LEAN BACK

Posted By admin on Apr 16, 2013 | 0 comments

Given my particular brand of market philosophy, exuberant bull markets (price, not sentiment wise) do not necessarily present a whole lot of opportunity. My best research and subsequent opportunity will come from more tame situations or even bear markets, where hopefully I will be wise enough to remain in cash long enough to have opportunities fall into my lap.

There just isn't very much out there in terms of risk/reward opportunities where the risk is so well defined that I can put on a concentrated position that will make a real difference. Of course, I still have the tried and true portfolio holdings, some of which I have been involved with for nearly a year now.  Even with these names, however, it is at a point where my performance thus far in 2013 doesn't warrant maintaining large positions.

I am a staunch believer in portfolio performance dictating allocation. Growth in the portfolio determines growth in chutzpah. Deterioration in a portfolio demands deterioration in chutzpah. Swinging for the fences during a drawdown is the surest way possible of guaranteeing your eventual demise as an investor. The market will eventually get you if you don't check yourself.

So I find myself in this weird place of not having new opportunities that are worth pursuing in small-cap land due to risk/reward being completely skewed towards risk. As well as a portfolio that is doing some reverting to the mean following the tremendous gains of 2012.

With that said, my cash position now stands at 50% up from 40% reported in the last "Portfolio Update" on April 6th. All current holdings are small to mid-sized. Again, performance doesn't warrant taking on large positions at this juncture.

With respect to the general market, I did say in the weekly review that a break of Friday's low on the Nasdaq had bearish consequences for the remainder of this week. I stand by that. Meaning that the recovery rally today will likely be sold for the remainder of this week. It will be much easier to assess the position to take into the end of April once this week is in the books.

Back to twiddling my thumbs in anticipation of a time when they can be used for putting the cash in the portfolios back to work.

Sitting tight. Goodnight.