2012 was the year when volatility was destroyed, even though the indices marked time for most of the year. All of the VIX ETNs were dismantled, allowing for the anti-VIX ETNs, like XIV, to become the biggest winners of the year. Earlier this month I pointed out the seasonal factors that makes up December, whose character is one of a sleeping lion than anything to fear. Needless to say, month to date, we are up 0.85%.
The month of January is the exact opposite. I could tell you tales of misery and elation until the sun sets. Vacation time is over and everyone wants to position correctly for the new year.
Look at today’s index leaders, courtesy of The PPT.
I’ve always made it a point to kick off the new year’s right, by making bold, directional trades. Right now I am 35% cash and haven’t the slightest idea what 2013 will bring. By the book, higher taxes should bring forth losses in equities; but the market has been manipulated for so long it’s almost hard to believe in a downward tape.
My theory is that money is being forced into real estate. Having a booming real estate market is the only way our unemployment rate gets below 6.5%. Hence, it goes without saying, homebuilders should be bought, especially on dips.
Since I sold my BZH the other day, I am back on the market for a housing related name–builder or materials maker.
NOTE: Eric Jackson is out with his annual Anti-Barron’s Round Table, with predictions from the blogosphere and twittersphere. Yours truly is at the top of that list his a few top picks, rightfully so.