Back in the saddle again
In my last blog about making omelets I detailed my decent from the 98-99 ranks to mediocrity as I was loading up on financials, home builders and anything related. I then proceeded straight to the basement at one point hovering somewhere in the bottom 10-20 players.
In my mind I was pretty sure I'd eventually be back in the 90's ranks but man what a ride back, from low single digits rank to 95 literally in a few days. Now I realize what comes up can also go back down and I might be hanging in the basement again next week but the ride provided me with a few insights anyway.
I was questioning myself about market timing in my decent to the basement. Should I have waited longer to bottom fish? Are the prognosticators of doom and gloom right that the financials and home builders are all going bankrupt and we have only just begun to see the pain?
I think it's been about a week that I went from low single digits rank to 95. So to me this is pretty good evidence that I may have missed the opportunity for some nice gains if I got to cute trying to time the market.
Being mired in the basement kind of takes the fun out of the competition a little and I had seen SpecBear was hogging the leader board for quite some time and I figured he was probably shorting the financials and home builders but never bothered to check his page out. Once I started to make my come back I decided to take a peek at his page and was shocked at just how negative he was. The funny thing is we have a ton of the same stocks with the opposite sentiment.
What I found interesting and a little amusing is that I was thinking to myself that he sees things the complete opposite as I do. SpecBear has bet that the country is heading to hell in a hand basket while I bet that the country will muddle through this mess. I was thinking there is going to be a sea change at the leader board when things really do start turning around and the day I popped back up into the 90 ranks Spec Bear fell a notch.
Now I am perfectly aware that SpecBear could wind up at number one again tomorrow and I could be headed back to the basement if the current rally turns into a dead cat bounce but I think it has been very informative how fast a contrarian bet can pay off. Even if this is just a false start I think the bears days at the top of the leader board are numbered and the next group at the top will be the players who made big bets that financial companies will struggle through the current mess and be fine in a year or two and that home builders will do miserably for another year or so but most of the larger ones will survive and over the next few years the home building market will come back to a rational middle of the road level.
If I can gain 90 or so points on just a rate cut imagine how I'm going to do when things really do improve. The bears think 10 years I say a couple. The CAPS competition will be an interesting arbiter of who is right.