Market Update - 5/7/10.....written by Greg Gann

I hate to lose money. And I especially hate to lose money for clients. As you know, my position has been that the market has been overbought and has been ripe for a pullback. What the S&P 500 returned in the last twelve months should have taken a decade. The fundamentals of the economy are still shaky, and unemployment has not improved much at all. The stock market has acted on its own volition, and it has ignored the economic realities. We have had very, very little allocations to stocks in the last year, finding other assets that provided good returns with much less risk and volatility. Because the market has ignored the economy, I decided to acquire some individual equities in specifically targeted areas last week after the initial market pullback. Over the last week, the stock market has been ugly. At one point in the Thursday’s trading day, the Dow was off 9% from its daily high. My computer screen showed the market going down like the Titanic. My first goal is to cause no harm and not lose principal. I frantically reset sell-stops and also sold out of some positions. There was so much trading commerce that the computer was operating extremely slowly and it was difficult to get a trading representative on the phone line. I don’t know where the market is heading. Whoever thinks markets are rational should sit by my computer and read my research. The point is that now I regret making last week’s trades. Hindsight truly is 20/20. However, I’d rather be bruised than burned. I want to make sure that we survive to see another and better trading opportunity.



Being nimble means not being beholden to any position and shifting to a protective, defensive stance when the market changes course. Being nimble also means acknowledging defeat, and realizing that if we step up to the plate with any degree of frequency, we are bound to strike out. It means cutting your losers short and letting your winners run. You will be receiving confirmations of the purchases and sales, and I just wanted to give you a heads up and appreciation for the moves. None of these positions represent a significant percentage of your portfolio, but I still hate losing any money for you.







The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, you should consult a financial advisor prior to investing.