Friday, April 18, 2008

"Doorman Syndrome"

As of the moment of this writing my trading portfolio pretty much "bleeding" on most of positions - I am 80% net short, started the week at 20% net short, was adding as market rally progressed( About 50% of short position is DUG - already at a loss of about 5%).


That rally had to happen, mainly because of "Doorman Syndrome" and here is

the Story:

One fine day back in 2000, right in the neurotic euphoria of the "New Internet Economy/This time it is a different story", when I came back home from work, the doorman of the building where I lived at a time, stopped me and was excitedly describing to me for about 15 minutes "how much money he made on the stock market, about to retire, well - he WAS retired at that time, and how EASY it was to make money on the stock market"

At that time I was, like a lot of other thinking people PARTIALLY in the market, I just found it difficult to accept the magnitude of degenerate feelings surrounding "The New Big Thing", so, truly I did miss A LOT OF upside by been overly cautious.

After "Doorman" conversation took place - I immediately went back into the market, 100% of my money.

SHORT, I went SHORT, very Marry Short. Not so Marry in the beginning, I recall not been able to sleep at night, not "sleep well", but sleep at all, pain was unbearable at times, especially if I tell you that in spite of my latest bearish ideas I AM a perpetual BULL , and by going short back then and been wrong I thought that punishment is deserved for "not believing".

OPWV ( back then it was and before merger, I cannot even recall tickers) - I shorted it at $800 just to see it at $1000 few weeks later.

I could not take the pain, I thought that preceding downturn was just a corrective action and market resumes steady move upward.

For the next few weeks, I continued to listen to doorman ( very, really very nice guy and quite smart one - for been in the position with the minimum amount of responsibility ) and...

I shorted (OPWV) AGAIN ... this time at $1200.

Needless to say, I lost sleep again, most likely gave myself a word to stay away from the stock market forever and... next thing I knew - it all crashed, and kept crashing, and sliding, and falling, and falling apart and ... I covered my short positions ( too bad I did not have many LEAP PUTS), so I covered, for example (OPWV) at about $6

Will it be like that this time? I don't know...

What I do know - I always watch for "Doorman Syndrome"

When "everyone makes killing on real estate and it is easy!" - it is time to short.

When "everyone makes killing shorting subprime and it is easy!" - it is time for 5% a week oversold/over shorted rally.

When "everyone believes that the worst is over and it will be easy to be long!" - it is time to be SHORT...AGAIN

Like they say: "Market will do what we expect it to do, only not WHEN we expect it too"

This time it is NO different, this time it is commodities and related ... TIME TO FALL

I know now that it pays off to stand the pain - pay off might be great ( as long as no leverage is involved )


P.S. I heard there is a great new International Coal Energy Oil Steel Shit ( Pardon me - fertilizer ) Company - I believe the name is ENRON.

One more thing - according to the latest Commitment Of Traders Report - all big guys are bullish now - of course they are always right after loosing billions of dollars.

HSBC - $10.6 billion (as of February 2007 - and we all know how optimistic that data was )

Merrill Lynch - $7.9 billion

Citigroup - $3.2 billion

JPMorgan - $1.7 billion

Goldman Sachs - $1.5 billion

Bank of America - $1.4 billion

Wachovia - $1.3 billion

Morgan Stanley - $940 million

Lehman - $700 million

Bear Sterns - $700 million

At the end all these losses will probable add up to $600 dollars Tax Rebate founded by the money collected from you and me on the first place.

So we get hit twice - first loosing jobs and houses due to Credit Crisis and after that getting taxed more and seen our tax dollars misused to help Bear Sterns (BSC) and Doctor Hortons (DHI) of the Worlds, fight needless Wars, Subsidize Farmers, Keep Troops in Europe for no apparent reason - well - the re is always a reason, the same old reason - to help rich to get reacher.

"This will lead to only possible logical outcome" ( I, Robot)