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Max Ansbacher is one of this country’s leading authorities on S&P 500 options. His major market forecasts have, in general, proven highly accurate over the years. Ansbacher, in fact, literally “wrote the book”, having authored the first volume ever written on exchange traded options, entitled “The New Options Market.”
He followed this best seller in 1981, with “How to Profit From The Coming Bull Market,” a book that accurately predicted the great bull market, which began the following year. Years later, in an editorial in The Wall Street Journal, when many were negative on the stock market, he argued correctly that the 1987 crash was just a blip in the bull market’s historic run.
More recently, in 1999, near the peak of the rally in technology stocks, in an
interview on Bloomberg Financial
Television, Ansbacher warned investors of an imminent tech stock decline, which also proved accurate.
On July 31, 2000, in what may be his most important major forecast to date, Ansbacher employed his Ansbacher Index in predicting a major across-the-board market decline. Unfortunately, this prediction, too, has proven correct!
According to Ansbacher, the only signal that approached the bearishness of this signal occurred in August 1987. The Ansbacher Index was developed by Ansbacher to help gauge long-term market direction. Over the last five years of the 20th century, Ansbacher’s Index identified and periodically reconfirmed the existence of a strong, upward trending market. The Index’s recent sell signal in the stock market, according to Ansbacher, was the most powerful sell signal ever generated by his Index!
In his capacity as a
Commodity Trading Advisor (CTA), he capitalized on his sell signal by selling (writing) call options on the S&P 500 for his managed account clients. Ansbacher points out that markets, often times, move to extremes, both on the up and down side. He believes it is now possible for the market to move to the downside beyond many analysts’ expectations. Why does he believe as he does? From a technical standpoint, he simply cannot overlook the clearly powerful sell signal generated by his Index.
Fundamentally speaking, Ansbacher believes the sustained intensity caused by a confluence of factors can crack the overall market at any point in time. These factors include a weaker Euro currency, higher oil prices, slowing economy, creeping inflation, tight labor markets, decelerating growth in personal computer sales, and many stocks still highly overvalued. Ansbacher believes cracks are already appearing in many individual stocks and points to the 40% plus declines from their 52-week highs in such well-known, supposedly “rock 2 solid” stocks as Intel, Microsoft, AT&T, Eastman Kodak and Motorola, to name a few. Certain stocks like Priceline.com have dropped an astounding 95%. But, Ansbacher points out, when a stock moves hundreds and even thousands of percentage points, as many stocks have during the previous great bull run, a drop of over 50% is relatively small in percentage terms.
However, for investors holding those stocks, it can be financially devastating, particularly if their portfolios aren’t properly diversified with investments that can potentially capitalize on falling markets! Max Ansbacher’s goal as a trading advisor of some repute, is to outperform the S&P 500, and do so utilizing prudent money management principles.
Ansbacher achieved this goal during one of the biggest bull markets in history! He seriously doubts we will ever, in most of our lifetimes, experience a bull market as strong as the one we have had over the past five years. He is not alone in his opinion. Even bullish analysts including Goldman Sachs’ Abbey Joseph Cohen are calling for returns in stocks over the next three to five years of only 7% to 8%. Based on prominent analysts’ lackluster forecasts for stocks in the coming years, we believe Ansbacher can potentially,
significantly outperform the S&P 500!
Max Ansbacher has withstood the test of time, as was pointed out in an article about him, entitled “The Art of Option Selling,” published in the August 2000 issue of Derivatives Strategy. The article asks that the reader “…keep in mind that Ansbacher has made a lot of money as a CTA, and has been doing so for a long time….And who can argue with his success? He’s made lots of money over the last quarter century and has yet to be caught egregiously offside.” (Ask your Vision broker for a free copy of the entire article.)
Max Ansbacher’s trading approach enables him to potentially capitalize equally well on falling or rising markets. Over the past five years, for his managed accounts, he’s shown how his astuteness has taken advantage of a rising market in stocks. He’s now demonstrating, with equal facility, his ability to capitalize on a falling stock market. Bear in mind past performance is not necessarily indicative of future results. The risk of loss exists in futures trading. Whether the stock market continues to fall or rise, Ansbacher potentially stands ready to perform.
Past performance is not necessarily indicative of
future returns. There is substantial risk
involved in futures and options trading. You can lose more than your initial
investment. This CTA shorts options which consists of unlimited risk.
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