-- S&P 500 breaches 1080
Higgenbotham wrote:
    I took my loss today, as what is going on looks nothing like what
    I expected (for example, look how much gold and silver went up
    today and how low the dollar is - I had predicted that would not
    happen). Shorting this bear market rally destroyed almost 8% of my
    net worth. The S&P is up 13.5% from where I started shorting.
    Analyzing my psychology heading into this exercise in Maximum
    Ruin (which has probably been gleaned by anyone reading this
    thread): First, I had made some money in the previous bubble from
    2003 until 2007, although I did sell everything 1-2 years before
    their respective highs (real estate, stocks, etc). Then I was
    short at the top of the stock market in 2007 and made some money
    there. And, as we know from the forum, I made a little money last
    Fall buying and selling stocks. So I hadn't lost a dime going
    into this exercise. I think what can happen in such cases is that
    a person becomes overconfident and doesn't consider their actions
    carefully enough. In addition, the overconfidence results in the
    failure to take the actions that one knows should be taken. I
    knew that I should be in safe cash and tangibles and should not
    be fooling with the market.
    As I watched my money get destroyed today, I told myself over and
    over that this will be the last time I ever speculate. I realized
    that the actions that had led to my previous success (or perhaps
    luck would be a better word) were based on similar thinking to
    what had led to taking the short position to begin with, but that
    I was basically standing in front of a tsunami that I had
    incorrectly identified. As we stated the other day, this market
    environment is nothing like that which existed previous to the
    crisis (and perhaps will be less similar to the past generational
    crisis than anticipated). During that time, it always seemed like
    the market would forgive your errors and let you out gently.
    Generally, the country hasn't learned this lesson yet, but this
    small exercise in Maximum Ruin gives me a taste of what is coming
    and how people are going to feel when it is over. It's going to
    be a very different world once this market crashes for real. Of
    course, having an understanding of what is coming makes all the
    difference because we all know that the days of easy money are
    over and once your savings are lost it will be impossible to
    recover them. One of the big problems I see is that our leaders
    have convinced many that the days of easy money are not over,
    when in fact they most likely are. Without that knowledge, losing
    this money probably wouldn't have bothered me much. For example,
    about 12 years ago, I lost about 20% of my money in the market.
    At that time, it didn't bother me nearly as much as losing 8%
    today and, in fact, I hadn't ever calculated the percentage until
    just recently. Looking back on that now, I must have been
    nuts....
When Higgenbotham posted this, almost exactly a month ago, I feared
that he would regret it.  He had planned to stay short until the S&P
reached 1080, and here he was taking his loss when the S&P was at
1065.  At that time, it seemed that the stock market rally was
ending, and that the S&P index would start falling from 1065.
Well, it turns out that Higgie's intuition was right. This new stock
market bubble continues to grow, and the S&P 500 index has just
reached 1084.
John