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    Wednesday, November 19, 2008

    Another Jim Rogers interview

    I didn't do anything last night in the Asian markets, but was stopped out of my ZB short trade for a small loss. Rather than having a strong opinion about market direction, I'll work to stay unbiased, but flexible to join either side. At a minimum, this approach has allowed me to avoid the "chop", and resulting erosion of capital. Bottom line, there has not been much follow through on either side in the last several days.

    I received a few e-mails regarding my longer term views (5 yrs or more). I believe it's premature to take positions in stocks for "investing", simply because the possibility/probability of lower prices at some point is very high. More importantly, if prices start higher, they will be met with sellers from all walks, including myself, so that should cap price rises. It typically takes a very long time for the sentiment to change, resulting is "strong" hands holding stocks for longer periods of time. Sure, I see many companies that are sound fundamentally, but that analysis is the problem. Fundamentals are "out the window", and stock prices go wherever they want, just like they did on the upside. Naturally, we'll see sharp spikes, but if I catch them, I'm better served taking profits because sellers will step in. Until this pattern shows signs of reversing, I'll sell into rallies. Recall the recent 10% rallies in one day, and the pundits that remind us that we "cannot afford to miss them"? Well, even with those 10% rallies, investors in stocks are much lower weeks later. The point is to try and catch those rallies, like an "investor", but also to ring the register. Stocks might be higher in 3 years, but why ride out a potential 30% decline from recent levels first? Our accounts are in much better shape than any investor I know of. Lastly, if we only look long term for "investments", we jade our decision making so that we cannot fathom shorting, which has offered the best all around risk/reward in the last year!

    I'm increasing position size again (+10%), as volatility in my vehicles is decreasing slightly,and trending lower. I'm hoping to be able to get a direction established, so that I'm able to stretch holding times as well, but that has not materialized as yet. Stay tuned,and good luck.

    Links I liked:

    Barry Ritholtz beat me to it this time, but here's another Jim Rogers interview with the Financial Times.


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