Last week we moved to a 100% cash position. Betting on a bailout was just too risky. It would have been nice had we bet against a bailout, but as we noted any bet made last week was a crap shoot pure and simple.
Our primary goal is to protect the assets of our subscribers. We are not gamblers. By moving to cash we have given ourselves a huge advantage in this market. Today we experienced a Black Monday event as the market took one of the biggest losses in recent history. Our subscribers experienced no loss on this event.
Let’s take a step back now and evaluate this situation from a trader’s perspective. We protected our assets against a risk situation that was impossible to manage. Blood flowed heavily in the streets today as Congress voted down the bail out. We now have our trading accounts fully in tact to take advantage of the fallout.
It seems likely to us that a bailout package of some sort will get passed this week. Like it or hate it Congress can’t just throw up their hands in defeat over this and the public who takes a look at the damage to their retirement accounts are now likely to second guess their position on this situation.
It would then appear that this sell off creates a huge buying opportunity rather than a reason to sell more. The bulk of the selling is likely now behind us. We certainly won’t now step in and try and catch a falling knife, but we are well positioned now to go long as soon as we see some evidence that the selling has played itself out. We were not willing to bet on this bail out vote but we are willing to bet that we will get that evidence that buyers are stepping back in this week; likely as early as tomorrow.
Bottom Line: Today’s sell off was not a reason to buy. We don’t have that yet. But, it was a reason to start watching for reasons to buy and those reasons might be just around the corner.
No comments:
Post a Comment