Tuesday, December 11, 2007

FED CUTS 1/4 point ..... DIP logic #1 plays out.

HELICOPTER BEN crashes into the EAST RIVER! .... taking "some" of the DIPfolio with it ... fuck!!!

good thing we went to 30% CASH....and also sold some holdings before the cut/crash...monday was green and early Tuesday was green, ... and right before the FED announced you saw the spike... our DIP logic was spot on...

1) if Market goes up Monday and early Tuesday, we only get a 1/4 point cut ... market goes to shit. (SELL BEFORE CUT)

5 comments:

Anonymous said...

now what? do we buy the dip or ?

Anonymous said...

you may have been right about the overall market(this time) but your CELG call sucked.

reindeer balls for you.

Anonymous said...

This is damn funny.....
What da heck do you mean by SELL BEFORE THE CUT???? How did you know before that it was going to be a 25 point cut and How come you sold before the cut!!! Do you read minds or what???!!!! Just curious

Eugene said...

The market was pricing in a 50bps cut. However, we know that Helicopter Ben is focusing on inflation rather than the credit crisis.

If Ben provided a 50bps point cut, then the market would be up fairly small. However, if Ben provided a 25bps cut, the market would shit itself.

Consider,
E[SPX] = P[50bps] * E[SPX|50bps] + P[25bps] * E[SPX|25bps]

We know -E[SPX|25bps] >> E[SPX|50bps]. So for if you think P[25bps] is a distinct possibility, then you would take profits off the table for risk.

sherpaehb said...

I love the caption for the photo. Rolling on the floor with that one. Let's just hope that the new year brings some sanity back to the markets. Happy holidays to you guys!