Friday, August 12, 2011

Right About the Stock Market - But for a Different Reason

In June 2011, I decided to liquidate virtual all the equities in the accounts I manage.  As the events of the last two weeks proved, liquidation was the right decision.   However, the reason I decided to liquidate apparently isn't the cause of the decline and volatility.  I thought that the debt crisis solution would be a disappointment and lead to a market decline, much like what happened when TARP was passed.  It turns out that the main cause of the market decline is the European financial crisis, in particular the issues with French banks and Italy's sovereign debt.

Anyway, this week was a good week to be in cash.  I actually even made some money.  I covered my shorts on Monday for a profit.  I bought some beaten down shares on Wednesday and those are making some money as of the close on Friday.  I made the decision to cover my shorts and make some small purchases base on the article Historic Returns Following a Market Selloff.

In this case,  I guess it's better to be lucky than smart  :-)
For more on  Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

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