Myself I’m mostly in cash, gold, and TIPS, with a few speculative bets against the American consumer (SCC, retailer put options). My expectations include continued dollar decline, falling discretionary consumer spending during the winter gradually developing into recession, eventually second round of credit crunch, this time driven by mass defaults in Prime/Alt-A sectors. When the dust settles, time will come to buy a house and move into stocks.
Brilliant. Totally agree, with minor exception that I have far more than “a few speculative bets” on the American Consumer (stopping their credit card / refi spending, causing a recession and and stock market collapse)
Weeks like this one are 7% (up) weeks for my portfolio. Yes, I understand the risks (and benefits!) of LEVERAGE. However, in the spirit of “full disclosure” I admit I’m getting my butt kicked on the Bear positions I took on oil at $82/bbl.
Regarding future Dow moves…
Let that American Consumer go home now and get frightened from reading scare headlines about how the Dow dropped 3.5% this week, ahead of the 1987 Crash anniversary. Let some tasty panic build ahead of Mondays market open. A 500+ point drop in the Dow on Monday would be just what the Doctor ordered. I’m not predicting it, just saying it is within the realm of possibility.
