Reply to: Mother of all carry trades faces an inevitable bust

[SantaClaus]

But I think our DEc put options are probably going to be worthless...........

I think your right Brillo unless there is sudden profit taking before Christmas.
That's why I would only punt what I am prepared to lose on a trade like that.

I have no doubt this market is going to crash, but I don't know when the governments are going to stop propping it up.

[threaded]

If then they must make sure that Labour totaly destroyed as a party and a movement. Otherwise it will continue as a cancer and kill us all.

Democracy results in an adversarial system, and all parties involved take positions that are incompetent.

[HairyArsedBloke]

It's not all bad for Labour though. At least they can say that the Tories will be party of high interest rates - and strictly speaking the facts will back them up.

If Labour fall at the next election and if the Tories have the interests of the country at heart, then they must make sure that Labour totaly destroyed as a party and a movement. Otherwise it will continue as a cancer and kill us all. However, I don't believe that even the first condition is true.

[centurian]

America did this in the 70s. When the time came to claw the money back IR went to 20%.

The amount of money they need to claw back is MANY MANY MANY orders of magnitude bigger this time.

What gets me is why more people aren't jumping up and down warning of the impending problems.

Why are we all sleepwalking into this.

The only answer I can think of - is that there simply isn't any other option available. Basically the boom of the 00's shouldn't have happened because it was based on nothing but debt - and this recession is just a massive reset button to put us back where we started (plus all the debt).

So all the policy makers are hoping that QE etc. will solve the problem because they simply can't think of anything else.


It's not all bad for Labour though. At least they can say that the Tories will be party of high interest rates - and strictly speaking the facts will back them up.

[suityou01]

Any stimulus package should be a kick-start only - and it is often the right thing to do.

But the kick start hasn't worked and now they need to keep pumping in money just to keep the economy afloat. But sooner or later this has to stop - and that's when we will really pay the price. Pretty much all of this pain is timed to kick in just after the next general election - funny that...

America did this in the 70s. When the time came to claw the money back IR went to 20%.

The amount of money they need to claw back is MANY MANY MANY orders of magnitude bigger this time.

[centurian]

Also, as some point all this QE money needs to be taken back out of the economy, and they do this by raising interest rates to claw back those QE dollars. This is when the hyper inflation kicks in.

Any stimulus package should be a kick-start only - and it is often the right thing to do.

But the kick start hasn't worked and now they need to keep pumping in money just to keep the economy afloat. But sooner or later this has to stop - and that's when we will really pay the price. Pretty much all of this pain is timed to kick in just after the next general election - funny that...

[suityou01]

Pub expert here :

China is pegging the Yuan back to protect the dollar. As soon as they stop and the Yuan strengthens then it's curtains for the dollar.

The problem here is as the dollar weakens, those that are sitting on those dollar reserves are losing out. The very fact that America is weakening the dollar by printing money is p*ssing off those countries that are ditching the dollar. Basically, America is waging wars to make money, and printing money to fund it's war mongering activities, leaving other countries to pick up the tab.

Also, as some point all this QE money needs to be taken back out of the economy, and they do this by raising interest rates to claw back those QE dollars. This is when the hyper inflation kicks in.

QE is due to stop in this country around the next election.

As someone rightly said on here, that will be the day to put the popcorn in the microwave.

The thing is, if a currency collapses, you need to replace it with something. I wonder if the North American "Amero" will become a viable option, and good ole Britannia adopts the Euro.

[DiscoStu]

But I think our DEc put options are probably going to be worthless...........

I think you could be right as long as the printing presses keep fuelling the FTSE's rise...

[BrilloPad]

But I think our DEc put options are probably going to be worthless...........

[BlasterBates]

Agree with the article. Don't bother with derivatives can work out very expensive, and often traders make a steady profit over months or years and then lose the whole lot in a short space of time. Just check out a few Investment banks and Hedge funds to see how they screw up. Even Mr Scholes who has a nobel prize and invented derivative mathematics basically lost everything in a single bet. So seems to be common place, and being mathematically savvy just increases your chances of f****ing up big time as it gives a rather dangerous feeling of confidence, you know "I understand the markets".

Listen to Warren Buffet....buy huge quantities of assets when there's a crash and not so much when they're high and steer clear of highly priced assets, i.e. those that bring miniscule returns, such as city centre appartments.

[DimPrawn]

Two things:

1) As DP says, do some research on leveraged ETFs re: backwardation and contango. It's a killer in things like oil ETFs where they roll over periodically and you can easily lose money even if your view on the direction of the underlying is correct.

2) I wouldn't bother with securities type CTF, as the amount of money you can put in is limited, dealing charges, etc. I've just stuck to simple cash accs for my CTFs. Children's SIPPs are a better bet for shares.

Am I right in thinking a child SIPP means you child can't touch the money until their retirement age?

Can't see the sense in that. We're talking 50 years time and retirement, pensions and god know's what will be very different.

[bobhope]

Two things:

1) As DP says, do some research on leveraged ETFs re: backwardation and contango. It's a killer in things like oil ETFs where they roll over periodically and you can easily lose money even if your view on the direction of the underlying is correct.

2) I wouldn't bother with securities type CTF, as the amount of money you can put in is limited, dealing charges, etc. I've just stuck to simple cash accs for my CTFs. Children's SIPPs are a better bet for shares.

[DimPrawn]

For anyone else holding leveraged ETF's.

http://seekingalpha.com/article/3119...struction-trap

They will lose you money faster than a Labour goverment.

[SantaClaus]

Mate, the ETF's are reset daily. You will lose your money, the longer you hold it above one day the more you lose.

Read up on leveraged ETF's.

They return double the change on the day, they don't work if you hold them for a week or a month or a year.

I know I bought one not understanding how they worked and lost over a period of months most of my money, even though the index went in the direction I was expecting it to!

The fact you don't understand this points you out as an amateur I'm afraid.

Ok, I understand what you are saying now, and I am not afraid to admit when I am wrong.

I never said I was a professional investor. I daytrade for a living.
There is a big difference in the strategies involved.

[DimPrawn]

I understand the risks involved in compounding.

However, if you can find any other way to short the stock markets from a child trust fund, then please let me know

Mate, the ETF's are reset daily. You will lose your money, the longer you hold it above one day the more you lose.

Read up on leveraged ETF's.

They return double the change on the day, they don't work if you hold them for a week or a month or a year.

I know I bought one not understanding how they worked and lost over a period of months most of my money, even though the index went in the direction I was expecting it to!

The fact you don't understand this points you out as an amateur I'm afraid.