Market Musings

I completely missed the September and October rallies. I simply don't stay in the market during those months. I take a holiday until November and then gird up for the January effect. This also means I am generally rather light in February, as well. This February hasn't been so bad, no? Nevertheless, I've now moved to a short position against the market (except oil, and today's rally makes me nervous even there -- given that it's driven by fears of a potentially cataclysmic war between the U.S. and Iran). The economic conditions aren't so hot, nor is earnings growth strong enough to justify current levels. I could just do stock picking, but I'm beginning to think this is one of those times when one should go against the calendar (this year in the presidential election cycle is usually good, but it has already been too good, so . . .). In any event, I'm not offering advice on what you should do with your portfolio, just babbling, as is the way of the blog. I haven't blogged much lately and I've heard it from a couple of students who seem to take my blog seriously. So I'm blogging. And I'm blogging about the market, at that. I don't like markets like this, all the negative economic fundamentals, potential for geo-political instability, and market indexes hitting record highs. I don't think this is the time to go long. But who cares what I think, I sure don't. The thing is my macroeconomic model (which I do care about, with a passion) is increasingly negative in its forecast and my stock picking analytics (which I care about just as passionately) aren't turning up nearly as many undervalued stocks as is the mean or median. Sooooo, I think it is time for building up a contrarian position, first with ETFs and then with put options. If the rally gets crazy enough, I'll even take short positions against specific stocks (rather than the market as a whole), which I almost never do.