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.