No Man's Land

That's where I feel the market is right now. There's enough evidence to suggest a ST low is at hand but there's still a ways before the coast is clear on a medium term basis. I have vowed long ago to resist  playing ST wiggles in the market because the shorter the time horizon the more random the market is and the closer you are to pure gambling. However, if this year is going to be a flat or down year as I expect, then I don't want to just sit around every day with my dick in my hands. I want to make money and so that means I may have to take a more active approach in the market and get out of my comfort zone of micro cap investing. However, I know all too well that the moment you start forcing things trying to make something out of nothing,  i.e. making trades without a strong edge, you will lose money. When there's no mouth watering opportunity you just have wait for as long at it takes before one shows itself. It may also mean that you need to start looking elsewhere in different markets/sectors  for opportunities but you gotta make sure you know the territory.

I've said it here before that you only need to make a few moves every year to have big success in the market. It's obviously easier said than done but it's true. It's also true that sometimes the best move could be no move at all and take long breaks away from the market when conditions aren't appealing. Not only is this a disciplined move but it allows you to mentally recharge/reset and come back with a fresh set of eyes. If you are a bottoms up stock picker then you don't care what the market does and so there's no reason for you to take a break. If you take a top down approach then taking a break as per the above is beneficial. I consider myself a bit of both. If I see a really compelling stock I'm going to make a move regardless of where I think the market is going and I will hedge or keep a cash reserve if need be. A lot of value investors don't pay attention to the macro but I do because I know individual stocks don't always exist in a vacuum although they can at times; but as we saw in 2008, 99% of stocks took a beating regardless of their own specific set of fundamentals. In the 2000-2002 bear market there were some stocks/sectors that did well and did not get caught up in the bear market vortex, but the majority of stocks did go down and so having success stock picking is much, much harder to do in bear markets than in bull markets where you have the rising tide lifting all boats effect. Newbies who never experienced a bear market learn this the hard way. 

The bottom line is that you don't have to play every single hand. You can fold and fold and fold again until you are dealt pocket kings or aces. The market is not going away. You can take a sabbatical for a month, 6 months, a year or whatever it takes. 

One trade I'm eyeing is long TLT calls. I'm kicking myself a bit already for missing this move. I won't chase it though and I'll wait for a consolidation if and when it happens.