Just a Quick Update on Portfolio

Rightly or Wrongly, I've reduced cash by about 10% (near 30% to about 20%)

Once the Fed did 25/25 I put about 5% of that into Ultrashorts. Once we broke 1490 yesterday I put the other 5% into more Ultrashorts.

The 2nd purchase above was obviously hurting this morning as we hurtled higher but at this point is not doing so bad. If the markets improve I will cut back that last 5% and take some losses, but for now I just don't see any impetus for buying on the long side. We've had a 7% bounce in past 2 weeks on smoke and mirrors of Fed cuts - the market got those, and the market even got a bonus this AM. And still we are hanging around 1490. Not much progress.

If we break 1490 (on a closing basis), looking for first stop at 1440s, and then we go back to November issues - risk of downside to 1405 level (which if broken would bring many bad bad bad effects), and then any bounce will be met with resistance around 1490. So stuck once again in 1405-1490 Groundhog Day era, if we break down from here. If the equity market were following the economy or bond market it would be markedly lower. Thus far it has resisted. So we shall see if the bond market suddenly improves and says 'we were wrong about this recession risk, credit markets freezing up, and general fear' or if the equity markets begin to falter (again). I am positioned now for either direction but being a long fund (no individual shorts) have to always be weighing long. If I were a hedge fund I'd probably be looking to have almost the reverse of my portfolio at this time *IF* the S&P breaks down under 1480 (below yesterday's lows)... but that's against the rules of the mutual fund :) Hence I am restricted (if the market falters) to simply trying to lose less money than the market, instead of truly benefiting by a falling market by being aggressively short as the technicals break down. So that's what I am going to try to do here with the index short hedges/20% cash.

No reason to do much here until the equity market picks a direction. I'm as negative as I've felt on the US economy for many years... but than again I'm a dismal scientist by nature. It doesn't mean the market needs to go down - that would simply be the logical extension.

Just as an fyi - a few major brokerages economists' have finally begrudgingly began forecasting in the past week a heightened risk of recession in 2008; a position I've advocated since summer. Again, the markets can disassociate from the economy for a while; and who knows, maybe we have a market at all time highs in the middle of recession - anything is possible with all the currency being printed in this world needing a home (real estate and debt is out, why not equities) but if logic would dictate that stock prices follow profits, and profits will be retrenching in 2008, than it would logically dictate a lower market. Logic has no place in the market in the near term though; I am simply speaking of the longer run.