<p>The s&p is down 5.7% from its peak. I try to buy at a 5% and 10% down with a larger percentage going to the 10%. This time feels different to me so I’m a bit uncomfortable buying with only 5% down. The q’s are down 6.1%.</p>
<p>Mad money said there will be more pain from the stock market. My husband listened to the show, I didn’t.</p>
<p>I listened to fast money. My back was hurting me. The guys are just guessing. I kind of watched the option show. I turned off mad money. </p>
<p>I did like that one of the brothers did mention he thought the volatility was too low in the options. I agree with him so I am not selling any volatility. </p>
<p>QE has changed the way markets trade. We should have more volatility without qe. Plus… It is Oct. :)</p>
<p>Pinched nerves suck. </p>
<p>I’m still mad at Mad money. When the market was 6000 , he said to wait until 4000 to pull the trigger. Well we could have made money if we didn’t listen to him. Actually my husband did and told me to wait. :D</p>
<p>I’m kidding about the mad part. I don’t stay mad that long.</p>
<p>OMG another cyber attack at KMART, good thing I don’t shop there.</p>
<p>This could get ugly. spy is very close to its 200 dma, and if it crosses that line, it could trigger more selling.
dstark, it is starting to look like we may actually get to that 30 on the vix that you said would trigger an investment in xiv for you. I will also increase my negative volatility position if we get that kind of spike.</p>
<p>We will see…</p>
<p>I like 30 because that is much higher than a normal vix and rare. The vix will not stay up there. Of course, we could see 40. Or maybe intc will say they dont see an industry slowdown.</p>
<p>I was looking at historical PEs and the average might be 15 to 16 but PEs have varied quite a bit over time. </p>
<p>I agree 100% with what you said about the ^vix–just about the purest reversion thing out there. but, as you suggested, sometimes you have to wait awhile before it reverts.</p>
<p>EMM1, :)</p>
<p>Sometimes, when we trade, as you stated, we have to wait. If our entry point isnt hit, we dont trade. </p>
<p>You can make more money trading 5 times than you can trading 50 times if your entry point is good. </p>
<p>One thing I dont know because I havent watched the xiv that much is what happens if the vix goes to 50. How fast can the xiv rise as volatity drops? </p>
<p>My own questions…
If the vix goes to 30… i think xiv will be trading in the low to mid 20s. Where will xiv trade if the vix is 40? 50? I know these are extremely rare events but I would like to know that. I can make an educated guess. 
I would like to know how quick xiv can come back. If I buy xiv at 23, and xiv drops to 15, how long will it take for xiv to recover? I assume the time varies. I wont be happy with an 8 point loss if that occurs. </p>
<p>I dont think xiv is going to hit 48 for a very long time unless there is qe.</p>
<p>The answers to your questions are complicated and depend in part on the changes in the relationship between the spot vix and the futures. In addition, xiv can be subject to very severe volatility drag because it is so volatile and the changes in price are based upon daily percentage changes in the futures.</p>
<p>However, we do have the concrete example of 2011. The vix touched 30 in March and you could have bought xiv at about 11 (adjusted for a subsequent split). The vix immediately retreated, and peaked at over 18 in the May-June period when the vix dropped below 16. However, the vix spiked again, reaching 30 again on August 4 when xiv was about 13. This time, however. the vix kept going up and in October-November, when the vix peaked in the 40s, xiv dropped below 5. It took almost a year after that to get back to 13, but within about five months after that was over 20.</p>
<p>Emm1, that is great info . Thanks. Really great. </p>
<p>I dont know if I have the stomach for this trade. I did not realize xiv dropped to 5. Contango has been around a few years since that pricing but still… The drops are pretty incredible.</p>
<p>My career was based on trading lower volatiity issues . :)</p>
<p>Market is too crazy, I think I’ll stay out of trading for a while.</p>
<p>Yeah, when the market dipped in July I invested in some low volatility stuff – like an ETF called USMV (the “MV” stands for “minimum volatility” – this is a dividend-paying ETF for the buy-and-hold end of things. Of course that and my bond funds are doing fine right now. I’m largely cashed out – most of my portfolio management is a basic, diverse array of buy-and-hold investments, and what is happening is that some long-term equities are getting stopped out while the bond or low volatility funds are stable. The downside for me is I’ll take a tax hit from capital gains for high-growth equities that I held onto during good times, and am losing during bad… but I knew this was inevitable. </p>
<p>I’m going to be traveling abroad during the last 2 weeks of October… so no new investments for me no matter what. The investment accounts need to go into set-and-forget mode. </p>
<p>“Market is too crazy, I think I’ll stay out of trading for a while.”</p>
<p>Interesting. A lot of traders live for this type of market. I tend to do better in this environment than a low volatility market. I’m praying for that 10% correction.</p>
<p>Well I’ve made almost 100% since last week drop and gave back some so it’s natural that I want to stay out. I don’t want to play and loose it all back as I found out yesterday, I did give back some.
Are bonds fund better than stable funds in this type of market?</p>
<p>It’s some kind of weird psychology. Before I started I told myself I could loose this trading money and still sleep well but after I made some gain I want to quit while I’m ahead.</p>
<p>DrGoogle - my observation has been that when there is an overall drop in equity prices, my bond funds tend to go up in price. Not by much. I’m pretty much out of mutual funds but I’ve got a couple of bond funds I’ve kept mostly because there has been no pressing need to sell. They are stable and with the dividends, the return is better than I would get with a bank account or CD (though maybe not better than I would get from simply buying the underlying bonds, but obviously it’s a lot easier to buy the fund). I think it’s just that when people get spooked on equities they put the money into the bond funds instead. </p>
<p>I’m 60 years old. Logically I should have a big chunk of my portfolio in bonds. But right now the biggest chunk is in cash… which is also pretty safe, and one way to ride out a short-term dip. </p>
<p>I also am holding some blue chips and they are not being hit as hard so this pullback might represent a good bying opportunity for those. As I’ve mentioned, I’ll be traveling and I simply don’t want to have to worry about all of this stuff, so I’m going to take a breather for a while. The advantage for me is that when I come back in November, that will also be enough time for the pattern to become clear – we will know then whether this was a short-term correction or the beginning of a long-term trend. </p>
<p>Quitting while you are ahead is definitely a great choice. Same reasoning applies: take a rest, sit back, wait for a pattern to emerge. You seem to have had an uncanny sense of timing on some of your trades – if your gut is telling you to sit it out for awhile, that probably makes a lot of sense for you. </p>
<p>Plus, since you are trading with your vacation fund… maybe now would be a good time to start planning for that great vacation you’ve earned!</p>
<p>EMM1, I still may do the xiv trade. I have been looking at your write up. The last several years were really friendly to the xiv trade. </p>
<p>I am going on vacation on Tuesday. Although I will have access to technology and the markets, paying attention to the technology and markets kind of ruins the point of the vacation. :)</p>
<p>I will see my son who works in the financial industry. I hope the posters and lurkers here pay as much if not more attention to him as you do to the guys on tv. ;)</p>
<p>Calmom, thanks for your comments. I think I might gotten a little careless after a big win. The euphoria overcame me. I worry I might do more stupid trades. Have a good vacation. I’m planning one but not sure if I can go before Xmas or after. All depends on this coming week. So I’m holding my breadth. Personal stuff.</p>