A Time To Reverse

Yesterday was a pivotal day in my opinion, both for the market and for The Velez Opportunity Report. After a very long, extremely profitable bull run, yesterday's market downturn helped to trigger the two positions I normally use to go short the market (see the last issue entitled "How to Hedge a Long Portfolio"), finally establishing the first change in my directional bias in quite some time. 

Trading For Wealth

As a life-long accumulator of wealth, I tend to be largely biased on the long side. In fact, I'd venture to say that more than 85% of the time, I'm looking to ease into a long position, even during very troublesome market environments, because hefty downturns often help an astute market speculator find the "diamonds in the rough" with greater ease. They stand out more. So it's a very noteworthy day or week when a consummate buyer of stocks, futures and commodities decides to reverse gears. 

Now, I must admit that my long-term record of short selling on the wealth side is not as stellar as my long-term record of going long, and last year's results will clearly show this. Out of 37 long-term wealth plays in 2009, only 1 loser was experienced. This stellar record lead to me being granted the 2009 International Trader of the Year award in Germany. Guess what the single loser was? That's right...the only short stance I took the entire year. Had it not been for that one short stance, I would have met my ambitious goal of producing 100% winning plays for the entire year. Despite this single loss, the portfolio was up over 300%, but that is besides the point. On the wealth side, my accuracy drops a bit when going short. So what does this mean? You've been warned. That's what. (smile).

Trading For income

Oddly enough, when I trade for income (micro, intra-day trading), this drop in accuracy does not exist on the short side. In fact, I'd go as far as saying that my accuracy on the short side is slightly higher than my accuracy on the long side. What's more, my short positions usually make far more money than my long positions in the short-term arena. In a way, this makes sense. Stocks and other financial instruments usually fall harder and faster than they rise, which confirms the fact that fear is a more powerfully abrupt emotion than greed. They both have equal power in the end; however, one takes its time, while the other typically runs and completes its race in a shorter period of time. In essence, Greed is a jogger and Fear is a sprinter. This should largely explain why the wealth trader should be largely biased on the long side, since one's plays are geared toward the jogging pace, while a healthy short bias intra-day rewards quickly and handsomely, at least a higher percentage of the time. 

The Shorts

With that being said, let's take a look at the three new short positions that were initiated yesterday. I'd also like to introduce a fourth one that cold trigger as early as today. Click on the two links below, sit back, listen and learn when and why I entered these positions, why I like them so much and what I'm looking to do next with them. Let's go!

Short Plays - Part 1 (click here)
Short Plays - Part 2 (click here)