Be extra careful of going forward. The good days are counted in weeks, if not in days.
Stock markets remain exuberant, and possibly will remain so until the end of May. If June turns out to break new recent height, it will defy all experts on advising to “sell in May and go away”. However, it shouldn’t be taken lightly at all. We are simply on borrowed time. The further out and higher we go, the bigger drop later it will be.
Due to the stock market drop last year, some of my colleagues invite me to regular monthly investment discussions in a small group of 5 people. This has been going on awhile. The last discussion has been one of the most optimistic ever. I’m obviously the standalone bear, while everyone else have turned bullish or slightly bullish. The mood was gradually happy. My own forecast for that last week gathering was that
“stock markets will have a very shallow correction, but I’m not optimistic for the remainder of the year. Furthermore, I believe that in 2010, there is a possibility for stock markets to break new low.”
I was not surprised by the upturn in the mood. Surprisingly, even given my words, my colleague concluded that even I, the super-bear, have turned slightly more bullish than last month, and interpreted the turn as a bullish sign. I didn’t say anything, but I actually interpreted his interpretation on my words as a very bearish sign.
In any case, I have been continuing to liquidate my non-PM (precious metal) positions gradually, knowing very well that the intermediate high may be still weeks away, and also that I cannot sell at the absolute top. I’m about 50% sold-out, and I will continue to take advantages of this rally. Yeah, I plan to go to 0%, plus some more in inverse ETF and shorts.
In case you followed my-networth page, don’t be fooled by changes in the “cash+leverage”, or “everything_else_besides_home” (which are my stock holding primarily) columns. All of my numbers are faithful posted, but were designed not to be easily decoded. Under “cash+leverage”, the leverage that I have is some hefty cash from my relatives which have become a super-nightmare throughout the last stock market drop, totally disrupting my own investing plan. The “leverage” goes up or down without any direct relationship to my actual buys & sells. And the increase/decrease of my stock holdings usually don’t correlate to the general stock market very well because I have more PM than anything else.
Anyway, I just want to make sure you’re not mis-led. I do say what I think, and I try to act on what I think (although not with a perfect 100% efficient execution). You can take my advice, or take advice elsewhere. Invest on your own risk.