I want to address the rookie/punk trader, who is fully margined out in stupid commodity stocks, waiting for the market to resume its uptrend. Mind you, this is the same guy who chided “The Fly” for being defensive, with stupid comments and inane financial advice. Yet, here I am attempting to help him out now. My kindness does not have boundaries.
Okay, so here goes.
Don’t get excited about the riots in Greece. They are Greek and have nothing better to do. However, watch for the sovereign debt crisis to snowball through Europe, effectively stealing the hearts and minds of investors. In my estimation, until this is put to the back burner, this is a DO NOT BUY market. While it’s true, I’ve been adding to my Goldman Sachs Group, Inc. [[GS]] position. It’s also true that I have like a gagillion dollars to allocate to such investments. For the average loser, such as yourself, you cannot afford to make mistakes, since it will wipe you the fuck out and send you to the homeless shelter for soup and shit.
If you are 100% long, sell immediately to lower the boom. Effective downside hedges are [[VXX]] , [[SKF]] , [[TZA]] and [[FXP]] . Normally, I do not condone purchase of 2-3x ETF fuckery. However, in a rising volatility environment, levered ETF’s do very well, especially if you can catch a nice crash or two.
With my money, I intend to add to my [[VXX]] position and suspend any buy orders I had in mind, due to my belief that this crisis is still in its early stages. When the bounce comes, use it to lighten up.
My target cash position is 50%. Right now, I am about 25% cash, 13% [[VXX]] .
UPDATE: I sold out of Cytec Industries Inc. [[CYT]] , Southwestern Energy Company [[SWN]] , Johnson Controls, Inc. [[JCI]] , The AES Corporation [[AES]] and Newpark Resources, Inc. [[NR]] . My cash is rising, indeud.
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