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Trading Believes

Have you been invested since March? Long Stocks? A 100 %?

Well, I was not. I had about 30 % of my money in Gold and Gold Stocks, but the rest was sitting in cash. Fool I am.

I was trading my beliefs. I believed, the market can not go up that fast that furious. No way, given the current economic conditions. Every correction since March 09 was an indication for me, that the next crash is here. I do not know, how many times the SPY healed itself from bad technical indications during the last 8 month. The more often it happened, the more certain I was that the correction has to come now.

I handle quite a lot of forecasting and planning at my workplace. Going trough a lot of prognosis data from all kinds of sectors worldwide - construction, SEMIs, Solar, automotive, pharma, consumer care - boy, I can tell you no company has the certain feeling the crisis is over, the worst is behind. Visibility is still short, and especially not towards the end of the year. QoQ and YoY prognosis is still like riding your car on the highway in a misty night: Just the chance you could hit an object lets you pull off the throttle. And all the corporations are doing the same: be easy on building stockpiles, keep production low, no costs expansions, go for a more flexible work-force, ....

But the lesson is: This has nothing to do with the markets. Maybe I can find a hundred arguments why the markets move up. But for what sake? The lesson is: don't trade your beliefs, trade the tape.

I did blame myself a lot when I got the 'big picture' right but timed the trades wrong. But in the end, the effect is just: NO GAINS. Having the big picture wrong and trading it correctly has just the same effect: NO GAINS.

NO GAINS in a market with clear trends is what I should be blamed for. Nothing else.
And that's the lessen of the last 8 months: trading the tape I would have been long the general stock market and Gold. Trading my believes I was only long Gold. Room for improvement.