What I’ve Been Doing

On the weekend I posted the reasons why I am very afraid that the situation in Europe is about to get a whole lot worse.  At the end of that post I highlighted a number of things that I planned to do to deal with this risk.  Over the last 3 days I have mostly completed these items.

1. Get out of Gramercy – I sold out of Gramercy today at $2.56.  In retrospect I could have waited and sold out 10 cents higher.  We can’t know which way the market will go on any given day.  I may regret this.  Gramercy is likely coming ever closer to the day they settle their Realty division issues with their lending consortium.  The stock could make quite the pop on that day once the deal is announced.  I will be watching the news very closely for that day and will pounce if it settles positively.
2. Trim Oils – I did this in my actual account but not in the practice account.  In my actual account Arcan, Coastal and Equal Energy were all trimmed by 10%.  I am dealing with somewhat larger positions in my actual account, so trimming is a more reasonable proposition.  I have found that using my strategy of taking off little bits at a time leads to extraordinarily high commissions with the practice account.  If and when I get to the point where I want to trim these positions to 25%, I will do the same in the practice account in one move.
3. Cut the Banks in half – Oneida Financial was cut in half.  I held onto all the Community Bankers Trust that I own.  I sold all of Xenith Bancshares.  I don’t think I will regret these moves.  The US economy, at best, will be sluggish for the next few months.  I don’t expect big moves in the banks for a while yet.
4. Cut Leader Energy Services by as much as I can – In my actual account I cut the position by half.  In the practice account I had a stink sell order at 69 cents and low and beyold it got filled today so I am out of Leader entirely there.  Some might say this is hypocritical.  How can I write up Leader a few short weeks ago and then suddenly turn around and liquidate my position.  All I can say is that when the facts change…  look I underestimated the crisis that is occuring in the Eurozone.  Leader Energy is in a cyclical business and has a lot of debt.  This is a good company to be in during a economics expansion and especially during a time when oil prices are highly profitable.  This is not a good company to be invested in during a time when debt markets tighten.
5. Watch Gold Stocks Closely – I haven’t done a lot here, though I did lighten up on Jaguar on Monday and add to Argonaut Gold today.   I’m still of the mind that gold stocks are breaking out and have higher (maybe much higher) to go.  But I reserve the right to change my mind here. I am wary of how far this gold correction will go.  However, the stocks never priced in the move anyways.  To take an example, should Newmont be crushed as gold moves from $1900 to $1600 when its price is lower than when gold was $1200?  Its ridiculous.

We’ll have to see how the next few days play out and what Bernanke announcement comes out of Jackson Hole.  But for the moment I feel a lot more secure after having made these moves.