Thread by @DougKass

@realmoney
Oct 26, 2020 | 04:15 PM EDT DOUG KASS
I Like My Positioning
* Especially into next Tuesday's election
* I end the day between small-to medium-sized net short in exposure (but closer to small!)
I end the day with large ($SPY) and ($QQQ) put positions (having covered

all my Index shorts -- for a nice profit -- into the whoosh lower).
After my long purchases today my net exposure is now between small- and medium-sized net short (actually close to smaller) but will change a lot depending on the direction of the market.
Given my put positions,

the lower the market goes, the shorter I get. The higher the market goes (and my puts leak in price), the longer I get.
As I wrote earlier I am surprised how quickly the market broke down today.
I have always been concerned about Covid-19 and I never thought a stimulus bill was

in the cards before the election next week. The third factor, SAP's (SAP) bad miss, might be a company outlier (but I don't know SAP well enough to give you a view).
Today is a good example of how machines and algos impact the market. The machines have become my

"bread and butter" providing unemotional trading opportunities throughout this year. This morning and afternoon were more examples of such an opportunity.
Some have a strong view about the markets. There is a camp of bulls who think this is just another healthy correction in a

bull market. Others, equally smart (like The Smartest Trader in the World, see Comments Section), are worried that the market is breaking down and a bear market may be upon us.
For me, with a large put position (see its influence above), I will let the markets do what they will

do and my exposure will move accordingly.

Conviction for me ebbs and flows with price relative to "fair market value." Recognizing strong seasonal impacts coming up and a possible resolution (without contesting) of the election I can see some positive action. But I can also see

downside given the degree to which stocks sell relative to my 2800-3000 intrinsic value calculus.
The swift decline put us into a trading area where my near-term conviction is not strong -- in either direction! And sometimes that is just the case -- though "talking heads"

rarely seem to say they, "don't know."
I do have stronger views of individual stocks now -- both on the long and short side -- and that is where my emphasis will likely be in the weeks ahead.
My longs are value oriented -- packaged foods, autos, banks, etc.

My shorts (like homebuilders and selected high growth like Carvana ($CVNA) , Apple ($AAPL) , Square ($SQ) and Zoom Video ($ZM) ) are company/industry specific and reflective of a possible pivot from growth to value as returns mean regress.

By contrast, I remain more decidedly negative over the intermediate term, a discussion of which I will have over the next week.
Thanks for reading my Diary today. I hope it added value.
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