I made a bet several weeks ago against the real estate sector. Specifically, I made a bet that we would see continued weakness in the Commercial real estate market. I made this bet because I just looked around my neighborhood and the ones I drive by and I notice numerous empty store fronts without any real chance of all of them being occupied. I actually did not realize how bad it is in certain areas of Southern California since my neighborhood is somewhat insulated from steep residential declines. But if you go into areas where house prices have fallen more, and thus affected consumer spending more, you see a lot more empty buildings. This is going to continue to be a drag on the economy and more importantly on the balance sheet of the those who own commercial real estate.
But right now, the market is just too good. Everything is going up and it is a bad time to be short anything. While my portfolio is up over the last several weeks, it would be even stronger if I wasn't short here and short against the Dow Jones. This does not really bother me since when the market looked weaker, I probably would not have gotten into some of my better positions if I did not short something against them. So net, I have made more money than I have lost.
Is it time to take profits on that position. If they were short term plays, absolutely. The market rally is now right around the level where greed and fear is taking over. There is no more reason to bid this market up yet it keeps going up. Yes, the world is not falling apart. But if you think a recovery is right around the corner, just take a peek there. You will notice that the next street over looks pretty bare.