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Long/short equity, special situations, momentum, research analyst
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Could we get a little correction in this market over the next few weeks? Sure. But I chuckle at the masses who have been waiting for a pullback over the last two weeks. One would assume they are waiting for a 10%-15% pullback but no, most just want 2%-3%. Is that really worth the risk? Seems like big risk with little reward to me. The big reward and path of least resistance this year is to the upside.

My economic timing strategy says that you couldn't buy in 2008 and you can't sell in 2009. '08 was a falling knife, it felt like everything outside of housing or financials was a good value buy but the rate of economic contraction was increasing, and it's force brought down all ships. Because of the economic trap, bottom call after bottom call turned out to be folly. Now in 2009, everything is the opposite. There are 2 types of investors today, those who want a pullback so they can get in, and those who are already in. That dynamic makes short selling a tough game. Last year I expected many to call premature bottoms and they did, this year I expect many to call premature tops and they will.

Admittedly I've been left in the dust on the most recent bank run because I didn't understand how these suckers could rally in front of stress test dilution; I was wrong. 'The worst is behind us' thesis is very powerful. Bernanke calling for any positive growth this year is very powerful. This could easily take us back to Dow 11,000-12,000 which would still be 2,000 points below the 2 year highs. Bank capital concerns really threw us into some nasty market depths, far beyond what was economically necessary. You ETF players out there can feel very comfortable holding this year. That includes SPY, IGM, and QQQQ. I especially like the 2011 QQQQ option LEAPS at the $40 strike price. If we do get a little pullback in May this would be a great time to average into such a position.

At this stage of the recovery, it's not a time to be a trader, it's time to be a mid term investor. Buy the right option LEAPS and you're setting yourself up for some solid returns in 2009.

Disclosure: Long QQQQ and XLF

Source: 2009 Is the Year of Premature Top Calls