I came within a whisker of throwing in the towel yesterday on my short ETFs and going into cash as the market roared up on all major indices wiping out my gains from Friday. The stars are aligned in favor of the bulls and I've been on the wrong side of the trade for well over a year now and have paid the price. The reason to sell would be to stop hemorrhaging money and have a nice tax write-off, but it would also mean I'd jockey myself out of position to take advantage of a correction in the near term, if indeed a correction is ever going to come. I hear all of the bulls on the business networks talking their own book and according to them, we are going to keep rallying for the foreseeable future. I should probably just turn off the television, but I enjoy watching the business news, at least in small doses.
Even an exogenous event like the revolution in Egypt can't derail the market. The market usually doesn't like uncertainty and this is serious stuff that's going on over in the Middle East. It just made me think about my investment decisions. There is no way I regret investing in short ETFs because at not only the time that I purchased them, but increasingly more so now, I believe that the economy is being inflated by the government and is due for a crash once the printing presses shut down. The market is always looking forward and as inflation starts to creep back into the economy, the FED will have to increase interest rates and that should cool things down for awhile. When that will happen is not in the realm of my expertise, but I'm counting on it happening before the Ithaca Experiment portfolio gets so low that I will have to sell and go into cash.
If you have been following this blog, you may be asking yourself how much time am I willing to sit on my positions or how much more money can I afford to lose. Well, I'll stay the course for as long as I remain solvent. The market can rally considerably more until I will have to abandon ship in order to salvage something out of my original investment. I realize the market has had a terrific run the past 5 months - up over 20%, but I seriously doubt it can continue at this torrid pace. I figure I have about a year's time until I have to bail. In a year's time, anything can happen.