Wednesday, January 09, 2008

Repeat after me: "There will always be opportunities"


It's been a while since I've posted my speculative account. Here it is: $19,115.44. The highest balanced attained in this account was a brief flirt with $23K. As you can see, I've lost a little ground. But as I indicated early on, the point of my showing you this account is for heuristic value. Further, there's a reason why I call it my speculative account--I take riskier positions. Now you can see that on an absolute basis, some of these positions are likely pocket change to some of you. But I look at this portfolio pretty seriously; so snicker if you must! Here's a brief explanation of some of the positions"

  • RTK: They actually have a buyout offer on the table for 2.28 from a hedge fund that has a position with them. I'm just holding on to see what happens. If it were to go to zero, I'd be okay with that.

  • PRS: On a whim (not a particularly good one I might add), I elected to take a highly speculative position here from a Real Money columnist. I rarely do that. The position was in the green for a short time. Perhaps I missed my opportunity!

  • PAY: Due to a DNA flaw, I am drawn like a moth to a flame for stocks that drop like a rock. Verifone is just such a stock. I elected to increase my position in it over the last two days, buying successfully lower stock prices. As you can see, on a % basis it is more than 1/2 of this portfolio. In periods of uncertainty, I believe that the market shoots first and asks questions later. I'm speculating on the news being better than what is priced in the stock. Of course, I could be wrong. But I'm okay with that for this portfolio. I note that Jeff Saut (whom I adore) likes this stock a lot for a long term opportunity. I don't mind taking a longer term view here.

This morning, expecting a reversal in the market (to the upside) I closed out my short position in DE and SMN. SMN had a bit more to squeeze out, as did DE. But I don't have a great crystal ball! Of course it seemed early at the time, and I groused about that a bit. However, given that the selling has been relentless, it was time for a rally. On Fast Money (CNBC), which I think is a terrific show--the jewel of CNBC--there was a feeling that today was a short covering rally. I did pick up some DDM and made a quick flip to give some incremental green to my taxable account. I've not been active in that account, and it is 100% cash except for intraday trades.

My retirement accounts are mostly cash. I do have a small position in OCR in one account and a position in UYG (double long financials). UYG has not been kind to me over the last two days of its tenure. Financials bounced up very hard today after being drip, drip, dripped down in selling earlier on. A couple of days ago, I entered UYG (double long financials) because I felt like there would be a Fed rate cut, and it may surprise to the upside. As is my usual MO, I was early. I should have bought more on the way down, but .....I didnt'.

Our blog contributer, Valvoline 6 mentioned Medco (MHS) on one of his drive by's. Here's a monster winner that he discovered early (I told you I could learn a thing or three from him!):


You may wish to put this one on your radar screen. There's been much money flowing to the healthcare sector due to the overall defensive nature of the sector. It appears to me that the valuations are getting a little rich, but that is where the money is flowing to a fairly narrow field of defensive names. There is a double long health care sector, RXL. I've never traded it.

My MO in this bear market is to be selectively short--though I have no short positions after today. You merely have to look at today's action and realize how quickly you can get blown out of your positions. I'm happy making small incremental gains while protecting the majority of my capital. Remember, I'm not coming to this market with long-held positions. I've been careful not to "buy at the top", but I also did a terrible disservice to myself by getting short too soon in 2007. I'm happy being more neutral than aggressively long or short. Maybe after a testosterone shot or two, I'll feel differently!

I have no aversion to cash, though it is treated like an asset pariah by many. To that I say, "There will always be opportunities"...and that can be on the long or short side. And once one recognizes this, it removes the pressure to be either this way or that.

3 comments:

Anonymous said...

L-

I made 50% on miners from the last dip and I am up 25% on them on this trip. I wish you were riding shotgun. :(

Cat

Leisa said...

Well Cat, I did so well with my couple of miners last go round, that I'm not too remorseful. There are always other opportunities. I do have a small regret that I did not re-enter EGO on the last dip. Your counsel was ringing in my ears, but I dithered, then I thought I had waited too long, now I feel like I definitely waited too long! I did re-enter SEED and cashed out with a nice 30% gain in my spec account.

Anonymous said...

Bellcow did not have a good day yesterday. That is often precursor for a top or pullback. Exit is always MECHANICAL. Until then, we let it ride.

We shall see.

Best,

Cat