|A month ago we increased client short positions from a net 10% to a net 20% (includes the 2X leverage). It seems to have paid off well. During the multi-hundred point daily swings in the Dow Industrials over the past few weeks, client portfolios moved sideways, lost a little, and showed very little volatility. Now that we know the fate of the remaining investment banks, we will be reducing the 20% short position to 10% in the coming 1-2 months. We are waiting for:
Since fair value of the S&P500 is probably somewhere around 950-1000, and it is currently trading at 1150, there seems to be no immediate rush in removal the short position (RSW). Stay tuned.