I want to demonstrate some simple math for you cynics out there–because you’re stupid.
Stock A is a 7% position and it’s down 11.5%.
Stock B is a 20% position and it’s up 2%.
Stock C is a 13% position and it’s up 2.2%.
Stock D is a 15% position and it’s up 2%.
Just out of those 4 stocks, knowing the weighting a daily change, what is the net result?
That’s called “diversification” gentlemen. It enables one to withstand outlier events without blowing up.
I’m eying coal. The sector is selling off for two consecutive days, likely due to bad earnings at CLF. Remember, the coal sector is impaired. You don’t buy the sector for its fundamentals. It is a play on the future, which makes it the perfect Pro-Romney election day pick. I intend to buy ANR and JRCC, ahead of the elections and sell after Romney is declared King.