Monday, September 19, 2005

Trimming down ahead of fed meeting

I thought I'd be sweating my shorts after the big gains in the market on Friday, but instead it was many of my long positions that proved better to liquidate. Today (Monday) I sold SIRI and BCON in the morning, and STEM at the close. I took a small gain on SIRI and a small loss on BCON and STEM. I had a larger than normal position in SIRI and ended up liquidating the entire thing within the first 30 minutes today because it fell below that key support level of $7 and didn't look like it had a prayer of recovering it today. I quickly scaled out in the $6.90's, and SIRI closed at $6.70. When you can buy it back cheaper than what you sold it for, you are ahead of the game.

The fed will announce whether they are increasing the interest rates or not tomorrow, and is probably the main reason for the unpredictability in stocks' daily charts lately. Making and losing money in an unpredictable environment is pretty much the definition of gambling. Not that that is a bad thing in itself, but it is a loser's game over the longer timeframes throughout which I plan to grow my equity. I believe taking money out of the financial markets requires planning in terms of decades rather than moving from one trade to the next, thinking each is the most important trade in your financial career. My plan is to make damn sure I'll be in the game decades from now, and from that perspective the day to day wins and losses seem a lot less important because they are just small parts of a bigger picture.

So with a lot less exposure than last week, I fell pretty good coming into this fed meeting tomorrow, and I've got plenty of powder to put to work when the time is right. Once again, it is a waiting game, and realize it or not, that puts me in a position of control.

P.S. I was on the phone with Jarod today when he referred to the fed meeting tomorrow as "judgement day". I jokingly reminded him that he was the one going into this fed meeting net-long. He currently only has one ridiculously tiny long position left after closing out all his other positions in the middle of last week =)


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