Friday, September 05, 2008
The video is from yesterday afternoon from the Waipi'o Valley (yes it looks similar to the Pololu video from the other day).
Yesterday was nasty for the market. There were also a couple of comments left on the blog that I think belied some sort of emotion presumably caused by the market action of late. The reader was not happy with something I wrote. While I am not exactly sure how I ticked him off he seems to think that the deleveraging that is underway will mean something much worse than a normal bear market (please keep in mind I am trying to read between his lines) and I think he thinks I am not getting what is happening.
This is all pretty simple in a way. It will either be worse than normal or it won't. But the financial mess is now more than a year old, more like a year and a half old. I have been writing about having a defensive stance for over a year now. Plenty of other bloggers have been opining about the bear market we are now in for many months as well.
I said in a post on December 13 that I thought a bear market had started and I don't think I was alone back then. In chronicling the bear market I have used the term feel good rally 19 times during this calendar year (not including videos). Plenty of other bloggers have talked about bear market or sucker's rally and bear market/sucker's/feel good rallies all give way to more declines. This is all normal stuff that requires no analytical acumen whatsoever. Additionally, people always forget how scary past events were and always believe this time is worse than the others.
At this point this is a very old story. Getting upset after 18 months of lead time...where ya been? If you are going to manage your own portfolio you need to think ahead. Getting upset now implies no plan of action having been implemented, no plan for defense and no forward looking thought.
If you think this time is different, the bear market market will be worse than normal, then you should have taken action months ago which would rationally head off being upset at the pass.
I have disclosed my actions and positioning many times in the last year; quite a bit more cash than normal and a position in SDS. This has been the case for about 13 months. The big macro has been the goal of missing a big chunk of down a lot. If the market keeps going down the size of the SDS should grow relative to the rest of the portfolio thus creating a bigger hedge on the way down. You can check the end of quarter videos if you are curious about the result.
I am still in the normal bear market camp which would be about 30% down from the peak; we are now 20% down. Optimistically speaking I think the market could bottom in Q1 2009 but I will begin to reequitize when the SPX goes back above its 200 DMA. I don't really care if that happens next month or two years from now. As a quick note equities will likely turn up for real well before economic fundamentals turn up.
You can leave all the emotional comments on blogs that you want but this bear market, like many others rolled over slowly giving plenty of time to implement some sort of defensive action. Hopefully you have heeded the textbook nature of how this bear has been unfolding (many bloggers have written about this including me) and you did what you had to (even if that means no trades) to avoid getting upset.
Now onto that jobs number.