I woke this morning asking myself: “Am I certain a recession is imminent, which will pull stock markets down 20% or even 30% in the next year?”
My answer: “Yes, I’m certain.”
So this morning I went from all cash to nearly all in, buying SDS the 2X S&P 500 inverse fund.
So
95% aggressively bearish in SDS, the 2X S&P 500 inverse fund.
The markets may climb up 5% in the next week or fall, but I’ll keep that money bet on the down side of this market for the next six months at least.
This is an insanely risky portfolio allocation. In my defense, I made assumptions and previously guessed the market would correct last July, and it did drop 10%, and the markets have gone incredibly unstable. I made money then and it reinforced my confidence my overall market analysis and predictions are correct. Roubini was on the right track; however, he was early 6 to 12 months on his predictions. The recession is just starting now. (Roubini had predicted the recession starting in 1st Qtr 2007.)
In the last several weeks I had gone to cash (from aggressively bearish positions) just on nervousness about the markets. Today I concluded that keeping that money out of this market will only lead to me missing (making money on) the 20% correction coming for western stock markets.
