I think it may have been sun-tzu that scolded me for holding "convictions". I agree that you can't hold inflexible opinions. Bull or bear, that is Clownish. However, everyone must identify a trading horizon, and then use all information at their disposal to determine their investment choices.
For me, my investment horizon is always 9-18 months, and I always want the long-term trend of the next highest degree (where I think things will be five years out) to coincide with my 9-18 month view. So, I knew things were overvalued in the late 1990s, but I played along anyway because the pieces weren't in place to make it go down. Now things aren't even undervalued, and the long-term trend is certainly down. Therefore, the only bets I will allow myself are bearish. Back a couple of months, I had a lot of profits and I was unsure about the 9-18 month prospects, so I stepped aside except for a core long-term short and hold. Now I am fairly sure of both the 9-18 month prospects and the five-year prospects for substantially lower stock prices. So I'm very close to releasing the hedges.
In this case, though, I'd rather be a little late than a little early. Middle-biting, as it were. It reduces risk to sell at the same price on the way back down - reduces the amount of time you're exposed, and allows you to gather more information in the mean time.
BC |
