Of Market Actions

It's good to feel being right but at the same time, seeing a historical downturn of the stock market gives me a tinge of guilt (more of survivor's guilt). I certainly feel sorry for those who trusted the market experts saying that holding on for the long term is worth it. Letting go was the right thing to do last year, at any point, since we are way below the lowest point of 2008. I bought some SDS on the day of the lowest close of 2008 (Nov 20) and I have finally gotten back to black this week (after accounting for ex-dividend) -- short ETF's do not track the index perfectly over the long term so do expect some divergence from the index over time.

However, I believe the general trend is down (still) since we are far from hitting the bottom (i.e., no real capitulation, yet). The VIX index is still much lower than the peak of last year (hit almost 90 while today we are at around 50). People on TV are still saying hang on, we may hit bottom any day now or stocks do great over the long run (even though we hit record 52-week low almost every day now). When everyone talks about shorting or never touching the stock market ever (maybe the sign would be when the POTUS confesses that buying stocks was not a good idea after all), then we should all cover our shorts (sell my short ETF's) and go back to buying stocks (i.e., going long instead of short).

So: Sell now before things get worse is my message -- or better yet, join me and go short the market since I expect we have much lower to go. We may not hit -89% like during GD1, but another 20-30% down won't surprise me (-70% from the peak) nor would I be surprised if we break GD1 and go below -90% -- we had the greatest bubble in US history when it comes to housing prices -- never before did we have investing environment where people were leveraged infinity to 1 with 0% downpayment on a huge investment (10x median income). Even in the 20's, people had to put 10% down on stocks (at most 10 to 1 leverage). The stock market bubble should have ended after dotbomb crashed. However, it was temporarily saved and moved onto the housing bubble. It seems we have only gold and Treasury's bubbles left today. And do note that baby boomers are hitting retirement ages which means they will sell their stocks (to retire or just to go to safer investments) exasperating the stock decline!

I did sell off some SRS shares to raise cash earlier this week at US$91.39 (it went down few bucks more afterward [so for about one day I felt like a genius] but then it has been climbing up since then). Right now, it's being quoted at US$107-110. So much for my market timing....

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