Hi Edwin, I am writing this more to collect my wits.
You are correct. I am concerned. A bad market definitely does affect my psychology and no one likes to lose net worth, principal or unrealized gain.
My caution, or bearish stance, is indicated by earlier announced sales of RMBS, INKT, VERT, ICGE, etc earlier (apparently too early) to Founder, part of 9984, Yahoo Call, AOL, INTC, MSFT, now SNE, general retreat to cash, as well as my recently renewed willingness to trade 9984 on intra-day basis.
I am prepared to buy back all of the above shares (as in the case of Visio puts now) at lower prices (not ?the bottom?, just lower prices). I do not believe that the tech rally is over (if I did, I would be out of 9984 already).
I view the game as an absolute game, not as a relative game. In 1998, the Indonesian guy who lost 98% gave me no comfort even though I only lost only my then year-to-date gains and kept intact my beginning of year principal. The game continued with my bet in 9984 and increased US tech shares in November. Staying on the side line for long is not my tradition, as I believe there are always investment opportunities, even in the most dismal of times. The world is a big place.
My earlier but recent postings on mania phenomenon and game theory served to remind myself on what this game is all about. My retreat to cash was to prepare for later games. My enormous but very short and successful bets in Golden Power (603), China Overseas (688), and the ill-fated but limited damage holding of TCL (1070) was to take advantage of what I believed to be a temporary mania within the overall context of a bull market.
I believe this current phase is simply an inevitable correction in Nasdaq?s rapid (vertical for many shares) 33% rise within the past 60 days. The entirety of the rise may be re-traced in the correction, but I will not wait that long before starting to buy.
On the other hand, I am not sure that the overall bull market is not over (no one can say) and so my re-entry into the market will be paced, some rapidly, and some via puts. I need to see the foundation not crack (trade deficit must improve, debt must come down, interest rate must have risen already, etc). Money is difficult to come by, not always as simple as buying today, and selling tomorrow for more. I am cautious: for a man with no money, $10k is a lot, and so when we have $10k, take care of it.
Many of us in HK treat investment as an activity where we only have to engage in the pure mechanics of holding, trading, timing and betting. I know people who moved house 4-5 times within a 2-3 year period, trading apartments as if trading stocks. Now I know folks who sold their apartments and choosing to pay seemingly exorbitant rent until their hoped for real estates collapse. These guys are all investing or speculating or gambling, and the label can only be determined after we know the outcome. We are all hyper, and from other observers in the world, we are odd. There is a lack of intellectual content to the activity, and this is wrong.
Investment should be an activity that we learn and think about, engage in, adapting to the changing reality of the market, sometimes holding, sometimes trading, sometimes out and out betting, and some times sit on our cash and watch the world go by.
There, I feel better. |
