I sold all my puts today ten minutes before the close near the lows for the day. I am not sure that we are done falling, but we are getting close enough where the obscene profits I made were too good to pass up. I am now all in cash and physical gold.
The next play is a no brainer. I will be BUYING GOLD MINERS. I'm going to start looking for bargains tomorrow if we have a panic in the morning. I am not going to buy all at once, but rather I will average in over several days. I am particularly interested in Goldcorp (GG), Royal Gold (RGLD) and Yamana Gold (AUY) and will be buying 2010 LEAP options with a strike price 30-40% above the stock price at the time I buy. Trust me, it's going to be a worthwhile ride. Worst case scenario will be 50% gain in the underlying stock and with options, we can expect 100-150% gains at a minimum.
We are in the midst of a wicked deflationary bear market and are set to embark on a "recovery" bounce in the general markets that will begin within the next month and last until spring. I plan to ride the gold stocks up into the spring, which will outperform other sectors during the bounce, then cash out and start AGGRESSIVELY shorting the market again in the spring. If you are a traditional buy and hold investor or stock market bull, don't forget this leg down that is almost done. Burn it into your brain. Remember how it made you feel. This winter and spring, when the market makes a bounce recovery, you might start (erroneously) thinking that you should keep holding. You will be wrong. If you continue to hold through next summer you will have more of your portfolio wiped out and it will take a decade or two to recover that money.
Next spring, after the intermediate term bear market rally is over, we will have another DEVASTATING decline in the general markets. I recommend anyone spending their valuable time reading this buy some physical gold coins to keep in their possession as a long term safety play (and a great investment) and some physical cash in their possession to cover at least one month's worth of expenses. Do not think a bank "holiday" can't happen here in the good 'ol U S of A.
Stock markets "see" the future and clearly, what they see ain't pretty. This is not a "temporary, irrational selling spree," though the rapidity and steepness certainly classify it as a "panic" move. However, this is rational panic, NOT irrational panic.
We all need to take off the rose-colored glasses and learn how to protect ourselves and our loved ones from this mess. I promise you, you can't do that by spending your time figuring out whether you want to vote for McCain or Obama - they're both clueless and have no idea what to do. After studying markets, market history and cycles religiously for the past few years, I think I may be able to help mitigate the pain that we are all going to start feeling from the fallout that has unfortunately just started.