What To Make Of The Market

We are in Hood River, OR. We got here yesterday did a lot of milling around the town, down toward the Columbia River where there was some sort of kiteboading event going on. When we got on the plane at about 10:30 yesterday the S&P 500 was down 1.35% and things got a little worse in the second half of the day. I heard a little of CNBC in the car on the way to the airport but I imagine the tone there was somewhat dour?

I think I covered a lot of this ground the other day and maybe now it is playing, or it isn’t. There is tremendous psychic value in preparing mentally for a decline when odds of one are pretty good and after a 40% rally… The green shoots sentiment was bubbling up pretty good there for a while. I thought that excitement was overdone and if the market goes down to 700 on the SPX then I imagine that the fear (or whatever other feeling it might create) will be overdone as it was a few months ago, IMO.

Not to be a wise guy but the US financial system and ordinary way of life was perceived to be in serious jeopardy. We have all sorts of problems the magnitude of which are quite bad and if you think of policy in terms of either speeding up a fix or hindering a fix we might all lean toward hindering right now but there is no need to stick a fork in the US–even if the SPX does break the March low before this is over.

I will continue to say that the better way out for most portfolios will be with more foreign exposure. The US probably creates a drag for a lot of countries, yes, but it will not cause all countries to grind to a halt however.

At this point, down a ton from the peak and churning around for a while now, I think it makes sense to still have some defense on and also start to think about adding to themes you believe will be important over the course of several years. I’ve got a couple of things mostly figured for the next two or three purchases when the time comes before now have cash built up, a little less than I did earlier, and now a full starter position in SDS (recall I added some a couple of weeks ago).

There is one reader (I think just one) who keeps posting asking what I’m going to do now that we are below the 200 DMA again. He also asked before it went below, what I would do. A few things, first I will not front run anything I might do for clients in a blog post. Second, we are not handing out fish here, do your own work. Third I just added some SDS a couple of weeks ago. No one should copy anyone. This means you should not copy me. I don’t have all the answers I have the framework for a strategy that I have been working with for a while now and while you can look at the quarter end videos to get a sense of how it has gone, do you really think you are helping yourself if you copy someone else in the middle of the event?

That is just not what this site is about. For the rest of you, thanks for indulging me that.

We are headed out to Mt Hood this morning before heading over to Astoria. Hood River reminds us a lot of Durango, CO. On a hillside, some water down below, somewhat touristy, some neat buildings. Candidly we had a tough time getting any pictures we really liked.