a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://2.bp.blogspot.com/_7ZckZ-8naz0/STSRedkyhHI/AAAAAAAACOI/O8X5Hfl3XXo/s1600-h/Dec+1+011.jpg”img style=”margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 400px; height: 300px;” src=”http://2.bp.blogspot.com/_7ZckZ-8naz0/STSRedkyhHI/AAAAAAAACOI/O8X5Hfl3XXo/s400/Dec+1+011.jpg” alt=”" id=”BLOGGER_PHOTO_ID_5275001016078730354″ border=”0″ //aFirst item is a href=”http://online.wsj.com/article/SB122809294013867881.html”this article from the WSJ/a. Apparently the Pennsylvania employee pension has run into some trouble with a portable alpha strategy sold to it.br /br /I would think the legacy of a href=”http://en.wikipedia.org/wiki/Robert_Citron”Robert Citron/a would have taught all municipal pools of money to beware investment banks selling sophisticated strategies.br /br /As a theme of the last couple of days; there is nothing wrong with simplicity. To that point I wanted to touch on something that I don’t think I have specifically focused on enough.br /br /One of the goals of taking defensive action after heeding a warning of some sort from the market is to simply have smaller ups and downs within the portfolio. I’ve spelled out the actions I have taken numerous times and so having a lot of cash raised means you go down less on down days and up less on up days. If the market seems like it is going to head lower for a while doesn’t it make sense to simply reduce exposure?br /br /If the average stock in the market is down 40% (made that number up, it is just an example) it stands to reason that the average stock in your portfolio will be down 40%. What seems easier to you, picking the stocks that will somehow only go down 20% or owning fewer stocks after taking heed of something like a breach of the 200 DMA or the 50 DMA crossing below the 200 DMA or the market getting 5% below the 200 DMA?br /br /I’m sure that at the beginning of the year there was an analyst somewhere who made a compelling fundamental case for why DuPont (DD) would hold up in the face of a slow down. Still the stock is down 57% from its high. Now that analysis, if it exists, could have been completely correct but still the name is down a lot more than the market.br /br /I do believe sector decisions and country decisions can help smooth out the ride but those decisions are nowhere near as important or as easy as simply having less exposure when it counts.br /br /On an unrelated note a reader left the a href=”http://randomroger.blogspot.com/2008/12/bad-things-happen-in-nightclubs.html?showComment=1228175700000#c717583796057909792″following comment/a on yesterday’s post about Plaxico Burress; span style=”font-style: italic;”I hope you appreciate the fabulous life you have/span. Well I have specifically built the life I wanted to have which took time and planning. I had a couple hardships early on in my life, one of which that was quite serious, which gave me an appreciation for life such that I don’t grow old in a cubicle plodding through rush hour traffic wishing the week away to get to Friday. I was in the log cabin before I had this phase of my career (meaning I took a risk to start into the current phase). So yes I fully appreciate the life I have worked hard to build and when I talk about bootstraps and the like I have a couple life experiences to back it up.

Last 5 posts by Roger Nusbaum

• The Big Picture for the Week of November 15, 2009 - November 14th, 2009
• Process Drilldown - October 23rd, 2009
• Sunday Morning Coffee 10-18-09 - October 18th, 2009
• A Little Followup From This Morning - October 8th, 2009
• Wednesday Roundup - October 7th, 2009