bobcor, outstanding post.
Of course I think it's outstanding because I agree with it. <g>
You said: 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.
I remember reading Richard Russell years ago when he said "the hardest thing to do in a bull market is buy and hold, and it's even harder to do in a gold bull." I told myself I'm going to do it. The only selling I've done is when I was reallocating from one stock to another, and that was rare. For example, when I thought the Peru election might be a problem for PAAS, I sold my massive position (it was my number 1 holding) and I put the proceeds into NG and SSRI. I have not tried to trade my miners.
you said "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.
My trading was done with shorts. However, when it seemed the homies were starting to fall apart last fall, I put on a massive position and used the profits to add to both miners on dips and more shorts on rallies.
you said 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.
I strongly agree. I hardly covered any shorts for months. I have a daily entry in my Palm Pilot that says "Only Short Strength." I kept telling myself don't get cute. Then last June I said take some money off of the table. I had a real hard time pulling the trigger, but I covered every short. I felt naked but I knew we just had to have a bounce.
I took all of my short profits and bought the miners on the May/June dip. For the first time in years I had a margin balance from buying longs (as opposed to one from temporary short losses). I've been selling the margined miners over the last few days (including more this morning) and putting them back into homies/lender shorts. The only margined miners I have left is a very large PAAS position purchased at an average of 18. My short position is back to huge.
You said: 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.
Again, perfectly said. I haven't been out of my core miner position in years. I've just added on dips. There can't be many traders that have outperformed me, especially when considering taxes.
It works the same way on the downside. There was a fortune to be made in homies over the last year. It's just beginning again for them and the rest of the market. It doesn't pay to be cute. Just don't overleverage yourself and ride the trend. |
