Use Intellect Not Emotions

The NASDAQ has hit a low of 2093. We have been predicting over the last couple of weeks that the NASDAQ would reach 2085 - 2090. Today's mini panic was close enough to finally deploy a large piece of cash into some key names: NSM, MRVL, BRCM, GLW, ADBE, CSCO, ERTS, GS, INTC, LU, MSFT, MOT, SCH, YHOO, MER, ADSK, and QCOM. Regular readers will know that your friendly neighborhood Kcap Team is very Bullish on the NASDAQ long-term. We have been patiently waiting for these price points to exercise our view. Our cash position is still large at approximately 45% but we intend on reducing it, little by little in the near-term.

Traders need to ask themselves the following question: If you are long-term Bullish, would you be welcoming these prices for your favorite stocks if Katrina never happened? Hurricane Rita seems to be like most other large hurricanes the Gulf has experienced before. However, memories of Katrina seem to be making it feel much more ominous. The Katrina disaster was largely due to inadequate planning from human beings (regarding the levies). The likelihood of similar long-term devastation is not as high as Katrina.

We are confident that these prices would not be available for the picking if it were not for the extrapolation that people are doing with Rita and Katrina. Considering our long-term Bullish thesis, it would be unprofessional and emotional for us to not exploit this financial opportunity (as cold as that sounds).

We have written numerous times explaining our long-term Bullish thesis for the NASDAQ. New readers can click on highlighted links in this post for more details on our views.

The worst thing traders can do is form a working plan only to abandon it when their emotions trump their intellect. Naturally we are cognizant of the fact that our thesis can be wrong and our stamina may not be as strong as we hope. However our still large cash position will provide us ample cushion and a clear head to continue assessing our strategy. Always remember that every trade or investment can be undone when you remove your emotions from trading and investing. We may be early nonetheless; this opportunity is what we have been planning for.
Certainly every bold decision requires a leap of faith. We are leaping like Peter Pan.

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