Dear Reader,
The events from the last 2 months show there is (in all probability) no such thing as a zero probability event. Tunisia, Egypt, Libya, Saudi Arabia, Japan (earthquake, tsunami, posiibility of a nuclear disaster...)
Results from my personal views on the markets: USO (-3.9%), GLD (-0.8%), May 21, 2011 PUT @ 134 strike is up (+13.9%). If I had invested 33.33% of my portfolio in the three mentioned instruments the result for last week will be: (-1%) + (-0.3%) + (+5%) = +3.7% for my hypothetical portfolio.
Regarding next week. Things in Japan seem scary to say the least... I expect most risky asset classes to sell off next week, including oil despite likely unrest in Saudi Arabia.
My personal views on the market for next week: Sell USO, Buy out of the money May 21, 2011 PUT @ 134 of SPY, Sell JJA, Buy GLD.
Basically, probability is a fascinating thing...
Disclaimer: Please be advised, this is NOT a reccomendation to buy the mentioned securities, commodities or their derivatives. This is just my personal, hypothetical view on the markets.
I do not own any of the mentioned commodities or their derivatives traded on exchanges, and options on indices and I do not plan to own them in the next 72 hours!
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