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SoS: Stopped out of everything.

So 5,000 has been broken on the Nifty and the WIDE stops on the Short Only strategy have been hit. I was expecting a move up but was thinking it would stop before this – guess it was not to be.

Crappy return, of course – a negative 10% in just about a year. Not surprising for a short strategy; and I’m sure if I had real money on it things would be different. It’s very strange, actually, to have no real money backing this strategy; I’m sure if I did I would manage it better (and who wants to lose this much!)

When we planned Moneyoga I remember hearing that this “virtual” portfolio stuff is only a learning exercise – the real test is the emotional damage the volatility of real money can do. Which is true, I guess – I’ve been strangely unattached to the losses of a “virtual” strategy, and been on the wrong side of most of the move!

There will be a time to return, and given we are currently way overpriced, the only thing I’ll do is setup Nifty puts on it. A better way to short perhaps is to find stocks that have very short term underperformance and take small bets on those – in a bull rally it’s tough to hold shorts on a fast moving stock. HDFC is still way overvalued, but to short it weakness must build; and there is absolutely no sign of weakness.

The blowout will come, but when, from which level? That’s not a question worth answering – the Taleb bet might be the only useful one, when you spend small amounts buying what will give you an outsized return in one of the following months.

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