Lightening up positions and taking profits

By , January 30, 2013


In the face of soaring complacency and optimism I am lightening up some equity positions and taking profits. To the left we see the VIX at near lowest levels since just prior to the onset of the GFC. With markets challenging their all-time highs, I would feel more comfortable with an ascending VIX, not a descending one.

This tells me that confidence and complacency are high. I am also seeing a lot of scorn directed at those who seem to agree with me, combined with numerous rationalizations on why the markets have nowhere to go but up. For instance, some guy on twitter has deemed this  “crass contrarianism” as “silly”, and people are pretty eager to agree.

So it’s time for me to take some profits off the table, including RIM – thanks for the easiest double+ ever. I once again made my cardinal investing error and wished I had bought more. I also lightened up a few of my Euro indexes and took profits on Portugal Telecom.

I should also mention I sold some of my beloved Tucows. I had a small position in another trading account I decided to liquidate for a tidy gain but I am still long and strong a much larger position within my RRSPs and plan to keep adding there when the circumstances present themselves.

Further justification of my thesis was just seen on Business Insider which just ran this article about Hedge Funds being net sellers while private, individuals are now piling into the stock market. As we all know, Business Insider is the “Gawker” of the financial blogosphere – more about sensationalism than substance, but as I peruse the comments of this article I see more rampant bullishness than anything else….








And this nugget:












I have to admit, I don’t buy the logic.

My point is not that hedge funds are the “smart money” and thus we should follow them onto the sell side.

My point is that what is happening now is in line with my overall observations about the market:

  • When new highs are greeted with complacency and bears are shouted down, you are in a higher risk/lower reward situation.
  • When new lows are greeted with pessimism and ridicule, you are in a lower risk/higher reward situation.

I’m not worried about “missing out” on further upside moves, I’m comfortable with my positions and now I have additional cash to add more on a pullback or look for some other low risk / high reward opportunity.

Who knows? Maybe it’s time to revisit Cyberplex 🙂 Now that they’ve cleaned up their balance sheet and gotten the albatross of that disastrous Tsavo Media acquisition off their back, they’ve got a chart that makes anybody who’s ever read the Stan Weinstein book instantly horny (briefly explained here)

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