Just when I’m going to write for Friday’s post, reflecting on the market actions, international markets threw another curve ball. Nikkei plunged by 2.3%, down by almost 400 points, while other major Asian markets followed with some 1 to 3% loss.
Will US markets open tomorrow with a loss?
Will the Euro and UK Sterling keep beating up on $US, which just broke $1.36 (Euro) and $2 (UK) levels?
Will gold ascent continue, or be hammered again (for the fifth time on HUI) by the invisible (Fed) hands?
Will uranium spot price continue its parabolic ascent after breaking $100 barrier? Yup, my U.TO (tied directly to the spot price of uranium) has returned 70% in less than a year.
Where was the subprime panic after all? Countrywide (CFC) now is back up to $38. I really wonder who is that stupid to buy those billions of subprime TOXIC loans from Fremont (FMT) and Accredited Home Lenders (LEND)? The only news is that they were sold at a discount (without a doubt). How can there be not a single trace of the loan buyer at all?
In the meantime, my short positions are definitely hurting. I just closed more with a small loss. I still have outstanding 5 short positions in QQQQ, XHB, GM, etc. I was approved for naked short-selling calls, which is allowing me to short stocks that are already on the FTD (Failed-to-Deliver) list via option markets. The advantage of selling calls versus buying puts is obviously that you benefit from time premium. The disadvantage on the other hand is obviously that your profit is limited, while your loss is unlimited.
Despite my short-selling, my net worth on 4/18/07 is just 0.18% below the “all-time” high since I kept a record on this blog (the all-time high was the very first date 5/9/06 quite ironically). My own saving and investing have made up almost 11% shortfall from my company holdings.
Despite all the complacency in the stock market, I’m spending 3+ hours everyday watching the market now (and therefore less time for blogging). This is one of the most dangerous time and my eyes and ears are paying full attention. I fully expect the housing slowdown to hit stock market this calendar year, and I have no time nor mood to cheer the market advances.
I feel almost like I’m back in 1999, when I’m totally shocked by the P/E ratios of the stock markets, while everyone else keeps hooraying all the way into March 2000. NASDAQ however doubled in a single year from 1999 to 2000 during which I was totally abhorrent of the stocks.
From my own investing experiences, I tend to be right, but early (if not way too early). I will delay my own actions, but will make sure that my delayed action won’t turn into inaction.
If you have not gone partially into cash yet, I would say, watch out below. NASDAQ is under-performing SPY, and that is a sign of weakness in this market.
I am prepared to take some amount of haircut even with my shorts which cannot hedge all of my long exposure. What about you?