Thursday, August 13, 2009

A rare point in my investing life.....

So here's the skinny. As of today, I am 80% cash in my portfolio. I spent the day closing out all of my open long positions. The only positions I have left are my shorts currently, and I will be adding a few of those over the next 1-2 weeks.

Here are the numbers:

Couer D'Alene Mines: Closed out at $15.65. Taking into account the 10:1 reverse split (entry price of $.61) I have booked a 157% gain since last December

Amorfix Life Sciences: Closed out at $1.00 flat. Entry price of $.30 for a gain of 333% since December.

Silver Wheaton: Remember buying Silverstone for $.45/share back in November? The buyout at $1.80 / share gave me Silver Wheaton at $10.00 - closed out today for $10.92 for a whopping gain of 409% in 9 months!

Uranium One: Despite the fact I think the forward looking fundamentals are very positive on this company, I think it's going to be a hell of a lot cheaper in the next 6 - 10 months than it is today. Closed out at $2.77 for a gain of 31% in 10 weeks

Canfor Pulp Income Fund. Purchased @ $2.20 / share in early June. Closed out today at $3.68 for a nice gain of 67% in 2 months!

Chartwell Seniors Housing REIT: Purchased in December for $3.88 / share. Closed out today at $6.72 for a gain of 73% plus $3000.00 in distribution income during the duration of the trade.

I guess you can say I just had one of those moments last night. I know I have been calling for a top in the S&P 500 for a while now.

But sometimes you just look at the big picture, listen to the sentiment, watch the dumb-money, look at the force and strength of a move like the one we have ridden up in glee, and just sort of stop.

And really look.

And then you have that beautiful moment of clarity where you realize that in the short-mid term there is still so much debt destruction that is going to occur and creditor insolvencies that are going to play themselves out that the market HAS to make AT LEAST one more new low.

In fact, there is going to be so much demand destruction for the next 2+ years that we will probably see a major major rally in the US Dollar and in US Treasuries. So here's the question, then, dear readers - "Gee, Derek, if you've been saying all along that the USD is doomed and worthless and that the US Government is really insolvent and can only pay back their debts by inflation, and NOW you are saying the opposite, you are a total liar!"

Well, just to clarify, no I am not saying the opposite. In fact, I still hold very very firm to the belief that the USD is doomed in the long term and the US Federal Reserve will eventually hyper-inflate the last gasping breath out of the currency whose value it swore to maintain back in 1913.

But that's going to be a bit further out. For now there is still some serious serious deleveraging that needs to be done. And deleveraging leads to a faster fall in asset prices, which leads to a faster rise in unemployment as government maintains minimum wage (the market is actually great at adjusting wage and price levels to perfectly match demand and supply, funny enough!). Thus more and more people are completely out of work deteriorating demand FURTHER driving prices lower and debt costs higher.

So get rid of your debt if you can. For the next couple of years.

Anyway, here's the game plan:

I am going to find a few choice companies and ETFs that I will either short or use Inverse (they make money when the market loses) Funds to play a nice sized crash in the US markets. Probably markets world-wide, to be honest. China is currently experiencing a huge asset bubble that will burst before their own economy can adjust all of the malinvestment caused by supplying economies over HERE racked with malinvestment due to the Federal Reserve and Goverment Intervention in our economies.

I'll post them when I find them!

After this next major leg down, which I think could last over 6 months all on its own, will probably be one of the best opportunities to buy gold and silver and stocks that we will see in the very next long era of investing.

I am holding off additional silver purchases as I think silver may very well touch back down on the $8ish lows that it made last fall with the market crash. At that point I will take a good chunk of the cash I have in savings and convert it to silver savings.

Then we can go value hunting again! My favorite!

Cheers all. Happy Investing and Stay Rational in these times.


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