Not Interested In Going Short

Heading into the seasonally weak time of the year in May I was very bearish as sentiment was giddy, but we will now be heading into the seasonally strong part of the year in a few weeks with sentiment a lot more subdued. Hedge funds have largely de-risked and individual investors have done the same. As a result I have little interest in trying to short the market unless all the ducks are lined up.

I have been burned too many times shorting during the seasonally strong times of the year to not take seasonality into consideration. This does not mean that I will not go short, but that everything will need to line up for me to do so. The market will need to be maximum overbought, preferably on a short term and intermediate term basis. Sentiment will need to be extreme. This does not mean that I will necessarily be long, as it is possible I will partially or fully hedge my portfolio.

7 comments:

PJ said...

Isn't September historically the weakest month of the year? How is mid-September a seasonally strong period?

Anonymous said...

No offense, but there is no money in being a pussy.

Tsachy Mishal said...

I was looking a few weeks ahead of that.

Tsachy Mishal said...

No offense taken. But you are wrong. The only way to survive in this business is to be one, when you don't have an edge.

CP said...

There is a huge edge in going short when investors with no staying power are being squeezed.

Funds are heavily penalized for having down months, which makes them quick to close positions.

You want to take over their positions when they are puking, e.g. right now.

Tsachy Mishal said...

PJ. The reason I am looking a few weeks out is because it will take a while to convert all the bears to bulls. Under current conditions I would not be excited to short, other than for a very quick trade, regardless of the season.

Tsachy Mishal said...

CP,

I think under invested hedge funds are chomping at the bit for a pullback although you are probably right that shorts are getting decimated.