QOTD: An Uncomfortable Position

Time to dust off your tactical skills, the momentum-following stuff we all got so good at this past year simply will not work in this environment.  Trending markets are a lot of fun than range-bound or choppy markets, but we play the hands we’re dealt and not the ones we wish we were dealt.

The quote of the day comes from a Bloomberg story this morning about how cash heavy even the most seasoned asset managers are right now.  18% of pro money managers are overweight cash and the top 50 hedge fund-owned stocks (as compiled by Goldie) are trading with their lowest monthly volume levels since August 2008.

Here’s Harold Yoon, chief investment officer at Hong Kong-based SAIL Advisors Ltd, on what the hedgies and other PMs are trying to do here:

“Most of our funds are in an uncomfortable position in that the fundamentals are bearish, but the governments are intervening.  Instead, managers have focused on tactical trading; shorting when markets are getting bullish and then covering into panic-driven selling.”

For traders who go home lean and liquid each night, this is a nirvana environment.  For those taking intermediate-term positions and managing Other People’s Money, this is a nice time to be overweight cash, even the big boys are standing aside.

Source:

Soros’s Quantum Holding 75% Cash Leads Hedge Funds Baffled by Instability (Bloomberg)

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At Least They Have Volume (TRB)