This is very simple. I will lay out three scenarios that many of you find yourselves in, with possible courses of action:
1. Fully invested, long. This is a HORRENDOUS idea, no matter how cheap things look they can always get cheaper. I know many of you learned that lesson in 2008. If I were you, thank God I am not, I’d sell 25-50% of my longs immediately, putting 10% of the proceeds in one of the following: [[FXP]] , [[TZA]] , [[VXX]] or [[SKF]] .
2. More than 50% cash, 20% short, 30% equities. You are in a sweet spot, in my opinion. If anything, keep your positions monitored on a spreadsheet and cover shorts when the weighting gets out of whack. The weighting of the shorts will become oversized when they go your way. So, do yourself a favor and “reverse nibble,” by taking profits in increments.
3. 100% short. This is a very dangerous position to be in, especially since the government is explicit in its desire to see higher stock prices. If this is you, it’s important to remember 2009 and how gay you were for the past 18 months. Book the trade, get to cash and hedge your shorts with some longs.
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Donzo
Like overbought readings, it can take a day or two for bounce to come
Ta
Shorts are necessary if your portfolio is all long
1987…Black Monday…Deja Vu and stuff. Kaiser your grandparents weren’t even born yet!
What a call VXX turned out to be. Simply brilliant Watson!
The question is…how long does one hang on for?
if you view it as a hedge, there is no rush. Sell in pieces.
You guys are cooked. The stock market is pure folly!
1000% percent short and 10,000% long yellow metal and cheese puffs you austerity stricken shitpipes
Thankee Sire.
What are your thoughts on a gold trade. I have some silver exposure, but gold seems to have a mind of its own. I also feel both are highly manipulated…whatever…my point being that Gold was (is) seen as a safe haven.
TIA
Fly I like the way you think. We agree on something which is scary!!. What you have missing in this formula is what that 30% long should be?. My thought is as follows:
I would put that 30% long as follows:
10% Utilities (FPL is a good name here)
10% Healthcare (MRK, Wyeth, are good options)
5% Low Priced Stocks (Fidelity has a good mutual fund for this mix)
5% In a fund that gives me exposure to international stocks (I am thinking Brazil here)
Your 20% short definetly will be in a mix of ETFs ETNs or overbought technology stocks like BIDU, AMZN
TZA, FAZ, BGZ, EDZ, you pick
I would decrease my cash position to 35% and will buy 15% of that in metals such as Silver, Gold and/or Platinum
This would be me. I think a diversification like this should be rock solid for the tough times ahead.
So True….Cuz Right now the Shanghai Comp is sitting on the fence at ONE heck of a key support…Will their Govt help them? Will they Punish them for Their Greedy ways? Or will they just not care cuz they are eating Pop Corn and waiting in line at the World Expo? Either Way…it’s a coin flip…and IMHO, their market is as tired as ours so with a week of little important data next week I bet we could see consolidation, unless they do something stupid and announce the same Tax that Aussies want on commodities which they have been hinting around with……..anyway, like I said last night…choppy around 1110/1100 levels until we know for sure…
fwiw my weekly article is up, hope you don’t mind I post link http://www.stockpickr.com/members/problog/2202/
We are very close to a sharp bounce.
I like your weightings but I wouldn’t be chasing new shorts here
A bounce though would be a great place to load up
The best position of all right now is probably option 4
4. >80% cash
Nibbled some RDN like a rat in a foreclosed house.
This market is environmentally friendly; it’s going green.
Stocks are for asshats. I come here for the abuse.
You normally get abuse
Look who’s talking! LULZ!!
Mr. LeFly,
But isn’t the PPT oversold now?…Could be a good short squeeze Monday, IMO.
Dazed and confused
I’ve only been trading since August. In other words, I have no fucking clue what I’m doing. But I know better than to touch this. I’m out for now – 100% cash. I’m doing nothing but watching and learning…
Please come join us in the PPT Lolo (if you haven’t already) to get the support, and teaching. You learn a whole lot (that will help you up the road) when we are in the roughest water. Several of us are currently in all or almost all cash right now–I’m continually learning a whole lot from watching Fly and the very experienced traders in the PPT make their decisions and moves.
Watch for measures to be announced during the weekend in Europe. Could be the banking system gets even more easy money from this.
Indeud. Expect a “Weekend Surprize” from the coffin stuffers at the ECB. For extra-beardy action, maybe they could announce some kind of joint easing program with the Fed.
You can’t go long and you can’t go short. Hedged is the only way to be in this plaguehole of a market.
How do you feel about DRR??
We rnt at bottom yet… my hedge is a shitload of boring stuff like t vz mo cash etc. Redeploy when in my own head, anxiety gives wya to excitement over bargains. Not excited yet, not time to buy..
Shouldn’t one always be some variant of #2?
what happened to sqnm? their earnings improve and it drops 12%?
sqnm said they wouldn’t have a marketable product until 2013 or something. don’t take my word for it – i saw it on twitter…
The V.King wuz here for just a moment…hurry look he’s over th….ah he’s gone.
From here on in, the surprises will be negative ones.
The fact that everyone and his brother is NOT piling on to short this market is all the sell signal I need.
Bought more FXP today.
Fly, what do you make of TLT’s weakness? Just a daily gyration or a clue? Power to the VXX! Sold 1/2 myself and holding the rest. You still holding all your VXX?
new strategy –
im trading gold yo
Fly,
What do you think about buying the long bond or the dollar here?
NYSE dropped the ball yesterday and now has their shills out blaming the electronic exchanges.
Also, scumbags are spouting-off about how we need to reinstate the uptick rule (which will only screw the little guy.)
As always, CNBC and Bloomberg fail to air opposing viewpoints.
Fly, since financials and energy have been the leaders DOWN do you expect them to get the best BOUNCE when it comes?
Hence, should I hold C (just below my basis now) and hedge with SKF or sell it outright to add to cash (already @ 25%) with about 10% short via SRS and TZA already or just stand pat?