First of all, no one is more surprised than me on the STI's recent rise from this January 2012!
Being 50% vested, I am not complaining! A red-packet from the market for Chinese New Year!
Of course I can take some money off the table (like some of my fellow bloggers in my blog list); if and when the STI rediscover gravity, I can always buy back at the lower prices - now that's more easily said than done!
Unfortunately (or fortunately!) most of my core holdings will be declaring or paying their dividends to me in the next coming weeks.
Furthermore, selling now will take my vested share to below 50%... Since I am still totally clueless to which direction the STI will go (hands up for those who saw this Jan 2012 rally coming during Dec 11), I better continue in neutral gear. This way, I am always 50% right!
LOL! How's that for positive thinking!?
This morning at 10:15 am, I shorted the SIMSCI (STI index futures).
It's not a short! It's a hedge ;)
I better "hedge" myself knowing how some people have mistaken notions about shortists... (It's not funny - I know! Throw me a bone here lah)
It's not a perfect hedge, but it's close enough.
If STI plunges tomorrow, some of my paper profits will be "rescued" by my "hedged" position in the SIMSCI.
The price I am paying will be the "capped" paper profits if STI were to continue defying gravity.
From now onwards, I won't be participating in the STI's rise fully anymore as each rise will be offset by my "loss" in the SIMSCI.
What I've done is to effectively "locked up" my paper profits up till this morning. I've taken my money off the table in another way. "Enough" is good enough for me!
I can also do it with CFD (contract for difference) index. It's just that I am leaving my CFD powder dry for shorting some stocks I've recently put on my short watch list. Just in case Israel strikes...
OK, derivatives and OTC (over-the-counter) products are not suitable for everyone (nor should they be).
To continue my Goldilocks and the three bears analogy, if we don't try ourselves, how do you know what's "just right" for us?
Some are more suited to be specialists; while I am more suited to be a jack-of-all-trades ;)
And are you a specialist because you know yourself well, or are you one by default because you just never ventured beyond equities?
Singapore Man of Leisure (welcome to my blog; just google it!)
