Speaking of Profits!

I took some profits yesterday when the market swooned 1%. I paired back my investments thinking that the market was headed towards a bad place. As soon as I paired my losses, I felt this nagging feeling that I was doing the wrong thing.

Today the market rallied nearly 2% and yesterday's nagging feeling turned today into real regret. Yesterday I sold RIMM at 49, BIOD at 4.75 and EK at 3.9. All were profitable positions, but less so yesterday than they were on Friday at the close of trading.

I wanted to hold RIMM for a significant time frame, but in the end I was only able to hold it from an average price of 46 to 49. Why did I sell it? Well, I did not want to see all the profits disappear. Some profits is better than a loss! Unfortunately, I did not pare back on my SH position. As a result, I am currently net short the market, and today's 2% rally set me back by $500. The loss of $500 did not bother me at all. It was the knowledge that if I had not altered my portfolio that loss would have been a net gain today.

Why did I sell on Monday? Well, I was nearly 100% invested on my retirement account. I was nearly break even once again, and I did not want to see the portfolio take another swoon if the market began to crack. In essence it was an emotional response driven by the news of the day. Nothing had changed other than my own perception of the news, and my perception turned out to be incorrect.

So now what do I do? I have altered my portfolio to the point of confusion and I feel like I should sell it off and wait for a more opportune moment or a few months to see how things play out.

This week is a big week. AA reports earnings, and MON reports earnings. If the past is prelude, the earnings are likely to be good, but the guidance poor. There are so many signs that companies are going to be guiding lower for the next quarter and the next year. Currently the game is turning towards what will happen in 2011. It's no longer about 2010. Perhaps that is what is bugging me at the point. I have no idea what is going to happen in 2011, at least I don't see anything good happening.

Euphoria has seeped back into the markets, and I truly think that the euphoria is about to end.