Sold all of my ~3% position in MKS Instruments (ticker MKSI) at $24.55 for a profit of 13.3% after all fees from when I established the long position on November 4.
The main reason for the sale is to move the portfolio into a more conservative position prior to what I believe may be a market correction during the next couple weeks. As I mentioned in the last post, I foresee three things that may shake things up in the near future:
(1) New members of Congress looking to shake things up, starting with a debate over the debt ceiling.
(2) Spotty earnings - Sure, sales looked reasonably good in December, but costs may have risen more.
(3) Macro economic signals leading to speculation/ worries about Fed - Too hot = worries of rising interest rates; Too cold = worries of power to avoid double dip.
The eagerness by the Republicans to pick a fight over the debt ceiling is most concerning to me. It seems foolish simply because it is merely symbolic. There is no chance, in my view, that the debt ceiling won't be increased. More importantly, this action highlights the naivety of these fresh-faced Republicans about financial markets and the damage that can be done. If they insist on pressing the issue to win cheap political points I expect yields on treasuries to rise dramatically, which would increase lending costs, neuter the Fed's quantitative easing efforts, and needlessly hurt investors in treasuries who would see their principal shrink. There is also a good chance a steepening yield curve based on rising concern about U.S. debt payments would hurt the equity markets.
In my view we are walking along a narrow ridge and stupid decisions by our leaders based on politics instead of economic health risk pushing us off one side or the other. This is neither a Democrat nor Republican view, it is simply the view of someone trying to predict market movements.
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