The Deleveraging Process Has Begun

I’m not here to amuse you, jackass. I never have been, nor will be. Whether you read the site or not is immaterial to me, not so much for the other top hatted folks who shovel coal into the iBC furnaces. I want to be very specific when I say, 2013 is the most important year of my career. I’ve been building up to this point for a long, long time. I was supposed to launch a fund several years ago, but procrastinated, then delayed some more.

Following 2011 and 2012, with returns in the mid single digits, I find myself less than enthused with my market approach and have subsequently put my big plans on hold. Well here I am, off to another gangbuster year, up 20% so far, trying to hold it together. Pardon me if I place my clown hat, gloves and scarf on the side, as I attempt to restore a sense of normalcy into The House of Fly. If you happened to be anywhere within 100 yards of me, I’d break your jaw bones into 10,000 pieces with a clawhammer. If, however, you were at 101 yards, I’d simply snark at you and warn you to “steer clear” with my faux southern accent.

I sold HLF because Ackman convinced the NCL to take a negative position on HLF, requesting the FTC open an investigation. While I did enjoy the specter of causing him pain, then anguish, via a “barbell’d” approach long HLF, short JCP, I cannot remain long a stock that might undergo a very negative news event. I wish Icahn the best and I am sure he will win in the end.

With the sale and the bulking up on my AG short, I am now in a net 95% long position, down from a record 140%. I am, however, looking at a series of banks trading below 1x book for possible purchase and might allocate funds there soon. My other big positions are all subject to sale, irrespective of what my core thesis might be.

2013 has to stick. If I cannot pull off 30-50% gains in 2013, I am underserving of the title of Blogfather and will resign from the post, vacating it until a new Blogfather is chosen, just like the new Pope.

I sold out of my HLF position for a 4% loss. I have no interest in sticking around for a possible FTC investigation. You’re going it alone Carl.

10,000 apologies.

Okay, I can’t quite put my finger on why the market goes up every single day. But I do know a few things that can help you immensely.

1. Don’t buy laggards. Only donut holes makers buy stocks that no one else wants.

2. Short stocks that are laggards, because betting against donut hole makers is a high probability bet.

I just know the market will top out when I least expect it. Typically, the market tops out when I am at my bravest, leveraged into low quality offal securities. The reason for that is simple: near tops, quality stocks are richly valued, leaving only the piker stocks, value traps, left to be bargained for. In the past, I’d eat them up whole, laughing all the way to the bank like a deranged idiot.

When the market tops, those stocks will fall 10% in a day, leaving you exposed to destruction. This is not likely to happen, it will happen. I can guarantee that.

Your question must be: “Dear Fly, so then what should a small pleb, such as myself, partake in if the markets go up everyday?”

Very good question.

You should practice discretion and asset allocation.

Here is what my holdings looks like, from a skeletal standpoint.

Position A: 20%
Position B: 20%
Position C: 15%
Position D: 15%
Position E: 10%
Position F: 10%
Position G: 5%
Position H: 5%

That is 8 positions totaling 100% of assets. You don’t need to follow this allocation to the tee. But I’ve found having fewer positions, smartly placed, is better than having 20 5% positions. Most large companies trade in a convoy, all up, all down. It’s your job to exploit valuations and outperform the peer group through smart picks. Most of the time, I edge into a 20% position 5% at a time, giving me a margin of error to average in.

When it comes time to go to cash, you will find an allocation like this to be extremely accommodative to your needs.

I don’t know how long this rally is going to last. My guess it ends in mid- April, trades around violently until September, then resumes upward into the new year. Right now I’m a giant elephant stomping out tigers and lions, but afraid of the mice running about.

I added to my AG short.

STOP TRADING!

I’d like to take this intermission in market activity to offer some incredible marriage tips. As some of you know, I’ve passed along excellent jewels in the past, helping those of you with retarded marriages enjoy longevity. Today’s subject pertains to discourse and how to allow your wife to “feel appreciated” for her labor.

Borrowing a phrase from a gentleman of the cinema, all of you should address your wives as “friendo.” It has a rather nice ring to it, expressing congeniality, in a whimsically playful way. More often than not, your mate will offer sexual advances for using this word properly.

Let me offer a few examples.

(puffs from cigar) “Why don’t you get me another glass of scotch (puffs cigar three times and exhales donuts into the air) friendo.”

(excited) “Good news, friendo, I am going out golfing with the boys.”

(tosses a steak onto the counter) Cook that for me, would you, (pause) friendo.”

“Please, refrain from talking to me during market hours (takes sip of wine from glass) friendo.”

“Shall we meet each other say around noon for a little afternoon sex, friendo?”

(pointing to the television) Do you see this, friendo? Don’t change the channel, as I need to relive myself in the lavatory this instant.”

“Please iron my shirt (extra pause) friendo.”

You’re welcome.

To borrow a phrase from Mrs. Fly, “I just had a vision” that I lost all of my profits after gloating about them, clad in a white robe, listening to gangster rap music–choking on the same incense that has cloaked my locale for decades. The scene was as real as the hand in front of my face.

There I was talking to myself, watching the markets scream lower. All of my gains vanished like heterosexuality in California. I laughed, then cried, then laughed some more. Is it possible that my 20% gains can vanish again, just like the past two years?

Absolutely.

Not only is it possible, but given my recent track record, it is likely to happen.

I AM HEXED BY POWERFUL WARLOCKS, WHO ARE INTENT IN DESTROYING ME.

I will punch said warlocks with powerful uppercuts to the scrotum, if given the opportunity.

I take these “visions” very seriously, as they’ve guided me through life, helping me dodge near death experiences and absolute ruin on several occasions–permitting me to nuclear bomb my enemies by surprise numerous times. I am going to expedite my exit from the markets; however, reserving the right to exercise my fist punching skills for special situations, or partaking in revenge, malicious trades to further my financial standing.

FORGET ABOUT GOING ON VACATION OR ACTING LIKE A GOD DAMNED FOOL AT A LUXURY AUTOMOBILE OUTLET. THERE ISN’T ANY TIME IN THE DAY THAT AFFORDS ME SUCH ECCENTRICITIES. I, “THE FLY”, AM BUSY ALL DAY INSERTING ORDERS, WITH PROLIXITY, INTO MY MACHINE, WHICH THEN PURCHASES SHARES OF PUBLICLY TRADED COMPANIES FOR ME AT DISCOUNTED PRICES, OF WHICH I SELL– AT A TIME TO BE DETERMINED– BY ASTROLOGICAL MEANS– FOR PROFIT, AT MUCH HIGHER, ELEVATED, PRICES–FOR THE BENEFIT AND ENRICHMENT OF THE HOUSE OF FLY (god damn it that was good).

WHILE YOU PARTAKE IN HOMOSEXUAL EXCHANGES AT YOUR LOCAL GOLF COURSE AKA “THE OLD MAN MUSEUM”, “THE FLY” IS BANKING COIN, LISTENING TO AFRICAN JUNGLE MUSIC, STARING AT THE SPEARS HANGING ABOVE HIS MANTLE.

AS YOU EAT CHEESE AND BREAD, EVER-SO-GENTLY, DIPPING INTO A SMALL VAT OF OLIVED OIL, “THE FLY” IS MOVING AMONGST THE SHADOWS, ARMED WITH KNIVES AND TNT, LIT FUSES, IN SEARCH OF HIS PREY.

CONSIDER YOURSELF SOMEWHAT FORTUNATE TO BE ALIVE DURING THE ERA OF “THE FLY’S” INVESTING RENAISSANCE. YOU SHALL BE ABLE TO TELL THE GREAT GRANDCHILDREN–JUST PRIOR TO YOUR DEATH– OF THIS ELEGANT PERIOD OF INVESTMENT SUPREMACY, MOST APTLY DEMONSTRATED FOR THE ENTIRE UNIVERSE, HERE, AT iBankCoin.com.

Good Day.

I just want you to know that when you see me buy micro-cap stocks it’s always a very small investment. Today I bought 20,000 CRDS at around $1.90. If the stock gets cut in half, I am prepared to lose 50%. We are in the late stages of the melt up and these are the stocks that can make you quick money. Granted, there is nothing honorable about selling CLIR for a one day profit of 36%. But it’s fun to do, nonetheless.

My short positions in AG and JCP went higher today. They are both 3% positions and do not warrant immediate attention. It is my belief that both will trade materially lower and I don’t expect that to happen overnight. My other short, CCL, looks like hell–ready for a leg lower.

It was a good close, a solid bull market surge into the bell. By my calculations, I have approximately 3 weeks left to enjoy this run. After that I am going to a large cash position. In the meantime, I intend to dwell in the gutter, with snipes, parlaying in and out (no sashay) of vagrant, vagabond securities with the explicit intention of realizing short term profits.

I bought a small position in CRDS.

Pure gambling, nothing more.

My exit on CLIR was sublime. Truth be told, it wasn’t a very big position, just 30,000 shares. But I made more than $50k overnight, so I can’t complain. It’s true, The Devil is positioning into CALL. But be warned, the law of averages catches up to us all. After seeing both PAMT and CLIR go haywire, I am tempted to go all in on CALL. But I am reminded of all of the times when hubris nearly destroyed me, so the position shall remain small– at around 7% of assets.

My other positions are not working today, with a general weakness foreshadowing what should be considered a terrific bull market.

I am waiting for BZH, USG, HLF, WNC and RAS to move higher. Until then, I am biding my time, looking for the next deal.