Smarty_Pants

Please, Let October Be the Worst of It

An expected lament from one whose view toward the market is that "diversification ... reigns supreme". Buy and shuffle for the long term without any truly significant thought for excessive risks.

Back in November Mr. Piscerno was willing to admit that being 'overweight' in cash might be worth the lost opportunity, but that one shouldn't give up on one's diversified portfolio. Simply massage the proportions a bit at the edges.

Well, if that's your approach then you have to take the lumps that follow. My cash/short positions since that time have rewarded me quite nicely.

To me "speculate" means being willing to go entirely to cash when it looks like a huge haircut is coming my way, and it doesn't mean moving 2% out of stocks and into cash while holding for the "long term".

If you're going to profess 'nibbling at the edges' as a stragegy, then you shouldn't be complaining about sustaining a disastrous month or two as a result of your neglect to safeguard from large losses.

Sometimes markets go down. That's why true speculators are willing to sell everything and go to cash.

Those who 'trimmed' neatly last year and are down 40% since then now have to make a 66% gain to get back to even. Those who saw great risk and sold everything can afford to wait for a clear bottom, miss the first 20% of the upmove, and still come out ahead.

Buy and hold is great for a bull market, but the last bull ended in November 2007. The successful rules for bear markets aren't the same.