11 May 2010 by Jim Fickett.
Followup to Friday's actions: I will stay out of coal for now; I think global growth is quite fragile. I sold the SDS, as irrational exuberance is back full-force.
Regarding coal: Not only are there pretty serious issues in China, whose imports are a major driver of current coal prices, but both global growth and sentiment about global growth are quite fragile. I don't think there is much upside.
I do want to increase the fraction of the portfolio in commodities, but I think the likelihood is high that there will be a slowing of global growth well before inflation in the US.
I sold the SDS that I bought on Friday, at a loss of 9%. That hurts, of course. But let's make the distinction between an unfortunate outcome and a mistake. I think, given the information available on Friday, it was right to be skeptical of the outcome of the talks, and to protect against volatility. My portfolio was closer to neutral from Friday to Monday, and I missed part of the upside Monday morning. That's not fun, but its ok.