InvestorGeeks

Well, I was right (see Wednesday’s post). That at least feels good. However, I thought the market would make a decent recovery. I had raised my limit price to $51.20 (from $50.20) yesterday, realising the recovery was probably not going to be as strong as I wished.

However, when I logged on tonight (it’s after midnight in Australia), SDS had already moved up to $53, and as I watched it shot towards $54. I got out the calculator, changed the volume and bought in just as it crossed $54. As I hit refresh now, it is in the mid $54s, heading back down.

Was this wise? Perhaps not. I did it on a high of emotion (I was at least aware of it) and there is a good chance the plunge protection committee will step in tomorrow and push the market higher. In fact, they may do so today (watch for a 2pm spike in the price). However, if that happens I urge you to consider unwinding any positions you are overexposed in or that you do not want to hold on to for the long run.

I have been selling down my largest holding for the past few months, moved my meagre retirement account to cash about a month ago, and convinced my parents to do the same with their not so meagre retirement account.

That said, I am not a “trader” - I am a longer term investor. So, I have held my positions in companies in the oil and gas sector as well as my ETFs.

I still think this is just the tip of a serious correction that is going to knock another 10% off the market. If that happens, I am expecting SDS to hit the mid 60s (maybe even into the 70s - but that is less likely). Remember - 10% corrections are not that uncommon!!! At the least, I think we will knock off the last 6 months of gains.

For me, this is the last serious move I hope to make until August. If the market corrects over the next month or two, I am hedged and my portfolio should stay roughly where it is right now in terms of value. I’ve taken a hit, but not enough to make me cry… or to need to explain to the little lady why our account says “minus” followed by “thousand”. If the market trends higher, I will miss out - my gains on my stocks are going to be countered by my losses on SDS.

Sure, I’ll miss out on some gains, but, to me, the peace of mind right now is worth it.

Good luck!

Philip John

This post is for entertainment purposes only. No part of this post should be construed to constitute investment advice. The author is not an investment professional and assumes no responsibility for any investment activities you undertake. Prior to undertaking any financial decisions, you should contact an investment professional.

Phil John grew up in Perth, Western Australia. He has BSs in Biotechnology and Chemistry. Phil worked for 3 years as an IP Attorney before moving in house as the IP Manager for a small, publicly listed pharmaceutical company. Finance-wise, he is particularly interested in the Austrian school of economics and their theories on money supply and the business cycle.