Comments on Fund My Mutual Fund: Bookkeeping: 'Rising Tide' Performance Week 22

I never use words like always in the investing wor...

2008-01-05T17:53:00.000-05:00

I never use words like always in the investing world. There is no always - i.e. triple bottoms always fail. I think there is a high probability it breaks and in fact am positioned and have been calling for it. But I am also aware the Fed head sat with President Bush on Friday, its an election year and they will pull out all the stops. What if the Fed cuts 50 basis points Monday at 9 AM? I don't consider that a high probability either. But always a possibility. as for earnings I believe the vast majority of stocks in my fund have solid earnings visibility - so I am not that worried. But a waterfall panic selloff won't care about earnings. So its more about sentiment in regards to a further sell off in these names.

Last, keep in mind I am a long based mutual fund here. Not a hedge fund. Hence my bias, my nature, is going to always be long biased. Otherwise when the day comes I can measure against the 3 year track records of the general mutual fund community people will say "well that doesn't count", he was 80% short at so and so time. I am trying to beat domestic based long focused funds, with superior stock picking on the long side and some smaller allocations (20-25% max) on either cash or shorts. So even if I thought SP was going to 1300 tomorrow I would not be doing a 50% allocation to cash/short exposure. That would be reserved for fundmyhedgefund.com ;)

Mark, you know triple bottom always failed, that's...

2008-01-05T17:15:00.000-05:00

Mark, you know triple bottom always failed, that's why i doubt 1400 will hold, any bounce there will be small and hard to swing trade, i don't see more then 2 days up on this trip down. Financial and retailer earning has been mark down, but what about the others sector? are they immune? will we get RIMM, ORCL type earning report??? i don't know. I feel the oil sector have a lot of risk for dwon side adjustment. My feel for the market right now is we will get a new trade range below 1400. Likely 1300 to 1375. I can not verify but i read on some site, commercial is net short, and put call ratio is trend up. In the mean time, i wait for clearer direction.

Hi, thanks for your comments. None of us can pred...

2008-01-05T15:17:00.000-05:00

Hi, thanks for your comments. None of us can predict the future. My gut feel is this S&P 1400 will break on one of these tests and we have a more systematic downfall. But if I had gone with that thesis in August or November, I would of missed a lot of return. So my working theory is keep repeating this pattern and eventually I will be wrong, but make enough money until the pattern breaks. My other gut feel is the Fed will be intervening soon enough, or if not soon they will do a lot bigger cut at end of January which will help sentiment. To be honest, retail, financials are very washed out. I am seeing stuff like JCPenney trade as if no one is ever going to go to the store again. It seems a bit overdone to me (for now). I don't have a crystal ball - AAPL could be $160 next week and I will buy more if it goes there. What I know is generally 4.5% down weeks are rare, and generally not followed by another 4.5% down week. That said, I am playing the odds and "one day" a 4.5% down week WILL be followed by another 4.5% week, but that would be atypical and I will take losses those weeks, but the other 90% of the time when that does not occur I will do ok. I have enough gains stored to be willing to sacrifice some in case this is wrong. I don't think the 'powers that be' will let the market go down much more from here without at least a fight (S&P 1400) :)

If you notice I still only have 3% type of positions in the top names - generally my top 3-4 positions will be 5%+ when I am very bullish so if the market continues to tank I still have a lot of building to do in those top names, so I will keep liquifying short exposure and keep pushing it into the AAPLs of the world.

But with all that said, until the market adjusts to the new economic reality we are at great risk of all these top dog stocks breaking even 50 day moving averages. EventuallYy I will be wrong on calling for a rebound - but I had people say the same in August and November (i.e. why are you buying here?) So as long as you can be correct 4-5x before you are wrong, overall you will do ok. This is how I am working it for now. I am hoping for say a 2-4% type of bounce in the indexes and some of these individual names will jump 10%+ and I will lighten up, go back to some cash and Ultrashort exposure and keep repeating... until it either breaks out to the top side (1510+) or downside (1390 or lower). Eventually this pattern must be broken...until then I am going to keep playing it and milk it.

Mark, i enjoy your blog everyday, your pick and se...

2008-01-05T13:37:00.000-05:00

Mark, i enjoy your blog everyday, your pick and sector have been dead on. Thank you for doing this. I have this observation and would like to share with you. It look to me like we are very similar to july / aug time frame, in term of the drop and rebounce. The SPX triangle is resolve to the down side break, and it could go along way. Don't you think a better approach now is to increase cash position and lighten up even more with your winners? you know very well top quality stock fall last, but they always fall to create the momentum on the rebound. I would be surprise to see aapl at 160 or Goog at 620. The question is can they hold those numbers?