Well, for a holiday weekend, Slope has been pretty busy!
I've got about 100 shorts on, and – unfortunately – about 161 potential shorts just sitting in a watch list. Having 250 shorts would be a better feeling right now, but my time machine is still not complete.
As I'm typing this, the equity, crude oil, and Euro markets are all getting mauled, and the gold and bond markets are pushing to never-seen-in-human-history highs. Silver, strangely, is left out in the cold.
Late in July, I was thrilled to see the profits on my shorts climbing, and I happily took those profits. Unfortunately, the stocks just kept falling, and it became clear to me that, for shorts, the biggest profits are actually in the very last stages of the plunge.
In other words – – and I'm just making up these numbers for illustrative purposes – – if a stock peaked on day "1" and bottomed on day "10", then you might see 30% of your profit by day "7" and then the remaining 70% of the profit on those final three days when everyone completely freaks out. My problem has been covering on day 7, patting myself firmly on the back for getting a profit, and then watching the real juice happen in the final stages.
You can see the problem with this, however. You never know when the bottom is in, and oftentimes – especially these days – you get these V-bottoms which permit almost no time to scramble out of a position (particularly if there is some bullish news in the middle of the night).
My intention this time, however, is to try to be more patient with these shorts. Unless something huge happens between now and Tuesday's open, I am expecting to see very handsome profits within seconds of the opening bell. But those may only be 30% of the potential profits of these positions.
Sorry for the rambling, but I've been thinking a lot about this lately, and I wanted to share the thoughts about the value of the "final plunge."