In my earlier post I outlined why I believe it pays to err on the side of caution and why I believe we are likely to get a better entry point in the coming weeks. That said, I am still not thrilled with the idea of trying to short this market either. Hedge funds have de-risked and if they decide to re-risk because of a perceived Republican victory or a perceived year end rally the market will likely go significantly higher. The performance anxiety is percolating.
There is also the possibility of a mega merger wave given high cash balances at mega cap companies and record low rates. Additionally, I have been burned too many times on the short side heading into the New Year to not respect the seasonality. That doesn't mean I am unwilling to short heading into the New Year but it does mean I am extra careful.