As expected, not much happening as the derivative guys jostle for position. Everything expires today so the market direction is pretty much up to them. For those new to days like this here is an explanation. Quadruple Witching
At some point it must be decided if I can hold the positions added over the last two weeks. Most have pretty good gains, sold some of those on the opening yesterday. But the remainder cannot outperform the market if it goes back down. I am currently without protection, no shorts. And since 60% of portfolio performance is market driven, rather than individual stock picking, my chances of outperforming are narrow.
Sidebar
Last week someone asked me about derivatives. The term is bandied about now that we know something about swaps, mortgages, reverse swaps, CDO’s, etc. When I was a sales manager in the headquarters of PaineWebber the derivative guys were constantly trying to create product for us. They would buy a bond, capture the long term interest, add a put for downside protection, and out of that capture a hefty yield for the life of the instrument. If that sounds like goobledigook to you that’s how it sounded to me too. Anyway, these quants were convinced their latest idea was perfect for retail investors. So, someone would package it, put a catchy name to it and we would hit the road. The instrument usually sounded too good to be true and was. It would have a big commission attached so we sold a little of almost everything the pin heads brought us. But, they almost invariably failed, eventually. A teeny weeny part of the complex formula they used would blow up. Kinda like now, only smaller.Derivative (finance) – Wikipedia, the free encyclopedia
