Scaling Out

Another disappointing day for the markets.  Congress had the opportunity to restore confidence by getting a bill passed quickly.  But, they didn’t.  I shouldn’t be surprised that many there don’t mind seeing confidence and the markets continue to drop.  At least until November.  But, you can see by the volume and the lack of conviction that investors are waiting for the details of this plan and to get the plan started.  We did have weak volume today and yesterday relative to the big up days last week.  It has felt that investors are waiting for good news and when they don’t get it, they sell.

I’ve had no other choice but to start scaling out.  I’m not running for the exits in a hurry yet because we’re still oversold.  However, I’m scaling out of positions that are lagging the market and those would first be material stocks.  These stocks bounced hard and the global growth slowdown is being talked about once again and dragging those stocks with it.  Great long-term investments but potentially more pain in the coming days and weeks.  Thursday & Friday were good examples of how fast markets can go up with any bit of good news.  So, averaging out is at this point the prudent thing to do.  It will reduce the whipsaw risk.


1 Response to “Scaling Out”

  1. 1 Dan September 23, 2008 at 9:08 pm

    Can you elaborate what you mean by scaling out? Have you and Dan decide, like a number of other experts I have heard lately, to go 100%, or close to it, in cash because the game is rigged now? I hear that it is too dangerous to either be long or short (or both as a hedge) because the rules of the game can be changed at any moment. The risks are just way too high.

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