Hi UF - A good question "winners are in very short supply at this juncture, so if you feel absolutely sure a stock is going to tank, why not profit from it? "
I take my capital and I move it around. That's all I do. From one pile to the other pile, so my choices are which pile the capital will go in.
Buying a stock means I must shift capital from the cash pile to the stock pile. Selling a stock is shifting capital from the stock pile into the cash pile.
I do not however go dig holes to create bigger piles in the hopes that rain will come and fill in the hole.
It's a matter of style. I know that I could profit if I used negative capital as effectively as I use positive capital. But I don't feel comfortable doing that. Not yet. But I am gradually being twisted around to that view.
As far as saying "winners are in very short supply at this juncture", you are absolutely correct. The time to pick today's winners was six months ago. Just like now's the time to pick winners 6 months from now. And therein lies another answer to your first question.
My stance right now and since July of last year is one of capital preservation. I am less worried about capturing gain than I am about losing the gains I've already captured. What looks like a winner today becomes a loser tomorrow. Yeuch, it's a mess.
If I venture from my bunker, then yes, I could capture more gains, but I also face the greater risk of loss. No risk, no reward. Since I am unwilling to risk more loss, I must forego opportunity of more gain. It is that simple.
And so far my gains have been more than I expected.
I know that bear markets don't last forever. So the sun will shine again. When the bull returns, then it's pretty easy money for smart folks like you and me and I'll have my assets in play.
So I can wait for my gains. I've already gained more than I expected, why should I go after more. I might end up only having what I expected. Or worse, less.
As to backing an opinion with a measure of conjecture.
Well, if I say a stock is over valued and I keep my position in it, that's the kind of unbacked conjecture that I too find inconsistent and questionable.
Similarly if I say a stock is cheap and yet I have no position.
But within the realm of reason, if I say it's inexpensive and I have a position, or if I say it's expensive and I have no position... well, knowing me and my style, then you would see I am behaving perfectly consistently.
Another measure is the willingness of an individual to speak his mind in reasoned terms against the tide of common wisdom. Fools and heros are only separable in retrospect. It takes a certain conviction to be willing to risk earning the label fool; none at all to murmur agreement with the crowd.
John. |
