Thursday, August 23, 2012


 It is with relative peace of mind that I go on vacation next week with only 2 of my 25 existing DITM positions "under water", thanks to the upward bias of the overall market (due to Inflation, survivor bias, growth, etc.).Although it is the least desirable direction (except, of course, for the Black Swan, or Bear Market that occurs once or twice a decade - since 1900), the rally does provide a cushion for existing trades, although it makes new entries higher priced, lower in dividend %, and usually lower Implied Volatility. 

Laddering positions month to month is always desirable for diversity of income payment as well as risk. In protracted stock and/or market declines (the opposite of rallies), it is possible to "step down" positions. Such was the case with Waste Management (WM), a long term holding:  

My number one source for DITM candidates has been Seeking Alpha, so I was elated that they accepted my writing for them - in columns and Instablogs. It is possible that this blog may migrate over to them at some point.

Hopefully September will be a positive month for the market, although historically it is the worst one of the year. In Presidential Election years, for the past 28 (since 1900), the market has risen whether the Incumbent wins, loses, and all 28 combined years. According to the Ned Davis chart, the real divergence occurs after October 1, in the case where the Incumbent is to lose - the market tanks dramatically and remains there for the rest of the year! 

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