I just got back in from playing tennis all morning, did something happen?Relax, just a little humor. The market appears to have entered a panic mode and obviously there is no way to know how long a panic will last. Yesterday and today, we took moderate defensive action consistent with when the SPX breached its 200 DMA and are prepared for more defense if circumstances dictate.
Europe is obviously a concern but it has been a concern (or at least it has been a concern of mine for years) for a very long time. If this turns out to be the big one then those who have avoided or underweighted Europe (meaning big Western Europe and the crisis countries) will fare better. If this turns out to be the big one then those who have avoided or underweighted US financial stocks will fare better. I've been writing about this for years and have been positioned accordingly for years.
In terms of normal cyclicality I mentioned last weekend that I think a recession is now in the cards by virtue of the GDP reports and the ISM data so our initially modest defensive action for now has focused on the industrial sector. I also think that our having peeled back Australia earlier is helping us now.
A big focus of my writing is about avoiding emotional reactions to days like this. All today was for me was a little more work. Over the years I've tried to really hit home on the fact market declines happen as a function of normal market behavior. People tend not to fear the familiar in other aspects of life so hopefully they will not fear the familiar in the market.
11 comments:
The markets crater and you're cracking wise! And playing tennis! Oh my.
I'm guessing you would have boarded the Titanic wearing a wet suit and lugging a rubber dinghy.
Prudence is never a bad idea. Ditto for planning, as you have ably discussed frequently.
Bill M
I assume the tennis photo is of your club?
absolutely making wise cracks
Newport Casino...read a bit of Allison Danzig & E.Digby Baltzell to crack the code. Fine post today as always.
thank you
96%in cash. on the 20 of june the 21 and june 30 described exactly wat was going to happen.
Jeff from Milan, Italy
Roger: Long time reader and many thanks for your posts. Just a clarification on how one should think. You had disclosed buying GXF in the last week of May. It has fallen about 8% since then. Should one get out of such a holding or hold on to it? Any thoughts on managing similar situations will help me a lot.
i am more concerned with defense of the entire portfolio as opposed to one position. for now we have taken defensive action with US industrials and for smaller accounts we have taken action with US small caps.
If the market were to go down 30% and I were to be down 15%, I would be be happy with that result; avoiding the full brunt
Roger: Thank you so much for clarifying your thoughts on how to look at one holding. Your posts are very informative.
I did not like today and there are more craks in the market than before.
But, The market is very oversold and this is still consistent with a correction IMO.
There will be a bounce.
If the bounce has weak internals, it will not be positive.
Still long for now.
SEG
The internals have stunk for a long time.
Jeff from Milan Italy
Playing tennis while the market is crashing is the right way for a long term investor. He need not worry if the market is closed for a week or so.
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