Wednesday, April 4, 2007
Copper approaching 61.8% Retracement
Let's see if it gets to 3.30. Overnight trading is around 3.00, albeit volume is very thin on globex.
Monday, April 2, 2007
Monday, March 26, 2007
Difference Between Shorting Futures and Shorting Stocks
When you short futures, essentially you have to watch your ass all the time, as you are always one eye-bat away from getting creamed. When you short stocks, you have great leeway to scale into more position.
Shorting futures means betting w/ leverage. That can play with you mind and accentuate the fear and greed.
I don't recommend it.
On the other hand, I think you are more likely to make more shorting the financials in 2007 than being long anything else. I consider myself market-neutral -- I am long gold mining stocks, but short regional banks with heavy funky mortgage concentrations.
Not advice, of course. Just opinion.
Shorting futures means betting w/ leverage. That can play with you mind and accentuate the fear and greed.
I don't recommend it.
On the other hand, I think you are more likely to make more shorting the financials in 2007 than being long anything else. I consider myself market-neutral -- I am long gold mining stocks, but short regional banks with heavy funky mortgage concentrations.
Not advice, of course. Just opinion.
Sunday, March 25, 2007
Shorting the Market
This is a recent email I sent to Bill Fleckenstein's Ask Fleck with regard to shorting:
"Bill, I have seen quite a few emails to you lately lamenting the fact that their shorts are not working in the face of a couple days' rally. My guess is that their short positions are too big relative to the size of their portfolios, hence are creating anxiety in the face of only a couple days of market rallies.In my opinion, either they need to constantly watch their large short positions miniute by minute and "dance around" (to use your phrase) it if necessary, or, if they want to follow your opinion (not advice, of course) as an investor and not short-timer the market, then they need to keep their position size down to a level they can sleep at night and be patient and listen to how the market "talk" to them, and "talk back" via stop losses. People who read Mamis' "When to Sell" know what I'm talking about.
Case in point, I started shorting NFI, NEW and LEND in modest sizes in spring of 2006 and took lots of small losses along the way, and I frequently re-entered my shorts at a lower price. Call it "risk management" if you want. In other words, I was "wrong" throughout 2006 on the subprimes. But I was never in a position where a wrong move by the stocks (as it frequently happens with these "fantasy" stocks) would mortally damage my portfolio. As you know, patience was paid off starting in February: Six weeks' of sudden favorable (i.e., doown) movement more than made up for the small losses and resulted in huge gains for my portfolio.
But that's just how market works: it does not do your bidding at _your_ timetable. For those interested, Jonathan Hoenig at Smartmoney.com also wrote quite a few articles about position sizing. His archived artcles at the website are free. But a lot of it is simply common sense and keep your own greed and fear under control. "
"Bill, I have seen quite a few emails to you lately lamenting the fact that their shorts are not working in the face of a couple days' rally. My guess is that their short positions are too big relative to the size of their portfolios, hence are creating anxiety in the face of only a couple days of market rallies.In my opinion, either they need to constantly watch their large short positions miniute by minute and "dance around" (to use your phrase) it if necessary, or, if they want to follow your opinion (not advice, of course) as an investor and not short-timer the market, then they need to keep their position size down to a level they can sleep at night and be patient and listen to how the market "talk" to them, and "talk back" via stop losses. People who read Mamis' "When to Sell" know what I'm talking about.
Case in point, I started shorting NFI, NEW and LEND in modest sizes in spring of 2006 and took lots of small losses along the way, and I frequently re-entered my shorts at a lower price. Call it "risk management" if you want. In other words, I was "wrong" throughout 2006 on the subprimes. But I was never in a position where a wrong move by the stocks (as it frequently happens with these "fantasy" stocks) would mortally damage my portfolio. As you know, patience was paid off starting in February: Six weeks' of sudden favorable (i.e., doown) movement more than made up for the small losses and resulted in huge gains for my portfolio.
But that's just how market works: it does not do your bidding at _your_ timetable. For those interested, Jonathan Hoenig at Smartmoney.com also wrote quite a few articles about position sizing. His archived artcles at the website are free. But a lot of it is simply common sense and keep your own greed and fear under control. "
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