I wish I'd had the cahones to step in and fade this morning's ramp, but I found my portfolio beta was already high enough (translated: the gut check was bad enough when things opened this AM, I was down 3%, and it was all I could do to avoid pressing the BUY button!)
I've already sold a bunch of stuff - sure wish I'd waited for this peak to do it, but you really don't know how things are going to unfold. At this stage of the game, I'm just trying to gradually ramp up my short exposure to follow what I think is a newly-established long-term downtrend.
What I learned (I think) from the last bear was, first, never short into weakness - always wait for some kind of bounce, however anemic. Then, don't get cute trying to cover when things get a little oversold. It might ease the pain on short-covering rallies, but more often than not I covered too early or failed to get the position back together before new lows were struck.
Basically, treat it like a bull market in reverse. In a bull, I'd stay fully invested, maybe hedge a little when I thought a selloff was overdue, buy a little on margin on dips, and try to hang in there if there was a bad day or two. So in the bear, I'm trying to stay fully invested, sell into moderate strength, buy a little hedge when a bounce is due, and try not to flinch in the unexpected (or even expected) short-covering rallies.
I always found that my stock-picking was sufficient to outperform the market substantially. Just by being in the right stocks during the bull phases, I've been able to beat most any average. So, hopefully the same should hold on the downside. By simply being in the right sectors at the right time, one should be able to do better than just shorting the averages. There was never a major need to use leverage or attempt short-term timing during the 1990s bull. Just maintain steady exposure in the right sectors.
BC |
