<So how 'bout it, how are people positioned? How are *you* putting new money to work?>
I'll be the first to answer my own question. [EDIT - I see I'm *not* the first to answer!]
I remain largely short here. I'm reluctant to go long much of anything for fear of a global unwinding that I give fairly good odds. Everyone is long "decoupling", and I'd be willing to bet (actually, I am betting) that things aren't as decoupled as the flying emerging markets and commodities would lead one to believe.
My top positions are shorts against real estate, finance, trucking, and retail: UHAL LEH BBY MDC MHK CNW CNET F JNS JOE RYL MCO SHLD MS CBG, although some of those have risen to size more because they've given me opportunistic entries as opposed to their overall merit. I tend to deploy capital where risk looks minimal, even if the reward isn't as large as elsewhere. I'm trying to maintain constant short exposure against some that I think are zeros: BKUNA BOFL DSL MTG MBI ACF IMB CORS WCI OHB BZH - but that is challenging as some have no shares for shorting, and most are locked in steep downtrends with violent short covering rallies. I keep trying to build exposure against restaurants, retail, and trucking, but they have provided few comfortable short entries. And I have a smattering of airline, momentum, and emerging markets positions that I'm testing the waters on (UAUA NILE RATE Mexico India China Indonesia Korea to name a few).
I had a great 2007 and don't want to give it up in 2008, but at the same time, the bear is just getting going, and one must take advantage and monetize the information one has when the opportunity presents itself. I think that the waters will be far murkier a year from now, if the markets fall a bunch with the economy going into an extended recession. "How far is down?" is a much trickier question to answer than knowing that the market is rolling over into a bear market here, especially given the lack of attention to such quaint notions as balance sheet quality, price-to-book, and yield.
`BC |
