Balance

So during the market bounce I have been having a string of good days, even though I now hold a good bit of precious metals positions and four (hopefully) well chosen short positions to go along with market longs.

I don’t post to brag because if you’ve read this site long enough you know that I can be a pretty faulty trader, making some great trades, some mis-executed trades and some dunderhead trades. Through shear experience and trial/error I have settled in as a portfolio manager. Helping in this regard has been an association I have with a small hedge fund, for which I do a few hours a week of technical work. I go through a lot of charts (mostly in emerging and frontier outposts) and get ever more comfortable with how a well diversified fund works.

So I balance, balance and balance some more and on more than one occasion recently – like today for example – all three of my accounts (2 long, incl. precious metals) and one short have been green together. I take some profits and re-seed elsewhere, all the while keeping my own (well, NFTRH’s own) evolving macro view front and center.

The best thing I have learned over the years is not to over react. I mean, I always knew that when an alarming news event drives markets – like today’s thing in crude oil for example – it will usually be undone before long. So I’ve never followed those kind knee jerks unless is was to do something contrary to them. But beyond that, I’ve learned to trust my own chart parameters and realize that the market is a living, breathing thing (informed as it is by man, machine, casino patron, ma, pa and legions of wide eyed chart thumpers who actually think their charts see into the future).

Being balanced against the daily news and economic disruptions really does work… if your macro backdrop view is within range of being correct at any given point. So balance is great, but a willingness to RE-balance along the way is even better.

As an example, I already know something about myself that precludes me from being a heroic bear. Just positioning come hell or high water. Instead, I slither and slink toward a view and hence, four short positions currently toward a forward bear view. Ah, but the market broke some bounce parameters to the upside and voila, I’d never abandoned my long stance. Oh, and then there are the gold stocks (and a long SLV position) which, at the instigation of proper fundamentals (not the phony, often inflation-based crap spewed by promoters of lazy analysis) are performing well and on which I’ll be solid as long as said fundamentals remain solid.

Finally, let’s not forget cash and equiv. At the end of each month my cash, SHY and SHV positions spit out nice income to go along with some big gains (not percentage-wise, but due to large position sizes) in the prices of the two Treasury funds as well.

Now of course, after I hit the Publish button on this post Trump is going to tweet something, somebody’s going to blow something up (read that how you will, recalling that AIG blew itself up a decade ago before being rescued) or for whatever reason my blessed state of balance will be tested. But for now, it is several days in a row of positive action even though I hold several positions theoretically opposed to one another. Balance, man.

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