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Let’s Not Fall Into The Gap: Balance and Harmony Pay Well Indeed
Meanwhile, at some point, the retail carriage trade may get just a wee weary and guarded as insider sales soar, market breadth deteriorates and market volume continues to decline from March 2009 highs, suggesting distribution, weariness and selling.
http://www.american.com/archive/2007/september-0907/the-hunt-for-black-october
The Big4 are decidedly short most markets except dollars.
To find out exactly which markets they are long, subscribe below.
So in summary, we have seven or eight good reasons to be guarded about a market of the 500 biggest stocks 65% above March 2009 lows, with peaks so far today at SPX 1089.65, still below 21 October 2009 highs.
It pays us well to consider what-If? well ahead of time.
What if the market begins to cascade waterfall down and is not liquid enough for Trailing Stop Losses to generate fair trade executions?
Now is the time to reintroduce an old lesson of balance and harmony we learned from one of our bigger clients from China.
He told us he lived long and prospered by dividing his assets into three kinds: Paper, Rock and Scissors.
Paper is securities like bonds, mortgages and stocks. Rock is property like commercial, industrial, residential and trade real estate. Scissors are cash to cut the deals to buy at great prices when nobody else can.
When his cash became largest piece of the pie, he bought Real Estate and Securities in equal amounts. When his Real Estate piece became largest, he sold off for cash and securities. When his Securities piece became largest, he sold off for cash and Real Estate.
By doing this, he followed Shakespeare’s timeless advice by Polonious in Hamlet:
Neither a borrower nor lender be.
For loan doth often lose friend,
And borrowing dulls the edge of husbandry.
