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The Case For Starting To Build A (Small) Short Position

Why I just took on a new short trade in my portfolio
Tuesday, July 10, 2018, 3:01 PM

So, we're in the midst of (yet) another rally in the markets. But this one feels different...

For those sitting on large cash positions, it's increasingly looking like the long-overdue and long-awaiting end to the secular bull market may indeed arrive this year.

There is NOTHING wrong with remaining 100% in cash and simply letting your cash appreciate realtive to stocks/bonds/etc when the correction hits.

But, if you want to have some upside exposure to the correction, now is a good time to consider how much of your portfolio to allocate to that strategy. And what to put it in. And to start putting small positions in place.

Technically, it continues to look like something broke at the start of 2018. The ruler-straight run-up in the major stock indeces seen over the past decade suddenly stopped as the year began. Since then, we've seen more price volatility than in the past several years combined.

And despite the most recent price action, both the Dow and the S&P 500 remain below their all-time-highs set in early January. And while the NADAQ is now higher, there are many reasons to be concerened about its ability to rise much further -- a rationale I'll lay out shortly below.

Technical Red Flags

This latest rally is rising two important red flags.

The first is volume-related. This most recent rally has occured on exceptionally low volume, near the lowest levels seen over the past year.

This indicates that the optimism represented by today's buyers is not widespread across market participants (i.e., there's not a horde of buyers eager to keep pushing prices higher). This hints that the rally may soon run out of steam.

Low volume driving a rising market also suggests fewer buyers willing to step in to defend today's price levels if they start falling.

The second warning sign is that we're seeing Rising Wedge formations appearing in the major equity indices as we see in this chart... » Read more

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I Just Added To My Short Position

Keeping you updated on my portfolio positioning
Wednesday, August 16, 2017, 2:01 PM

Last year, I detailed out my personal investments in the report How My Portfolio Is Positioned Right Now. It turned out to be one of our most popular articles over the past few years.

In it, I mentioned that I'll do my best to update our subscribers when I make a material change to my portfolio allocation.

Well, I just did. » Read more

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Why The Markets Are Overdue For A Gigantic Bust

It's just not possible to print our way to prosperity
Friday, June 9, 2017, 7:38 PM

As much as I try, I simply cannot jump on the bandwagon that says that printing up money out of thin air has any long-term utility for an economy.

It's just too clear to me that doing so presents plenty of dangers, due what we might call 'economic gravity': What goes up, must also come down. » Read more

What Should I Do?

Google Alerts screen capture

How to Get Alerts of an Emergency

Resources for increasing awareness
Friday, December 16, 2016, 8:17 PM

A cornerstone of being prepared for any type of disaster is being aware of what is going on around you. Since natural disasters can happen with little to no notice, it is important to do everything you can to stay informed. With today’s advancement in technology, it is easier than ever to get alerts about what is going on in your area. » Read more

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Observations From The Heart Of Silicon Valley

The calm before the storm?
Thursday, May 19, 2016, 8:11 PM

Yesterday I made the 2-hour drive back to Silicon Valley, where I lived for 15 years before moving out to the country.

I rarely go back, as I miss very little about the hyper-elite scene there. When I do, though, I feel I have a useful 'insider-now-outsider' perspective that allows me to see things there more accurately than those who live in that fishbowl 24/7.

What hit me most strongly upon arriving back in the Menlo Park/Palo Alto area, is how little of the craziness has changed since I left 4 years ago. I don't mean 'unchanged' though; rather that the same craziness is there, just more extreme than ever. » Read more

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The Fatal Blindness of Unrealistic Expectations

We are damned to fail when we avoid hard truths
Wednesday, October 28, 2015, 10:10 PM

We, as a society, have very much indeed lived beyond our means. By building up such a tremendous amount of debt through our profligacy that a small rise in interest rates would be catastrophic. That our children and children's children will be "paying backwards" for our largess, unless some debt-clearing event transpires (which I think will). » Read more

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Weather Is 1,557% More Harmful Than Helpful To Corporate Profits

Or so we're being told
Wednesday, March 26, 2014, 8:55 PM

It's just another day in the spin factory so let's have some fun with it.

Lately 'bad weather' was cited as the reason that Walmart and FedEx earnings were disappointing.  If it isn't 'one-time' charges that happen every quarter being removed from reported results, it's the weather being blamed for somehow hurting operations. » Read more

Daily Prep

Visualizing the Impact of Humans

Interactive timelapse landsat photos
Wednesday, July 3, 2013, 5:18 PM

A fascinating and sometimes disturbing look at the impacts humans have on their environment as we develop, grow, and inhabit our world.  You can explore the pre-selected regions/topics (oil sands) or use the "Explore the World" link at the bottom right of the page to type in your own location and look at how your region has changed over the past 30 years. 

http://world.time.com/timelapse/?hpt=hp_t3

Note:  Grab the slider and move it back in time to see how things might look in reverse.  How long would it take for Nature to reclaim the land and reverse the impacts of our development and growth?