“I’m more concerned with the return of my capital than the return on it” –Will Rogers
I am not going to post on the “why” of what’s happening. If you read the blog you know my thoughts. If your a subscriber then you really know. This isn’t a surprise.
Drunks get hungover, crackheads and heroin addicts jones for the next hit and pay the price, if you bought a boat and ten plasmas with your equity line you are now paying the price. America and the free world is now paying a price for their sins, it hurts, but it’s a good thing in the long run. It lays the groundwork for the construction of the next bubble. You won’t see it being built, but trust me it will happen again. This is bullish.
This market has been in la la land for a while, absorbing warnings and turning its head at bad news at every turn. This last week we have had a reality check. No mas, just too much nonsense to absorb. Washington, Europe, double dip…you name it.
The market faked out everyone yesterday when it rallied, it ended up being a golden opportunity to let longs out, they took it. Today was a classic risk off deleveraging, hedge funds and other institutions had margin calls and had to raise capital. As a result, the speculative play in gold and silver got taken off as a source of funds to meet those calls. Gold and silver are liquid, so is Apple $AAPL and they got hit as a source of liquidity. Europe is melting, this wasn’t just a few hedge funds and mutual funds just “lightening up”, this was hard selling, almost (maybe not yet) fear selling.
My website reaches about forty states and eight countries. My subscribers range from newer traders to hedge funds and sell side idiots. My message is simple and I have been in cash for most of the week. Cash is good. Wish I was wicked short but I wasn’t, but I will take cash. I bought energy yesterday and was stopped today. The market hates everything right now.
We could really go lower, really we could. The jobs number tomorrow in my opinion is meaningless unless we save the world with an off the chart number. By the way, do you know anyone that ever got a stimulus job? Cuz I don’t.
Of course we are going to rally in spite of ourselves at some point and it will be epic. I did however think we would rally this morning, but we were demolished. If you caught falling knives all day you are currently fingerless. Let the market run it’s course before you lay it down.
The guys I know today that lost the most money are the ones that couldn’t stop out and take a loss. Next to my family, stops are my best friend. I know some of you are holding that one stock or two because you thought the market would reverse and rally. It didn’t. Don’t do that. Take the stop.
Be careful tomorrow and good luck. I will be longer than a redwood soon.
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