October 24th, 2008

What I’m Doing In The Face of This Sell-off

I’m not going to aid fuel to the fire about today’s opening: “It’s going to be the capitulation we’ve been waiting for”, “It’s more benign than we thought”, “I would have liked to have seen a 1000 point drop on the open”. Enough already.

Here’s what I’ve done, do with it what you want:

  • I finally and reluctantly dumped my silver and gold at about 50% of cost. These “hedges” never did work and I’ve been dreaming a fool’s dream that all the new money being printed around the world will create an inflationary environment. That might come, someday, but in the immediate future the balance of opinion is that a deflation scenario is besting and inflationary one. My positions were a small percentage of my portfolio but contributed significantly to an overall loss for the year.
  • I also sold odds and ends, the little toes dipping into individual stocks.
  • All the proceeds from these sales I added into averaging down my SSO position, the Proshares UltraLongs. Whether this is the bottom or a way station on the road to the bottom, the remaining journey can’t be too much further.
  • The actions are reallocating; the portfolio remains 85-90% cash and I’m not committing new funds — yet.

This market is just too spooky to be playing individual stocks. It’s hard enough trying to figure out which direction the trend is, let alone trying to pick the industry or stocks leading it there.
I’m trying to look to the other side of this valley and see a 20-25% bounce; I hope to be able to show that to you in the next post. The only thing I haven’t been able to figure out is whether it will be soon, today or early next week or next month?

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