We will continue to hold our short positions even though they are up 14% today. We would even buy more or initiate new positions today. As we have been discussing, the structural integrity of the markets right now are in a very precarious position. There really is not much more to do but let the markets find their natural position. Artificially propping up the markets is really hurting credibility. It may give Main Street the sense of comfort and hope-unfortunately they do not control the markets. The Fed should let the markets find equilibrium at a lower price. This would wash out the lemmings and satisfy the real investors. Until the real investors have confidence that the market is washed out, they will not commit. This is evident in the whipsaw action of the markets. It is very difficult to have "real" committed money (The foundation for a new advance and stability) without shoring up the fundamentals and allowing the markets to reflect acurate pricing. It is time to bite the bullet and get rid of the "QE Investors". They are not long-term investors. They are leaches that are sucking the fundamental soundness out of our system. This would cause a quick void in the market as they limp off into the woods; however, they would be replaced by the real investors. Credibility would be restored and the market would have a solid foundation of committed investors. The "QE Leaches" wil come back because-quite frankly-they like to make money too. Having a 30% correction is a natural market event (at least it used to be). The persistence of creating "Moral Market Hazard" is destabilizing the markets. It is time for The Fed to cut the relationship with these investors and get down to the business of rebuilding a credible and stronger capital system.
WSR's Position: We do not like to be short. We just need the confidence in the markets to commit on the long side (as do many others). Unfortunately, that is not present at this time. We want America to be prosperous and get the heck out of this mess.
