One Step in the Bear Side

As I wrote in my previous post, the Bear side is strong with me and I'm afraid I've finally stepped in again. Just one foot for now...

In my previous post, I was quite proud of the performance of my holdings in an asian equities fund in GBP (+8-10% for the year). But on June 29th in the morning, just a few hours before the big slump in the stock markets as there were concerns about the Chinese growth, I asked the asset manager to get me out as these profits vanished to something close to 5-6%, -3 to 5% in a couple of days, it's going fast (and I've not checked yet where the order has been executed, probably a couple of percent south)... On that bucket, the managed equity funds one, I'm now 100% on UK Gilts, let's say that the default risk of the UK remains acceptable... for now The same day, I initiated a short position on the DJ Eurostoxx 50 (SX5E) at around 2570, the first of several if things keep on going badly. As one can see, one clear advantage of minimum diversification is flexibility : in a couple of hours, a fax and a few clicks and I'm able to switch from long to short my whole position.

Back to the last summer, the main argument for me being bullish was the way the Sheriffs, governments and central banks, were coordinated to fight the crisis with a set of stimuli, measures and the will to put whatever it takes to recover. To me, the name of the game used to be "Don't short the Sheriffs", but is it still the case? The reason why I stepped from bull to bear is not only because in the debate between "austerity" and growth as I discussed in my previous post, I think Germany is wrong, but mainly because of the de-synchronisation of opinion and action among the Sheriffs, particularly after the last G-20 meeting that I found accomodating for both parties and ruled nothing out. That's enough for me to stay on the sidelines with my managed funds and start testing the market with a short position on a stock index.

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Great Post Sauros. Last week I had a similar experience with my NG position. Last Tuesday when the prices were down at about 4.65 I thought of adding to my long position. Instead, I stopped myself out of the trade. Sometimes the best trade to make is not to trade at all.

Have you had any experience trading the BE 500?

Batman wrote:

Great Post Sauros. Last week I had a similar experience with my NG position. Last Tuesday when the prices were down at about 4.65 I thought of adding to my long position. Instead, I stopped myself out of the trade. Sometimes the best trade to make is not to trade at all.

Have you had any experience trading the BE 500?

I've never traded the BE500. For Europe, I stick to the DJ Eurostoxx 50 which is the most liquid.

Congratulations for your move, I know it's not easy to get out from a losing position and averaging down can be soooo tempting. It shows you start mastering the trading game