i'm covering part of my short here

[paulsby]

for those that were following my short the dow at the close when it broke 10,000 post.

we've had a solid 300 point drop from that close, with only 60 pts of risk. time to take 1/2 profit and move the stop to entry (dow futures of 10059) and see what happens. fwiw, the futures (dow) are approximately 50 pts lower than the cash DOW, which is currently 9783. futures 9733

the adage holds true. sell euphoria and buy panic.

[Hissyspit]

1. Well, my Caterpillar is down 3 bucks from 58 on Friday.

I thought about selling it Friday, but I really want to hold on to it for the long term. It would be the responsible thing to do?

On the other hand, I sure could use cash.

On the third hand, I think everything will all go to hell one of these days.

[paulsby]

2. like i said,

i thought shorting the market at the close when the dow broke above 10,000 was the play, on a risk.reward basis.

the market has had SUCH a huge run, and there is SO much downside risk right now, that being net long is simply scary.

also, this drop in the dow has been helped by strength in the dollar vs. the euro the last few days, which puts double pressure on it.

the magic of shorting is that one can also hold one's long, but short against them in the indexes, to lock in gains, but not make you pay capital gains taxes on your longs that you would pay if you sold them.

by shorting futures, i also get favorable tax treatment. even a short term trade of 30 seconds is taxed at 60% long term cap gains rate, 40% short term.

i haven't been following CAT, so can't comment on it specifically

obviously sounds like it would be heavily leveraged to performance in the housing and business construction market

[Hissyspit]

3. CAT

is heavily leveraged to performance in the housing and business construction market. :-)

I am going to think seriously about what you have said and talk to my sister about it (She works for Edward Jones). My broker actually called me about the Caterpillar last Thursday and I hadn't been paying attention enough to know why. Also hadn't seen your previous posts.

[BR_Parkway]

4. This is part of the problems that need to be fixed (not you specifically)

but as much as we've moved to a services economy versus a manufacturing one - we've also moved from a capital market that provided money to businesses for them to operate and expand to one that simply moves money around (or simply electronic blips that are supposed to represent shares of a company to the really out there concept of someone saying they'll maybe buy some of those shares next week for a certain price or sell the shares they don't own hoping to profit from it)

It seems like we churn a lot for quick profits (and the tax policies support that) versus thinking long term anymore - and as far as I can tell, there was no value added to anything in the transactions you describe above to justify 'earning' a profit (again, using your post as an example, not trying to criticize you personally or sound judgmental)

We just don't seem to do anything that actually adds value anymore in this country - and yet think growth is ever and onward going to magically happen - no wonder we keep having bubbles