Saturday, May 19, 2012

No Worries

  On May 2, 2012, I initiated a long-short portfolio in one of our taxable savings accounts.   Specifically, I have been buying stocks of quality companies and shorting stocks of companies with financial, business or competitive challenges.  On most days, the decline of the long short portfolio has been much less than than the market, even to the point of rising in a down market as it did yesterday.

As the markets have declined, I've had none of my typical challenges as the stock market declines:  when to buy, went to sell, and second guessing almost every decision I make.  As a result, my anxiety level has been very low, to the point of being non existent.

Also, the long-short portfolio enables me to not worry about the market response to a policy decision.  For reference, my predictions typically been wrong.   However, with a long-short portfolio, I believe my total investments will benefit not matter which way the market goes.

For example, I no longer ponder the effects of President Obama's growth (a.k.a. more government spending)  initiative.  If it produces more inventions and successful businesses as Mr. Obama claims happened with prior government "investments," then my longs will do well and I can exit my shorts if needed.  If the growth (government spending) initiative has a negative impact on the economy, as I would expect, my shorts will decline resulting in a positive return and I can purchase more stocks for the eventual recovery.

My new attitude to Mr. Market is "bring it on!"  :-)

For more on Reflections and Musings, check back every Saturday  for a new segment.
This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

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