February 20, 2019
A little trading history…
This is not whining. It is just the way this business works from my end…But I will SWEAR to you that the best trading ideas are impossible to sell to people because the best ideas are inevitably going to go TOTALLY against all the supposed “logic” in the media…which IS where everybody who invests DOES get their information and form their opinions.
IN THE MEDIA, there is now talk everywhere that we should all beware of slowing World and USA economies…and with it…that the possibility of higher interest rates is now virtually NIL…I think this is just the usual forever backwards Wall Street nonsense…and I AM FIRMLY OF THE OPINION THAT THE ECONOMY IS CLOSER TO ROARING THAN RECEDING…that stocks are going substantially higher, this year, and that yes, the increase in rates from basically ZERO in 2016 is still far from over. I CONTINUE TO LOUDLY RECOMMEND BUYING PUTS IN BOTH TREASURY BONDS AND EURODOLLARS.
As I think it relates very much to the present, I want to briefly recount some recent history involving me, my opinion and many of you guys…
In late 2016, when rates were on their lows, I started screaming about rates going up…But with all the bank, brokerage house geniuses and financial media then unanimously certain that rates would stay low for years…at zero basically…this was a tough, tough sell for me to make. Nevertheless, inch by inch, I managed to convince a number of you to make the bet on higher rates through the purchase of puts on Eurodollars.
And here is a quick summary of how that trade unfolded during the ensuing 18 months or so…
The point of all this is that I think we are NOW pretty much exactly where we were in September, 2017…As noted on the next chart, since we exited the trade a year ago (March, 2018), Eurodollars have really not gone anywhere…and most recently rallied with the absurd financial media notion that “the economy is showing signs of weakening” and that “there is no way rates can go higher from here.” WHICH AGAIN, I THINK IS JUST ABSOLUTELY RIDICULOUS. I think economy is HOT and getting HOTTER. Period.
What I am recommending…
I think Eurodollar puts are dirt, dirt cheap. I do not think you will ever see the option recommended below any lower in price than it is now…And I certainly might be dead, dead wrong…which could mean losing every dollar you invest…but I absolutely believe that owning these puts give you a strong shot at hitting for ALL of the dollar amounts I show as possibilities here.
I say there is no telling how hot the economy will get…or how high stocks could go…THIS YEAR…
And just for the record…If I AM correct about what I indicate below for the stock market…or even half of what I really do think is quite possible…THIS YEAR? Then I absolutely DO think you WILL see December Eurodollars hitting 96.50…AT A MINIMUM.
And just for the record…Here is more of the ever present evidence that there are hoards of analysts, economists, and strategists spewing the same “Don’t buy stocks here” mentality that they’ve basically been on since 2010…Just more proof to me that stocks and the economy are STILL headed north…And yes, I think they will do so in a major way…
Really…When we DO get to the “top”, NONE of those guys will be looking for it…
I CONTINUE TO THINK THIS IS A BIG, BIG TRADE…and as indicated in the first line of this piece, I also believe that it’s highly significant that virtually no one seems to agree with me…that virtually no one seems to have the slightest interest in making this bet…
As always, I could be dead, dead wrong…but I am obviously all over this…It has a ton of leverage and a ton of time.
Do SOMETHING with it.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars, Treasury Bonds