See the end of the post for the current make up of my portfolio and the last four weeks of trades.
I haven’t done a lot of writing since my last portfolio update four weeks ago. I have made only a couple changes to my portfolio, and added only one new position, Midway Gold, which I wrote about last week.
I remain reluctant to add positions. As I stated previously (here and here) I remain wary of the market reaction to the post-QE era. So far nobody seems to care, tapering has had no negative impact on stock prices, and we continue to march to higher highs. Nevertheless I’m not convinced. I don’t have a lot of insights into the specific mechanism by which quantitative easing leads to higher stock prices or how the end of it will cause them to go lower but I know from experience that you can’t overstate the importance of liquidity, particularly where small and micro caps are concerned. Now we’re in the process of draining a bunch of it and I just don’t think that is a great time to be too far out on the ledge. Why take the chance when you don’t have to?
I’m also not having an easy time finding stocks that I want to buy. I’ve spent the last four weeks rather diligently investigating new ideas. I’ve probably gone through 100 names. Nothing I have looked at has stood out as something I have to own.
In fact, I’ve come back to old names. In particular, I’m currently betting the farm on Pacific Ethanol. Below is a list of my top ten positions. Pacific Ethanol was a 20% position that has grown to 24% because of price appreciation.