I have not commented on the markets much recently because I have been battling a strong cold.
The markets remain ugly, and thus I am keeping my cautious stance with a few short positions. I expect Friday to be another challenging day with the White House political turmoil sucking away valuable energy.
I listened to the EnCana Corporation (ECA) conference call. Unfortunately ECA fell short of expectations, but I do not think that is a major worry. The hedging losses, which were largely the result of the Tom Brown acquisition, will expire at the end of next year. Moreover, we have not experienced winter yet. Given that gas supplies remain tight, I do not believe there is much downside to ECA. When I purchased the bull spread, I was unsure about my timing, so I used long dated calls. My purchase as a percentage of my portfolio was also modest, leaving me with ample opportunity to increase my bet should ECA fall substantially.
While I remain cautious toward the market, I am mindful that the markets might be getting poised for a vicious year-end rally. The market has a tendency to do what most people least expect.
As difficult as the markets have been, I enjoy following the markets. I enjoy reading well reasoned arguments, both bullish and bearish, and then making my decisions. Bullish arguments are always easy to find. On the bearish side, I enjoy reading Doug Kass at Street Insight, an expensive subscription site, and Bill Fleckenstein at Fleckenstein Capital, a subscription site. As I have stated, investors should always seek both sides of an argument. It is far too easy to find reinforcing viewpoints.
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