Incredibly Good Piece

This was an incredibly good piece highlighting the bull and the bear arguments.

http://pensionpartners.com/blog/?p=253 

Bernard Baruch on Bears

Bears can make money only if the bulls push up stocks to where they are overpriced and unsound.

Bulls always have been more popular than bears in this country because optimism is so strong a part of our heritage. Still, over-optimism is capably of doing more damage than pessimism since caution tends to be thrown aside.

To enjoy the advantages of a free market, one must have both buyers and sellers, both bulls and bears. A market without bears would be like a nation without a free press. There would be no one to criticize and restrain the false optimism that always leads to disaster.

Quote at the beginning of "The Art of Short Selling."

Market Due A Pullback

The market is due a pullback. The odds are in my favor. I know that. x number of up days in a row. x number of days without a 5% pullback. But just because I know the odds are in my favor, doesn't make it any easier to sit on losing positions and watch them drain away.

The market is up 16% YTD. 21% in the last six months. The move has been relentless. 7% in just the last month. There has been little to no respite. A couple of minor pullbacks here and there. Other than that, it has been a tidal surge.

The move is flushing the bears and the laggards out. I feel it. I can feel the sentiment changing. I feel better about the future. I see things differently from what I saw them before. I can see the justifications for valuation levels, expanding multiples and all sundry of related thoughts that go hand in hand with this kind of move. Don't fight the Fed (or is it ABE and don't fight the trends/momentum). I have some short positions on that are getting pretty painful. I shorted for the wrong reason (valuation) and they are names leading the charge. I have gone against this thing for the last couple of months - selling into it, putting on shorts and directionally speccing on market puts. I know that you need to manage your risks. I know there are times to cut and run, take the loss, live to fight another day.

But I have been here before. I felt those same feelings, and I have not held to my conviction or had the patience to hang tough. I have spat the dummy and watched as I missed out on the rewards that were there waiting for me. Not this time. I am going to go with my conviction. I am going to have the fortitude to go against the flow. But I am also going to put in some stops that will minimize the damage should it continue to go against me.

Are The Bears Getting Suckered...Again?

Over the last eight weeks we've had the bears getting drawn in by a 30%+ rally.

Now that they've covered some or all of their positions, there is a chance they may getting suckered on this retracement.

With regret weighing heavy on their minds, and risk aversion brought on by a traumatized portfolio, this sell-off may well be inducing bears, who have bought in or who are still on the sidelines, to sell the sell-off. If this turns out to be only a consolidation, rather than a sizeable sell-off, they will again be exposed to the upside.

I don't know what will happen. But the market seems a master of preying upon ones greatest weaknesses.

How Long Can I Stand Being In Cash?

How long can I stand being in cash, while this market rockets off without me?

That is the question all those investors who fled for the sidelines are asking themselves.

This market is shaking the trees and you can bet your bottom dollar, that when most of the bears capitulate, it is time to take it down again.