My Modus Operandi; Potential Outcomes: Best of Kass

NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among the posts this past week were entries about his method and Fed funds forecasts.

Please click here for information about subscribing to RealMoney Pro.


The Method to My Madness
Originally published on Friday, Sept. 20 at 12:00 p.m. EDT.

I wanted to emphasize something that is obvious to all subscribers that have been around for a while.

As a matter of strategy it is my modus operandi to almost always average into positions (long and short) based on the notion that it is impossible for me to figure out the perfect/ideal entry point.

My sense is that many contributors go all in at the get-go in putting on positions and their first price is close to their average cost.

It is great having that confidence, but after four decades in this business, I simply cant exact that precision.

This means, from the first time I mention a position -- let's use my PowerShares QQQ ( QQQ) short as an example -- I am averaging up or down (based on macro or micro factors), and my total cost basis might be (far) different from my original mention.

Again, QQQ is a good example.

I originally mentioned the short at $77.40, but with today's large short add, my average cost is now slighlty over $79.

I hope my approach is well understood.

At the time of original publication, Kass was short QQQ.


Looking at Potential Outcomes
Originally published on Thursday, Sept. 19 at 9:34 a.m. EDT.

If you look at the range of Fed funds forecasts for year-end 2016, the high is 4.25% (Fisher?), the low is 0.5% (Evans?) and Bernanke falls seemingly right in the middle at 2%. The dovish view on the unemployment rate for the same point in time is 6%, while the hawkish view is that it will be down to 5.2%. The median is 5.6%, and that seems to be where Bernanke resides.

If you look at the interquartile range (kick out the top 25% and bottom 25%), the Fed funds views still range from as low as 1.75% (7 hikes if you start at zero) to as high as 2.75% (11 hikes up from zero). Note it is widely believed that Yellen is currently in the most dovish quartile, clearly outside the middle 50%, whereas Bernanke seems to lay claim to the median.

If you liked this article you might like

Like Your Market With a Little Froth?

Will the Plunge in Bitcoin Crush AMD and Nvidia?

Market Presents Traders With 2 Big Challenges

There Still Is a Bid Under the Market

Dip Buyers; Essentiality of Selectivity, Vigilance -- Rev Shark's Top Thoughts