This blog post originally appeared on RealMoney Silver on July 14 at 8:19 a.m. EDT.
On Monday morning, I awoke at around 2:00 a.m. EDT to see the
futures down by about 45 points and the
futures approximately 7 points lower.
By the end of Monday's trading, the DJIA rose by almost 200 points, and the S&P futures rallied by nearly 30 points from the nadir in premarket Monday morning trading.
There has been one constant in my columns over the last 15 months: The only true recommendation I have made is that below-average trading and investment positions should accompany the uncertainty of our economic times.
Whether stocks are poised for the next trade to the upside or downside, there is one tautology or certain truth: As Jim Cramer penned last night, "
"; it is simply too hard to have the confidence to place a lot of chips on the table, either on the long or short side.
While my baseline expectation remains that we are in a
and that we will be range-bound for the balance of the summer, the fall could bring a breakout to the upside and a final curtain call to the rally off the March lows. But, from there, I expect a broad, erratic and trendless trading range characterized by substandard returns for years to come.
There are many reasons for the projected lack of clarity in 2010 and beyond and for the market to be characterized as one with no memory from day to day. Among the reasons include a too levered worldwide economy (at nearly every level), the residue of past policy errors (deregulation and a laissez faire attitude toward regulatory agencies, etc.), political partisanship and the uncertainty associated with the government intrusion into the private sector.
Stated simply, in the current period and anticipated reset period, the range of economic outcomes remains broader than usual.
It is for these reasons (and others) that most investors should take a permanently more defensive position than in the past: Under these circumstances investors should be more concerned with the loss of capital than the loss of investment opportunity.
In a period during which
, common sense and logic dictate that most investors should err on the side of conservatism in the stewardship of their assets.
There is simply too much guesswork and too many moving parts for most investors to have a strong conviction. Exposure to equities should be below average for some time to come as money is too valuable and its preservation in this tumultuous environment of untested conditions and
should remain investors' first priority.
Cash will be king for some time to come. Preserve it!
Doug Kass writes daily for
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At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.
Know what you own: Some of the most active stocks during Tuesday's midday trading include Bank of America (BAC) - Get Report, Citigroup (C) - Get Report, CIT Group (CIT) - Get Report, Financial Select Sector SPDR (XLF) - Get Report, SPDRs (SPY) - Get Report, Dell (DELL) - Get Report and PowerShares QQQ (QQQQ) .
Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.