Last week, I decided to drop my trading to virtually nothing, and I intend to remain in that mode until the end of the quarter. Just six days to go!
As you might deduce from Slope’s Woulda Shoulda Coulda page, I’m kind of obsessed with looking in the rearview mirror and seeing What Might Have Been. Poisonous, yes, but sometimes it yields insights.
I have a rather sophisticated and very personal way of “looking backwards” besides this. Sometimes I’ll preserve my spreadsheet of positions into a file of its own and take a peek at it from time to time to see what the P&L is compared to what it used to be.
A couple of weeks ago, when I decided to Exit Stage Left with my 60 short positions, I preserved this in a file called Virus Cover, and I’ve looked at it every day since then. The profits kept climbing in it, of course, but sometime last week, they peaked at $360,000. Since then, the profit has dropped as low as, oh, about $315,000, and it’s been bouncing around.
What’s been quite interesting to me is that, in spite of new lows – – and not just slightly lower lows, but quite substantial new breaks in the market – – the profit has never made a new high. In fact, even when the market was at its very weakest today (and it was of course the lowest for many years back as of Monday’s session), it only got up to about $350,000. Putting it another way, there’s just no more juice to squeeze out of the lemon.
With the VIX plunging from almost 90 to almost 60, I’m sure the same must be going on with options too. Besides all this, there’s another little piece of anecdotal evidence I like to use, which is Slope traffic. I’ve jokingly referred to the “foul weather friends” who only show up when the market is in a state of free-fall, and I only half-jokingly mentioned last week how much I wish I could buy puts on the traffic of my own site. Well, I wasn’t kidding:
I’ll be a lot more comfortable shorting again once the S&P has rallied 20% and Slope is basically a website where only total weirdos and kooks hang out in very small numbers.
Oh, one last thing. I’d like to offer, during these dark times, my Covid-19 Drinking Game. I’d like to suggest the following actions when any of the phrases below are spoken or heard. Good luck.
– Panic Buying
– Flatten the Curve
– Social Distancing