I was curious how things would go at the start of the week.

So far not well…

So I decided to finish and return my positions to where they were, plus a little extra.

After hedging my positions last week by going inverse energy, I unhedged after the market shored up. worrying that the positions would prove money losers on a rebound into Monday.

As Monday has come and gone, I took up a smaller version of that trade today by selling out of WNR, raising my cash levels, and re-shorting ERX the 3x energy bull ETF.

The advantage to that trade is that I should have the ETFs decay on my side, as so many avidly pointed out while shorting similar products.

Oil is likely overpriced here. The middle east aside, supply does not seem to have been materially disrupted with the Jasmine Revolutions, and more importantly, I suspect the current elevated prices could easily slack line demand, sending the economy skidding. I’m picking up traces of hardship, above and beyond what can easily be absorbed by budgets.

Going into summer, I anticipate the price of oil to drop to at least $60 a barrel, unsupported by the middle classes cutting back hard. Don’t bother asking how I arrived at that number. I really just made it up, but it sounds good.

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You know, for getting my teeth kicked in this week, my portfolio does not look that bad right now. My losses were almost exclusively centered on the SLV trade, which was both monumental and bipolar. After getting out of that psychotic relationship, I find that the remainder of my positions are really doing just fine.

The REITs are still hoving near their highs, AWK has retraced from $20 but is still obviously running, and the others are holding firm. Even MGM has managed to avoid spiraling into a death knell.

Except for CCJ, but that was a small fry position anyways.

If you missed watching CCJ getting curb stomped, you missed out on a great show. It was rather remarkable, how quickly and visciously it got taken to the corner. I am suprised that the uranium miners are still being so thoroughly priced out of the game. Where does everyone think the nuclear plants are going to go?

Thankfully, I backed off the trade some time ago, taking profits and selling completely out of UEC (it was fortune at its finest, I would have thoroughly regretted not selling). Now, CCJ looks tempting, so maybe after things settle I’ll raise my stake.

Succinctly, what I’m trying to say is that, even though things are looking bleak, my positions were all so beaten down to begin with that I’m comfortable staying with just a small 5-15% cash position. I’ll complete the WNR trade sometime down the road, and sleep soundly at night, even if we should start to spiral into a double dip.

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I apologize if you watched the spectacle I made of myself today. I dropped my entire SLV position and then hedged on and nearly immediately thereafter, hedged off, my portfolio. It was a magnificent money losing tap dance, that I performed with such grace I can assure you.

The primary reason I dropped my SLV position was the state of the futures. They were being torn apart with such a spread that you could have taken delivery of a metal one month and sent it out the door the next, for a 10% gain. Not healthy, unless you believe it costs so much to hold the metal.

I didn’t think so either…

However, not even a few hours after I dropped SLV, the futures began to settle. They are calming down now, approaching a more reasonable state.

I do not know if I will jump back in and try to regain my lost coin.

I’m holding MGM, WNR, CCJ, BG, AEC, CLP, AWK, and physical silver.

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So Congress has called back the oil executives before their Mighty High-rise Desk of Deference to remind those greedy bastards of their place in the world. After all, the U.S. Government gives them some fucking table scrap tax credits. So why are gasoline prices at $4 a gallon?

Sweet. I cannot wait for the grand standing of our most desperate elected officials trying to score quick political points with people dumb enough to think this constitutes intelligent leadership, a.k.a. Independents.

Here’s a sweet idea. The oil executives should walk in and say something along the lines of “Hey, you’re right, take away the tax credits.” Nip this fucking thing in the butt right now, before it is permitted to become a penny show of cheap whores, like the kind your great-grandfather used to sneak into when he was fourteen.

I am in a very sour mood right now, so pardon me if I’m a little short. You see, I absolutely nailed this call on the dollar rally. I’m not going to take the time to link the post; just get your lazy ass up and start walking backwards until you find it.

Yet, I completely hosed myself, taking up this position in SLV thinking, “hey, 30% is the sizable correction I was waiting for.” Now I find myself blowing up my own wisdom with expedient decision making.

Apparently, you all will not be satisfied with such a drop. Silver must become so cheap that it will replace plastic as our go to material of choice. My children will suckle on silver pacifiers, because ones made from petroleum are “health hazards, and so damn expensive.”

I’m going to wait it out a little longer. Some part of me still believes I made the right move last week. For Christ’s sake, no action has even been taken to strengthen the currency yet! The dollar has really only rallied because literally no one believed in it. I can see us careening downward if actual steps were taken to shore up the dollar. Hell, maybe even if steps were taken to preserve it.

None of that has even happened yet. It’s just a looming possibility somewhere over the horizon.

I will abide a little longer, yes. But I don’t like the feeling in my stomach. No not at all…

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I should have taken my own warning a little more seriously, it seems.  The dollar is cutting through its opposition like a well made ginsu knife, or Damascan sword.  Meanwhile, thanks to an early and quick mobilization into the silver market, I find myself without a single real dollar to spare – precisely where I did not want to be.  Alas!

I added to my SLV position back above $36 (it’s printing below $35 as I type).  It seems that was also an imprudent decision.  I will refrain from moving too much more, so as to attempt to float on the quick sand.

I am already down more than 3% today, but am strangely unfazed by the whole affair.  If we continue to see a complete melt down of the entire market, perhaps I will hedge.  Or, maybe, I will just bleed red until the market bottoms.

I am not, after all, a fund of any kind.  I am only Cain Hammond Thaler, and I’ll not be held responsible if I should lose every cent I hold.  There is no one to withdrawal my managed money from under my jurisdiction.  It seems to me that the best thing to do right now is remain steadfast and dilute steadily with new money coming in, until I see a clearer path than what’s before us; the fruits of my labor can abate my condition yet.

To each their own friends.  Good luck to you; storms on the open Ocean are never navigated with complete confidence.  I’m holding fast, but I won’t belittle you if you should choose to try and exit.

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I ended the day up 1.88%.

Silver’s continued rebound was, interestingly enough, not even in the top three gaining positions in my portfolio today.  It barely outperformed AEC.

In ascending order, my biggest gains came from:

MGM: +1.84%

CLP: +2.16%

WNR: 3.15%

And the biggest gainer today in my portfolio is…

AWK: +3.27%

That’s right, a water utility company already paying me 4% a year in dividends was up more than any other position I own today.

Allow us to a take a trip together, down the hollowed corridors of memory.

The Next Things

In this post above, I distinctly detailed out my new rotation and succinctly tried to explain why I was interested in the places I was.

And actually, I better laid out the advantage of switching over to utilities at the beginning of the year, back when I was posting in the Peanut Gallery. 

Utilities Will Be The New Municipal Bonds

Although I was very specific about municipal debt being rolled over into the utility sector, I unintentionally hit the broader point then: money at risk needs somewhere to go.  I reiterated several times after then, utilities are cheap, for how stable they are.

Today, massive quantities of money found utilities, AWK included (I would say especially, it was a front runner).  Why do you suppose that is?

I’ll give you a hint; the answer has more to do with where you don’t want to put your money than where you do.

The recovery in silver and oil not withstanding, things are dangerous right now.  Silver is recovering because men oversold it without thinking.  But I will be out of SLV quickly, once it crosses back to fair value, somewhere north of $40.

It is still the time to be thinking about safe assets.  It is still the time to respect the U.S. dollar.

I’ll leave you with a thought:

AWK (1 Year)

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