Today Is Going To Sting

I’m less than pleased with my recent performance. I’ve succeeded in losing money six ways from sideways, in this asshole Jitterbugging I’ve been doing of late. Today should prove no different, looking at the oil futures.

ERX traded at $90 not too long ago; and if this correction should rebound too sharply, I will be bitch slapped upside the head with a tire iron.

I can only hope that the other garbage in my collection manages to keep up with the radioactive ETF I’ve decided to load up on. The last two days have been acceptable, with me up, but that could change.

This correction has been agonizing, and I don’t believe I’m up at all for this year. My singular hope could come from silver, if it rebounds to $50, taking my precious physical with it. However, short of that, if these REITs don’t start taking off soon, this year could be a red mark and what has thus far been a two year blitzed marathon of joyous wonder.

God willing, this market will make up its mind, so that this party can keep on dancing.

If you missed the news yesterday, American Water Works Company announced a massive trade of assets with Aqua American, ceding their Texas operations in exchange for increased exposure to Missouri.

Through their subsidiary, Missouri American Water, they acquired 11 water systems and 59 wastewater systems, a deal valued at roughly $3 million. By consolidating their assets, they’re hoping to lower their administrative costs by also being able to consolidate their staff into a smaller area.

Despite the consolidation, AWK maintains presence in more than 30 states, hardly making it a centralized operation.

Needless to say, I am pleased with the company. This sort of strategy almost always brightens my day; the management of AWK has been working hard to open up value and take full advantage of their existing structure. I don’t know if this move will significantly improve earnings, but it definitely helps and shows the men and women in charge of AWK to be intelligent and willing to continuously improve the business that has been entrusted to them.

Combine that with my own positive outlook on utilities at the moment, and I’m glad I own AWK.

Elsewhere, I continue to be up for the day (about ¾ of a percent, at the moment) despite my ERX hedge jackknifing higher. I will hold this rally with suspicion until I have better reason to trust it. I wish to directly see where the currency is going before I’m willing to relieve myself of this small, but questionable, cash position.

As I sit here in my office, running my fingertips gently across the finished granite surface of my desk and staring intently into my reflection as it pierces my gaze from the mirror across the room, I also feel a deep sense of calm about where I am in the world.

Aside from the twisting in my neck that is permitting me this angle, everything about where I am seems rather straightforward. I am back on the course I set myself upon in February. The only difference is now I am hedged a further magnitude, short energy from the highest levels prices, amongst them oil and gas, have been in three years.

And further, I am up for the day about a third of a percent, setting out from my most secured positions; real estate, utilities, and agriculture, with the gentle additions of beaten down names and cash.

I am at ease now, here in my office on this floor of mine. Whether the whole planet should come to an end, I will not be panicked when it does.

There is too much uncertainty. Until now, the direction has been clear, but now that direction hinges on the actions of some of the most unpredictable and untrustworthy men and women the human race has ever known.

What course will they take?

Until that is known, all of global finance is in the balance, and I do not care to press on such bipolar outcomes. Not until specific decisions have been made; decisions that will give current to future and create a polar outcome; will I be committing to an end.

And until then, my friends, you can expect me to remain tranquil and still up here on these stories of 9.

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.

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.

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.