Thursday, February 28, 2013

Keep Moving

The market are making a slog of it at 1500.  Month end, with Bernanke speaking on asset sales reassured the markets of panic free trading.  As we see the earnings reports wind down, will we see a domination of fear driven headlines like we did in 2011? Or will we see a continued rise in stocks all year like 2012?

I closed off my GOOG, MERU, ATVI longs into the strength and shorted AMZN, LVS.  My GPOR short from yesterday is already ripping my face off, spiking 9% higher, probably my worst time position in the past 6 months.

Interesting article - probably looks towards a favourable outcome on short term momentum rather than medium term price reversion.

Interesting allocations in multi asset ETFs.

Consumer spending is fading..

Markets are still rising, losing momentum, but everyone is bullish.  This is definitely the toxic mix.  The tops I've seen in the past 5 years take a few weeks to develop, and by the time the move happens, it's really hard to get defensive. Preemptive defense it the only psychologically sustainable way you can play market corrections.  It's very, very hard to play a reactionary style of asset management on the downside - this is akin to playing 12 tables of poker online whilst taking blunts on the side.  

However, if you manage a portfolio, you've got an objective: to get total returns, and to beat a benchmark (so you have someone else to berate, or blame if things go wrong).  This mandate of returns, forces our hands to be in the markets most of the days, and any whimsical "let's liquidate it all!!!" will make you donkey 9/10 times and the 1 time you are right, it will not make up for all the losses.  Better to stay long with some shorts trailing, preferably the shorts with high PE's and cyclical earnings.

“In chess we have the obligation to move; there is no option to skip a turn if you can’t identify a direction that suits you. One of the great challenges of the game is how to make progress when there are no obvious moves, when action is required, not reaction." - Kasparov