The investment advice du jour--9/10 commentators it seems (unofficially) is calling for folks to invest outside of the US due to the declining USD. These markets are very volatile, and I wanted to provide for you a list from today of the losers and the magnitude.
As I've stated here before, in the event of a US downturn (and I believe that we are downturning), these markets would not be immune. Here's a chart of EPP:
The composition of this ETF includes BHP, which is the highest weighted stock in addition to financials. If you are going to invest in ETF's, do ensure that you know the composition--highest weightings by individual stocks as well as overall industry representation.Here's my Ameritrade account. You will recall that I posted in the comments section that I culled through this and dumped most things--good thing as they all fell hard.
Though most of my accounts are mostly cash, I do have the SMN and DUG here. My thesis is that I believe that the economy is slowing and basic materials and oil (despite the admonitions that there's not enough) will go down. Nevertheless, I believe that both are in a secular bull market--I see some warranted slowness for the near term. I've consciously elected to be more cash-centric as opposed to be overweighted in a short position.I closed profitably some SLB puts JAN 90 Puts that I bought on Friday. SLB fell hard today. I left money on the table--but I'm okay with that. I had a 60% gain for a one day hold. That's fine. I also closed out my HRB DEC 17.5 puts. I left money on the table, but expiration week makes me nervous. I'm not ashamed to scalp small gains, particularly in a market such as this. However, having said that, I will tell you that I have an important lesson to learn: I need to discipline myself to hold onto stock longer. But I'm mindful that the last 14 months I've been wary of the market altogether, so my paranoia has prevented my holding longer. It will be a habit that I need to break.
10 comments:
Leisa
I also have the problem of selling too soon
I need to learn to scale in and out but like you see a nice little profit and take it
I'm fixated on China thinking we go down, they go down further % wise
I've just got off my first FXP rollercoaster for 7 dollars profit but was down 18 like 2 weeks ago on it, and I'm sick to my stomach that it's going to take off without me
Same rollercoaster with SKF back in August made a couple of ok runs with it but missed a 10 point run, then got in it for that nasty Sept-Oct run but ended up with couple of bananas out of it but left the bunch up in the tree, but I think that train has left the station
I get the theseus right but don't follow it 1/2 way through
I like the action on the ultras and am thinking about using some type of straddle on them or do the scaling
You doing options (which I know nothing about) might ought to think about some type of straddle to protect profits on a position if you think it has more to give up
I was looking for were they weren't when I bought the SKF and looked at DUG , I put it on a chart with USO and saw little Ultra just a short, I think oil services are going to do better that oil, so you might look at the USO puts if your playing crude prices
A couple months ago you mentioned Swift Boat Pickens in studio as a top for oil, good call
Me thinks this credit crisis is just reaching Joe 401k's radar so buckle your chin strap,
This ain't no Russia
This ain't no Thailand
This ain't no foolin around
Hello Detriot
Hello Stamford
Hope your feeling better
K
Maybe those of us who seem to be able to PICK winners should have a partner who makes the decision as to when to SELL winners.
Hi K: Thanks for your post. For my own behavioral modification, I did modify my underlying anxiety of a stock taking off without me. It was very liberating. That fear can cause you to hold onto losing positions because one is "sure that it is going to take off!"
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There is a line where one has conviction and holds--even adds on downturns--with the payoff being quite large. How is one to know when one's conviction is conviction or foolhardiness? There are times when I think it is difficult for the individual investor to know with certitude all of the information necessary to truly inform conviction. I'm not saying that it cannot be done. The compromise, I think, is to NOT weather large losses while waiting for your conviction to pan out. So determine how much you will "pay" to have your conviction pan out and get out. Put the stock on a watch list and WATCH. That way you can watch for a blast off without having your capital blasted in the meantime.
AT least that is how I deal with "left behind" anxiety!
What is worse is holding on to losing positions, then selling them and then they take off. It is like a double negative.
I am working on selling them at my original stop (disciplne and trust system)... put them on my watchlist and if and when they do rebound and start to "take-off" (confirmation of my faith in the company etc) I buy a position with the dollar amount of my sell.
Let's say I had an original position of 1000 shares with a total cost of $10,000 and held too long on the "take-off" theory. I eventually sell at a realized 50% lost. It reaches a bottom at $4 and has a bonafide "take-off". I buy 1100shares at $4.50 with the $5000. If I had not sold I have a 60% paper lose which needs to climb back to $10 to breakeven while with the sell and buy back, $9.05 is my new breakeven price. (10000 - 5000 + 4950 = 9950 of total outlay .... 9950/1100shs = 9.045)
If I put the $5000 from the sale into a MMF or whatever, for the time it takes me to buy back the stock the income will also lower my breakeven point.
Note: this does not take into acount taxes and commission etc but I think the basic premise is valid.
Comments welcome.
"So determine how much you will "pay" to have your conviction pan out and get out."
I like that, put a cost to a conviction = stop loss, instead of a using a percentage, cause whats another couple of percentage points is what kills me
With the indexed ultras I'm getting where I trust my conviction much more than individual stocks, just the volatility can bend minds, need to put on a short term, 1/4 or 1/2 position ultra long hedge , when I've had a good run to insure my conviction
Golfer
I sure needed some type of partner when I though I got a 1/2 price sell on dresses at CWTR for 17 back in August, still holding at 6.50
Your strategy would have made alot of sense if this one ever turns around
K
I am in the camp of no strong moves for the rest of the year. Positive seasonality now gets offset by tax loss selling and a lotta days just like Tuesday. R2K probably red at year end and that will cause "rebalancing".
Then January brings a whole new set of revelations about the banks.
Cat
Well Cat, TA Kitty is sitting very quietly on my lap. So she must agree.
However, I have a little one running around with a very large, real to life toy garbage truck picking up all of our garbage. He says he is not finished- that there is more garbage to be picked up. But TA Kitty is not worried or interested in the garbage just yet.
When TA Kitty moves, we are all in trouble.
I got a bit miffed here and on other blogs when my integrity was challenged, like anyone else IMHO.
Nusbaum was a flame out. I am grateful for his efforts, but skeptical of his conclusions.
I finished the Nov options acct at +70% after a peak of 155%. That spike up, prolly induced by the PPT, then, hammered my DIA puts.
IRAs, were + ~ 5% but I managed to convert all but 20% to the Roth at 11% tax rate before the end of this year. I have buy recs, but too risky for here.
You all need to find what works for you.
Since having studied 75% full time for the last year... I'm
incredibly happy with my results. Made many contacts as well.
Made far more $ than I could have at a conventional job... most in the Roth IRA. Tax free. If you can do this, there is no reason to do that!!!
I've started to withdraw fron the Roth IRA and invest in metal bars. First chunk is silver and palladium. I don't trust the Govt to honor the Roth, and they might institute a consumption tax. Going to the Roth, and then out!!!
Next bite is gold and platinum. Physical. TBD.
May you be enlightened so you take your own action.
Dave B (the one Nusbaum pissed off, not the one on Cara)
Nusbaum will live to regret; And I will not forget. He's a guru for the non-commital. Lets own everything going down, but be diversified on the way to hell.
When I have a 60% up month and then look at Nusbaum, how do I feel?
I'm sorry we didn't get along on the blog but I feel great I was correct. My 60% up vs what...? Your 2%?
I believe I have a realistic view, and not one formed in cognitive dissonance. Trades are based on my technical view and premonition.
Ramjet is clueless. I do what I do and you can languish if you like.
There is a Domino H&S on the Dow, S&P, NDX, about to unfold. Those who know will heed; others will be annihilated.
DB
Dancing on the rim of the Volcano.
Good luck!
DB
Golfer--I believe I wrote about this--mixing styles--being a buy and holder, having a 20% loss and then capitulating and selling! Better to set a reasonable stop loss and then watch OR being damned confident and buy more! Having reasonably sized positions takes the sting out of all of it.
K: Those ultra's (long or short) can bite nastily in the short term--do not stay in a countertrend up or down too long! Sorry about Coldwater--hopefully it was a reasonably sized position for you. The important thing to ask is (1) what would you have done differently? and (2) is it dead money that can be better deployed? Sometimes looking at a loss this large can be psychologically troubling. Only you can know that.
Cat: That everyone was expecting a rally, and we've had none makes me think that the market is indeed in a funk. However, I do believe that it wants to bounce--but not a coiled spring sort of bounce. These unprecedented credit infusions by the ECB are jaw dropping. It will be the investment banker vultures that will benefit by scooping up cheap assets.
DavidB: Your integrity was never challenged here--that is a gross mischaracterization. Your hubris was challenged--you were cock-a-doodle doodling over your trading prowess and basically calling people on the other side of your trade fools. I called you on that, because I found it offensive and I'm sure my readers did as well.
If you do not like Roger's style, then do not read his blog, and do not complain about him here. That your account is up so much is terrific. Sustainable? Not likely, but I would gladly wish for it to be.
You can take risks with YOUR money that other money managers cannot take with their client's. Jeffrey Saut is fond of saying that he knows old traders and bold traders, but he does not know any old and bold traders. Hubris, my friend, is an investor's worst enemy.
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