So what does a writer do if after spending hours trolling for ideas, he comes up empty?  If one is a part of the mega media machine, it would seem that the best alternative would be to make something up.  However, at ZachStocks, I try to be careful to only bring you ideas if they are worth considering and have an attractive risk to reward ratio.  And in the current market it is becoming more and more difficult to find attractive places to put hard earned capital to work without being irresponsible in relation to the importance of protecting against losses.

Its not that there is a lack of opportunities, it is simply that each opportunity seems to have an exhorbitant amount of risk attached to it.  Shipping companies have seen 50 to 100% gains so far this year and while these names were covered in early January for profitable trades, the risk now is that a significant correction could wipe out a significant portion of gains in just a few short days.

Similarly, we pointed out risks in Chipotle and Google a few months back which hopefully gave readers a chance to profit from falling stock prices as optimistic traders were forced to face the reality of a contracting economic climate.   Short ideas such as this can be used to offset the risk of declining prices in positions held long, or as absolute return vehicles to profit from a weakening market.

While the path continues to unwind, and new opportunities are born each day, the high risk in this market has me holding a cash position of nearly two thirds of my capital.  While it may be frustrating to earn money market returns (which aren’t much these days) on idle cash, the frustration is nothing compared to the indigestion that comes with losing clients investment capital.  So for today instead of illuminating an attractive trading idea, I will simply urge readers to exercise caution – keep some powder dry – and be actively pruning a watch list for the attractive opportunities that will certainly continue to evolve.