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Looking Back and Looking Ahead

1st off I am thankful to all for keeping the comments throughout the website fairly civil–a little bit of testiness here and there, but not terrible given our current situation. Thanks all. I did find out that my spam parameters for ‘four letter words’ doesn’t include ‘shitstorm’–it seems pretty descriptive so I will let that go.

Last Friday morning–very early (I was up at 3 a.m.) I looked at the futures market and smelled opportunity as it was up 900 points–again. The market had been yo yoing fairly predictably but I ‘felt’ (a technical term–meaning a gut feeling) that this was not to last this time–which is why I wrote on Friday morning to ‘get your portfolio’ in order.

In a ‘even a blind squirrel finds a nut’ moment the market did exactly what I thought would happen–in particular leading into a weekend and with the day being a quadruple witching day.

I unloaded everything I wanted to be rid of in the 1st couple hours and then I went ‘short’ via the Proshares SP500 Ultra Short EFT (SDS). Then each little bounce I added to my short–by the time the day ended I was up 1.5% on day. At this point I am mainly holding utility baby bonds and preferreds and CEF preferreds. I held my short right into the close as I would be shocked to see market shoot higher Monday–if it does I am going to get spanked–but I will take the risk. My cash level is now around 50%.

Here is what I see happening in the days ahead. Continuing shutdowns throughout the country–I see no reason whatsoever for this to change. A continuing economic high stress level–everywhere. Yes there are some businesses that are benefiting from the Covid 19 outbreak, but unemployment and business shutdowns will overwhelm any benefits. There is no immediate relief with potential treatments–yes they are out there, but not close to being a known effective treatment.

Yes–for the time being I am very negative–on markets–but I am very optimistic on the future. Remember the $7-8/share preferreds back in 2009? I think we will see more chances for them in the next 2 weeks to 30 days.

So my plan is–watch–no buying and determine if I have to start backing out of some utility positions–I hope not but we all need to have cash–which means we have to preserve the stash–one way or the other.

If we get a sharp market run higher tomorrow I am going to have some losses on my short position–but I don’t think that will happen, but we will have more of an idea in an hour when the futures markets open up.

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