Monday, May 22, 2006


Stepping up to the plate

The punishment continues: my portfolio was down another 0.9 percent today. I must admit this sell-off has turned out to be much deeper than I thought it would be. Indeed, I'm kicking myself for not trying to mitigate my losses by shorting some of the speculative commodity stocks that had run up so much in the last few months. Well, hindsight is always 20/20 I suppose. Fortunately, I am seeing more bargains out there than I have in a very long time. As such, I'm slowing increasing my exposure to the market. I got back together with a few ex-girlfriends today (GV and AE). I made serious money in both these stocks in the past and I'm hoping to get lucky again. I also started a new position in FRD, a stock that I think is now seriously oversold.

While there will be rallies along the way, this "correction" is far from over. The roots of the change in the market lie in Japan. The Bank of Japan has for the first time in years changed course and started withdrawing liquidity. The BOJ (along with the Fed to a lesser extent) has without a doubt, with zero interest rates and money supply increases, fed world stock markets and inflation for years now. The carry trade accompanying this is already withdrawing. The cyclical 4-year highs in our stock markets have without a doubt already been seen. As bond rates go up, stocks look increasingly less competitive.
were going below 11,000 on the dow.

As for the small caps, they could lose more ground, they say that money may be coming out of the small caps and into the large caps...short IWM
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