Got quite a few emails from professionals Tuesday in same boots as me; if you are hedged days like Tuesday sort of stink. Most of the people (outside daytraders) who make money on a day like Tuesday are the ones who held through this downturn taking bullets day after day, vaporizing their (or their clients) capital.
It is quite impossible to be both safe and aggressive at the same time. Remember, when you lose 40% you need to make 80% just to break even. If you lose 5%? Not so tough to get back in the green.
As for us, while I bemoan the fact we would of had a monster day Tuesday if positioned as we were late last week (missed it by THAT much), we were able to turn around a 2% loss in the AM into what appears to be a 1.5%ish gain by day end. This puts us back to a 4% loss for the year which will be a mile ahead of my peer group. I still would like to be green for the year - so near yet so elusive....
I drink Kool Aid for now and we'll see how S&P 724, and 741 are treated when and if we get there. Depending on the action I'll be swigging more of the red juice (unlikely) or starting to rebuild short exposure in large measure (likely)
As for Depressions? Tent Cities? Food banks? Job losses? Forgetaboutit! All you gotta do is change shorting rules and accounting rules & all our problems go away. It's magic folks. Magic!
On a serious note - it would be much more "healthy" if we built a rally over time, not get these massive 5-6% moves which we just give up a few days-weeks later. But beggars can't be choosers. We did the same thing off November 2008 lows - 90% of the rally was in the 2 days when we reversed - then we went sideways all of December, before putting in one last fake run to start 2009, before imploding.
And last... you ARE WELCOME - I only bring out Depression stories when we are in need of a rally [Tent Cities Sprouting in Sacramento and Seattle] [Is the US Starting to Lurch Towards Depression?] That is my gift to stubborn Kool Aid drinkers, and my peer group. Now remember, use this opportunity to lighten up so you can sleep at night again. Gift baskets can be sent to....