Saturday, September 25, 2010

Frustruation Squared

Don't get me wrong, it's a good frustration, but its still frustration squared.

On the one hand I can't find very many stocks that trade under 8x FCF (I really only like to buy at 6x or under) but at the same time holding cash is not generating any returns.


The squared part comes from the fact that Ben Bernanke is doing everything in his power to reflate all assets by printing more dollars(while deflating the power of the U.S. dollar). I can't buy gold because it's against my discipline to buy non-cash producing assets, but its a little painful watching it go up everyday when it seems so obvious. It also doesn't help to watch my short position eating away at me. Bernanke's also buying long-term debt to keep the market interest rates artificially low. And he can buy as much as he wants because he can print as much money as he wants. Argh. I'm not finding cheap stocks, the recovery seems like a headfake, and junk bonds are yielding miniscule yields over risk-free treasuries.

What's an investor to do?

I think this is why investing is so freak'n hard. You need to have the discipline not to fuck things up. Not to want to buy just because Bernanke says that he's not going to let the economy double dip. Good luck pal, there are some forces beyond your control. I have to stick to my guns, my game plan, my strategy.

Wait, wait, wait, wait. Strike.

People panic. Mood's swing. Optimism fades to fear. In the next 3-5 years there will be opportunities for me to buy large positions in stocks trading at 6x FCF. Until then I just need to sit and wait.

You can't control the debt markets forever Bernanke, eventually they will control you.

"In 2009, hedge funds generated about 3% of trading volume in U.S. government bonds. This year, that share jumped to roughly 20%, according to consulting firm Greenwich Associates."

The sharks are sitting at the table. They will pounce when they're ready.

YTD: +1% (up 10% on the net ~10% long exposure established throughout July and August - but should I have put on more exposure / larger positions?).

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