Many of you query “hey Fly, if the market is so bad, why don’t you short stocks? (heavy Brooklyn accent)”
Before I answer your question, let me just re-warn you of retardation taking place in the Empire of Accounting Fraud: China. Met coal prices are plunging and the global growth story is in jeopardy. Very soon, you will be tempted to own stocks with low multiples. Moreover, you will feel a certain sense of instant gratification upon short term runs in these commodity names. Before you know it, BAM, the homo-hammer of certain death and destruction will crack your skeleton in half.
Look at ANR, ACI, CLF, AKS and X– all very attractive no? Those stocks can easily lift 20% from current levels, or continue their fucked up trip to hell and drop by another 50%.
Right now, I have a net 15% short position. My cash position is around 70% because we are very oversold. I am a firm believer in the “rubber band” effect and have seen markets run hard in the most arduous of circumstances. All we need is one positive headline and this market is going to decapitate all of the newly minted bearshitters. I am not ruling out adding to short positions; but for now, I am purposely opting for the safer route via cash.
My original intention was to hold cash until the market got hammered, in order to step in and buy names. However, now I am starting to think it makes greater sense to wait for a rally and sell it short. We are in a very difficult market and selling short isn’t for the faint of heart. I do believe there will be a run on a number of hedge funds who are long commodity names, which is why they are getting hit the hardest.
In closing, I cannot justify buying stocks in size until the S&P touches down below 1,000.If you enjoy the content at iBankCoin, please follow us on Twitter