Tuesday, December 28, 2010

Brian Wesbury

In December of 2009 I reviewed Brian Wesbury's book It's Not as Bad as You Think and gave it a five star rating, but didn't agree with what he was saying because he thought the market was going to rally in 2010 and into 2011. This was at a time when pessimism was rampant on Wall Street, and out of the two dozen or so finance and economics books I read during the latter part of 2009 and early part of 2010, he was the only author except for Steve Forbes that put a positive spin on the markets. Well, kudos to Mr. Wesbusry for being dead on with his assessment. In It's Not as Bad as You Think Wesbury states the DOW could reach 14,000 in the not too distant future. According to his blog First Trust Economy and watching him on CNBC, he is still bullish on the markets for 2011. If you would have taken his advice when he was the lone wolf out in the wilderness, you would have profited handsomely. I just wanted to give him a shout out for not only being right, but taking a gutsy stance.

I haven't been posting any updates to The Ithaca Experiment for a few months because I am still short the market and didn't want to be repetitive like Chicken Little chirping "the sky is falling" over and over again. The market had a very good 2010, especially since September when the rally seemed to have snowballed into a very nice year for those that are long equities. Do I regret being in leveraged short ETFs? No I don't because I still believe that there will be a day of reckoning with the massive debts that governments have accrued - especially in the "civilized" world.

This portfolio is a multi-year holding, just like most of my positions when I was long equities during the 80's and 90's and most of the double aughts. I don't like to sell for tax purposes, and statistics show frequent trading is not good for your bottom line. It is very difficult to time the market so I need to follow my gut instincts. As long as I don't panic and sell anything, all I have are paper losses. I have to be patient and wait it out as long as I remain solvent in my ETF holdings. My positions in ProShares Ultra Short S&P 500 (SDS) will be less of a problem of staying afloat than my holdings in the Direxion Small Cap Bear 3X Shares (TZA) because the former is double leveraged whereas the latter is triple leveraged. In fact, my allotment of shares in the Direxion Small Cap Bear 3X Shares (TZA) have already done one reverse split since I've owned them and may in fact do that again if the price falls to hat sizes once more. I have thought about selling them, but they are a small percentage of my portfolio, and, I believe they will get me to break even point eventually, or pretty close to it. I'm going to just let it ride as they say in the casinos.