Just as a rising tide can lift all boats, a falling tide can also sink them.
As I've been writing for the past few months, investors should be thinking about opportunities for profit-taking after the market made a virtually uninterrupted upward move since October, 2011. I was poorly-positioned for that rally in my $100,000 Real-Money Portfolio, focusing on stocks that were built for the long haul. Instead, the market has rewarded investors that aimed for the riskiest corners of the market.
Since hitting a peak of 1,416 back on March 26, the S&P 500 has slipped by about 4%, though many individual stocks are off 20% or more in recent weeks. Some of these laggards were only recently added to my portfolio, and as I think they are poised for much better days ahead, I'm not looking to sell them when the markets get rough.
But I do want to have cash to play with, now that many more bargains are emerging. And I'm making a pair of moves that should free up more than $15,000.
For starters, I am selling my 600 share position in the Direxion Small Cap Bear 3X Shares (NYSE: TZA), unlocking more than $12,000. This exchange-traded fund (ETF) is rallying as the market slumps, and I run the risk of getting out too soon if the market tumbles from here. It's the price I'll pay to build a cash war chest.
(An important interview) Saving the Net from the surveillance state (And Crony Media): Glenn Greenwald speaks up (Q&A) | Nick Sorrentino