I remember the summer of 1982 very well.The market had been heading lower and the DJIA was about one tenth of its current value.One blowhard, but very influential, market prognosticator was predicting the markets would move still lower.And I bought into that.

As a CBOE market maker I carried positions that made me very short.I traded primarily Hewlett Packard and Dupont.I planned to make a killing on the continuing decline.1981 has been a fantastic year for me, and I was going to make even more money in 1982.

Then, a funny (not really funny) thing happened.The market rose.And rose some more.Being as undisciplined as possible, I remained short – confident that this newsletter writer had it right and that I was going to get the rewards I deserved.And so I did.The markets moved higher and higher and, eventually, I had to give it up.I owned a large short position at the bottom, and paid the price.

Why mention this story?Because I feel I’m there again.I see no reason why this market should do anything but recognize that our economy is in horrible shape; that things are going to get far worse than anyone believes, and that we may even find ouselves in a depression. Under those conditions, the stock market should get crushed.

But, I also know I have a very poor track record of predicting market direction.And I’m much more disciplined today.Thus, I can ignore my bearishness and avoid placing myself in jeopardy in case the market bottom is already in place.What I know for certain is that I have no idea what the future holds.I fear a debacle, but cannot afford to bet on it. Nor can I allow myself to get clobbered if it comes to pass.

Thus, I’m really in a good place – not exposed to a large loss if we see a dramatic rally and not exposed to a big loss if we find ourselves in the midst of a stock market catastrophe.And if neither occurs – if it turns out that we are range bound for awhile, my iron condor positions (not large enough to hurt) will provide sufficient reward.

If I’m in such a good place (for now), why does that make me uncomfortable?Common sense and a disciplined approach to trading is supposed to be a good thing.I know it’s a good thing.

Dr. Brett, where are you?