PORTFOLIO UPDATE: SUMMER REMIX
During the trading day, I tweeted the following:
The initial position in TZA was taken at 32.50 on May 23rd. This addition takes TZA up to a large sized position. At the same time, I am in the process of reducing long exposure slightly down to 75% from the 85% long exposure that I started the month with. Details of the transactions will be posted on Friday.
This is certainly not a point in time during the raging bull market that has been 2013 to gallivant around without any concerns whatsoever for risk. People seem to have a short memory of how terrible the pain of getting caught in a dramatic change of trend in the markets can be when you are overexposed and under-prepared. My only focus here is to make sure I do not fall in the overexposed and under-prepared category.
Thus far, I have been perfectly content with the portfolio performance in the face of early June weakness. An initial sign that the overall construction of the portfolios matches up well with the current intent of the markets.
My goal during bear trends, regardless of the length of the move, has always been to protect assets as opposed to generating pure alpha from the short side of the market. It has been my experience that psychologically there a rare few investors who can adapt to both sides of the markets allowing for profit to ensue regardless of the circumstance without getting their signals crossed at some point in time. In other words, attempting to profit equally well during both bull and bear trends leads to an anxious tendency to flip from one side to the other prematurely. I'm not saying it can't be done. There are better ways to exert one's creative energy in finance, however.
My own energy is better served looking for the risk/reward opportunities in misunderstood companies with tremendous upside and minimal risk. Everything else is lunch money.
With that said, the portfolios are:
- 75% long in WMIH, CIDM, IWSY, HMPR, SBCF and JMBA
- 25% short via TZA
