Prediction: Dec 31, 2015 S&P 500 close at 2346 up 13.9%

My 2015 year end prediction is based on the trend channel shown below, which has been in place since around May 2012. There’s nothing magical about this channel. The market will transition from it at some point, and I think it’s important to plan for that, but for the moment the channel is the trend. This sort of trend channel has characterized the last three …

Read more

Sell in May and Go Away—Not Good for Taxable Accounts

When I first saw a chart similar to the one below in Business Insider I was immediately suspicious.  For example I knew that May through September of 2009 was a period of rapid growth (21%) yet that surge did not seem to show up on the bottom curve (green)—which shows the performance of staying in the market only May through September.   It turns out …

Read more

Ten Questions About Short Selling

We don’t have good metaphors to help us understand the short selling of equities.  It’s easy to understand a straight “long” investment.  For example, planting a garden is a reasonable analogy—it involves buying seeds, planting them, and in due time there is a payoff—or not. But in real life people rarely borrow something, immediately sell it, and hope to buy it back at a cheaper …

Read more

If There’s Liquidity It’s Not A Short Squeeze

I’m seeing a lot of articles (e.g., here) warning about a possible short squeeze in volatility.  At the risk of being a curmudgeon, it appears to me that people don’t know what a short squeeze is. Sure, if you’re short something that starts going up rapidly (e.g., Achman with Herbalife), life is not good. There’s a positive feedback loop when people closing out their short positions have …

Read more