PORTFOLIO UPDATE: WHAT WOULD YOU DO IF I SANG OUT OF TUNE?
During the trading day Thursday, I posted the following:
First, you will have to excuse my propensity for absence as of late. I have been busier than usual with spreading my gospel of uncorrelated, risk-adjusted market returns utilizing a small-cap strategy layered on top of a tactical asset allocation method in order to control risk. This involves more meetings and travel than I am regularly used to. I prefer a secluded life, frankly, that involves snarling at my children when they make me angry and scolding my wife when she cuts my apples too thin.
The markets, while being gracious in their demeanor towards all those who sing its praises, have become somewhat monotonous in nature. This monotony makes for difficult story telling or blogging, if you prefer. We are in the midst of an uptrend, within an uptrend, within an uptrend. This type of one-sided market movement is an intellectual market observers worst enemy due to the fact that any seemingly wise analysis is rendered useless upon arrival. That is not to say that those who are long the market are moronic by any stretch of the imagination. It is just to say that being an intellectual on Wall Street is about as overrated as cupcakes. Its a piece of cake cut into a small circle. There is nothing cute about it.
The idea of this ultra-smart, number crunching machine analyzing spreadsheets and making sophisticated business decisions is part of the image. It doesn't stand up to reality. The reality of it is that the ones who have longevity in this industry possess vision, discipline and an edge that sets them apart from the stampeding, drooling and robotic herd. The same herd that things trading for a few points here and there is going to drive their net worth into the stratosphere. The same herd that believes diversification is a method of risk control. The same herd that thinks applying stale ratios of value to an emerging technology sector will tell them whether a company is a long or a short.
Let's get back to the subject at hand: I am now up to a 100% invested as a result of putting back on a small position in IWSY. I have also added to SPNS over the past couple of weeks. There is a nice performance cushion in place for this month as well as a cushion for the year that is allowing me to take on a little more risk than I usually would. I am a big believer in leveraging gains to create more gains when you have them. That is how big years are built.
Now I will say that I am uncomfortable with where the market is from a risk/reward standpoint. I am fully cognizant of the fact that I may be 100% long at an outright terrible point to have that type of exposure. I will deal with in accordingly if need be.
Yes, I may be singing out of tune here. But the audience in 2013 has been as forgiving as I have ever seen. Have to take the trend-followers mentality, placing faith in the fact that this trend towards forgiveness will continue.
And if it doesn't?
I'll defend till the end.
