IF YOU HAD A BRILLIANT FIRST QUARTER SHUT UP ABOUT IT ALREADY
The first quarter of 2012 was like a Grateful Dead concert if you are into dropping acid and experimenting with mushrooms. There were plenty of opportunities available to get what you wanted. The results were immediate. And everybody walked away with great experiences to talk about for years to come.
Here is how it went for my individual stock picking during the first quarter:
-- PRGS position initiated on 1/17 (position liquidated on 3/28) +26%
-- PTGI initiated on 1/17 - 1/18 (still holding) +28%
-- GSIG initiated on 1/17-1/18 (still holding) +10%
-- SPRT position initiated on 1/29 (position liquidated on 3/29) +20%
-- DPTRQ position initiated on 3/22 (still holding) +34%
-- CIS initiated on 3/26 (still holding) +15%
-- SYNC initiated on 3/29 (still holding) +6%
I'd love to talk about how my in-depth analysis led to these opportunities that leave me in rarefied air that cannot be matched by mere mortals that I laugh at while petting a striped cat from my castle in the sky. But that would be bullshit. That would be giving myself more credit than I deserve. That would be playing the game that so many others with a keyboard and an ego like to play.
This was the best first quarter in 14 years for the US equity markets. That means that the environment was extremely accommodating and forgiving to anyone who decided not to get in his or her own way. The more aggressive your strategy, the more favorable your returns. That is as long as, again, you didn't get in your way.
And that was my genius in the first quarter. It wasn't my stock picking. Not even close. It was the fact that I came into this year bearish after being bullish since the bottom on October 4th when I loaded the boat with leveraged ETFs. Right before Christmas, I believe it was, I began buying inverse leveraged ETFs planning for the market to tank into January and beyond. I had sentiment data that was corroborating with technical data and further confirmed by fundamental data telling me the market was on its way down.
And now here is the real genius of my first quarter. Are you ready? This is going to blow you away. My genius and my secret to success in the first quarter was that I changed my mind. Yes, that was it. On January 10th, I took the losses on my inverse leveraged ETFs and I didn't look back. The market was telling me that I was wrong and I didn't argue with it. I could have stuck to my guns, dug my heals in and talked about the bevy of data confirming that I would eventually be correct. In fact, a lot of traders and investors did exactly that. I didn't. I switched early. And I turned a quarter that could have been a catastrophe into one that ended up being a brilliant.
This quarter was not about stock picking genius, macro understanding or being a guru of deciphering a balance sheet. As with every quarter, every week and every day this was a period where those who are able to be flexible, cut their losses and change their minds won and those who were not lost. That was the brilliance of the first quarter. And that will be the brilliance for every quarter to come.
So don't go around bragging about this quarter as if you are the second coming of Freiherr von Rothschild. Your ability to adapt under changing conditions will suffer the more you take pride in the quarter that was. Humbly go about your business and consider yourself fortunate for having the savvy to stay out of your own way.
