It appears that despite my essay In Closing a substantial part of those who comment on my blog have failed to read for comprehension — or somehow think that they’re going to change my mind on the essence of why I write for public consumption at all.
I speak specifically of the never-ending parade of people who appear to have one — and only one – interest in the content of my thought process when it comes to the economy: How do I exploit what is going on to get “mine”?
The unsaid part of the question, however, is the most-important part. The real question, stated as a full sentence, is this:
How do I exploit what is going on to get “mine” while screwing everyone else in the ass: My neighbors, my associates, MY CHILDREN AND GRANDCHILDREN.
And yes, that is your question.
How do I know this? Because I put the exact same question before people in my family some 15 years ago over a holiday dinner, and it marked a point where I pretty-much literally walked out for quite some time afterward when the answer was simply, in the end analysis: I deserve it so **** you and yours.
Well guess what folks — I am certainly no more tolerant of that crap coming from people I know only because of their presence on a message board than I was from my own family.
You want the answer? I’ll give it to you here and now, because it’s simple, if that’s your goal.
Find the asset classes with the largest delta in P/E and P/S that have positive momentum and go all-in on maximum margin with a moderate stop under each position. Pick at least a dozen but no more than 20 names and move the stops up to maintain the same percentage gap between price and the stop at least once a quarter; monthly or even weekly is better if you have the time for it. You will get stopped out plenty of times but the ones that hit and run due to the use of leverage will be home runs. Do not replace the losers. This is the very simple model I ran in 2006 and cleared right around 30% on the at-risk funds .vs. ~11% for the SPX on the year, and I was only exposed for six months of the time. You do the math on the IRR for that strategy.
This post was published at Market-Ticker on 2014-09-04.