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If I take the "talking heads" at their word, the reason for today's spankage was a small upturn in the dollar, coupled with low volume. "Low" is a bit subjective, the Bond Market was closed, and most of the reports I heard suggested the volume was "light" or "lower".
I even had the day off to watch my empire crumble; the barbarians entered the castle, made off with the wimmenfolk and my treasury - while I mowed lawn, and did laundry..
It illustrates how little I know, and how much there is to learn about investing. Specifically, it shows me the weakness of my "style" - commonsense investing.
Perhaps there are multiple commandments that dictate my behavior, these are the ones I can articulate:
1) Only invest in what you know, don't leap into something just because everyone else is doing it.
2) Attempt diversity, if you don't know enough things to be diversified, learn more.
3) Do not chase things, they always seem to run faster than you can.
4) Don't ride stocks to their grave, set a number and sell ruthlessly.
5) Short where appropriate, using the proper vehicle.
I learned #4 and #5 while participating in this contest. Like all other rules these take practice.
None of my rules helped me today, and therein lies the weakness of this strategy. All I could do was dump stocks and bank the cash, leaving the shorts in place hoping the tide would swing in their favor. While they did in the end, it was not enough.
I had a bad feeling about all of this early - right after I discovered every stock I owned in the red, and in a big way. FCX, POT, MOS, all were headed through the floor, and they weren't even stopping to wave..
I exited FCX, EMC, BHP, CNQ completely. It seemed all of my stocks were the frothy speculative kind, and even the shorts were losing money. Safe haven time, as I pulled nearly 400K onto the sidelines, and added to the NASDAQ short QID.
Chores were undone and watching the stock screen was understandibly depressing, so I checked out. I returned just before the closing bell to survey the carnage with awe. I saw devastation and damage, and assumed (contrarian?) that some may actually be bargains - so I bought 500 FCX and 500 POT, both were "double digit" down, and I assume will pop briefly on speculation tommorrow.
The lessons learned today are valuble to me alone; shorts cannot make up everything, and yanking the money is the only tool left in my arsenal. Rule 2 applies here, as there are likely other things I could do, possibly even other investments I could own, that could hide money from the worst volatility. Rule 1 requires me to know about them before I can invest, so this is a long way of saying I have homework, lots of it.
In the meantime, I'll just lay here in the fetal position, learning humility.
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Comments (4)
Speaking of humility, I thought you might like this quote from Ken Fisher: "I refer to the market by its proper name, "The Great Humiliator" (TGH for short). I've come to accept my goal is to interact with TGH without getting humiliated too much. TGH is an equal opportunity humiliator. It doesn't care if you're rich or poor, black or white....it wants to humiliate everyone." From The Only Three Questions That Count p.5
Another personification of the market is proposed by Ben Graham: "Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers to either buy you out or sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly." From The Intelligent Investor p.108
I think you would be happier dealing with Mr. Market than TGH.
Posted by Thomas Armistead | November 13, 2007 7:19 AM
Fish Guy,
Daffynition : Fishing - A Jerk on one end-of-the-Line waiting for a 'jerk' at the other end.
That's a FogHorn LegHorn Joke, Son. " Ah, Ah Ah SAY, "that's a Joke, Son".
I'm a Fishin' Fool, too. Salt & Brackish Water ( Chesapeake Bay , where the Rock Fish
[Striped Bass] will be Runnin' real soon now - the Bigguns in December, the Jabones later.)
There were only two Truly Meek & Humble Men in the History of the World - Moses & Jesus. Total Flamers both. A meek is a "Meek" Horse - a WarHorse - disciplined & determined in the Din of Battle. As for "Humble" - well, Only in the Eyes of God.
.... I Blogged on the Seasonal AG stocks
a while back. At the time I said that I'd sold Covered Calls against my AGU position in my Real World Account. I dumped AGU in my SLO-Port earlier on and reaped "Good" Money on that 'Play'. The Blogwas 'published' on Sept 17,2007 as 'Tactic Lesson #1 (Gretzky Tactics ) in the FIG ( Fertilizers in General) section. Take a Gander - Read 'em & Weeep OR
Believe 'em & Reap.
Don L. Ferk
( aka VikingWarrior}
PS - EOL ( end of Line ) is Craps
(Crappies ???)for double sixes - Klickety-KLAX with RailRoad Trax - Caboose Box Cars at the end of the Train.
Posted by don ferk | November 13, 2007 8:19 AM
The Great Humiliator or Mr. Market - both of them put the boots to my prone form... I think I would prefer Mr. Bubble, irrational as he may be at least he giggles a lot.
Welcome Fellow Fisherman, it's about time we breathed a little life into this gathering. I was afeared I was alone amongst "them English" - good to know I have some company, even if you did forget your rod and fishing license.
KB
Posted by Keith Barton | November 13, 2007 7:27 PM
By now I am sure you have read my "most insane portfolio blog". I am working on an all inclusive "how to short" right now, but I have another insane alternative for you other than yanking the money. If you pulled the trigger on yanking the money you would of course be out of the rules. However, if you bought opposing long and short ETFs, such as an equal amounts of money in DIG (ultra long oil and gas) and DUG (ultra short oil and gas) and did the same with the index trackers, you could have an entire portfolio that would be within the rules and virtually go nowhere, up or down. It would in effect lock your gain where it stands now and force the competition to come get you at the top. It is insane, of course, but theoretically could work. Congrats on climbing the rankings
--Jaudio
Posted by Jonathan Coyle | November 16, 2007 6:37 AM