Monday, October 25, 2010

PragCap: How To Beat The Market

Pragmatic Capitalist via Zero Hedge via Goldman Sachs:

“On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%. in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%. the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market’s performance on the 19 non-OMO days: +70bps.”

Prag Cap:

The Fed certainly doesn’t help their credibility when this sort of stuff is being thrown in people’s faces. It’s one thing to imply that you’re going to print millions of dollars. It’s a whole other thing to admit that you want to run a ponzi economy (as Brian Sack directly did). Amazing way to run an economy….