How do we do? The August 2006 Review

On the 19 positions we sold (out of 21 total entries from August 2006) the average profit was 48% with an average holding time just shy of 7 months which implies an annualized gain of nearly 86% on closed positions.

Winners were 19 out of 21, breaking down to 16 out of 17 longs being profitable and 3 out of 4 shorts being profitable. That's a success rate of nearly 91% and that's without even counting the very accurate calls on gold, silver, platinum, uranium, housing, the U.S. dollar, and the credit crunch.

Perhaps best of all, no quick trading required to achieve these results. All trades here are posted outside market hours, allowing for leisurely reflection and execution.

Details below.


We are always thankful for notes bearing good wishes and concern.

We have been asked how we fare in these markets and if all is well. Most certainly all is very well, thank you very much.

The markets are moving as we've predicted, and the continued pathetic and irresponsible flailing of the U.S. "authorities" along with the continued falling of "dominos" such as Fannie, Freddie, and Lehman suggests to us our call for much lower markets will soon be proven correct.

However unless we see a rally to provide us better shorting levels, we're content leaving our diarized positions here as-is. There are times we consider editorializing when there are unusual events in the markets, even if we've no fresh positions to detail, but as summer wanes we value a walk in the park higher than additional time in front of the screen.

Also, consider that there have truly been no unsual events of late. Government meddling in the "free" markets is quite common, and we would think to those who read this blog that answers to emails such as "What do you make of the gov't bailout of Fann/Fred?" is self-evident.

It is unnecessary and irresponsible and simply a bail-out of big or foreign investors who should certainly have known better - and if not then they need to learn the hard way as we all must. It is also a bail-out of those in power who allowed this to happen, who arguably facilitated this happening in abdication of their responsbilities as executives of the companies and as persons in government or regulatory agencies.

Now they'll simply find lucrative employment elsewhere or re-election as the case may be, then getting fatter while shearing a fresh flock of sheeple. Nothing changes. As we are fond of saying, "history repeats" and "pigs are pigs".

How do you do? We welcome feedback, and tales of your market successes.


Speaking of which, in response to past requests for a tally we had said we'd summarize the results of past trades on this blog. It's a time-consuming task, so we shall compile it in portions starting with a review of August 2006 which is when we began this blog. It seems an ideal time to do so, given that the DJIA is exactly where it was back then and the TSX is little higher.

Going forward, each month we shall review the comments and entries from 2 years previous, feeling that 2 years which have included very volatile markets is plenty of time to judge the accuracy of the ideas.


August 2006 Review


Long NOC at $3.90 We booked a 51% gain on this position 4 months later in December '06. A maximum 252% profit was possible when NOC was bought out for $13.75 in December of '07


In august 2006 we wrote that "gold is currently fluctuating around $640 USD. We're very bullish and long on shares and bullion, as well as with silver and platinum and copper. Extremely bullish on uranium, which hit a new high of spot $47.50 USD today. Bearish on housing prices, and have been for a year now - the Canadian market should fare favorably, particularly in Western Canada, but the US market is in for a major shock. Bearish on the US dollar."

Gold subsequently crossed $1000, silver enjoyed similar gains, and platinum more than doubled while uranium tripled. Housing prices, especially in the US, I'm sure readers are well aware of and so too should they be aware of the slide in the US dollar. In Canada housing did indeed remain stable although a slide has recently begun in that sector.


Long INFY at $40.50 We sold 4 months later in December for 31% profit. At the time we wrote that INFY "looks toppy currently so we're taking those hefty gains." The stock went slightly higher over the subsequent 6 weeks then fell almost continually back to the current level of $37.25 just slightly lower than our purchase price. Might not make a bad long holding at this point. We'll consider it.


Long ATYT at $20.10 Two months later ATYT was bought out by AMD and we went along with the conversion to AMD shares. The conversion itself signified no real gain for us however we later made a profit on AMD, and we'll eventually count that score for AMD.


Long FILE at $31 The company was bought 2 months later by IBM resulting in our 12.5% profit.


Long DCS at $20 We sold DCS at break-even 13 months later after enjoying a 6% dividend for the year. The stock began to plummet the following month and is now at $6.94


Long WNR at $23 We sold in January of 2007, 6 months later for an 8.5% gain after it fell below our stop loss level. It only went higher from there, peaking around $65 a scant 6 months later for a maximum possible gain of 182%. The stock is now at $12.07 up from recent lows around $8.


Long CXX at $1.45 We sold 6 months later for a 100% gain. Upon selling we wrote that "it looks unusually weak [and] due for more consolidation and a lower support level." The stock went slightly higher thereafter then fell to its present price of $0.26 Perhaps it will find support soon, as it can't go much lower. The prospects are not bad, as far as speculative uranium companies go, so the fall of this stock gives some idea how beaten-down the uranium sectors has been over the past year.

In November '06 we sold a 2nd entry in CXX for a gain of 66% after holding it only 1 month. We bought a 3rd position in July of '07 which we still hold. Admittedly not smart, in hindsight, but we hope for a rally in the sector due to future energy scarcity.


Short L at $50 That was Loblaw's in Canada, not Loews in the States. 7 months later in March of '07 we covered for an 8% gain. The stock is now $31.42


Short WN at $75 We covered for a 5% gain 7 months later. The stock is now 30% lower.


Long MAI at $1.30 We booked an 82% profit 8 months later circa $2.25 The stock is now $1


Short MCK at $51.50 We're still short, with the stock 12% higher. Not a great call, but we remain optimistic.

At the time we wrote that "we've followed this stock for a few years, and feel we know it well enough to be intuitive about it. It looks tired to us, and we expect US markets to do poorly going forward along with a general credit crunch ..." Wrong about the stock, but quite right about the markets.


Short CFC at $37.25 That's the infamous Countrywide Financial, one of the flagships of the credit and housing debacle. We only made 6% profit on this one, covering 7 months later.

At the time we wrote that "we expect a market bounce thus cover some short positions to secure the gains. The gains are minor, but they served us well as intended hedges for such market action as we saw this past week."

The DJIA had just fallen 750 points in less than 2 weeks, and was at its lows for the spring as it then did indeed did rally significantly gaining around 2000 points. However CFC went only a little higher and fell to a low circa $4 in late '07 at which point it was acquired by Bank of America. At least we didn't lose on this stock, like so many stockholders did.


Long Red Hill Energy, RH at $0.69 We booked a 91% profit on this position 14 months later at $1.30 At the time we wrote that "we remain bullish on the company's resources, but wish to consolidate these generous gains in difficult markets, especially as we see the stock up against resistance and a need to consolidate at this level." The stock went no higher, falling to the current $0.80 where it appears to be consolidating. In early May of '07 we sold a 2nd position in RH for a profit of 64% after only holding it 2 weeks. We've been very lucky with this stock.


Long Santoy Resources, SAN at $0.41 We profited 251% when selling 7 months later, writing "we see major downside in the charts of these stocks before their long-term trends and support levels are reached, at which time we may re-enter". The stock was around the $1.50 level when we sold and was slightly higher the following month but then it slid all the way down to its current price of $0.15

In early November of '07 we sold a 2nd entry in SAN for a gain of 42% after holding it only 1 week. We weren't as lucky the 3rd time however, buying it in January of this year at $0.45 and still holding, however we did caution at the time that "it's a long way up or down from this level, and the move should come soon." The move lower began mid-April and appears to continue but we'll hold on hoping for a rally in the sector. We are bull-headed on this one, not bullish.


Long Silver Spruce Resources, SSE at $0.49 We sold at break-even 6 months later, tired of waiting for this one to move. Two weeks later it hit a high 367% higher. Oops. It is now 70% lower than our original entry, currently trading at $0.15 Don't pity us for missing those massive gains, pity instead those who bought higher and are still holding on.


Long Consolidated Abbadon, ABN at $0.50 We added to this position in December of '06, and sold both for a net 1% gain in February '07 The stock is now below $0.08


Long Titan Uranium, TUE at $1.70 We held for 10 months, then selling for a profit of 4% We could have had profit of nearly 100% but did not sell. At the time we finally sold we wrote that "we do not wish to risk this modest gain turning into a loss as we believe the current trend suggests will occur if we hold." The stock only went lower from there, and is now at $0.21


Long ALZ, Aldershot Resource at $0.30 We sold 6 months later for a 17% gain, writing that "we feel it's lagging and might not stay above its support." It went only pennies higher over the next few months, after which it sold off to its current level of $0.05


Long EMC, Energy Metals at $5.20 We booked 151% profit 7 months later and wrote that "we see major downside in the charts of these stocks before their long-term trends and support levels are reached". This time we were wrong, as the high was reached 3 months later when the company was bought out for $19.12 per share, meaning a 267% gain was possible had we held that long. Judging by the results of most uranium companies after we sold in the spring of 2007 though, it's a good thing we didn't make a habit of holding longer. Can't complain, and no regrets here.


Long UEX, UEX Corporation at $3.38 Here we made 71% in 7 months. Some called us fools for selling, and indeed the ultimate high was 7 months after we sold at which time we could have realized a profit of 169% however the stock is now at $1.80 and still falling.


Long SKF, Skor Food Group at $1.15 We're down 73% sadly still holding this one. It hit its lows around $0.25 late last year and has since fluctuated as high as $0.50 and appears to be consolidating around the current price of $0.30 In December of '06 when the stock was still as high as $0.85 we wrote that it was a position in which "we would not take positions at this time". The charts suggested we should have sold on closings under $1 but we held on and have paid the price in shame and dollar losses. Hopefully it will recover.


Long PTCH, Patch International at $1.10 on which we profited 11% in aggregate. At the time we initially purchased it, wrote that "the chart suggests it'll coast just above $1 before making another upward move and a breakout over $1.50 would be extremely bullish, however if it breaks downward the support should be no lower than $0.50" Indeed, just two weeks later the stock hit an intra-day low of $0.55 before consolidating above $0.75 and then finally rising past the key $1.00 level and appreciating all the way past $1.50 to $2.75 at which point we could have booked a profit of 150% Instead we stupidly added more around $2.50 on its pull-back and hoped it'd go over $3.00 and beyond but it didn't go much higher before selling off ever since. We were lucky to get out when we did with some profit overall, as it since has fallen to $0.10


Scorecard for August 2006

Average gain thus far on positions bought in August 2006 = 39%

On the 19 positions we sold (out of 21 total entries) the average profit was 48% with an average holding time just shy of 7 months which implies an annualized gain of nearly 86% on closed positions.

Winners were 19 out of 21, breaking down to 16 out of 17 longs being profitable and 3 out of 4 shorts being profitable. That's a success rate of nearly 91% That's without counting the very accurate calls on gold, silver, platinum, uranium, housing, the U.S. dollar, and the credit crunch.

We sold most of these August 2006 entries in the spring of 2007, which displays our great luck since that was the high point for most of these stocks. Had we held them until now, the results would be very poor. Timing is not everything in speculating, but it does count a very great deal.


We'll post another update soon, be it a new trade or another review. If those on our mailing list are wondering why they were not notified of this post via email, we simply did not think it worth your bother since this post contains no trade updates.



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.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list.



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.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor have we ever sent anything other than update notices for this blog to our mailing list.