Got Shorter

Reached 45% short.

Around 4% of that is really low beta stuff, so its more like 41% short.

I'm comfortable with that as the market is now overbought.  Rallied for 3 days.

Reloaded shorts

I reloaded my shorts yesterday night, before midnight (noon in NYSE time):

I was looking to go a little shorter again tonight, dunno if I'll get the chance.  The market was overbought last night and did not react well to Trump's speech.  

Uncertain

Kept most shorts, trimmed a few.  Rebounds in bear markets can be vicious for shorts.  Market has the potential to rebound from its oversold position, with VIX at borderline 29.  But has not done so yet.  Still waiting to see when I should trim more or reload for another leg down.

Market seems to be ignoring whatever Trump says.  Before the close, he says "Iran really wants to stop the war", after the market close he'll "obliterate them".  My base case is that the threats (not the war) escalate next week as both sides negotiate.  But it can end tomorrow.  Or Iran (and the Gulf States) can be "obliterated" anytime.

Short term uncertain, medium term moderately bearish.

Still Short

Kept most my shorts as market is crashing.  VIX > 30.  I don't know what happens next or when the rebound is.

My portfolio was up tonight more than 1%, or more than I make in 2 months of my day job.

Time for the weekend.

Gone shorter

Night 3 of the rebound, gotten shorter at the start of the session.  Also bought 1% oil (BNO) as a trade - which is the same as shorting the stock market.

Choppy market with a bearish bias.  This is about as short as I'll get.  Look to cover some on the next drop, probably in 1-4 trading days.  The war can end any day, however unlikely.  Or it can get worse.  Follow the market and don't listen to your beliefs.

Cutting exposure and Shorting again

Market was oversold, Trump made an announcement just before market open to make it pop:

Its a kangaroo market with a bearish bias, use the chance to sell:

• Sold some LATAM stocks.  High beta.  Fundamentally, I want to buy them back again when the war is over.
• Sold SOBO, too small a position to track (spin off)
• Sold the gold which I foolishly bought Friday.  I like my gold position, but it was too big.
• Wanted to sell Malaysia Smelting Corp (tin - industrial metal), but market closed today.
• Added shorts, as they has bounced back to the middle or top 1/3rd of Hedge risk range.

I may be a bit early shorting, by a few hours or a few days.  Would prefer to monitor first, but I need to sleep at night. I can still go shorter.

I think theres a 90% chance the war continues this week.  The chance to strangle the Iranian Regime is too good to pass up.  And Israel & the Gulf States will be in a bad situation if the job isn't completed.  Could be weeks, could be months.  The only real constraint is that it has to end before the mid-terms, probably August.  In this market, thats several lifetimes away.

Small chance the war is over tomorrow.  So keep nimble.  Currently a Kangaroo market, with a good chance of going into a correction.

Love Hurts

My portfolio is down 4% in a month.  It hurts:

Its a 7% drawdown from its all time high at the end of Jan.  Gold fell 16% in the same period.  Even in a gold bull market, it can historically be expected to correct 20-35%, so I expect more pain to come. 

I'm up 10% YTD while gold is up 4%.  So I'm "outperforming": rode the upside, missed most of the downside.

The market is choppy: 3-5 days up, then 3-5 days down.   I hate it, but we trade the market we have not the market we want:

• Started covering some shorts early tonight,
• Sold platinum and silver in the last two days, trailing stop-loss.
• Bought a little more gold (RGLD), bad timing.
• Sold my oil trading positions (XOP and BNO).  Still have Var Energi as a longer term holding. 

I don't know if we get a real correction: VIX > 30 with markets crashing from oversold levels and correlations going to one.  I think we should, as the market prices in inflation and a real (not nominal) recession.  But no sign of it yet.  So I'll probably cover more shorts in the next few days.  The war can last for months or could be over tomorrow.

This is the first time I've been able to short the market successfully over a few months.  And the first time being able to trade the chop.  At least reducing the effect of falling gold on my portfolio.  I should be happy about that.

When would I sell Var Energi?  Even through its a long term fundamental play, oil is cyclical.  Prices can't stay triple digits forever else they'll reduce demand with a recession.  Back-of-the-envelope, from 2025 numbers:

• 5.2bn revenue from crude @ 68.3 USD/bbl.  At 120 Brent it would be 9.1bn, or an extra 3.9bn  At 150 Brent it would be 11.4bn, or an extra 6.2bn.
• 2.4bn revenue from gas @ USD 74.4/boe.  Around 15% of their gas price was fixed in Q4, but I'll ignore this cuz its usually only one or 2 years out.  TTF now is EUR 59/Mwh, or roughly USD 106 per boe.  Selling gas at USD 106 would give 3.4bn revenue, which is an extra 1bn.
• Apply Norway's 78% O&G tax to this: At 120 Brent & 59 TTF, its an extra 1.07bn profit.  Or profit goes up 2.26 times.  At 150 Brent & 59 TTF, its an extra 1.58bn profit.  Or profit up 2.8 times.
• At 10 times earnings, that would be a stock price of USD 7 (NOK 67) for Brent 120 and TTF 59.   Or USD 8.7 (NOK 83) for Brent 150 and TTF 59.

The stock doesn't have to get there or could go further, but these would be unsustainably high stock prices.

Fundamentally, its not yet time to begin value investing.  Some stocks in the UAE ETF might be value buys later, but need to get cheaper.  Stocks in general are still too expensive, there's nothing yet where I'd stick my hand out to catch a falling knife.  Need to see real fear of a recession.  And if this war continues long enough we'll get it.