Fleck's Thoughts

A reader was kind enough to send in a collection of his favorite "thoughts" from Bill, which are reproduced here.

One of my short selling rules is that if the Fed is printing money, one has to refrain or be extremely careful and use guerilla tactics, i.e., try and get in front of a catalyst. When that comes and goes, get out of the way unless somehow the cumulative effect matters.

Investing is about finance, speculating is about psychology.

Forget the VIX. It is a horrible product and everyone usually loses when they mess with it.

Technical analysis is just a tool, not the final answer.

Deflation, if it is to occur, ONLY happens at the very end AFTER markets have cracked up badly and the Fed can't ride to the rescue.

Being able to get out of positions quickly is very, very important to me when shorting. Shorting is all about tactics, NOT research, though you must do that.

Money printing is perceived to be the solution to all problems as opposed to the root of all evil.

Re: Options. An example: I bought the GG Jan 35 calls for .99$, that’s all I can lose. If I bought GG, I could lose far more than 1$. I only bought as many options as I would have shares, so I’m risking about 3% on that trade, but losing 3% on my 5% position is quite tolerable. I often lose all my premium, but when I do the loss is far less than if I had bought the stock. The trick is to be very patient and judicious about when to use options.

A bear market in an asset class, be it stocks or real estate, is NOT deflation. It is a bear market.

You can't let the madness of the crowd or the length of the insanity persuade you from your own common sense argument.

Markets don't have to make sense, though we want them to. Just look at the past two bubbles, etc. Markets do what they do and then people try to explain why, but often there is no cogent explanation.

When building wealth, diversification may make less sense, though not diversifying does increase your risk. Once you have built wealth, diversification makes more sense, but you also need to be prepared (mentally and perhaps with some cash) for far more volatility when you aren't diversified.

Using logic or common sense has been an especially dangerous strategy lately.

Correct analysis isn't about the number of guys who agree with you, it is about being right, AND having the courage not to get sucked in by all the head fakes and noise until you are PROVEN right.