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Random Thoughts: Full Disclosure in Silver


The only difference between a mistake and a lesson is the ability to learn from it.

There's a lot going on in my home these days following my first cohabitation six months ago; two tremendous seven-year-old twins, three frisky kitties, a great gal, and a baby due a week from Tuesday.

In a conscious effort to balance, I've made a concerted attempt to leave my work at the office and focus on the important stuff once I walk through that door. Old-school Minyans know this has been a long time coming, and I can honestly say that I've never been happier. That's not to say work isn't tough; anyone in the media business, particularly a fledgling franchise like Minyanville, is busting hump to get ahead, and we're no exception.

I bring this up for a reason. Last night when I walked in, Jamie said, with a smile on her face, "I saw silver is down 28% this week!" I paused for a moment, before realizing I had mentioned to her in passing the grief I took last week for daring to publicly question the parabolic frolic, after she had asked me how my day was.

"I would be more concerned if everyone agreed with me," I told her at the time, "the profitable trade is rarely the most popular." Little did she know that, after successfully fading (read: shorting) into the $50 level a few times, I decided to get cute and play for the counter-trend bounce yesterday.

I'm not proud of that fact, as I know better; or at least I should. And lemme say this-it would have been entirely alright had I stuck with my mapped-out defined risk, as you can do anything as long as you're disciplined. As the really old-school Minyans will tell you, I had a massively bearish bent in technology stocks in 2000, but I wasn't shy about flipping the switch and aggressively playing the bounces. In fact, that's how our metaphorical friend Snapper was born, out of repetitive experience.

I hearkened back to that stylistic approach yesterday, and reminded myself that my original entry on the short side of was around $43, which didn't exactly catch the cusp. My saving grace, as shared in real-time on the Buzz & Banter, was right-sizing my exposure and layering into a full position (twice) as white lightning approached $50 (my stop was set on the other side, along with everyone else I would imagine). There is a very fine line between proactive patience and being a dear in headlights; it's called the bottom line.

I could offer that my long-side stab was a much smaller position than my negative bet (it was) but I won't; that defeats the purpose of why I've shared my stream of consciousness online for over a decade. I'm far from perfect and make plenty of mistakes; our goal and role in the 'Ville is to share our processes with hopes that they improve yours. In other words, if you can learn from my mistakes, then the trade, or the efforts surrounding the constant communication, wasn't a total washout.

With silver bouncing, I could pretend there was some mystical magic behind my approach but the blunt truth was that my long position, however, small, is a mistake. While I consciously sat back and let the margin clerks do their dance into yesterday's close, I did so with the shared view that there would be a better exit point for this trade.

So let me end this saga with two vibes; first, I plan to feather out of this risk (I have trailing stops on the position, in an effort to run the winner and cut the sinner), and second, you should never trade errors as more often than not, it will waste good money after bad.

My apologies on the momentary lapse in judgment; I take pride in my name and word and it, much like silver, was a bit tarnished yesterday.

Some Random Thoughts:
  • Financial Markets: The Good, the Bad and the Ugly!

  • Maybe Bernanke was right -- maybe inflation is transitory!

  • I don't know about you but by my watch, Cinco De Mayo arrived right on time!

  • Dr. Copper is sitting on its 200-day moving average. Given its historical predictive prowess, we would be wise to watch it.

  • The equity strength (given the commodity volatility and the dollar rally) is pretty far. Unless, of course, "commodity volatility leads equity volatility" infers that that movement is yet to arrive.

  • If the opposite of love isn't hate -- it's apathy -- how do you reconcile the bipolar action from one week to the next?

  • Goldman (GS) $150 should remain on ye radar.

  • I wonder if I would have been happier as a veterinarian?

  • You know how to really piss of Qaddafi? Take his $33,000,000,000 and give it to the Libyan rebels! Oh snap!

  • Al Qaeda has confirmed the death of Osama Bin Laden and has threatened to retaliate "soon" against the US. I take no pleasure in sharing this, but I would be remiss not to. Watch your backs please.

  • Novellus (NVLS) has traded with a very curious bid all week; something is afoot at the Circle K.

  • Aren't the sharpest moves supposed to be the counter-trend moves?

  • Portugal "won" a $116 billion international aid package?

  • Won?

  • Does that make Greece and Ireland "winners" as well?

  • Why is Charlie Sheen coming to mind at the moment?

  • What's the level to watch on the dollar? DXY 74.75, where the downtrend comes into play. Keep close tabs on the greenback; should this puppy continue to pop, as I recently vibed it would, it will test the collective bovine wills.

  • Three words to remember: "correlation" and "carry trade."

  • The credit markets continue to hum; again, not a panacea, but worth noting.

  • You know what sucks more than losing money? Losing friends. Keep it in perspective, Minyans, as we continue to find our way.

  • Have a great weekend! You've most certainly earned it!

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Position in silver.
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