Alright, sold all of my position in VIX Mid-Term Futures (ticker: VXZ) at $53.60. Took a bath on it as the market has consistently appreciated almost every day this year. Originally I had established the position to hedge a possible market correction after a strong rally through the end of the year. Well, that obviously didn't happen. Even more frustrating, I've been expecting the market to show a strong rally through the first half of the year. So I successfully positioned myself against my 6 month expectations, and then got stubborn about it. So I start 2011 in a hole (down about 1%) and will need to climb back out.
Going forward looking for investment vehicles with:
(1) Pricing power as I expect costs to rise for many businesses. If they can pass along these increases then revenues should grow more rapidly than expected and margins should remain fairly stable.
(2) Beneficiaries of higher commodity prices, likely increasing U.S. interest rates, and pent-up demand.
(3) Larger cap companies trading at attractive valuations with high returns and growth prospects.
