Picking battles vs Gambling

Pick your battles, don't gamble.

There's a big difference between choosing high probability trades and gambling.  I think about this as we approach Friday and the vaunted Jackson Hole speech by Ben Bernanke.  Most news outlets would have us believe that this is the make or break moment for the market.  I think that it all depends on your perspective and your investment timeline.  If you are looking to "get rich quick on one big move of the market" then you are a gambler.  You may win big on Friday, or you may lose your shorts.  While I'd love a big one day gain as much as anyone, my mentality is a little different than the one I just described.  I'm looking at the likely direction of the market for the next 20 or so trading days.  I use my battle-tested analytic methods to come up with the most probable direction for the market and then contrast that with the ultimate question.. what is going to make my future clients, and therefore me, the most happy?  I believe that making money is only half of the equation when it comes to building wealth.. keeping it is the other half.  

Having said all that, I'm hesitant to jump into the market ahead of Friday for a couple reasons.  First, the overall direction of the long term (multi-year) market is bullish in my opinion.  During such markets, the big money is made on the upwaves, not the down waves.  I already made my friends a nice profit on this down wave.  Going after more profit on this down wave is pure greed... but like Gordon Gecko, I sometimes think greed is good.  More specifically, I think a moderate amount of greed is good.  It keeps you hungry, which keeps you sharp.

So, what's my point?  All my indicators are at a point of uncertainty.  The only indicator that shows a definite bearish trend is the RumWave, and I'm confident that the market decline will continue for a while to come.  The risk I run in recommending that my friends go short again at this point is this: if my hyper-short term gamble is wrong and I lose the gains that they are already happy with, the trust that I've earned to this point may be damaged.  I'm going to sleep on it, but right now I'm not inclined to recommend that we re-enter short positions ahead of the Fed.

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