Mid Day Market Talk at Equities

Steve Kanaval |

This year has been a pain in the ass for any manager who tried to hedge in the first hour of trading. If you did this you sold them right into the hole, and managers hate that because you are just giving money away. It is better to buy insurance using out of the money puts and just rolling them, which many managers do.

Trying to use these 3x ETF's is a fool's folly, and if you are playing that game in 2016 you will not make it to the end of the year - you will get fired. Organized hedging is a skill set you must have as a manager on top of picking great stocks. Great portfolio managers have little turnover during volatility - they add value during these times.

Major Indexes are down just over 1% today on the back of news that Korea may have tested a Hydrogen Bomb and roiled markets. The irony is that U.S.-based investors are stepping back during this first hour of trading and starting to look for value and volatility is settling down, which is a welcome sign for retail investors who shy away from volatile moves (like we had in August 2015 where markets fell 12% in 3 trading days on the back of Chinese Yuan readjustments).

We look forward to getting back to looking at companies' balance sheets and earnings versus speculative buying and selling of securities on global rumblings. Stocks are a reflection of revenue and industry multiples and it's important to remind ourselves of this at the start of each year. It is not our intention to preach about what stocks to buy and sell. We always find it best to observe and report.

Know that we focus on Emerging Stocks under $1B in Market Cap and look to assist and highlight news and information that Wall Street misses. We cover all sectors and also private markets. Plus, we a have a unique perspective when we search for news and information on these small companies. We look forward to a profitable 2016!

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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