To Sit Tight
Note the comment about sitting tight: “its extremely difficult to do”. You know I know the old Jesse Livermore quote better than anyone as I keep it under my pillow each night and hey my name is Plunger after all. But I have to say frankly , holding over the past 3 months has been about the easiest thing I have ever done.
I have been cool as a cucumber sitting on my positions taken in early February. I haven’t felt rattled in the least. There has been no nail biting at all. I haven’t sat debating if I should go to cash to protect my gains. I have actually been somewhat amused reading the contrary opinion written by the sceptics and the bears. It has been interesting so see them become increasingly more shrill and militant the higher price has gone up. We have been called lemmings for remaining bullish and then within days witnessed said poster get crushed under his short position.
The bearish group has scrambled to find data and arguments to support their position. Recently the data de jour has been the COT series. It has been infallible in the past right, after all the banks always win don’t they?
However from the beginning, I recognized the essential difference this time was the role of market psychology. If this was indeed the first leg of a bull market the historical model would have most players who were burned in the previous bear to greet the new trend with scepticism. The model showed the market would never look back and correct, and allow this tortured group an entry they could be comfortable with. They would like to get in, but only at the old bear market price. They have become prisoners of the past bear market, through their damaged psyche. In other market bottoms of the past price action eventually forces this group to shed its bearishness and scepticism one at a time. Eventually they succumb to the reality and buy into the market and embrace its bullishness. This of course results in the boat getting one sided and triggers the first secondary reaction or even a cyclical bear market in the new established uptrend.
So that’s the process I have recognized from the beginning. Their is no certainty that it continues to play out according to script, however, so far so good. When bears read this missive certainly the reaction will be violent ridicule and not reasoned discourse. That should tell you that we are on the right track.
Now regarding to the above posters comments of selling the positions he has, what strikes me as the most significant, and he is starting to understand this himself, is what can really happen here. The concept of multiple baggers has alluded him. Folks, I suggest two books for you, 100 to 1 written in 1974 and Chris Mayer’s 100 baggers. One of the major takeaways is to get this type of return one has to stay in the stock….(duh)
This is what is going to happen here ladies and gents. There are going to be multiple times return to a lot of these and you are going to have to turn off the bearish chorus and not let it bother you!
I Love It! Great Post.
I too have sat tight with little concern since the Feb trend breakout. Just a brief portfolio management question. Spock understandably advises trimming runners over a set % of the rock set, so my question becomes (to him and you Plunger would have some thought on this), how is a potential 100 bagger to be realized if the top keeps getting trimmed based on a desire to not overweight the portfolio and protect gains – who actually will or should sit on that runner? On one hand I can understand taking profits on them but doing so limits the gains to those of the portfolio average – what I’m surmising is as the bull proves itself further (I’m obviously in Spock’s camp), the trim weight limit percentage might go up a pct or two or three.
As far as COT analysis goes I’d like to see data comparing Fully’s NetDania chart with one from the period 1968-1980 (if COT data was avail from that era). Just a guess but sentiment today might be relevant to that of Nov-Dec 1976. Thanks guys.
YYZ, I don’t see Spock keep trimming over a set %. I think what he is doing is some occasional balancing when he sees a stock make some sizable gains in comparison to another he sees with more potential. I kind of see Spock’s occasional changes as pistons on an engine getting fine tuned.
I’ve actually kept a couple he has sold and done well. But then like some others, buy the new one too!
Great post, Plunger. You were right about the previous bear market, and I believe you are right now.
The majority of the gold analysts are either bearish or they are waiting for a correction.
One of the best (and funny) example is Kereport where all the analysts completely missed the bottom,they even “fired” Gary Savage just before he called the perfect bottom on the same day it happened!
Now they are saying there will be great opportunities in the gold sector in the months ahead,but a correction is needed to buy at better prices!