letting go in any situation. In retrospect of my performance yesterday I could not have been more tight, or any more conservative. I fear pain and loss so much that there is no way I could achieve the rare layup. My colleagues made more money than me yesterday, not because they are better, but because they took on more risk and were more relaxed at it than I was at being conservative. There’s nothing more to it than that. More risk and more relaxed at doing it.

 I read somewhere when asked if Kelly Slater is going to go for another world title that he wasn’t really focused on it. In other words, he’s competing because he loves to compete and loves the fact that there are other super surfers around him that will challenge him and push him. Either he is going to be the best or he’s not and he’s simply comfortable with that but stoked that he can have the opportunity to be challenged. I’d like to add one more thing though, whether he says it or not, it sure feels good being great doing it. The fact is, I love my business and I love trading. I’ve going on nine years in this business and I love it more than I started. That’s just the way it is and I wish everybody could say that about whatever it is they are doing in this world. I forget that a lot though. Maybe, just maybe, when I’m being all tight and my palms are sweating, I have to remember that it’s those moments that attract me to what I’m doing. It’s like dropping into a a six foot wave over a shallow reef. Nature’s perfect yin yang. There is pain and ecstasy existing in perfect harmony.