Expecting a market bounce soon within a continuing bear market, we cover more shorts.
We entered XLY short at the end of January and book a 16% profit there in roughly 5 months. We entered SPG short in late April and now realize a 17% profit on that trade in under 3 months.
Especially in the case of SPG, we feel it will go much lower, however we also feel it is due for a bounce and we hope to see a rally which we might short again before the company reports their quarterly numbers pre-market on July 25th.
We hope this won't be "one that got away" as has our RATE short proven to be. We covered that short for an 11% profit in our last update stating that we "believe the stock remains extremely overvalued yet it stays up at persistently gross valuations despite the sinking markets so we're happy to step aside for now and book this gain." Today the company's valuation became a little more reasonable as shares hit a low 37% below where we covered, with the price collapsing more than 25% in the past few trading sessions alone. On the bright side, we did profit and we were correct. Given its resilience at the time in falling markets however, it seemed prudent to step aside and we do try to be prudent.
With these trades today, thus far in 2008 we've closed 21 positions, all winners both long and short, for an average 31% gain on an average holding period of approximately 7 months which implies an annualized gain of 53% We're asked the following question by email :
"Big fan of the blog. One thing I've noticed is that I had to read post after post to get a complete picture of the portfolio, and I still don't know the percentages each position represents in your overall portfolio. While I figure this is probably the least I can do given the information you provide (for free), it would be much more helpful if that info was available (particularly the holdings percentages, since my portfolio isn't likely to be the same size as yours)."
Thanks very much. Others have written to suggest we create an attachment with a list of past trades. We're working on it, albeit slowly since it is summer and we prefer to look ahead rather than back. Indeed while we're undertandably proud of our record we detail it only to illustrate that anyone can succeed similarly and fairly easily, if by no other method than simply culling ideas from free sources such as this one. We hope it inspires investors to go from passivity to activity, and from losing to winning !
We consider each entry a single position, meaning whatever your allotment is for a given position of this nature - generally we are aggressive and speculative, but we like to think intelligently and repsonsibly so. Unless we state we're entering an "aditional position" in which case the allotment doubles, or triples as the case may be, or perhaps not according to your capitalization and risk tolerance.
The way we play, a given allotment is a dollar figure rather than a percentage of a portfolio. While a percentage of an overall portfolio - 25% for example - may be dedicated to this type of trading, if that % in dollar terms equals perhaps $100k then we may decide to allocate roughly $10k per trade and once we have 10 positions we'd enter no more until a position is closed. Further, when new capital does become available, unless we state currently that we continue to like a given stock at current levels (which we do in order to save people the effort you've described), we'd wait for new ideas rather than seek out and put money into old ideas that may have changed in price, attractiveness, or suitaiblity for our plan.
While that's extremely general, we hope it is also clear. Everyone trades differently and with different resources and comfort levels. We strongly suggest all investing be done in consultation with your broker or investment advisor, and not to consider this blog investment advice of any kind. We're merely diarizing our trades and outlook, in the sincere hope that it will be of use to some readers and that the process also serves as a valuable double-check on our own trading.
We finally add long holdings, with an initial entry in refiner
Valero and telecom giant
Verizon. These last traded at $36.79 and $35.43 respectively. Our simple view is one of near value, given the market and economic environment, and of somewhat oversold conditions.
However we remain in a bear market and it'd not surprise us to see these trading much lower in the coming weeks, at which time we might say they've become true "value plays" and enter additional long positions. Should there be a near-term market bounce however, or especially should we prove to now be at a market bottom (which we very much doubt but must prepare for all possibilities), the upside move in these shares should be quick and very profitable.
In any case, we shall continue to accumulate relatively attractive "blue chip" holdings as the markets wither.
Please enjoy another sad commentary on the reliability and ethics, or lack thereof, of the "big boy" alalysts.
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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