3 Lessons from the Bear

OK, so we’re still up for the year, and still doing way better than the market, with our portfolio. That’s the good news. The bad news is, if you’ve been invested in the broad market, you’ve seen the worst opening week of any year in Wall Street’s history.

I still recommend a mix of shorts, bonds, precious metals, and utilities to weather the storm. That’s what has served us well so far this year, anyway. You dance with the one you came with.

With that said, here’s 3 things the market is telling us right now:

Don’t bait the bear-When you start with a powerful downtrend on high volume, don’t bet against it. This market is going down hard, and we ain’t seen the bottom yet. Sell the rallies, and buy shorts with the proceeds.

Volatility? You ain’t seen nothin’ yet! This is not the market for the weak of heart or stomach. If you can’t handle big swings, just sit this year out. It’s better to sit on the sidelines and save your principal than play in this game if you can’t sleep at night because of the ups and downs.

Act fast, and go with your gut-I correctly predicted, in advance, a big drop in Tesla. This auto company proves that high-fliers unsupported by market fundamentals will get eaten alive by this bear. But, I hesitated, because on day one, Tesla was down, and I wanted to wait for a rebound before I took a short position. Bad move. If I’d acted on my first instinct instead of overthinking it, I’d be up about 8% on that short right now:

Tsla.png

 

 

Oh, well. No point crying over spilled milk. We did pretty well anyway! Here’s the portfolio right now, Thursday, December 14-

Symbol Type               %        Performance
TLH        Long Bonds  32        +1.4
SH          Short S & P   22        +4.2
FNV        Precious        15        -(1.5)
AGRO    Agriculture    3         -(0.9)
YORW    Utility            10        +0.3
LTC        Health care   11        +1.3
ENB       Energy             7        -(5.7)

Total                                       +1.4

As you can see, I have jettisoned ADM in favor of a much more volatile agriculture play, AGRO, and taken a very small position in that. AGRO is invested in the most undervalued land on earth right now, in Uruguay, Paraguay, Argentina, and Brazil. But because this is a long-term play and we are in a highly volatile market, if I were to jettison just one stock, that would be it.
Last, a note about my financial ramblings on this blog. By popular demand, I will cease writing about market matters as of today, save for maybe a quarterly review here and there or if there is some major news that makes the headlines. It seems there’s not much interest in it.

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