As the FTSE 100 has finally broken a key level this past week I’m breathing a slight sigh of relief.
The thing is I’ve held far too much cash of late and I’m itching to deploy more as it’s just not making sense to have more cash that which is invested into stocks.
This is why I’m happy that the FTSE 1oo has at last made it’s way past 6000 and if the S&P 500 breaks 2000 then we’re headed for lower prices more generally.
On reflection, this year has been one for making more money from shorting stocks rather than from buying them.
Weak balance sheets, terrible outlooks, dodgy accounting, equity dilution, cash burn – these are the characteristics of the stocks I’ve made money on from shorting.
I’m wondering if 2016 is the year I turn into a permabear when there is so much dross in the small cap space on the London Stock Exchange.
The FTSE 100
Chart from Yahoo Finance
Indeed some stocks are so terrible that I refuse to short them like Thor Mining (LSE: THR), the balance sheet of which is made up of £10.4 million in intangible assets and total assets of £10.5 million leaves very little protection for investors when you consider that total liabilities are £1.2 million.
Thor also like to issue equity, suffer operational losses and their share price is so low that it is beyond the confines of my strategy to short them.
But there are opportunities to short sensibly without adding to the already increased risk of shorting stocks without getting into too much bother so long as the liquidity is there.