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What is Happening?

August 8, 2011


Good morning. It is hard to even describe what happened in the market/world last week and the ramifications it may have on the economy and individual wealth going forward. The market had a horrible week, with the SPY down 7.2% to close at 120.08. The volatility index (VIX) closed up 27% on the week to close at 32, a level not seen since June 2010. Maybe even more amazing, since the focus of the week was the impending downgrade of the US credit rating, the 30-year bond was up over 3% on the week to close at almost 132, representing a 30-year yield of 3.8%. 

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Rationally Bearish on Bonds

May 9, 2011


Good morning. It was a very interesting week last week for investors, especially those who either trade commodities or have used security ETFs to gain exposure (chase returns) into the commodity area. The SPY was down 2.23 (1.6%) to close at 134.20, not a very significant amount given the recent rally, but the VIX, possibly seeing what can happen when sellers arrive and longs are forced out, was up a whopping 25% to close at 18.39.

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Efficient Market

February 14, 2011


Good morning. We had another quiet but positive week for the broad market last week, with the SPY quietly advancing 2.04 to finish at 133.11 (1.5%). The VIX, mainly due to the very quiet week, was down to 15.68, a drop of another 1.8%, and a level that we reached last April before the market underwent a roughly 15% correction. For whatever reason market advances have been associated with the significant decrease in market fear, so that virtually all market corrections or sell-offs have been associated with low implied volatilities at the start.

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Economics 101

September 13, 2010


Good afternoon. It was a second in a row up week for the market last week, with the SPY advancing .59 to close at 111.48 (.5%). It was significant because the market was able to hold and consolidate the large gains of the week before, leaving the SPY up a strong 4.3% for the two-week period. The VIX was actually up slightly (3%) last week but still showed a large drop of 10% for the two-week period, closing at 21.98.

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