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Mostly Out of the Market for Now

Having so much uncertainty about the coronavirus in combination with a market that is at all-time highs, I made the decision Wednesday to get (mostly) out for now.  Over the last 2 days I sold down nearly all my positions.  I’ll wait this one out until I feel a bit more clear about where things are headed.

I don’t have a clue whether the coronavirus scare is over or whether it is only in a lull brought on by the strict measures being enforced in China.  It seems to me that if 10+ cities are shutdown, we should expect to see the number of cases slow.  It is also possible that the number of cases have simply stopped being reported.  From what I have read of flu’s, they don’t really just disappear so it seems at least possible that this is not one and done.

But I’m also being influenced by the market.  When the market was down 70 points on Friday I was buying a few stocks, but after the move this week, in the wake of what I don’t really see as a resolved situation, it just doesn’t make sense to me.  Yes, I know – stimulus.  Whatevs.

As I’ve said on a few occasions, because I don’t run money for anyone, and therefore have no investors to answer to and no shareholder letter to write with returns to justify, I just have no reason to take risk when I don’t feel comfortable doing so.  The market is at an all-time high.  The risks seem to be plenty.  So I’ll just wait this out for a month or so and see what happens.  If I miss a 5% move, big deal.  I would think that most of the euphoria of a virus-nonevent has been already priced in over the last 4 days (but who really knows).

I still have a smaller position in Smith-Micro, a smaller position in Sonoma Pharmaceuticals, my position in Nuvectra and Schmitt Industries (which announce a voluntarily delisting – I mean come on!) and a couple other tiny 1% positions.  I have two new positions that I have kept for now, Rada and Sharps Compliance, neither of which is particularly tied to this virus and Sharps should be positively correlated to it.  I also continue to own my gold stocks and I did add a bit to Wesdome this week when it got into the low $8’s.

My positions remain hedged with index shorts.  Though not in the practice portfolio where I cannot short, in my actual portfolio I’m still short some shale names, a couple of airlines and a couple cannabis names.  All very small as I really hate losing anything material on shorts.


7 Comments Post a comment
  1. I think this is great. Knowing yourself is such a giant value-add.

    February 12, 2020
  2. ijw z #

    What is bad about delisting SMIT? Was kind of expected? Liquidation will probably take at least a year, and this way they probably save several $100k in listing costs.

    February 13, 2020
    • Its just a negative to have a stock in your portfolio down 50c in a week.

      February 13, 2020
      • Also, have to sell from registered accounts, probably won’t have volume, and I won’t be able to see level 2 or quotes with my platform.

        February 13, 2020
  3. ijw z #

    This may be a bit dark, but wouldn’t funeral companies be a good hedge here? If 1% of the population dies in a pandemic, I would say funerals would tick up quite a bit.

    February 16, 2020
    • ijw z #

      FWIW looking at past pandemics, ones that were at least an order of magnitude worse than this one so far, none seemed to really have an impact for more than a year or two. And a lot of them did not have much of an impact at all on markets.

      I think if you avoid high risk stocks, and buy what is cheap, you will probably do fine over a 1-2 year time horizon?

      February 16, 2020
      • That could be. I’m just not going to try to predict something like this. like I said in the post, stepping aside could be a mistake and I am at ease with that.

        February 16, 2020

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