Tuesday, April 17, 2007

FMD and other "Stuff"

Well, my $1M FANTASY Portfolio, benefited from my FMD selection. It's value is $1,226,210. They'll do the rankings overnight. Who knows what 10,000 decile I'll be in! (I'm doing this for fun and on a whim--and readers can feel free to throw me a bone here!). I wallowed into that mess yesterday in my personal-far-below-$1M-portfolio.

For whatever reason, I have a strong pull for buying into these horrific drops. I know the admonishment that you shouldn't catch a falling knife, but when I believe that (1) fundamentals trump emotions (and technicians would throw darts at my saying that) and (2) when the stock price reflects emotions RATHER than fundamentals, you have an opportunity. Oh, it is not an opportunity without risk, though. (And this is exposition, not advice. Never take advice from me!).

So I bought some FMD (First Marblehead Bank) on investor's concerns that their student loan business would suffer on the Salli Mae deal. It may very well suffer, but that's a longer term issue. That sort of action attracts me like a bug to the light. And in keeping with that metaphor, one could also experience a ZAP! The sound of capital evaporating.

Remember my mentioning BAMM and the stupid increase in their shares due to a pukey report that clearly investors had not read or understood? Well, I shorted that stock. And let me tell you with a basis of $17.58, I was mighty uncomfortable when it went as high as $19.45 yesterday. My sphinctometer (no, it is not a word, but we coined it at my last, highly stressful cannot sleep at night job) was pegged. There are still a few shorts in that position, and it is clear that they are getting milked.

But today, I was greeted with that stock opening down. It was a time to act, not think. I guess the shorts out-lasted the whomevers. I closed with a profit--$650--not worth the capital that I had at risk, but given that I was down as much as $1600, it seemed like a fortune. Though I fully expect that stock to drop further, for I feel that the price is STILL foundationed on ether (which is not part of the universe) I do not have the visceral fortitude to see that through. That Damoclean sword is gone. As Joey points out, that New Moon was favorable.

Over the weekend I printed out all of the Yahoo profiles on Chinese stocks. Please see the composition of that list on my Halter Index that I published here. This a.m. , I printed off all the charts. I looked at the charts in relation to the opening action, and I made a buy of CBAK at $3.378 because the chart looked good (to my amateur eye--you will only see my posting charts for very specific things, but never for techinical analysis. Go to Tim Knight's excellent site, listed on the right, if you want good technical analysis.)

CBAK is up a ridiculous amount today (9.78% and I caught 6.3%). I bought it through an E-trade account that does not have margin. So, I'm feeling mildly regretful that I did not buy it through my Fidelity account, so that I could just flip it. My E-trade account was leftover from my last job. They used E-trade to manage their stock options and ESOP. What a great way to offload administration and what a boon for folks like E-trade to attract (or keep like me) customers! Well, my options evaporated when I walked away, but I had a little money in there. I decided to keep the account, for there are some research reports and data views that they have that Fidelity does not. So I kept it. I never have more than 1 or 2 positions. And, I think that keeps me very focused.

Now that my nose is not in systemic risk readings and translations, I've dusted off my Behavioral Finance book. I'll bore you with my distillations for the selfish reason of that makes ME comprehend the material better. Jeffrey Saut at Raymond James (DO visit his daily audio commentary--see info mosaic--for it is worth your time. You will find him, Hussman and Ritholtz--I'll throw in Cara as well- to be similar in their market bents.)

So in Saute-esqe style, I'll say, "That's it for me".

Thanks for stopping by.

1 comment:

joey said...

okay, do tell.

the etymology of "Halter" Index, please?

a contraption for leading some old nag around the course?

much comes to mind in response to your post; but I will contain myself by showing off my Chinese play:


I bought my positions in dec/jan for less than $4.10; and still hold it for much more upside...a 10 bagger in progress...

tx for your post. a pleasure to read, as always.