September 22, 2010 – My Q3 Performance

Featured Trades: (MY Q3 PERFORMANCE),
(CORN), (DBB), (SSG),
(GLD), (SLV), (PPLT), (PALL),
(ECH), (TF), (IDX), (TUR), (EPOL), (EWY), (EWS),
(FXJ), (TBT)

 



1) My Q3 Performance. Today is the autumnal equinox, the day when the sun crosses the equator and heads southward to the Tropic of Capricorn at the 20th parallel. The moon is full, and night becomes longer than day. This is when pagan civilizations sacrificed virgins to assure the return of the sun in the spring.

As my days get longer and the sun sets earlier I find myself completing my daily hike down Mount Diablo late, my contemplations about the market interrupted by packs of howling coyotes, hoping I don’t step on a Western rattlesnake in the darkness, yet again. Sometimes I have to skip adding the 30 pound log or rock I use to keep my shoulders and quads in shape. After all, the next forced march in Iraq or Afghanistan is only a phone call away. Until then, the High Sierras will have to suffice as a motivator.

I was expecting a boring summer and got a sizzler instead. Corn (CORN), wheat (DBB), soybeans, sugar (SSG), gold (GLD), silver (SLV), platinum (PPLT), and palladium (PALL), the subjects of years of painstaking research, all paid off big time by going ballistic. Emerging markets in Chile (ECH), Thailand (TF), Indonesia (IDX), Turkey (TUR), Poland (EPOL), Singapore (EWS), and South Korea (EWY) also made generous contributions. I wanted to short the yen (FXJ) and Treasury bonds (TBT), but took a nap instead, sparing myself much grief.

This equinox marked the passing of long time friends, like CNN correspondent John Lewis (click here for the obit) and Murray Sayle (click here for his piece).

It also heralds the onset of the most treacherous time of year for stock investors. There should be some substantial selling to beat imagined increases in capital gains tax rates from 15% to 20%, once the November election is out of the way. There will also be sacrifices of a different sort, as unfortunate managers playing catch up desperately reach for performance. That may be what’s powering the current low volume rally in stocks.

I have heard of too many advisors who panicked and sold their clients out, close to the 2009 bottom, chased the market back in front of the 2010 Q2 top, taking yet another hickey. Thus, I expect the bloodletting to be fierce and unforgiving when they are fired in December, such is the cruel and heartless nature of our business.

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