Dennis Gorelik

~~~~~~~~~~~~~~
https://www.facebook.com/photo.php?fbid=10222515987392983&set=a.10201818625331867&type=1&theater
On the Diamond Princess, where most of the passengers were in their 60's and 70's and you would expect at least a 5% fatality rate, the actual rate when everyone was tested was 2% of those with symptoms, 1% of those who tested positive, and 0.2% of all the passengers.

A global lockdown doesn't just destroy the economy. It kills people. In some Caribbean islands, 80% the economy is tourism. Now, they suddenly have 80% unemployment and people can't eat. Every year, global GDP increases 2.5% and global life expectancy increases 0.2 years. A 3 month lockdown (what it took in China and Korea) means a 10 year setback, or a 2 year reduction in life expectancy. That is 116 million people killed through reduced income to pay for food, sanitation, and health care.
~~~~~~~~~~~~~~

Originally posted at: https://dennisgorelik.dreamwidth.org/186162.html

Don't Worry, Be Happy song was written during the fallout from October 1987 financial crisis (that developed as rapidly as the crisis we have now in March 2020).


Thanks to formview for the reminder.

Originally posted at: https://dennisgorelik.dreamwidth.org/186052.html

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf report suggests that COVID-19 epidemic in the US is only at the beginning.
But how do they know that without extensive testing for COVID-19?
Much more likely explanation is that the US is at about the worst part of COVID-19 epidemic already (or even beyond the worst part).
The reason why daily cases of COVID-19 rapidly go up -- is because the US makes more and more COVID-19 tests every day.
So the trend looks scary because number of detected COVID-19 cases rapidly goes up. But the number of real COVID-19 cases is already at the peak and is likely to go down in the following days. Most of these real cases of COVID-19 still stay undetected.
Meanwhile, the number of tested COVID-19 cases may still go up for couple of more weeks - until it hits the declining tail of real cases.

Originally posted at: https://dennisgorelik.dreamwidth.org/185781.html

S&P 500 dropped 5.18% (down to 2,398.10)
UAL that I bought yesterday dropped 30.29%
GUSH (that I already sold) - dropped 26.40%

VIX - after significant move closed at 76.45 - only 0.71% higher than yesterday.

Originally posted at: https://dennisgorelik.dreamwidth.org/185402.html

Donald Trump said today: "in the war against Chinese virus".

So Trump implies that the US is kind of in a war with China.

WTF?
Trump should have known that the problem is not the Coronavirus itself, but our society panic about it.
Bringing up that war reference and blaming Chinese for detecting Coronavirus - will make the panic situation worse, not better.

I think that Trump will lose the next presidential election (2020-11-03).

Originally posted at: https://dennisgorelik.dreamwidth.org/185202.html

VIX is a volatility index.
UVXY is an ETF that corresponds to 1.5x VIX changes.

Because VIX itself is very volatile, UVXY decays a lot (usually, more than 50% per year), in spite of a modest 1.5x leverage.

So, today, I made a bet that in 2.2 years (2022 June 17) UVXY will drop well below $20/share price (currently UVXY is at $87.53)
I bought 8 .UVXY220617P20 PUTs with average price $9.42/share (Strike price $20/share. 100 shares each PUT. Expiration date: 2022 June 17)

I expect that in a couple of months .UVXY220617P20 will go up to ~$15/share -- either because of decay (if volatility stays high) or because of the drop in volatility itself.

Originally posted at: https://dennisgorelik.dreamwidth.org/185008.html

The remaining piece of my sanity suggested to me, that I have to sell the rest of GUSH at market price -- and just cut losses.
I do not work with that 3x instrument correctly and do not have right temperament to do that.

So I sold the rest of GUSH at ~$0.56/share
I could have sold at better price, and possibly, GUSH may still grow 3x from the current price in the next few days.
But that does NOT matter.
I should not use 3x instrument as an investment.

Instead of GUSH - I bought United Airlines at $32/share.
That is my long-term bet that Coronavirus concerns are seriously overblown and people will start flying again after the panic will subside.
How long will it take people to calm down - I do not know. May be several weeks, may be several months. But with long term stock investment - that does NOT matter.

BTW, GUSH went down today in spite of S&P 500 going up.
That is, probably, the compensation for GUSH going up yesterday when S&P 500 went up.

Originally posted at: https://dennisgorelik.dreamwidth.org/184761.html

Got lucky today and sold 18,425 GUSH shares for $0.77/shares
But did not use my luck to sell more (should have exited for the sake of my sanity).
At the end of the day GUSH was at $0.61/share
I learned today that:
1) GUSH decayed over the weekend about 25%:
(GUSH dropped since Friday 21.19%, and opposing bear 3x ETF DRIP dropped 29.41%)
So they dropped on average (21.19% + 29.41%) / 2 = 25.3% which is a lot.
https://www.google.com/search?q=stock%3Agush
I should have remembered about weekend decay from my FAS/FAZ experience back in 2008.

2) GUSH grew [*] a little bit today, in spite that S&P 500 dropped a lot.
[*] GUSH grew relative to Sunday, but dropped relative to Friday due to the weekend decay.

I expected that S&P 500 would grow at least a little bit, because the Fed rate cut on Sunday.
I even disagreed with the Fed decision to cut rates as much.
But I was wrong. The markets panicked anyway. A lot. S&P 500 dropped 11.98%

I expected that GUSH will grow proportionally to S&P 500.
I was wrong. GUSH went in the opposite direction from S&P 500.
Looking backwards I may expect some of that GUSH comeback, considering how much GUSH (that is based on SPSIOPTR) dropped on the day I bought GUSH for the first time. But I did not expect that SPSIOPTR comeback to be that quick and prominent.

So it is clear now that I cannot do short-term market predictions. I can do long-term market predictions generally successfully, but my short-term market predictions are closer to random noise.

Originally posted at: https://dennisgorelik.dreamwidth.org/184568.html

~~~~~
https://finance.yahoo.com/news/federal-reserve-cuts-rates-to-zero-restarts-quantitative-easing-qe-210001968.html
But the Fed on Sunday slashed rates by 100 basis points, less than two weeks after it had already made an impromptu 50 basis point cut.
~~~~~

1) I think that this sudden rates cut is too extreme.
I agree with "Cleveland Fed President Loretta Mester, who supported all the actions but preferred only a 50 basis point cut to a target range of between 0.5% and 0.75%."

2) That interest rates cut also benefits my risky GUSH purchase.
I should, probably, use tomorrow market growth and sell some of my GUSH shares.

3) Friday's sudden 10% growth in the last 20 minutes of trading (15:40 EDT ... 16:00 EDT) -- most likely explained by the leak about impending Federal Reserve Interest rates cut.

Originally posted at: https://dennisgorelik.dreamwidth.org/184113.html

GUSH started at $0.71/share (31% down) today and drifted a bit down.
I bought 348 GUSH shares at $0.60/share

I would like to see +6% ... +8% GUSH price increase every day for the next 2 weeks.

Would something like that happen?

Update [17:24 EDT]:
Unfortunately, instead of modest gain of 6% - 8% I was hoping for, GUSH rose +43.33% today up to $0.77/share
That high volatility makes me scared.
If on Monday there will be another jump like that - I may consider selling GUSH CALL option earlier than I planned.

Originally posted at: https://dennisgorelik.dreamwidth.org/183934.html