July 28, 2015

Capital preservation should be priority for Investors

For the balance of the summer, and perhaps longer, the primary consideration of most should be preservation of capital.

For the more aggressive, like me, a short exposure is appropriate. However, this is a function of one's risk profile and appetite.

The U.S. dollar's advance and its impact on exports and corporate profits, the investment ramification of strengthening deflationary forces, the market's narrow leadership, the continued mania in social media stocks (abetted by high-frequency trading and other price momentum-based strategies) and private equity valuations, subpar global economic growth, elevated price-earnings multiples and other factors are the sources of my concerns.

I would maintain above-average cash reserves and be quite selective in new purchases by always judging reward versus risk.

I am now at among my highest net short exposures in some time.

Position: Short SPY