October Performance

Portfolio performance to 7 November, monthly/6 month performance to 31 October. I will not say much about my performance in October, except to say that I am glad that I stuck with it. In the beginning of the month, I was almost ready to sell all my positions and take the month off. The volatility was very stressful. But it was worth it.

Last week was another stressful one. Massive rally on election day lifted my portfolio to a new high, then it was hit pretty hard by the sell off Wed/Thursday. I was so busy with my real job that I did not have time to follow the markets, therefore I did not reduce any positions, which would have been prudent at some junctures. Did not even have time to set some proper stop losses (I did not want to rush that, as I have screwed them up in the past).

At the end of the week, however, I am not too worried about my holdings. Yes, a lot of paper profits were wiped out, and that was poor risk management. But this market still looks like it is heading higher, and my portfolio is well positioned for that move.

A few of the reasons why I am still bullish: 1) the news is relentlessly downbeat. Everyone seems to know that the economy is going to be really bad in Q4 and through 2009. Even though the employment number on Friday was worse than 'consensus', it was better than the whisper number, and the market rallied. So few negative surprises left in the short-term. 2) The other financial markets did not really participate in the sell-off Wed/Thursday. Bonds, currencies, commodities all moved a bit in sympathy but far less than a 10% decline in the equity market would usually cause. 3) the 100 point decline in SPX was a nice 2/3 retracement of the 150 points it rallied in the previous week (if it falls below 900, then I would start to become more concerned).

So it seems, from my perspective, that the market just needed a big downward 'correction' to shake out the soft longs -- those that had jumped into the rally but did not have the stomach to hold on.

The market now should be better positioned for a slow grind higher. But this is still a trade. Not sure if I will hold this for a few weeks or months, but unlikely to be very long.

MARKET POSITIONS: EQUITIES: LONG CDN EQUITIES (3 units); ENERGY (3 units); SPX (5 units); EAFE (2 units); GOLD (2 units); CDN$ (2 units); CASH (1 unit)