Hard decisions

A day of hard decisions.

I've pulled out of all my long stock positions - thankfully no great losses. I have opened shorts on the UK and US markets and they are going great guns. I have held onto my hat and it has worked - so far. Two problems:

• I do not put enough money into shorts; 
• I still have no good way to take profits - from longs or shorts.

I guess my failure to take profits on the Lloyds position illustrates that. But much worse is my failure to take money out of the precious metals market. Today's movement has devastated what was a very big paper profit. In this choppy market I should act fast and grab money while it is there sitting on my account. Instead I play it as though the market was in a reliable bull run. It is all about emotion. I have made the right buy decision and cannot persuade myself to believe it will end. Mastering this is my next big challenge.

The US market closed well down but pulled back up in the last hours. Is this the end of the fall or does today bring us closer to the bottom of the current channel? Price movements in the past couple of weeks suggest that there is a support level around 11700. If this is the case I should sell my FTSE short, which has delivered a 2.8% return in three days. And, according to the futures market, will fall another 1% when it opens. A hard decision.

Silver: should I worry?

Silver has fallen right through the bottom of its channel and is looking very ugly. The move is partly a response to the recovery of the dollar exaggerated by the tendency for silver be extremely volatile. I have a lot in my portfolio so I cannot be too cavalier. The absence of a spike in the volume of trade is ominous.

Gold: opportunity to buy?

Gold has also broken down and here I may use the opportunity to buy more. There was a volume spike and gold is the market of last resort in these bad times. And prices have started to pull themselves up off the floor.

I have finished reading Boomerang and was disappointed. It does nothing to analyse the European financial crisis. Instead the reader is treated to a short catalogue of racial stereotypes  It starts with a description of Icelanders, portrayed as testosterone fuelled, thuggish fisherman who, bored with the sea, decide to stay on dry land. They attempt to conquer  the world by setting up investment banks using what they have learned during brief intern-ships in New York. The Greeks appear to be a thoroughly greasy lot who cheated spectacularly to get into the Euro and cheat whenever the opportunity presents itself. The Irish are presented as stupid but not bad. They walked away with nothing. But they had borrowed to build more houses than there were people. The Germans saved money assiduously, being an anally and cash retentative bunch. They placed their hoards in the hands of naive bankers who fell over themselves to lend it to sub-prime peddling American banks and then the profligate Europeans described above. Essentially to any snake oil salesman who appeared at their door. Finally there were the Californian cities who ended up owing so much to the pension funds of the police and fire departments that they are ruined to the point of bankruptcy.

If the nations described in this sad story had been blessed with skins in shades of brown instead of pale ones Michael Lewis would never have dared to write as he did. PC considerations aside, I have walked away very little the wiser. The best I can say is that the book was short.