All Cash and a Clear Mind
February 4th, 2006 by BWV
Last Monday, I liquidated all positions so that I could enjoy my last day of skiing and the 3-day road trip back to Kentucky without worrying about stock positions going awry. The risk/return of my timing seemed good at the time too..
After a post-FOMC mini rally on Wednesday, the wheels fell off on Thursday and Friday.
I won’t delve into the anecdotal evidence of recent over-enthusiasm (but fellow blogger Barry Ritholtz will). Still, I’ve definitely noticed a stench of greed in the market’s air recently.. as I discreetly “left the building.”
Of course one can always have done it better.. and hindsight is 20/20..
In the same few hours when I sold all my longs, I also covered my index short sales.. for 1-2% losses.. right before this recent selloff. I didn’t feel comfortable with any position going into a Tuesday that held an FOMC decision and Google earnings.
As I survey the market landscape today, I’m enjoying the mental clarity afforded by the “clean slate” status of my accounts.
Index charts suggest this is merely the beginning of a bigger, broader decline. I’m not sure I’d see that as clearly if I had a psycological bias due to pre-existing long positions.
I’ll be back before Monday with more concrete thoughts and trading ideas. While the past 3 months have been very upside-oriented, there are bound to be good trades on both sides of the market now. IBM is one of the top shorts on my radar right now. Check out its chart, and I’ll expound later.
Long 1 clear head
