Two Friends in Two Days

I am blessed. Before you think, I have gone all spiritual and am referring to some temple visit of mine let me inform you that I am actually referring to the number of "good" friends I have who care about me. On Friday I wrote about a friend who tried to get me to move to equity sales and stop trend following. My caustic comments ended that friendship. Now as luck would have it, my note of Friday actually got another friend to call me.

After the initial pleasantries he got down to the point "How do you handle a situation like this European crisis?" I replied honestly "I trade it as per my system. I do not make any changes. As long as my risk parameters are robust and leverage is non existent then there should not be any problem." He countered "But why be brave? Currently the market is not behaving as per technicals. There are too many fundamental variables (I honestly do not know what this means and since when was the market a simple organism? It was always complex and always full of known and unknown variables whether those variables were being highlighted by the media or not). This Greece situation can be very bad for the markets. Asset prices could go into a tailspin. You should stop trading for a while"

I could not help myself. I asked "Wow man! You were always influential but now your influence has increased by leaps and bounds since we last spoke. Clearly you now have some inside dope on Syriza and the Greece election". He said "What? have you lost it?" I acted surprised. "No? Then may an inside line with Draghi, Rajoy, Hollande or maybe a direct line with Merkel?" He sounded irritated "What is this all about? Where did I ever claim that I have an inside line with any of them?"

It was then time to end the call "You mean you do not have any inside dope? Your view on Europe is based on publicly available information and your inference from it? Does this mean that you think that none of the other participants in the market could reach this inference from the same information? Or God forbid, you think that only I do not have the ability to understand the gravity of the situation?"

I continued mercilessly "Since the market rallied big on Friday just before the potentially disastrous Europe weekend there are only two options. One that the market is filled with idiots, say like me, who are unaware of the European problem and therefore bought so much on Friday that the Nifty went up 84 and the Sensex went up 270 points. Or does this rally of Friday actually tell us something else? That the smart money has probably discounted this Europe problem? That may be, the market will rally further in the coming days? Now let us think. Which of the two is more likely?"

Thus, in two phone calls, I lost two friends in two days. You know the saying, "count your age not in years but in the number of friends that you have" (if there is no cheesy proverb like that then there should be one!). I better be  careful about how many phone calls I take in the coming days. Else, I might like Benjamin Button, find myself growing younger with time!

And yes, I continue to be long. I will cut my long position and go short only below 5045. Thank you.