Posts from the ‘Portfolio’ Category

Nov 30

Week 177: Perspective

Five weeks ago I wrote that I was walking away for a while. And so I did that. It didn’t last as long as I had anticipated.

At the time I had taken my portfolio to about 60% cash and I had a number of shorts that helped hedge out the exposure from my remaining longs. In early October I had basically stepped away because I had made some mistakes and lost confidence in my decisions. It had started with the mistake of not looking closely at the oil supply/demand dynamic, which was compounded by the mistake of selling the wrong stuff when the bet began to go wrong. As I lost money on a few oil and gas holdings, rather than reducing those positions I reduced other positions, presumably with the intent of reducing my overall risk. Unfortunately this isn’t really what I was doing. What I was actually doing was selling what was working while holding onto what wasn’t. A cardinal mistake.

The consequence was that I saw my portfolio dip 12% from its peak by the second week in October. More frustrating was that as stocks recovered in late October, I watched as some of the names I had sold near their bottom, in particular Air Canada, Aercap, and Overstock, recover their losses and were on their way back up.

I wrote my last post on a Friday afternoon after the market had closed. Over that weekend I was virtually unencumbered by the markets. My portfolio was cash, my blog was on hiatus, I had nothing to prevent me from thinking clearly. I don’t remember exactly when the moment came, but at some point that weekend I had a realization.

For those who have followed this blog over the past few years, you will remember that in December of last year I made a very large bet on New Residential. The stock had gotten hit down to below $6 at the time. I thought this was rather ridiculous and so I bought the stock. I bought a lot of the stock. I made it a 25% position in my portfolio.

In a narrow sense, the trade worked out. By the end of December the stock had jumped close to $7 and I sold the position for a tidy profit. But in the broader sense, it was an abject failure. Read more

Oct 24

11 Comments

Week 173: Done for now

Two weeks ago I made the following tweets describing my latest and last investment decision:

I meant to get around to writing a post acknowledging the same sentiments but I never did until now. Since that time I have watched the market go down a lot and then come all the way back up. I haven’t done much of anything during the whole see-saw.

And that is because I think I’m done. I have a lot of cash, a few positions and no plans to chase anything up or even add to anything as it comes down. Maybe when the Fed (or perhaps the ECB) decides to get back into the game I will change my mind. But for now I don’t really have a strong inclination to do anything. So I’m going to walk away while I’m ahead. Maybe there will be a better set-up in the future. But until then…

Good-bye.

Sep 20

19 Comments

Week 168: Cutting my gains

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

I don’t know if the chart of performance really does justice to the volatility my portfolio has had over the last couple of weeks. It feels like much more of a roller coaster than that little blip in the trend that you see on the screen.

I sold out of the rest of Pacific Ethanol and Rex American Resources in the first half of this week. I hemmed and hawed through the weekend, even briefly added to my position to Pacific Ethanol on Monday (at the same time I was reducing my position in Rex American), but the volatility of the stocks, the declining price of ethanol, and specific to Pacific Ethanol, my uncertainty with respect to their corn basis (I concluded tentatively it is actually quite a bit higher than Q2) led me to capitulate on many of my shares on Tuesday. I followed that up by selling the rest on Wednesday in the minutes that followed a very bearish EIA inventory report (+800,000bbl!). I tweeted on my sales at the time.

My caution turned out to be fortuitous as the stocks continued to fall the rest of the week. I was even able to catch a few dollars of profit on the way down; always remembering the old classic to which this blog takes its namesake, I took the lesson that if a stock is to be sold it is likely just as well sold short, and so I took a small short position in Rex American and a few $18 puts on Pacific Ethanol. The puts were sold Friday and my short position has been cut more than in half, so these were merely short term trades taking advantage of a clearly bearish dynamic. Read more

Aug 20

6 Comments

Week 163: Knowing when you are not at an advantage

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

Note that this update is as of Friday, August 15th. I have been a few days delinquent in getting it out.

I have strayed from my bread my butter of late, away from the tiny micro-caps that pass everyone else by and into the world of still small but not so obscure caps. These are stocks like Air Canada, AerCap and Bellatrix among others, still far from being large caps, but big enough to receive the attention of analysts and funds.

I am not so sure of my own advantage with these stocks. I may be overstepping my own abilities to think that I can see something here the market is not. I am under no misconceptions about my research. There is simply no way that I, as an individual investor with a couple of hours of free time every day, can match the depth and scope of the research that the institutions have. Read more