In the videos last weekend I played part of a song called Cold White Christmas by the Casiotones For The Painfully Alone.Yesterday, sort of early in the day I sold the rest of SDS when the market was about flat. I also sold another stock (not so widely held) along with it as a partial offset to being wrong on the sale and for the tax loss.
The cash level is now very high but still anyone who has used inverse products during the bear market has probably come to view them quite fondly as either a crutch, emotional support or an old friend (lol). So I sent an old friend packing yesterday with the market down 37% from its high.
The logic is simple and posted before, the risk of the market going down a lot is much less after it has already gone down a lot, yesterday's closing notwithstanding.
Clearly this has been bad on a historical level as market action goes. I don't think it changes the notion that at some point it must exhaust and work higher. Reader TomK left a comment boldly (not being sarcastic) calling the bottom as being yesterday. I simply don't know.
As I wrote about taking defensive action more than a year ago I commented that being correct about magnitude was not a priority just missing a chunk of the decline was the priority. The biggest difficulty for me personally is that people are worried despite the action taken.
Being worried is reasonable as this is what happens during panics; seemingly no end to the selling in sight. A 20% decline in a couple of weeks is real gut check time. If you have been reading this blog for a while you know where I am coming from in terms of faith that as the market has malfunctioned before it then works higher. Whatever fear you feel now, I am telling you the fear in 1987 and the summer of 2002 was the same. I try to post a tone that reflects my emotion which as my brother told me the other day, I have no emotion.
I take my own advice about bracing for periods like now, knowing what has happened before and realizing that the only thing I can control is the action I take (which I've obviously been writing about for years now), I have no control over what the stock market does. I have enough to worry about with the bridge from the Red Sox starting pitching to Jonathan Papelbon. The middle relief has been tough all season.
11 comments:
Guess everyone's speechless. Probably waiting to see how much worse W can make it during his pep talk.
I'm gonna thumb through my copy of Graham's Intelligent Investor to review his thoughts on bear markets.
Roger - why wouldn't they set the rotation for Lester to pitch twice if he has to?
Label this: Humor attempt so I dont put my head in the oven.
Lester is 23. he can go game 1,3,5 and 7 if need be and then do some spot work in the other games
Roger, do you think it makes sense to buy small amounts of 2X like SSO at this point (with stop loss), for somebody who is mostly cash, lost money on the way down, and doesn't want to completely miss a rally, or at least to hedge against any upside risk in the coming week?
On second thought I'd better keep that money. I might need it in the spring, to buy a hoe and some seeds.
Jim
Jim, you best get to the country store to get yer provisions, course they are probably out of shells by now.
I took off the SDS to get a tad more long. My cash level is ridiculously high but i think i would lag a rally less with out it. if it ever rallies agian I might lighten up some at that point.
getting closer to my s&p 800 target
Boy, was I wrong.
Thankfully my intuition doesn't play a role in my investment decisions.
Not willing to say anything about right or wrong -- this market is confounding and very dangerous -- but did liquidate the QID position entirely in my tactical account and sold a block of SDS in my strategic account because the hedge had grown higher than my model allows.
Sometimes I hate it (like NOW) but my trading model says line up buy candidates by selling puts at lower out of the money targets and raise cash to buy further in if the trend warrants it.
My gut tells me that even if we get a rally next week the market will be lower a month from now but discipline is discipline (shrug).
At times like this I think maybe an immediate annuity makes sense, at least for some of a retirement portfolio. Just pick the strongest Insurance company. My kids just won't get it all, but enough.
i think AIG may have been perceived as strong. i think policy holders ended up being ok, but it was scary there for a little bit
Strongest Annuity Insurers Data as of 09/03/2008
Company Name State Weiss
Safety
Rating
TEACHERS INS & ANNUITY ASN OF AM NY A+
STATE FARM LIFE INS CO IL A+
COUNTRY LIFE INS CO IL A+
AMERICAN FAMILY LIFE INS CO WI A+
AMERICAN FIDELITY ASR CO OK A+
STATE FARM LIFE & ACCIDENT ASR CO IL A+
NORTHWESTERN MUTUAL LIFE INS CO WI A
NEW YORK LIFE INS CO NY A
MASSACHUSETTS MUTUAL LIFE INS CO MA A
PACIFIC LIFE INS CO NE A
NEW YORK LIFE INS & ANNUITY CORP DE A
GUARDIAN LIFE INS CO OF AMERICA NY A
FIDELITY INVESTMENTS LIFE INS CO UT A
USAA LIFE INS CO TX A
SOUTHERN FARM BUREAU LIFE INS CO MS A
JOHN HANCOCK LIFE INS CO OF NY NY A
SENTRY LIFE INS CO WI A
FORT DEARBORN LIFE INS CO IL A
AUTO-OWNERS LIFE INS CO MI A
UNITED FARM FAMILY LIFE INS CO IN A
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