Big turn around today.  Again, I think back to the concept of reading the tape and trying to listen to what the market is telling you.  It is showing resilience and that should not be discounted.

The gyrations are not for the squeamish and at this point, we have had some nice pullbacks in core stocks.  I am not messing around too much with speculative plays.  Yes, they can have some good rallies from here, but given that I am trying to build a long term portfolio, I find the speculative plays which I would not allocate much money to anyway to be a distraction.

I reduced my position in BBY on the good earnings announcement yesterday and am looking at TEF and wondering why on earth I am in that stock.  It is a pure cyclical play on latin american growth and is probably a black hole.  That said, I think there will be a good opportunity to bet on Latin America or other developing areas, but it should be done in a diversified manner, for example an ETF for Brazil.

Germany 30yr bonds trading below 2% yields is an interesting development.  Ours are in the 2.8% area and in my view look like there is not much upside (lower yields) but looking at Germany gives me pause. If we go into a complete capitulation of taking risk (non zero probability) then we could see US rates even lower!

I try to think about markets in scenarios and then attach probabilities to each scenario.  In that way I can come up with my own expected value of outcomes in the near future.

More on this tomorrow.