Slider,
Your post on the Derivative Bubble brought some things to remembrance which may be useful for the thread to bear in mind.
I recall the 1998 meltdown of then Derivatives wouldbe King LTCM. During the time frame of their destruction, the markets were close to locking up due to lack of liquidity. Stocks were doing very poorly, the DOW going from 9400 mid July to 7500 by end of September:
stockcharts.com[w,a]daclyyay[d19980501,19990101][pb50!b200!d20,2][vc60][iUb14!La12,26,9!Lk14!Ll14!Lp14,3,3!Lya7,14,28!Lo14!Lw25!Ld20]&pref=G
Gold stocks didn't hold up during this period:
stockcharts.com[w,a]daclyyay[d19980501,19990101][pb50!b200!d20,2][vc60][iUb14!La12,26,9!Lk14!Ll14!Lp14,3,3!Lya7,14,28!Lo14!Lw25!Ld20]&pref=G
Energy stocks didn't hold up either, as a matter of fact, that last half of 98 sucked for energy stocks:
stockcharts.com[w,a]daclyyay[d19980501,19990101][pb50!b200!d20,2][vc60][iUb14!La12,26,9!Lk14!Ll14!Lp14,3,3!Lya7,14,28!Lo14!Lw25!Ld20]&pref=G
stockcharts.com[w,a]daclyyay[d19980501,19990101][pb50!b200!d20,2][vc60][iUb14!La12,26,9!Lk14!Ll14!Lp14,3,3!Lya7,14,28!Lo14!Lw25!Ld20]&pref=G
I don't believe much of anything did well in August/September 1998. I don't believe most traders knew what was going on until well into September when there were some news announcements about LTCM. Of course the Russian default was known in August 1999 and was not helping, though the Russian mkts in 1999 didn't mean much to most Joe Six Pack investors.
Catching the early October bottom in indexes and riding the ensuing rise into early December WAS very profitable, for those that had cash. Unfortunately, I also recall that at that time I did NOT have cash, a situation that many others shared in also, ggg, myself being underwater in some NR stocks, but I played other sectors on margin and made a little money while I waited to get out during the Jan 99 bounce in PM stocks.
The major point of this (rambling) post is that during a derivatives meltdown there are only two things that make money, shorts and the very safest one, Cold Hard Cash. Everything else gets busted pretty hard!!
sidenote, btw, I also caught the spring PM bounce in 1999 and was doing quite well until the BOE announced their very odd gold sale auctions on May 7, 1999. That day I quickly sold out at a profit, but only salvaged 1/3 the profit I had the day before. My best timing play was still to come. Somehow I managed to anticipate, via the charts and tape (or Divine Intervention), the short but great September 99 Washington Accord gold rally and made a great deal of money in a week.
I was up and working the screens nearly 24/7 for five days.
(BTW, no one knew what was going on the first few days when gold shot up, news was LATER, as always) I should say I made a great deal of money for me at the time, as my return to profitability in 1999 was greatly appreciated after a dismal last half in 98.
Doggone, I was a seasoned trader in 99, all this reminds me I've been doing this gig for quite a long time!!
Best,
Roebear |
