Macro Tsimmis

intelligently hedged investment

SELL Ultrashort Oil & Gas ETF (DUG)

Posted by intelledgement on Tue, 20 May 08

OK, time’s up…enough messing around. Losing money when we take a position consistent with our macro analysis but our timing is off or a particular company has problems that we did not foresee is one thing. Losing money betting against the macro is dumb. We are willing to be dumb in pursuit of an intuition up to 10%, but that limit was reached here with yesterday’s close (in four trading days!) so we are hitting the eject button today on this trade. In theory the notion that increased price yields demand destruction sounds good, and a short play will undoubtedly be viable at some point down the road…but for now, until there is hard evidence of demand moderating to south of the 85MM barrels of oil that the world’s producers can pump at full capacity, we are back to the sidelines (or the long side) here.

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