What if I am wrong about a double-dip and/or subdued economic recovery!
I have a tendency to be late to trends (which is not a good thing), so this is a real risk for me.
There are lots of smart people, making lots of smart arguments as to why we could get a recovery in the 4Q09. Am I stuck in an old paradigm? I bought the argument that it took a long time to wind ourselves up into this mess, and that it will take longer than normal (or expected) to get us out of it. What if the US/global economy is much more resilient than I am giving it credit for? Then I need to be careful and not expose myself too much, one way or the other.
The other risk is that much in the same way the equity markets overshot on the downside, there is always a chance they will overshoot on the upside. The hard part in all this chaos was determining the extent to which equity market values/levels reflected economic reality.
When the market was down 60% it was reflecting an awful lot of bad news - that was not a bad bet to take. Now we're off 44% (which is huge) and the market has to wrestle with how much this reflects reality.
Happy investing.
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