Monday, February 13, 2012

Why am I not long Apple? Take risk, it’s ok. Buy upside calls and dump your longs.

Why am I not long Apple?  Take risk, it’s ok.  Buy upside calls and dump your longs.

You are probably reading this because you are not long apple, short the market or pulled your money out - our recent market survey confirms to us the continuation of equity outflow data.  Everyone is bearish, neutral and upset.  Small volume rallies continue to move the marginal price higher.  What feel’s like an amazing rally, is in-fact only taking the vapour out of recent fear that was priced in.  The equity markets maybe a touch ahead of themselves, but as we will see from the charts below, still plenty of upside is left.

People simply don’t trust the market and have piled into bonds.  PIMCO’s Bill Gross has even leveraged PIMCO to hold bonds and MBS.  A full 180.

It’s hard to take risk when see pictures like this below, markets seem to be over-extended and risk premia to low.  This is why we feel it’s better to hold upside calls
Still plenty of upside left.

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