selling CVT + 42%, shorting LEH, buying DUG

We purchased CVTech Group Inc, CVT per this blog at the start of December and now sell to book a 42% profit in light of the recent rally in the stock price.

While we still view this as a good long-term holding, and indeed will continue to hold positions outside of the entry diarized in this blog, we feel the stock is somewhat overbought currently and we remain bearish the general markets so we wish to pocket the profits on this holding while the stock is strong.


With this sale thus far in 2008 we've closed 11 positions for an average 25% gain on an average holding period of 7 months which implies an annualized gain of 43%

By contrast, during the past 7 months the general markets worldwide have sold off considerably while many investors, and indeed even many "value investing" legends, have lost significantly. We count our blessings and good fortune.


If wishing to re-deploy these gains into another penny stock speculation while participating in the current alternative energy trend, we continue to feel cautiously bullish of our KWPW position in light of this news. We reiterate our original text that "to us purchases up to $1.75 have seemed fair, with low bid attempts placed below $1.50" However note the major caveats that KWPW is not currently a power producer and it is an illiquid and highly speculative stock. Hopefully those conditions will change in our favor in the fullness of time.

Cereplast, CERP also remains at a good speculative entry point in our view, per our posting dated April 23 of this year.


In our posting dated April 21 of this year, we wrote that "we remain general market bears and would likely turn to a neutral stance if the DJIA starts to close above 13000 - not much higher than it is now."

While the DJIA has recently tentatively breached 13000, we continue to see significant resistance above that level thus we have not turned away from our bearish stance and today's market slide bolsters our view, if perhaps temporarily. Nonetheless we proceed with caution since we continue to believe that the general markets, commodities, and the majority of individual stocks are considerably overvalued and overbought at present.


Due to this belief, we have not yet covered our Google, GOOG, shorts entered per this blog April 21st. Readers have written to ask about this. No update = no change in our position. The stock has indeed risen more than we had stated we'd be comfortable with, however upon re-evaluatiion we see that it remains within its down-trend from its all-time highs last year and remains in our opinion significantly overvalued and overbought thus remains as good a way as any to be hedged short per our general bearish market sentiment. More conservative traders may have rightly exited with a small loss. We remain short, if at times uncomfortably so.


We additionally short Lehman Brothers, LEH, last at $43.64 We would likely cover if it shows strength above $50 making for roughly 15% risk if using that level as a stop. More conservative traders might wait for a rally in the stock, rather than shorting immediately after the stock and markets sell off as happened today.


We also effectively short oil & gas via a long position in Ultrashort ETF DUG. In doing so we hope to have luckily timed the near-term top in oil & gas which is admittedly unlikely. It is further folly to effectively short anything making new highs as oil did today, so we count this play as high-risk thus if we find the stock closing at new all-time lows below $29 we'll re-evaluate and perhaps even add to the position if it moves lower rather than cover so soon. However very conservative stops might be set there, thereby tightly limiting the potential risk to only 3.5%


We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult your broker or investment advisor before making any investing decisions.

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