Portfolio deconstruction

Here's a quick look at my portfolio as of now:

~30% in cash - looking for short term plays and liquidity when the volatile markets swing in my favor

~ 30% short Europe - through ETF's / put options

~5% short the Euro/USD - Euro has had it's run up, expecting low 1.3x by the end of the year on nothing good coming out of the Eurozone.

~10% physical silver - PM's are a great store of value.

~ 25% pot pourri of hand-picked stocks that are underweight utilities and overweight non-cyclical goods & services. Net short on financials.

Plan on playing more broadly as this market is definitely headline driven. Watch out for news out of Europe, and for God's sake stop buying on the rumor and selling on the news. All positive news out of Europe coming from FT.com or The Guardian is utter nonsense, and nothing is credible unless an official is willing to put his name behind it. The half-life of rumors has died down considerably, but that hasn't helped market volatility.

If you want you can try and be nimble and take a quick profit off rumors & their subsequent refutation, but that depends on your risk appetite. Mines is currently smaller than usual, and I am looking for more convergence trades and obvious mispricings (VIX @ 25?!).

Happy trading.

The Big Three

Forget Greece for a second. Forget Italy. Forget the individual countries, and let's look at Europe more systemically. There are three issues that seem to be good flag posts for the ongoing crisis, and there can't seem to be a solution that solves all three. Addressing two of the three issues seems to starve the third of much needed attention.

Those three things are:

1) Bank solvency

2) Sovereign stress

3) Bank funding

It's interesting how when addressing bank funding and bank solvency (naked CDS/stock shorting ban), the sovereign risk seems to have blown out.

Over the next three years, ~$1.7 trillion worth of debt needs to be rolled out (either paid or kicked down the road with the issuance of new debt). An EFSF levered 4x-5x will not be able to cover such an amount, not to mention the bank recaps and continual buying of securities. A number closer to $2 trillion would be needed... but seeing as how bond auctions can barely get covered in Europe as it is now, all with extremely high yields, it does not seem like this problem is shrinking nor solved.