A Clean Slate

I just caught my first pin less hand grenade of the year with AFOP, a top 3 position of mine. In times like this, I don’t care to discuss what went wrong or how wrong everyone else is for selling. Wall Street is a fashion show and AFOP is a three piece plaid suit right now, so I am out.

Booking heinous losses in AFOP was coupled with locking in massive gains in ANGI. Finally, I sold out of my largest position, AREX, for a small loss. The point here is to start new. I wasn’t happy with the positions that I had, so I ripped them out and moved on. The only stock of meaning left is GOGO. Part of the issue with taking big positions, 20% stakes, is the other side of that blade. When they work, life is grande. However, when they fail, especially during earnings season, life becomes somewhat difficult, to say the least.

So instead of lamenting over a down position, wondering when to average down, I just decided to sell it all and start fresh.

I find it hard to believe Benjamin “The Bearded Clam” Bernanke resigned. He was fired by our bank hating Prezident, who wanted to place the insane man, Larry Summers, at the head of all tables. When that failed, miserably, he conceded to Yellen–but not after hemming and hawing about it.

The blunt smoking ways of Bernanke, catching short sellers flat footed at midnight, infecting their dreams with visions of doom, is gone. He’s now on the love boat, sailing the seven seas, somewhere near the Bering Sea. He is watching the mess unravel and can only marvel at his track record of saving the world, not once, but twice, all the while our cabal of amateur politicians threw mud and rocks at his good name for meeting extraordinary circumstances with extraordinary antidotes.

Ben had the world under his “Iron Dome” of liquidity, keeping the music going long enough to help us forget about what was in store for us in 2008.

Now he’s gone and coincidentally everything seems to be unraveling again.

Let’s see if Yellen runs with his playbook, or is under the directive of the President–who’s busy organizing communities, instead of governing from the top.

The blunts have been extinguished and the Federal Reserve ashtray has been cleaned out and filled with old lady butterscotch sucking candies.

I am not looking for high fliers on sale. I am looking for high growth stocks that have sold off due to the overall market correction.

Here’s what is on my radar.

WETF
YNDX
DDD
DWRE
AMZN
RH
GNRC
FSLR
MONT
YGE
OSTK

If we gap down tomorrow, I am a buyer.

…
David Trainer, from the website Seeking Alpha, warning investors of imminent downside in ANGI, yet it was one of very few stocks that went higher today.

Indeud.

Did you know that there are only 166 stocks, with market caps above $1 billion, that are within 5% of their 52 week highs? The Dow is now off 1,000 from its peak and Chairwoman Yellen is set to preside over the dumbest stock market rout since the great nano-tech bubble of 2004.

I’m taking claw hammers to the skull and brain today, like many of you. But I do have some cash and a mind for this sort of thing. Truth be told, you and I, the unwashed reader, have gone through many tapes like this and have always came out on top, haven’t we? I don’t see any reason to believe this time will be different. It’s important to remain cool, try not to sell at the bottom, and buy more when the selling programs have exhausted themselves.

Just to play devil’s advocate here for a moment: there is a very large equity exposure in the accounts of the investing public, from pension funds to hedge funds to the average Joe. Margin levels are extended and complacency has been high, which might lead to an exacerbated decline to the downside. If the pain is too great, drop out now and spare yourselves from the agony of having to work through the sludge.

At the core of the problem is “Fed tapering” coupled with “Emerging markets” not emerging anymore. The Yen carry trade is unwinding, the dollar is strong and treasuries and precious metals are safe havens, all classic bear market traits. The liquidity that drove stocks to fantastic heights is being withdrawn, frankly. Hopefully we can get it back soon, else selling will beget more selling and then people will call for a crash scenario to “put in a firm bottom.”

It’s all a ridiculous process, one that I loathe, sponsored by a media who don’t really know anything about making money in the markets. They are only interested in witnessing your pain.

I think I’ll wait for lower prices.

There is nothing for me to boast about, except the fact that I called this correction to the exact day. I am neither short or in a large cash position. My positions, just like yours, have c-4 sticks attached to them and are ready to be detonated, at any given moment. The only discernable difference between you and I is that I relish set-back and work well under pressure. I am never comfortable living in a utopian society.

I have 12% of my assets in cash and that’s a lot (for me), since I was leveraged at 150% of assets for most of 2013. I intend to purchase your margin calls, just at the right time, then sell into the rally, furiously, as if my head caught fire.

My prediction is for another 1-2% lower in February, which means today’s clown show is dated. We will bounce very hard in March, to the tune of 6-9%–because that is the playbook of 2000, the one we are reliving now.

You losers are about to lose a lot of money. You’re not 17 anymore and it’s unbecoming of a gentleman to occupy oneself around a game of stupid men tossing a pigskin around the lawn, whilst drugged up on cocaine, trying to decapitate one another.

At the end of the day, the markets still open tomorrow and the future looks very dark.

See you in the morning.

It was a day out of hell for some. For others, it was a day of genius. With about 35% of stocks higher, many dodged today’s bullets and rode into the weekend feeling brave, magnanimous, victorious. However, pride always come before the fall and the market is speaking in a different tongue.

It was a classic suckers today, whereby stocks gapped lower, screamed higher, then walked down into the bell. Come sunday night, as sure as I am sitting here, a great tragedy will be revealed and futures are going to cause heart attacks across america. Asian markets will be decapitated and it all ends badly.

That’s how I am feeling now, after witnessing today’s trade. Many of my colleagues are “feeling their oats”, buying stuff today like drunken sailors marooned on an island without food, yet replete with disease and agony. I fell into the trap this morning and bought more ANGI and AFOP. My cash position is about 11% and I wished it were much higher; but I lack the courage and the internal fortitude to sell it all now. I work best under stress conditions and need to feel the heat from the flames before I remove myself from the situation.

My prognosis is grim. My position is stable. The current condition of the patient is critical.

DEVELOPING…

I added to both, small bites, while eating protein laden foods.

You’re not going to enjoy today’s trade and you will certainly lament the opening trade in Asian on sunday night. Thankfully, you have the super bowl to serve as a distraction. In many ways, this is a very traditional decline, with stocks whooshing lower, unannounced, while treasuries and gold trade higher. Commodity driven currencies are smashed into the earth and the dollar and yen are safe havens.

The silver lining of it all is the reduction of rates and drop in gasoline prices.

However, let’s not get disillusioned. During all previous market calamities, these same characteristics were present. The tone of this market is very bad and I have to believe it means something, considering it coincides with the retirement of a certain Benjamin Shalom Bernanke.

Ben’s blunt smoking chairmanship has been a boon for investors. He’s been the single best catalyst to own stocks since 2009 and now he’s leaving. By the way, how does Greenspan get 18 years and Ben only 8? Some people believe Janet Yellen is going to tone down the Fed’s influence on markets, disassociating itself from the cocaine parties and such. What is that worth, percentage wise? 5, 10, 15%?

How does one begin to quantify?

This is what I know: today’s drop comes as a big surprise to all “normal” people. I was tricked into allocating funds to the market yesterday and regret it today, like many of you. I will not be fooled again and will reserve the 12% cash that I have left for “code red” prices.