Market is extremely dangerous now - actually the most risky time in about two years according to my model. The model is showing we are very close to a crash - one that may go down 15-25% before year end.
I sold into the rally in the past two weeks, now have about 40% long, and 60% short position. If the market run up another time on positive news (such as capture of Bin Laden), I will short even more.
I shorted RIMM, SOHU, AMR, WWCA, ZIXI, CA and AIRN, mostly last week. Had order to buy QQQ May2004 39 puts at $2, just missed it by 5 cents. The order is still in and I hope to get it filled if there is another rally.
The chance to go down is much higher than up for the general stock market.
The US economy is experiencing a serious fundamental shift - inflation is here but no job growth, simply because companies don't need to hire. Productivity gain (many people I know are telling me they feel like working in a sweatshop now, and with fear of losing job) and outsourcing changed the economy. For people having their retirement money in stock market now without any hedge (short or put), this downturn could prove to be very painful.
One stock I expect to outperform the market in the next 1-2 years is Microsoft. The company will likely to increase dividend or buy back stocks using its cash, after most of the legal cases are settled now. |
