I’ll be wrong sometimes

Good morning and welcome back to the garden where the apples sure look tasty.  It’s a nice quiet morning, which, after yesterday’s 3% plus moves in the markets, is probably the best the bulls can hope for right now. I mean, there’s also that 20% move off the lows of late August too.  Wild, wild markets. Do you remember how scared you were back in August?  Remember how truly frightening it was to buy stocks, much less long-dated, out-of-money calls, in names like Sandisk which had fallen from $40 to $33 or in any of the many, many other names and calls we were buying back then at the lows?  And now, as the markets are all up huge from those lows and the same mainstream media that wanted you to panic out of the markets then now applauds another can-kicking down the road, it all seems like a lifetime ago, doesn’t it?

Your mission today is to try to remember your mindset, your psychology, your emotional state as they were back then.

And just as important, let’s step out of our present peaceful state of mind and try to picture what we’ll be saying in six weeks about today’s emotions.  Because it’s when things are peaceful and the markets seemingly “safe again” that they’re actually at their most treacherous.  Indeed, wasn’t the least treacherous time to buy this summer actually back when the panic was at its greatest?  Flip it.

On that note, I’m continuing to raise cash as we continue to go higher.   I’ve sold another small tranche of my many Sandisk calls, which continue to kick in with leverage as the stock continues to run past their various strike prices, making this position still one of my very largest despite all the selling I’ve done in it of late.

And I’m selling my Baidu put for a loss.   The company reported a fine quarter and gave good guidance and as you’ll see me do often, I’m admitting my mistake and moving right on.  Matter of fact, our portfolios are up at new highs again anyway today despite the Baidu hit — remember how I’ve been preaching to bet much smaller on these earnings trades lately?

And on that note (did we change the key we’re in?), I’m getting some reactions from readers who are disappointed about the Netflix and the Baidu trades going against us, despite our Google, Sandisk, Riverbed, Akamai, Goldman, BAC…and about five other earnings-type trades that I luckily got right for you guys in a row.   I understand that you’re disappointed anytime I make a mistake…but guys, do you really think that I’m ever going to be infallible in my calls?  If you’re expecting me to bat 1000, you’re setting both of us up for disappointment.  Cramer and Altucher have both talked to me many times over the years about how the best traders only have to be right slightly more than half the time over the years.  (You also have to do a good job of cutting losses and letting winners run…hmm, see above for how I’m trying to do exactly that, btw!)  Point is, of course I’m going to get some of these trades and investments wrong!

But I will tell you this — nobody works harder to find the best, most revolutionary investments and trades out there than I do.  And I’ll continue to bring you the best I’ve got. Even though I’ll be wrong sometimes.