Cross-posted from TradingWithCody.com, where I post all my trades in real time.
Saving is a fine thing. Especially when your parents have done it for you. – Winston Churchill
The markets are rallying today, but all eyes are still on the European crisis, in which the discussion seems to now finally be turning toward a currency debate, rather than a sovereign-debt/banking-crisis debate. More control over a sovereign fiat currency is probably the endgame for each of the EU member nations. That doesn’t mean the euro is going away, but that it will likely become a currency that’s mostly used for cross-border trade and not for the daily use of money inside each nation. The destruction of the euro will likely take much longer than any of the suddenly “Hey, the EU is going to collapse, so get short the Euro” people predict.
Here’s something I was writing about the coming euro crisis a couple years ago (italics are new):
Revolution Investing: Why you should be buying into this panic
I’m thinking we might be seeing a blow-off top in the “fiscal-crisis concerns” market, and I think the key to making money here is keeping your cool and to get longer into weakness below DJIA 9,850. Cover some shorts (we’re covering one short that’s been a big winner for us already in the portfolio) and start scaling into some longs and even some calls in the best names that you’ve got in your portfolio.
Even after the recent selloffs and newfound panic over the EU crisis, the Dow Jones Industrial Average is up nearly 30% since that panic. I could be wrong, but I continue to think that we’ll likely see these markets up a bunch from these levels in a couple/three years when this current batch of panic over the EU crisis plays itself out.
Here’s a few other thoughts of mine from EU crises past that outline what at the time was some very contrarian thinking, but is now, as the crises have continued as I’d predicted, a lot more mainstream:
Let the euro die and the bull market resume
What if the “worst-case scenario” is actually the best-case scenario?
I’ve got all the questions sent in from my TradingWithCody.com subscribers from yesterday’s live chat that wasn’t (the Little Bear Fire continues to burn down homes in and around Ruidoso, N.M., and has wreaked havoc on our communications) downloaded to my computer and I’ll be answering them offline and then emailing them to my staff to get up on the site ASAP. The lack of broadband and spotty Internet connections out here in Alto, N.M., right now remind me of using AOL to log into my Ameritrade account to buy Network Solutions for my personal account from Brooklyn, N.Y., back in the late 1990s.
As you’ll hear me remind you often, don’t force any trades. The hardest trade to make is often the right one and right now, just sitting tight after having scaled into more long exposure recently — including more Apple Inc. (AAPL), F5 Networks Inc. (FFIV) and our two new picks, including Facebook Inc. (FB) – seems to be pretty hard to do for most traders. Patience for now.
Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple and Facebook.
Related posts:
