In the past 3 months, SPX recorded 20% rally since Thanksgiving. I got in at the right time but chicken out too early. It's time to review move and study why I could not hold the chips.
Kimble made a very interesting point. The RYDEX money market assets as % of total assets hit 150% in early Oct. This is suggesting people putting all money in cash (100%) and then starting to short the market. Since the margin requirement is 50%, this is the rational max point a porfolio can go. In real world it actually hit 200% in early 2009. What's next if you shot all bullets, or you used all money you can get to short the market? The stats says it will reverse.
This is a very good contrarian play. It happened 9 times in the past 15 years, including 1998-Russian Debt concerns....2002/03-9/11 fallout, recession... 2009 Financial Crisis...2011 European concerns.
I should learn this earlier. I add this weapon to my arsenal. Let's see how it works.
On the other side of the trade, how about if everybody is in equity?
I have my reason for not jumping into the water where everybody else is there. No herding for me.
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