Tuesday, October 07, 2008

Market Grab

I suppose that the market was not satisfied with giving back thos 500 points yesterday, and snatched them angrily back from surprised investors. I've no great insights, but I know this, that no matter who you listen to, you have to own your investment decisions. Part of me wishes that I had made more money in this environment. But at least I've preserved capital. I was too early to exit some of my juicier positions. OCT DUG 35 calls and SEP DIA 125 puts. Both were bought in April. Both would have been worth mucho dollars--but no, Leisa was afraid of a monstrous rally.

You see, I've had some very expensive puts expire worthless. HIG--I was early to that pig. I had about 5200 in put premium that expired in May of this year. Yep. That's alot of money to me. The BEST lesson that I've learned, and paid handsomely (but not lethally) for is this very simple fact: Reality and the market's perception (or cognition) of reality can be separated from a fairly wide gap. I new that HIG was in trouble last year. Waited a whole year--a faint whiff of trouble but then stability. Now look at it.

I'm a much better observer than a trader! But my capital is intact. I've just enough short and long positions to be balanced. I closed my XLU puts for a nice 130% gain. But I could have waited just a wee bit longer. But as high as the VIX was and as sustained as a downtrend and OCT expiration....the sure thing seemed to be the smart thing.

Because I've not paid much attention to the market through a full cycle prior to this one, I did not have a full appreciation of (1) how far things can go up; (2) how far things can go down. Of course I've seen these things written, but until experiencing it, I could not appreciate it very well.

Long time readers will remember my uber-nerd project at the begining of the year of loading all the blasted symbols in by each sector. That project has more than paid for itself. HOWEVER, had I a more systematized way to tag things, it would have been all the more better. I'm still of the mind that being spider like--spinning one's web, crafted with fundamental expectations coupled with technical analysis (confirming the timing/accuracy of one's fundamental theses) , and then watching and waiting patiently is really the best mental model for being successful in the market.

I may have to re-do my blogand put a spider theme in it. It's a mental model that I like very much, and Halloween is coming soon and all of that.

I'm slipping into old habits. I'm drinking a glass of wine. Dinner is on the grill--pork tenderloin and baked potatoes. Grilled asparagus will be the accompaniment. I'm enjoying Va's Horton winery, Viognier. It is really nice. I used to enjoy wine nightly. I've not had wine since last Friday. I'm toasting my SIL's father who died one year ago today. Clink.

In another week, I'll be down in Hatteras for a few days. My SIL/BIL generously invited us. They go every year. We've not been on vacation for a bit. It is hard to get my kids' to go at their ages. We are mostly home bodies--but we've taken a few vacations here and there. Frankly, my husband and I do not travel well together. Despite my inate bitchiness (a blogger on another blog accused me of being the bitchiest woman on the blog), I generally try to find the non-confrontational line. But--once I'm on that line...well...it ain't pretty.

Nikkei down 383 as I write and sign off. I hope that you are faring well in this madness.

1 comment:

nice said...

Basically IMO 'they' have been letting the market fall now - until we hit some obvious point where everyone says 'ok this is way overdone'

Buy programs have dried up since the 'pre bailout' push.

Once we hit that final point then
risk adverse investors parked in bonds/bills will shift out --> until then they stay in bonds until the prices are too 'juicey' to resist.

As the market falls those that already bought come up with different fundamental reasons for holding through the 5-10-15-20% decline. Some puke and give up also.

We must be getting close - there are only 3 times in the last 30 years where price went 24% below the 200 dma... and they were:

1974 end of bear
1987 crash
2002 end of bear

Anyone got any data back to the 1920's to check this?

If we go much lower than another 5% at this point - then something extraordinary could be happening.
(survival training could then come in handy LOL)

nice