Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:04am EDT -
Sinking Animal Spirits
Apr 27 20098:04am EDT -
Counter-cyclical Urban Policy
Apr 26 200910:04am EDT -
Be Your Own Counterfeiter
Apr 26 20099:04am EDT -
Being Tim Geithner
Apr 25 200912:04pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:04am EDT -
What Good is the News?
Apr 25 20098:04am EDT -
Stressful Enough
Apr 24 20092:04pm EDT -
Not Regretting the Pound
Apr 24 20091:04pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:04am EDT -
Non-Economic Questions of the Day
Apr 24 20099:04am EDT -
The Stress Test Blind Alley
Apr 24 20098:04am EDT -
Happy Hour
Apr 23 20099:04pm EDT -
Recovery Without Rebalancing
Apr 23 20096:04pm EDT -
The Shape of Your Recession
Apr 23 20095:04pm EDT
Links
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How to Trade a Bear Market
Baruch at Ultimi Barbarorum gives us his tips on how to trade a bear market:
Let the Constanza Doctrine be your guide: do The Opposite of what feels good. You are not alone, and at the moments of maximum stress when you think they'll never, ever go up again, everyone else will be thinking the same thing. Take your hedges off because that's when we are about to go up. Similarly, watch out for when you feel really positive about the market. When you think everything is going to be all right for a while, add those puts back. This of course will drive you mad, and if you are successful you will eventually stop being able to recognise what it is you actually think about things, at which point you will no longer know what The Opposite is. I am there already.
Baruch is hopeful that the bear market will come to an end in three to six months, at which point he can go back to simply buying stocks he thinks are going up. So the key, it seems, is to know when you're in a bear market and when you're not. If you are in a bear market, then feeling good about something is a bad sign; if you're not in a bear market, then feeling good about something is a good sign.
Baruch tells me that I will "suffer appropriately" for being invested in index funds. Frankly, the suffering involved by being in index funds seems small compared to the suffering involved in perpetually second-guessing oneself.
