Thursday, May 11, 2006


Tough week so far

I'm still in Asia but will be returning home in a few days. The weakness that my portfolio experienced last week has carried over to this week. Although the damage so far has not been overwelming (down 1 percent so far this week), I am obviously concerned about the general weakness in so many of my positions. Quite simply, almost nothing is working. Most of my positions are either stagnant or slowly sinking. As best I can, I'm taking a defensive posture. I sold STRC Tuesday morning after the company reported a lousy quarter. Right now, I have a cash position of about $100K, which is helping to buffer my losses. Hopefully things will turn up a little over the next few days.

Well, this is a situation I saw coming for you long ago. I have previously posted to this blog that you were in danger by virtue of having dozens of long positions, almost entirely in very illiquid stocks.

Granted, you pick them well for a time when general market indices are rising, they are indeed value stocks, but that won't help when the indices turn down as the economy starts to roll over. I believe this time is coming, with interest rates on the rise, the dollar sinking, and housing rolling over. Disappointing retail sales this morning just confirms the outlook.

You will not be able to get out of dozens of illiquid positions all at once. And what once appeared to be a value stock can quickly change when the economic outlook dictates that earnings will fall.
agree, interest rates are going to 5.5% and the dollar continues to drop. Markets are due for a correction of at least 5%.
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