Worth reading: latest from Robert Prechter

[SD Realtor]

stocks very interesting article. I follow another former posters blog who feels the same way about gold (and etfs) that you do. He preaches futures rather then etfs due primarily to liquidity.

One question, is your statement regarding etfs, extending to the negative correlated ones. For instance SQQQ a HIGHLY leveraged and risky etf. Even if it is downside are you saying that in a flash decline the market can simply say tough luck the etf gets nothing. Is that because of the leverage?

[nct]

Stockstradr,
Thanks for the post. It is interesting. I actually agree with RP that Fed Reserve cannot print in the sense that when they monetize the debt as they did last time they did not make the debt go away. This is the key point of “debt-deflation”. In debt-deflation situation as i understand, the key problem is the distribution of debt. Fed monitizing certain debt just swap the creditors with Fed itself. But all those homedebtor , those getting into debt by “buying” a house, still have to service the debt and pay the mortage. I believe that’s his point of “Fed cannot print”.

Do you know a place online I can read all his past prediction and comments on market?

Thanks again

[nct]

Stockstradr,
Thanks for the post. It is interesting. I actually agree with RP that Fed Reserve cannot print in the sense that when they monetize the debt as they did last time they did not make the debt go away. This is the key point of “debt-deflation”. In debt-deflation situation as i understand, the key problem is the distribution of debt. Fed monitizing certain debt just swap the creditors with Fed itself. But all those homedebtor , those getting into debt by “buying” a house, still have to service the debt and pay the mortage. I believe that’s his point of “Fed cannot print”.

Do you know a place online I can read all his past prediction and comments on market?

Thanks again

[nct]

Stockstradr,
Thanks for the post. It is interesting. I actually agree with RP that Fed Reserve cannot print in the sense that when they monetize the debt as they did last time they did not make the debt go away. This is the key point of “debt-deflation”. In debt-deflation situation as i understand, the key problem is the distribution of debt. Fed monitizing certain debt just swap the creditors with Fed itself. But all those homedebtor , those getting into debt by “buying” a house, still have to service the debt and pay the mortage. I believe that’s his point of “Fed cannot print”.

Do you know a place online I can read all his past prediction and comments on market?

Thanks again

[nct]

Stockstradr,
Thanks for the post. It is interesting. I actually agree with RP that Fed Reserve cannot print in the sense that when they monetize the debt as they did last time they did not make the debt go away. This is the key point of “debt-deflation”. In debt-deflation situation as i understand, the key problem is the distribution of debt. Fed monitizing certain debt just swap the creditors with Fed itself. But all those homedebtor , those getting into debt by “buying” a house, still have to service the debt and pay the mortage. I believe that’s his point of “Fed cannot print”.

Do you know a place online I can read all his past prediction and comments on market?

Thanks again

[nct]

Stockstradr,
Thanks for the post. It is interesting. I actually agree with RP that Fed Reserve cannot print in the sense that when they monetize the debt as they did last time they did not make the debt go away. This is the key point of “debt-deflation”. In debt-deflation situation as i understand, the key problem is the distribution of debt. Fed monitizing certain debt just swap the creditors with Fed itself. But all those homedebtor , those getting into debt by “buying” a house, still have to service the debt and pay the mortage. I believe that’s his point of “Fed cannot print”.

Do you know a place online I can read all his past prediction and comments on market?

Thanks again

[Arraya]

Prechter is brilliant at understanding human herding behavior.

The Fed can’t print behavior i.e. confidence.

I agree, deflation will (re)assert itself as the primary force and it will be a doozey.

[Arraya]

Prechter is brilliant at understanding human herding behavior.

The Fed can’t print behavior i.e. confidence.

I agree, deflation will (re)assert itself as the primary force and it will be a doozey.

[Arraya]

Prechter is brilliant at understanding human herding behavior.

The Fed can’t print behavior i.e. confidence.

I agree, deflation will (re)assert itself as the primary force and it will be a doozey.

[Arraya]

Prechter is brilliant at understanding human herding behavior.

The Fed can’t print behavior i.e. confidence.

I agree, deflation will (re)assert itself as the primary force and it will be a doozey.

[Arraya]

Prechter is brilliant at understanding human herding behavior.

The Fed can’t print behavior i.e. confidence.

I agree, deflation will (re)assert itself as the primary force and it will be a doozey.

[stockstradr]

“One question, is your statement regarding etfs, extending to the negative correlated ones. ”

Truth is, I don’t have all the answers or in-depth understanding of the various areas of risk for ETF’s. I do know that multiple brilliant market analysts with great track records have in recent years have emphasized the risks they are seeing with certain categories of securities, such as ETF’s. They know something. They understand the risks of ETF’s and it has them scared.

1) ETF’s prospectus reveal multiple levels of counterparty risk, and most importantly most ETF’s don’t actually hold much or all of the underlying asset they are intended to have a correlation with. Usually, they hold some basket of derivatives of that asset that are intended to create the intended (-200%,-100%, +100%, +200%, etc) correlation with the primary asset AND MOST IMPORTANTLY the prospectus allows the ETF add to their profits via additional market actions (puts, write calls/puts, whatever) on those derivatives), meaning at any point in time there is considerable counterparty risk for much of assets in an ETF.

For example, the gold ETF’s prospectus allows them to hold complex gold futures contracts or other derivatives INSTEAD of physical gold PLUS they can write derivatives (or loan out) against any physical gold they own, plus they have ZERO liability of the ETF fails to maintain the correlation to the asset

2) There are weird pricing instability issues with ETF’s that were confirmed with the recent “flash cash” where the investigation has already confirmed about 60% or 70% of the securities that had value crash temporarily in the flash crash were ETF’s.

So certainly these factors also mean same risks for SQQQ.

[stockstradr]

“One question, is your statement regarding etfs, extending to the negative correlated ones. ”

Truth is, I don’t have all the answers or in-depth understanding of the various areas of risk for ETF’s. I do know that multiple brilliant market analysts with great track records have in recent years have emphasized the risks they are seeing with certain categories of securities, such as ETF’s. They know something. They understand the risks of ETF’s and it has them scared.

1) ETF’s prospectus reveal multiple levels of counterparty risk, and most importantly most ETF’s don’t actually hold much or all of the underlying asset they are intended to have a correlation with. Usually, they hold some basket of derivatives of that asset that are intended to create the intended (-200%,-100%, +100%, +200%, etc) correlation with the primary asset AND MOST IMPORTANTLY the prospectus allows the ETF add to their profits via additional market actions (puts, write calls/puts, whatever) on those derivatives), meaning at any point in time there is considerable counterparty risk for much of assets in an ETF.

For example, the gold ETF’s prospectus allows them to hold complex gold futures contracts or other derivatives INSTEAD of physical gold PLUS they can write derivatives (or loan out) against any physical gold they own, plus they have ZERO liability of the ETF fails to maintain the correlation to the asset

2) There are weird pricing instability issues with ETF’s that were confirmed with the recent “flash cash” where the investigation has already confirmed about 60% or 70% of the securities that had value crash temporarily in the flash crash were ETF’s.

So certainly these factors also mean same risks for SQQQ.

[stockstradr]

“One question, is your statement regarding etfs, extending to the negative correlated ones. ”

Truth is, I don’t have all the answers or in-depth understanding of the various areas of risk for ETF’s. I do know that multiple brilliant market analysts with great track records have in recent years have emphasized the risks they are seeing with certain categories of securities, such as ETF’s. They know something. They understand the risks of ETF’s and it has them scared.

1) ETF’s prospectus reveal multiple levels of counterparty risk, and most importantly most ETF’s don’t actually hold much or all of the underlying asset they are intended to have a correlation with. Usually, they hold some basket of derivatives of that asset that are intended to create the intended (-200%,-100%, +100%, +200%, etc) correlation with the primary asset AND MOST IMPORTANTLY the prospectus allows the ETF add to their profits via additional market actions (puts, write calls/puts, whatever) on those derivatives), meaning at any point in time there is considerable counterparty risk for much of assets in an ETF.

For example, the gold ETF’s prospectus allows them to hold complex gold futures contracts or other derivatives INSTEAD of physical gold PLUS they can write derivatives (or loan out) against any physical gold they own, plus they have ZERO liability of the ETF fails to maintain the correlation to the asset

2) There are weird pricing instability issues with ETF’s that were confirmed with the recent “flash cash” where the investigation has already confirmed about 60% or 70% of the securities that had value crash temporarily in the flash crash were ETF’s.

So certainly these factors also mean same risks for SQQQ.

[stockstradr]

“One question, is your statement regarding etfs, extending to the negative correlated ones. ”

Truth is, I don’t have all the answers or in-depth understanding of the various areas of risk for ETF’s. I do know that multiple brilliant market analysts with great track records have in recent years have emphasized the risks they are seeing with certain categories of securities, such as ETF’s. They know something. They understand the risks of ETF’s and it has them scared.

1) ETF’s prospectus reveal multiple levels of counterparty risk, and most importantly most ETF’s don’t actually hold much or all of the underlying asset they are intended to have a correlation with. Usually, they hold some basket of derivatives of that asset that are intended to create the intended (-200%,-100%, +100%, +200%, etc) correlation with the primary asset AND MOST IMPORTANTLY the prospectus allows the ETF add to their profits via additional market actions (puts, write calls/puts, whatever) on those derivatives), meaning at any point in time there is considerable counterparty risk for much of assets in an ETF.

For example, the gold ETF’s prospectus allows them to hold complex gold futures contracts or other derivatives INSTEAD of physical gold PLUS they can write derivatives (or loan out) against any physical gold they own, plus they have ZERO liability of the ETF fails to maintain the correlation to the asset

2) There are weird pricing instability issues with ETF’s that were confirmed with the recent “flash cash” where the investigation has already confirmed about 60% or 70% of the securities that had value crash temporarily in the flash crash were ETF’s.

So certainly these factors also mean same risks for SQQQ.

[Author]

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