Look out above! Unfortunately (or fortunately) my accounts are almost all net long right now, many of them are indexed. While I am personally bearish-agnostic on stocks, I have to take a back seat to the research which says that stocks by and large rise over long periods of time. That is why I am OK with investors owning stock index funds but only if they are prepared to own these funds over a five to ten year time frame without selling at the lows. With that said, I am short term bearish still and my smallest “fund” account is 200% net short via an options position short the QQQ.
In other words, I think the marke will go lower but I certainly “hope” that it will go up in perpetuity. The ration and logic behind this view is not supported by many factual tenets of valuation or historical perspective which leads me to think the best short term trades right now are on the short side of the tape.
So, for now I would consider using today’s monster uptick to lighten up on equities or possibly add shorts. I would not be a buyer of this rally at all. That said, if you own stocks in a diversified portfolio (or portfolio of concentrated value funds) you can take a long term view and stay invested. Personally, I think “Sell in May and Go Away” is a good strategy right now.
