Bookkeeping: Cutting Back Flowserve (FLS) - Again

Gosh. Just frustrating to buy any global growth story - even the ones who increased guidance by $1.30! [Jul 31: Flowserve - Mighty Impressive Earnings] I had hoped the chart was telling us that in the past week Flowserve (FLS) had disassociated itself from crude oil/commodities but apparently not to the hedge funds. Once more buying a breakout was punished - this is like a toddler reaching for the hot stove for the upteempth time and getting burnt continously. At some point you just give it up. Sticking to our rules we are cutting this back from a 1.6% stake to 0.1% as the stock broke its support of the 50 day moving average today.

I have to tell you, they usually say in tough markets "it's a stock pickers market" - meaning if you are selective and can find jewels among the trouble you can still do ok. I have to say in this new era that is complete and utter garbage. This is a sector pickers market - it doesn't matter what type of company you buy, no matter how bad their fundamentals, as long as you are buying the favored sector - any airline will do right now; any housing stock will do - you buy 1, and you own the whole group - they all move together as they are one monolith. The same goes on the downside. It doesn't matter if you do research among multiple companies and own companies who just raised guidance by $1.30 not 5 weeks ago - it is considered trash because it is in the wrong sector.

So stock selection is out the window - it is all about being in the favored sectors. This is yet another new paradigm. Quant hedge funds, along with perhaps the proliferation of sector ETFs continue to change the game. Or in this case maybe another hedge fund is blowing up and barfing up its positions into the market as it gets ready to close its doors. Who knows anymore.

Long Flowserve in fund; no personal position