The call-put action is still really aggressive on both sides of the S&P and the tea-leaf reading (my own included) is off the fucking charts and then right back on them again because everyone’s grasping at straws. This is where Nassim Taleb’s point that the guy with 50 indicators really doesn’t have better predictions than the guy with 10 but feels more confident is the guy who blows up. Which is me, right now.
I was pretty surprised we didn’t have the “market direction bloodbath” I anticipated on Friday. Ie, I was fucking wrong. Now that we’ve all irresponsibly carried it over to a three day weekend we could see days or weeks of more positioning. Or the whole fucking thing could collapse or break out. Whatever, who fucking knows. I was and still am pretty bearish long term, but the right way to play that (I think) is to have 120-130 January (yes, January, assholes, I like padding!) 2013 SPY puts for 5%-10% of the total portfolio, buying up to 10% on bullish-headfakes and selling off down to 5% based on market moves down. Which is not what I did…what I did was put 50% into MONTHLY PUTS! Jesus Christ, what the fuck was I huffing!
The point is that playing Nostradamus has cost me money in the past, and I fell victim to that messianic impulse last week. Rather than say “slightly adjusting my hedge towards the downside” I got all in on the idea of a double downturn on the market, and kept accumulating. Even if I haul away mad loot off the tears of others this week, I fucked my portfolio the fuck up and showed the risk management profile of a retarded chimp who thinks he’s Jesus. I am 2% in cash in this market (why, oh god why?) and each “fuck” in this post represents approximately 10% of my portfolio that’s in some seriously fucking stupid and unstable shit.
The smart money is 95% cash right now and at this point anyone not willing to consider a 25% downside on stocks and a 100% downside on puts/calls in like, the next two weeks should be 100%. I’m at 2% cash as of writing and 70% puts. I need a snide teenager who shoots down everything indiscriminately to just act as a tiny speed bump because left to my own devices I apparently enjoy sticking my entire body as far into the abyss as it will go.
