Hello Netwit and fellow crew, the storm, while nasty, was not unexpected, not especially powerful and thankfully was short in duration (compared to the 120 day rising market). The boat was not damaged (especially in view of gains embedded in the portfolio). This past week was not the tsunami. I think most here would agree that 2000 would be more volatile than usual. I can stand this type of weather. What I do not deal well with is the 1994 drip drip drip Chinese water torture market.
I had to think about your question ?What made you get out when you did??
I had reasons, as listed below, but the timing was pure chance. If not, I would have gone short instead of just selling.
1. I was worried (if not worried, then I wasn?t betting enough).
2. I believe the market is frothy, with hedge funds and my mother playing the same tech stocks. All signs of froth present, look around.
3. The tax rules in the US for onshore and offshore hedge funds, mutual funds and frequent traders are different than those applied to regular individual investors. Many have incentives to sell.
4. My cynicism tells me that the playing field is not level. The bonus check heavy Wall Street types will want to buy into the market, but not before they drop the level a bit.
5. Given the many issues (trade deficit, interest rate, hot money, day-trading, Instinet retail after-hour trading, Japan recovery, savings level, valuation, election, IPO lockup expiration, etc etc) I believe the market will be especially volatile this year; and
6. I was afraid that I would not be affective in taking full advantage of the volatility in equity market if I was loaded down with equity already. I would make mistakes. I do not mind flying at 60,000 km per hour one meter off the ground, through the forest, but not while carrying oversized and overweight luggage.
7. To take advantage of the volatility, I need to concentrate on multiple markets across several time zones, while travelling most of my time (much like tuning the car radio, putting on a sweater, hands off the wheel, while the wife has her foot on the gas pedal), thus
8. I had to cut the number of shares I concentrate on, else I will be overwhelmed by volume of information. I would also get physically sick from lack of life (my dreams were getting pretty vivid, in 265m color, with dynamic theatre surround sound ? much like wearing Sony I-glass goggle and playing Quake II ? causing motion sickness).
I did not abandon my favorite 9984, as I believe in the story of Son. If I had held on to the rest of my shares, the temptation to take more profit out of 9984 would be difficult to control, as images of Maui flicker and fade on the screen.
I will rebuild some of my now severely depleted position and end up with full complement of MSFT, CHL, and SNE.
On the issue of market timing. We are all market timers. If not, we would all take out the biggest loan we can get and spec it on the market. It is our job to market time, just a matter of degree.
Should the crazy market get driven up before March, I would be a seller of premium rich naked calls on high value ICGE, VERT, YHOO and even AOL, as I do not believe these companies will take over the world before the calls expire, and wait for IPO lockup expirations.
But, first, as a market timer, I will look at the possibility of selling Puts on LU, since there are so many ?don?t wanters? out there. I will see what all the fuss is about over the weekend. I still have a subscription (100 shares) to LU annual report.
I want to be in some short positions so that I am ?market neutral? and can hold my selling finger off the 9984 button. When I do go short something, I will post promptly on this thread so that my flame-out and vaporization would be visible to all.
Murphy's Military Laws
(a) Never share a foxhole with someone braver than you are
(b) No battle plan ever survives contact with the enemy
(c) The most dangerous thing in the combat zone is an officer with a map
(d) The problem with taking the easy way out is that the enemy has already mined it
(e) Incoming fire has the right of way
(f) If your advance is going well, you are walking into an ambush
(g) The only time suppressive fire works is when it is used on abandoned positions
(h) There is nothing more satisfying than having someone take a shot at you and miss |
