Patience Isn’t Easy

For those of you who aren’t participating in this rally, being patient as I’ve suggested doing can be quite difficult.  You wake up this morning, the futures are down and you’re feeling pretty good.  Then we open down about 125 points or so and you’re saying “here we go, finally a big down day” only to see a rally of almost 100 by the end of the day.  Now, I’ve written for a few weeks I thought a rally was coming but wasn’t sure how strong it would be.  It’s actually a little stronger than I thought it would be.  I covered my shorts a few weeks ago but still had a lot of cash.  I’ve bought a few positions in the past few weeks but I still own a good deal of cash (about 50% or so).  Do I wish I was 100% invested?  Sure I do.  But, it’s about the big picture.  It’s impossible to be perfect and the fact that I didn’t (and hopefully you didn’t) participate in the horrible down market the first two months of the year was great.  In exchange, I’m not participating 100% on the way up.  Missing 100% on the way down and participating about 40% on the way up is not bad.  But, if you are 100% cash right now, then it’s got to be extremely difficult.  But, remember what I said yesterday.  Markets don’t move in one direction too long.  I believe we’re getting extremely overbought in the short run.  So here’s my plan to deal with it.

For the short run, I want to continue to buy pretty looking pictures (nice charts).  Those might be in very specific securities.  In other words, I want to own specific investments that can still go up even if the broad market goes down which I think will happen soon.  That’s why I shorted the dollar last week.  That trade can keep working even if the market goes down.  So, for now, I’ll stay very specific and get more broad on weak pullbacks.  Some might say we had a weak pullback this morning and it only lasted for part of the day.  Speaking of shorting the dollar, the dollar was whacked today after the announcement that Fed will buy over $1 trillion in Treasuries.  That sent the dollar down and interest rates down more.  Many of you are short treasuries like I am.  Now, I’ve said before that I am short for a longer term move in treasuries.  If you own TBT for a trade, watch it closely.  The $44 level is a critical level.  That would be my stop.  Notice that it didn’t close at its low so it might hold here.  Very interesting though.  The Fed announcement could be a game changer (a negative) for the near term in TBT.

Are we having fun yet?

Jury Duty

Well folks, it looks like I’ll be in jury duty one more day so I’ll have a sub again for my radio show tomorrow.  But, I can assure you tomorrow will be my last day there and I’ll return to the airwaves on Friday morning.

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1 Response to “Patience Isn’t Easy”

  1. 1 hogcatch March 18, 2009 at 6:36 pm

    Being patient and watching the boost off of the bottom? We have been beaten silly with bad news since the summer of 2008, and most people I talk to are just now coming to terms with the fact we are in a credit crisis, never mind the fact that banks are talking profit and looking toward the light at the end of the recovery tunnel! There is a huge disconnect between investor’s fear and the reality of the situation. I heard a money manager a few weeks back talking about buying performing mortgages with an average FICO score of 690 for 14 cents on the dollar! Now every mortgage is collateralized by a home, and under the worst conditions we see homes selling for 50 cents on the dollar! The opportunity lies in searching for what works, not avoiding what will fail!!

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