nothing like a little volatility

The portfolio has lost about 200bps of relative performance to the S&P 500 the last 3 days -- that sucks. To some extent I'm giving back some of the great performance I got from being long asia, energy and not owning financials over the last few months. This week financials have been rallying while my stocks have been pulling back. In some ways its just the way corrections work -- the problems go down hard and fast but eventually bottom. The good stuff (hopefully in my case) goes down late and not as much but comes back too. Imagine a fund manager realizing all his financials are down 30-50% but his Google is still up huge since July -- why wouldn't he trim the winner while its still up. That gets the ball rolling and then the momentum types bail and then the oh my goodness chartists sell because they violated some rule.

I say all that but the reality is that corrections serve to change market leadership while everyone is distracted by losses. I am talking about leadership for the next few months not long term -- in the next few months I would expect consumer discretionary (retail, restaurants, etc) and financials to do better than the market while energy, tech and other areas may struggle. Its all hard to say for sure but it could happen. I would bet that after a bounce back the financials will roll over again to go back to their lows but that kind of depends on where we are in recognizing losses, where the fed cuts to and other stuff.

Interesting comments I have seen from others -- Fed is trying to prevent a repeat of the great depression but in doing so they are driving us towards the Japan scenario or a repeat of the 1970's depending on how successful the Fed is at reflating the economy. high energy prices, the promise from the dem's of higher taxes and a fed cutting aggressively look like the 1970's but all of our debt makes us look like Japan -- our low rates due too. such great choices we face. that's why asia may suck for a time due to things getting ahead of themselves but over longer time periods that's a great place to be.

By the way, 12:53pm wednesday and Cramer says here we are at the lows again and he says they hold and its time to buy. I bought some more CLB yesterday but just a nibble. What I realized afterward was that was the chance to buy some calls on the S&P 500 -- I checked out the feb 1325's and they traded between 18 and 47 yesterday closing at 47. Assuming the 18 was near the lows of the day -- that would have been one profitable trade. Buy 10 calls for less than 2000 and sell them for 4500+ all in a couple of hours work? good deal. everytime Cramer makes a call like that I think about it but usually don't or can't (work).

AB had reasonable numbers -- I think they are well positioned but it will take some time for the hedge fund performance fees to come back. in the meantime I would expect them to earn around $4 to $5 this year depending on where we end up in terms of the market. In my mind the stock is still cheap even at $4.

got to go to work