Wednesday, November 26, 2008

It's a Lot Easier to Play the Short Side

I keep getting asked if the market's turning around right now. Yes we've bounced a bit over the recent week, but don't think we're out of the woods yet.

Remember, there are such things as bear market rallies and I believe we're staring straight in the face of one right now. It's a whole lot easier to play the short side right now. Every time the market's going up the volume decreases, which makes betting on the market going down is a lot easier.
So how do you make money on the short side without taking on unnecessary risk? It's a lot easier now with the ETFs they have out there to eliminate the unlimited risk.

I guess if I HAD to make an argument for equities right now it would be that you can sell happiness and buy fear right now. But you have to be nimble, VERY nimble. Investors are getting happy very quickly right now, even though we're only getting relief rallies. I know this because all that's driving the market right now is stories of global growth, which isn't what you'd be seeing if serious investors were getting in the market. So all we're seeing is people covering profitable short positions, which definitely does not mean we're in a new bull market.

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