Riding The Gravy Train: September 2008

Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Monday, September 29, 2008

covering VAR +13% in 6 weeks

We cover VAR for welcome & generous short-term profits.

We are not bearish this stock in general. We remind readers that on August 18 we wrote :

"First, regarding Varian Medical Systems Inc. , VAR, let us say we like the fundamental growth and note the medical/biotech sector is generally rising fast at present. We respect the products and business model and believe the company will do well over time, however the recent spike in share price reveals what we feel is an overbought condition which, should general markets turn lower soon as we have forecasted, will likely be corrected with perhaps a 15% drop thus we short VAR which last traded at $64.97"

The low target of a 15% drop was hit today intraday, and anyone having set their cover at that level made the full 15% Congratulations to us all. While so many weep on a market day such as this one, we can find simple satisfaction in trading according to our plan. No stress, no fear.


Yesterday's comedic content in our blog prompted readers to send us other amusing quotes :

"The reality of the situation is that an open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention."

- Henry Paulson, Shanghai, March 7 2007


"It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions."

— Joseph J. Cassano, at the time an A.I.G. executive, August 2007



And an update on our own stance.

On August 18 we wrote : "We believe a new and severe downturn in the markets will begin soon."

September 13 : "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."

September 15 : "We reiterate today that the markets are very treacherous and we believe are very likely to go very much lower very soon. Verily."

September 19 : "Bail-outs, random meddling, and outrageous restrictions on short selling hamper the efficiency of markets. Who will buy when there's a selling panic, if not shorts seeking to cover? We may find out soon enough."

Yesterday : "We're looking at good shorts [...] Regardless of whether such a rally occurs or not, we believe the general markets will be much lower in the coming months if not weeks or days."


As of today's close, after the largest 1-day point drop in the DOW ever, we turn towards a neutral sentiment on the market. We are as surprised to write it as loyal readers must be to see it, however a move as large as today's suggests capitulation at least in the near term. Factor also the psychological barrier of 10000 on the DJIA.

This doesn't mean we're looking to rush into long positions, but neither are we looking to add shorts at present.

One caveat is that with so much short banning it's tough to gauge true sentiment since shorts would have normally been covering on a day like today thus the losses would have been significantly mitigated. Many people wish that shorts were out there propping up the market today, but thanks to the government's meddling that wasn't happening to the degree it would normally. Further, on rallies there'll be no amateur shorts covering in a panic shooting financial stock prices higher.

Both for the good research they generally do and for the liquidity they provide, shorts are a long's best friend. Ying/yang. Anyone who thinks otherwise is a novice or a fool.

The spectre of government intervention looms large despite today's brave and correct defeating of Paulson's shameless proposal. Amazing to see so-called conservatives finally voting conservatively - against the bill, for the most part.

Is this a turn in government sentiment towards proper management of the markets & economy? We doubt it'll last, but for one memorable day we applaud it. The market may have fallen today, but its principles still stand as does the Constitution of the United States. Barely.




News of today's vote is here."

"But in the end, only 65 Republicans voted for the bill, joining the 140 Democrats who supported the Bush administration's modified plan."





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 only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

Sunday, September 28, 2008

Liars, Liars, economy on fire.



President Hoover said the same thing, students of financial history and the Great Depression will note :




Or perhaps they're not liars after all, given that just last week President Bush admitted the economy is a house of cards.

Bush said he initially thought the government could deal with the trouble on Wall Street "one issue at time." But the financial "house of cards ... started to stretch beyond just Wall Street in the sense of the effects of failure. So when one card started to go, we were worried about the whole deck coming down."


The pattern we see currently in the US is virtually identical to the pattern observed in Japan during that country's massive real estate and stock market boom and bust in the 1980's, replete with bank failures and government bail-outs. Research "Japanese lost decade" to marvel at the similarities, and check a long-term chart of the NIKKEI to see what stock markets might have in store.

Marvel too at the irony - "experts" such as Bernanke himself said that the Japanese government should have allowed banks to fail and the free market to operate properly to avoid the subsequent recession in Japan which is now 20 years old. Yet now Bernanke is in a mad rush for a taxpayer bail-out of banks that he recently said were sound.


It can be tough to figure. Are these "leaders" and "experts" liars or simply completely incompetent? Could they not see something so obvious coming, when history contains so many examples of this happening and when even so many humble observers predicted it with precision as evidenced in this very blog?

If they are liars, why should we trust them or their hasty bail-out packages now? If they are incompetent, why should we trust them or their plans now? Why should we trust their assertions the economy will collapse without the taxpayer bailing-out the rich speculators and the very banks that econouraged consumers to go so deeply into debt?

These "experts" remain either liars or wrong. Take your pick. They are not to be believed, their ideas are not to be trusted, and their plan will not work since it fails to even slightly address the root of the problem. Banning short sales and buying bad assets will reduce liquidity, or at best prolong the inevitable.

The consumer will not get more credit, nor will the family who incurred too much mortgage debt on a clearly inflated home "value" be able to afford their mortgage. If they are allowed to make reduced payments in order to keep their speculation (they are actually amateur speculators and mortgage debtors, not home owners) then they'll just overpay even more, live under the cross of their poor debt decisions even longer, and those who responsbily saved cash & credit will not be able to step in and purchase those properties at the proper pricing as seen in foreclosure sales, and the real estate & mortgage market will simply take that much longer to correct.

As seen in the Japanese example, banks will hoard the cash or liquidity provided to them by the taxpayer and will not trust lending to each other or to businesses and consumers overburdened with debt and leverage.


Consider also Treasury Secretary Henry Paulson's obvious conflict-of-interest. As recently as 2005 he "earned" almost $38 million in one year as CEO of Goldman Sachs. His net worth is estimated at roughly $800 million and it is reported that much of that is in Goldman Sachs shares.

Who is really being bailed-out? Some say the economy is being saved, and some say the taxpayer is being robbed.


"The whole world, including the U. S. has benefited…from credit availability."

– Henry Paulson, Times Online, September 18 2007


"There is no way to stabilize the markets other than through government intervention."

– Henry Paulson, Wall Street Journal, September 24 2008



Note too that no economists have been consulted on the merits of the bailout or its likely efficacy, rather almost 200 prominent economists are against it. This blog covers that beat far better than we could hope to. For the most part we'll stick with trade ideas and we expect to diarize some trades very soon.

We're looking at good shorts, especially in Canada which has so far effectively skirted the global stock market crashes, and at taking initial positions in a few beaten-down uranium and perhaps precious metals stocks.

If we must guess, we say that markets may rally somewhat on a confirmed bail-out. Perhaps even rally enough to fool many into thinking we're in a new bull market. The alternate view is that the expectation of a bail-out is already factored into the markets. Regardless of whether such a rally occurs or not, we believe the general markets will be much lower in the coming months if not weeks or days.



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 only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

Friday, September 19, 2008

Quick points in light of recent chaos in the markets.

Let us tune out the market noise and bleating of sheeple, rather focusing on what consistently works.


On Monday evening, near the recent bottom of the markets we wrote :

"There may be massive rallies, perhaps starting tomorrow, perhaps on futher meddling by the so-called authorities. Certainly sparking a market rally is their main concern at the present time. We cannot blame them for trying to cover-up, however history both long past and relatively present teaches us that this meddling only makes things worse.

We hold other shorts in order to profit further should markets continue to drop, and should markets rally significantly we will reload at least some shorts we have recently covered for generous gains."


1. The markets closed slightly lower this week than last week, despite the massive gains witnessed the past two days.

2. Adieu "free markets". Bail-outs, random meddling, and outrageous restrictions on short selling hamper the efficiency of markets. Who will buy when there's a selling panic, if not shorts seeking to cover? We may find out soon enough.

3. We enjoy the good fortune of remarkable accuracy in our forecasts and continue to adhere to our plan.

4. If any reader is aware of an outlet for market commentary/forecasts and actionable trade ideas that enjoys a greater degree of accuracy at any price please let us know. We'd like to subscribe to it.


By request we have recently begun to review trades from the past. We posted the review for August 2006 last weekend, and since we diarized no trades in September 2006, will we skip ahead to review October 2006, perhaps as early as this weekend.

Until then, here's a sneak peek :

We posted 16 trades that month. All were subsequently closed, roughly within 6 months. Average profit was 63% implying an annualized gain of 126%.

Best of all, in hindsight we see that we sold these at virtually their highs, and almost all are far lower now.

Only 2 trades were losers, for an average success rate of 88%. The average loss was just 2%.



This is no attempt to pat ourselves on the back. Rather, we are counting our blessings and bringing into focus that with reasonable foresight and prudent trading anyone can come out ahead in these markets.

It is important to find consistency and exploit it to profit among the market chaos.


In 2008 we entered 21 trades thus far per this blog, some long and some short. Most have already been closed at a profit. Of those that remain open which we entered in 2008, 6 are losers thus far however all but one of those was labelled as "highly speculative" while 2 are roughly at break-even levels and 2 are in the black.

That's a success rate of 63% overall, despite markets that have plunged to nearly historical degrees. That's without counting our very accurate calls & timing on market direction and government intervention. Also bear in mind that none of these trades involved "day trading" or required quick action.


We remain calm and consistent winners while others panic and lose. A key trait for success.


Thus far in 2008 we've closed 23 positions (including positions entered prior to this year 2008), all winners both long and short, for an average 29% gain on an average holding period of just over 6 months which implies an annualized gain of 58%

The pattern is clear that whether it be with highly speculative penny stock longs in the booming resource market of late '06 and early '07, effectively shorting oil near its 2008 highs, or going short blue-chip financials during a "credit crunch" and savage bear market, we have the good fortune to enjoy a remarkable consistency irrespective of the general market direction or the sector in which we speculate. That has been, and it remains our primary goal.



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 only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

Monday, September 15, 2008

covering CAKE +17% in 1 month

We hope readers of the blog have weathered recent market events and moves as well as we have, as we are invested predominantly short along the lines of our repeated bearish market predictions.

We are truly fortunate that the markets are validating our research and forecasts.

Those unfamilar with our past market commentary, we refer here : http://ridingthegravytrain.blogspot.com/2008_06_01_archive.html

More recently : August 18 2008 - "... we believe a new and severe downturn in the markets will begin soon."

We reiterate today that the markets are very treacherous and we believe are very likely to go very much lower very soon. Verily.

There may be massive rallies, perhaps starting tomorrow, however we will not be fooled into the idea that these markets offer "investment opportunities" or "value". The very experienced and sophisticated investors will have their own ideas of course, while those following television personalities and stock pickers who can only succeed in raging bull markets will lose even more than they have recently - indeed very much more - if they persist in their market activity or come too late to the shorting table.

Or perhaps the ever-reliable and free-thinking investment bank anaylsts are a preferred source of actionable information. Hardly.


We prefer to think for ourselves thus we fear an imminent rally, perhaps on futher meddling by the so-called authorities. It is largely their fault that things have come to be as they are, ergo they wish to appear to be in control and "doing something".

We cannot blame them for trying to cover-up, however history both long past and relatively present teaches us that this meddling only makes things worse. Rate cuts especially, so bear that in mind as the U.S. Fed meets tomorrow.

We have been extremely lucky in the accuracy of our predictions of government agency interventions in the markets the past year, and if we had to guess we'd say there will be a surprise rate cut tomorrow. Terrible policy, but quite likely popular policy that could spark a market rally.

Certainly sparking a market rally is their main concern at the present time. Indeed, today President Bush announced that the markets are fine, a clear indicator that things are much worse than they seem.


Amidst this chaos, we book the generous rapid gains we've enjoyed the past month via shorting Cheesecake Factory, CAKE. We now cover for a profit of 17% in just 1 month, thus turning today's negative markets into a positive result for us.


With this trade today, thus far in 2008 we've closed 23 positions, all winners both long and short, for an average 29% gain on an average holding period of just over 6 months which implies an annualized gain of 58%

Despite the markets, this remains remarkably in-line with the results offered in our "August 2006 Review" which those interested will find in the post below, immediately preceeding this one you are now reading.

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.


We pray to the Market Gods for continued good fortune.


We hold other shorts in order to profit further should markets continue to drop, and should markets rally significantly we will reload at least some shorts we have recently covered for generous gains.

We also hold longs, some of which are of course not doing well, however we had no illusions going into them that equities positions are anything but speculative and that the general markets were due to collpase. Luckily the consistent profits we've booked on closed positions have paid for the open positions many times over, and we've tried to hold positions that once regular markets return will turn to our favor. However that may be a long way off.

We will not be entering new long positions any time soon, nor will we soon be adding to previous longs on which we had stated we'd wait for lower levels to complete our entries. We expect much lower levels at which time we may add to complete our entries as planned.

We refer here to our posting of July 07 of this year :

"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."





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 only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

Saturday, September 13, 2008

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.