03.24.14

Since Fed Chairwoman Yellen’s speech last week, I have become am more bearish. I the long-run I think stocks go higher. Here is what I would recommend for the various type of investor:

1. Buy out-of-the-money protective puts on individual stocks.

2. Sell weekly out of the money covered calls on individual stocks.

3. CEF’s and $ETJ,etc, don’t need hedges.

4. Raise comfort to your level of sleep comfort.

5. Buy portfolio protection: this could be biotech index ($IBB) protective puts; SP500 $SPY Protective Puts; $IWM Protective Puts; hedge interest rates if you have a lot of interest rate sensitive stocks.

6. Focus upon quality names: Oaktree $OAK would be my key name. But that’s me and I know what Howard Marks knows: he has forgot more about risk management that I will know in my lifetime. That’s who we want on our team.

I wish the best. I don’t want anyone to lose money. Buy car insurance before the car accident.

The U.S. has never had 5-years of QE and now tapering. Yellen was quite clear: rates move higher sooner than later. Since there are zero humans who know what 5-years of QE ending – and the outcome – the best example I can come up with is Marty Zweig, the brilliant Marty Zweig. This guy would not make such a call without thinking awfully hard.

Carter on CNBC – who predicted the 2008 Crash: he has a lot of respect; many have viewed him on Friday’s option CNBC show. He was out before the 2008 crash.

All I am suggesting is “consider” taking steps to protect the portfolio. 

Louis Rukeyser: Marty Zweig Calling for a Market Crash in 1987

Not to be Mr. Cheery, but this is a classic moment in time. Louis Rukeyser’s show, a much younger Marty Zweig (we own $ZTR), predicted  a market crash due, in part,  to rising rates. Marty makes the prediction at the 6:93 minute mark of the 10-minute broadcast. Calling for Market Crashes, on air, was not Marty Zweig’s personality. There are enough perma bears calling for a market crash. I reflect upon the QE/tapering – and this is the first time we have gone through it – and what would Marty say right now if he and Lou were alive?

 

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