GET IN THE VICE!

Everyone with a series 7 east of the Marshall Islands has been looking for a pullback; because, well, they’re just looking for it. There is no specific near term catalyst that will stall the rally, short of the dollar rising for a few days. People just love to hate this market. As a result, they get the black flag planted in their red ink.

I know a lot of people who got caught leaning short today, attempting to play the early January swoon. See, I have a problem with going with the herd, which is why I elected to avoid getting sucked into the January bear bet. Lots of people are in it (the vice); and they shall feel the iron tightening around their pockets, until they wiggle loose.

At the end of the day, or beginning, you’re all a bunch of know-it-alls. You know everything and require little input from anyone else, because God himself is guiding your actions. One day you will awaken from your cocoon induced slumber and realize the mistakes you made were all preventable. You could have done better, yet you chose to bet against the guy in the fucking space rocket.

Does that make any sense to you? I mean, there are lots of people to bet against. It makes zero sense to bet against SAM (space alien magician), but you still do, nevertheless.

Today’s biggest winners are names with large short positions, like ATP Oil & Gas Corporation [[ATPG]] , Western Refining, Inc. [[WNR]] , Superior Well Services, Inc. [[SWSI]] and Patriot Coal Corporation [[PCX]] . With my money, I like Russian milk, via Wimm-Bill-Dann Foods OJSC (ADR) [[WBD]] and truck parts, via Cummins Inc. [[CMI]] . Moreover, I will outline my rationale behind CMI later on, maybe this evening.

I bought 10,000 Cummins Inc. [[CMI]] , north of $46.90 and 5,000 Wimm-Bill-Dann Foods OJSC (ADR) [[WBD]] , in the low $24.50’s.

Disclaimer: If you buy the above stocks because of this post, China will outlaw trucks and Russia will ban milk. And, you may lose money.

Some of you goat herders are short the market, awaiting a prolonged pullback to the March lows of 2009, which is EXACTLY why I bet against you and spit in your face. During the “BROKEN ROBOT” era of 2009 (late December), I thought about shorting stocks in early 2010, due to distant memories of getting hemlocked in 2004, by way of a dastardly fucked up January. However, that idea sort of drifted out to sea, like a pelican in a canoe, as I counted my money and drank my coffee.

Thanks to the invention of the single server coffee machine, more specifically THE KEURIG, I drink more coffee than God now. If I should awaken in the middle of the night and head downstairs for a beverage, it is coffee that shall be the chosen liquid for my person. Do you understand what I am saying to you, caveman? I declare the share price of Green Mountain Coffee Roasters Inc. [[GMCR]] to be a bit extended here and pray to the Gods for a pullback. If the stock pulls back to $75 or lower, I shall empty my bank accounts and thrust into the stock, yet again.

Generally speaking, my holdings are off to “le fucking races” today, led by gains in POSCO (ADR) [[PKX]] , CGG Veritas (ADR) [[CGV]] , Equinix, Inc. [[EQIX]] , Flowserve Corporation [[FLS]] , SandRidge Energy Inc. [[SD]] , Cummins Inc. [[CMI]] , [[CBD]] and U.S. Global Investors, Inc. [[GROW]] .

Do not fear me because I am better than you. Fear me because I shall punch your mustache off with such vengeance and veracity; your entire face will cave in from the g-force.

Top picks: whatever I think of next.

Instead of offering cogent stock advice this evening, I will outline a time tested strategy that will insure market diversification and trading discipline, with regards to adding to or reducing positions.

Before you sit down and screen for ideas, understand what the 8 principal sectors of the market and what percentage of your money should be invested in them. If you are one of those guys who refuses to invest in “banks” or “oils” due to immediate adverse market conditions, you are missing the point. Being diversified is about participating in today’s hottest stocks and biggest losers. Unless you are a Godly market timer, being diversified is the way to go, mainly because it will offer dumb fuckers peace and prosperity (wholly dependent on the quality of the stock picks of course).

At any rate, let me offer an example of sector diversification, before your heads explode from confusion.

Basic Materials: 15%

Consumer Goods: 10%

Financial: 10%

Healthcare: 10%

Industrial Goods: 15%

Service: 10%

Technology: 15%

Utilities: 5%

Cash: 10%

Okay, now that the weighting have been established (hopefully after careful consideration), it’s time to select stocks. If your bullshit account at E-trade is low 6 figs, you should keep the number of stocks per group under 3. So, essentially, this means you will select a maximum of 16 stocks, and no less than 8. In an effort to avoid getting into a philosophical debate over: “what’s worse, rape or bad stocks?” I will select 16 random names, irrespective of quality.

Basic Materials: Endeavour International Corporation [[END]] , TETRA Technologies, Inc. [[TTI]]

Consumer Goods: Green Mountain Coffee Roasters Inc. [[GMCR]] , Skechers USA, Inc. [[SKX]]

Financial: Goldman Sachs Group, Inc. [[GS]] , KKR Financial Holdings LLC [[KFN]]

Healthcare: Wyeth [[WYE]] , Perrigo Company [[PRGO]]

Industrial Goods: Raytheon Company [[RTN]] , Gafisa SA (ADR) [[GFA]]

Services: The Finish Line, Inc. [[FINL]] , Bally Technologies Inc. [[BYI]]

Technology: Intersil Corporation [[ISIL]] , Texas Instruments Incorporated [[TXN]]

Utilities: Enersis S.A. (ADR) [[ENI]] , ONEOK, Inc. [[OKE]]

Okay, now you are officially diversified, at least amongst equities. Most of you should have some fixed income exposure. However, that would send many of you to an early sleep; so I’ll keep it straight gangster, 100% equities.

Once you’ve committed to this strategy, it’s important to stick with it. This means: avoid cashing in on winners abruptly, and sticking with losers—despite the insatiable desire to cut them loose and move on. Don’t get me wrong, if something materially changes in a name, you need to sell it and move the funds into a better name. However, if a stock is going down, only due to market weakness, real men buy said names on dips and build up positions, instead of blowing them out. When I used to adhere to the program, I’d review my weightings on a quarterly basis. Let’s say GMCR and SKX shot to the moon, sending my Consumer Goods exposure to 20%, I would force myself to sell off enough of GMCR or SKX, in order to get the weighting back in line, around 10%. On the other hand, if GS and KFN tanked, sending my financial weighting down to 5%, I’d force myself to buy more GS or KFN, to get the weighting back to 10%. The key to this strategy is having good weightings and stellar stocks picks. Unfortunately, many of you will fall short, in a most atrocious manner, attempting to invest like Le Fly.

Finally, there will be times when the market is not worth investing in, bringing the topic of cash reserves to the forefront. Generally speaking, one should have at least 5-10% of cash on hand, in order to buy severe dips or participate in short term trading opportunities. However, every once in awhile, like in 2008, the market is simply “too gay to buy”. Your cash reserves can be used to short sell stocks or invest in levered ETF’s (providing you are into asshole products of course). Or, you can simply bulk up on cash, just to reduce beta during market declines, in an attempt to time peaks and valleys.

Either way you slice it, investing is an art, not a science. There are thousands of ways to skin a cat; this is just one of them.

“Let the banks die and their employees eat hot lead, for the good of the country and banking system.”

“The fastest way to lasting peace is through the demolition of entire nations in our way.”

“What Wall Street needs is less bailouts and more bankruptcies.”

“In the future, your local grocery store will only accept gold bars. Your money is as good as worthless.”

“OMG, I hate CNBC. Did you see Cramer last night? What a douche.”

“The housing market will never rebound. Ever.”

“This country will never produce jobs because we sent them all to China. Enjoy your day job at Burger King.”

“We need to spend a trillion a year on the military because China is going to invade Oregon one day.”

“Global warming is real. Therefore, we must stop drilling for oil.”

“Our current system of healthcare is perfect. Why mess with perfection?”

“I am a fat slob; therefore, I am on the Atkins diet.”

“Get out there and vote. It’s your constitutional right. Make a difference, by way of electing a republican or democrat!”

“Bush did 9/11.”

If you believe any of the crap written above, then you are “going full retard” in 2010. Congrats. Feel free to add some of your own quotes in the comments section. They must exemplify the stupidity of man, while entertaining me. God speed.