Wheee, that was fun!
It's amazing what just 2 days of good market calls can do for your virtual portfolios. In just 2 days we've taken our small virtual portfolios from down 30%+ back to about even, that's a 50% upside gain in 48 hours – now if we can just do that without starting off with the loss we'll be in good shape. We were more lucky than good in salvaging our positions but I will pat myself on the back for my 9:37 decision, which was: "Rutterfly – if you can afford to take out just one caller, do so! XXX as many as possible." That kind of set the tone for our trading day – committing our remaing cash and "going for it" in the small virtual portfolios is an indication of how strongly I believed we were going up for the day.
It's times like this I like to remind members that I'd rather be lucky than good because good and unlucky is just as broke as bad and unlucky. We were thrlled to get our money back and get back to better than 50% cash positions in our small virtual portfolios and now we are left with some nice, manageable spreads and we can all have a nice weekend and concentrate on our rolls next week.
The worst thing you can do in an ultra-volatile market is start thinking you're smart just because you had a good day. I quoted Churchill the other day who said: "Everyone has his day, and some days last longer than others." That's why our goal is to simply stay in the game and recognize the opportunities to take our profits off the table – even when "profits" mean just getting even. I often say to members when we get behind on a spread: "Stop trying to win and start trying to get even." This is a very important lesson to learn and it's how we try to follow Warren Buffett's Rule #1 – Don't Lose Money!
If we can just make it through a TERRIBLE Q1, like we've had so far, and just stay even, then we are going to be in great shape to take advantage of the market when that turn does come. For those of you who took my January advice and took the month of February off, welcome back, we've kept the markets warm for you and now it's getting interesting again!
I made a call to cover at 2:32, hitting the top pretty much on the button and it's always a good sign for members when I'm back in a groove calling tops and bottoms. While I still think we can expect further action from the Plunge Protection Team ahead of the weekend, I was concerned that Paulson's morning conference caused 300 points of short covering and our failure to retake yesterday's highs turned me a bit bearish as we faced the last 90 minutes of trading.
Mainly I was worried about the continued decline of the dollar (finished the day at 72) and oil finishing at $110, not to mention gold at $1,000 – these are not signs of economic health and until we see money rotating OUT of commodities and INTO tech specifically, I don't think any run can be sustained for very long.
