Friday, March 29, 2013

First quarter perspective

For the first quarter some of the ETFs:
+12.0% Russell 2000 IWM
+10.0% S&P 500 SPY
- 2.8%   20-year US Treasury TLT -2.8
- 3.6%   Emerging Markets EEM
- 4.7%   Gold GLD
- 6.6%   Silver SLV

Three more quarters of the same would mean +40% to +50% for the stock market, so odds are against that. Same for silver, three more quarters like this one and it is down 30% for the year, unlikely. (None of the above factors in the modest dividends.)

That said, I am not with the crows cawing about an imminent stock market correction, or the true believers saying this is a great time to be buying precious metals. The stock market advance is almost sure to reach more new highs. Metals haven't shown any real signs of a bottom, especially on headline sentiment and chatter.

As almost always, when the stock market goes straight up, my accounts tend to lag. I was on the right side of the market, mostly long, but because I hedge, because I trade long and short, because I sometimes trade bonds, or metals, I tend to lag behind. It goes with the territory. I had a good quarter, but not as good as the top ETFs (or as poor as the bottom of the list).

I recently had breakfast with a young relative and I talked about this tendency to be cautious. I prefer that my account go up slow and steady, with a high percentage of winners. I have little stomach for losers. Some trading styles are taught with 1/3 winners, 2/3 losers, but the winners are big home runs so the overall picture is profitable. I don't have a personality that can stomach so many losers. I am also a relatively slow moving trader, so vehicles such as the triple leveraged ETFs are not for me. Weekly options are not either. I'm not a big fan of the new 10 options either.

"Stick to my knitting," do what I am relatively good at. If I see something really good, maybe take a shot here or there, but it has been a long time since I have done that even. Certainly on big movers such as LGF Lions Gate Entertainment which is up about 50% since December 2012 (and 400% from 2011 when it was 6), more aggressive strategies would have reaped huge rewards. 

I am always learning. One reason I go to the Canslim meetings is to try and adapt parts of that home run swinging strategy to my relatively cautious trading style.

I hope all my readers had a good quarter, and continue on to have a good rest of the year. Cheers.

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