It's pretty radical how much my portfolio has changed over the last month.
I don't expect this rally to last and so I put on sizable shorts and hedges today (into the weakness) going from 25% net exposure to 7% in a day. I could change my mind tomorrow in a second as I think there's a good chance that I am too early with putting on this hedge and perhaps the S&P rebounds 5% from here before breaking down again. If I'm right however, and it was the correct call to put on these hedges, then I think it will breakdown swiftly with a 2-3% day tomorrow or next week.
We'll see. This is all a parlor game. The real investing is in figuring out which positions I want to own for the next few years (aka core positions). The hedges are just a way to try to preserve capital in the event of a market collapse where all positions, even cheap stocks, get crushed.
My core positions are currently DCIX / CA / SWY / WFC.
That said, from an economics perspective the market is eagerly anticipating August nonfarm payrolls and unemployment announcements tomorrow morning. I think the clues suggest that it's not going to be good. I guess the first clue is how many companies increased their hiring in August when the Country was facing a default and was downgraded? The second clue is that Obama is giving a speech on jobs today. He probably already knows the jobs figures that will be reported tomorrow, so I'd imagine, this speech is probably timed with a weak figure. Or why else would he make a speech? The third clue is that Obama picked Alan Krueger, to lead the council of Economic Advisors earlier this week. According to the Nytimes, Mr. Krueger is known for his "studies of labor markets."
As I said, this is all a parlor game. I'll take off my significant hedges in the blink of an eye if I think the market is going to keep this rally going.
No comments:
Post a Comment