Reminiscences of a Stockblogger

Oct 26

Lessons from the Debt Ceiling

In my post from earlier today I mentioned that I had made some portfolio changes over the past fews weeks and would be sharing them in a series of short posts. In this one I want to talk about what I did and then undid because of the debt ceiling.

In my last monthly update, posted on the 12th, I wrote about how I was reducing exposure to stocks in response to the uncertainty about the debt ceiling.

In my accounts I go into the weekend with more than 25% cash (I’m a little under that in the practice account I show here, at around 23% including my remaining Novus position, as I didn’t quite keep up with the selling I was doing elsewhere). I should perhaps be at an even higher level, but many of the stocks I own are so obscure and out of the mainstream that I feel some confidence that they will be spared some of the carnage that will occur if the debt ceiling is not raised out of indifference alone. The stocks I trimmed the most were the one’s that have proven most volatile to market swings.

By Tuesday of the next week, October 15th, I had moved to a little over 35% cash in my accounts. I received a few comments that this was a silly move, that the US government wouldn’t be stupid enough to let its interest payments lapse. They turned out to be right. Nevertheless, I stand by my decision; I work hard to grow my portfolio and putting that hard work at risk on the assumption that the people in positions of power will do the sensible thing is, in my mind, an unnecessary risk. Remember Dick Fuld? Read more

Oct 26

A couple of Gold Stock Positions (AR.to, TMM.to)

I’ve made a number of moves in my portfolio over the last couple of weeks and in a few cases the stocks I’ve bought have already started to move so I thought I’d dedicate a few short posts this weekend to talking about the changes before things get any further.

A couple of Gold Stock Positions

I haven’t been in any gold stocks since the spring. When I sold out of my positions, I gave the following state of the union.

But the path gold takes to get there could be rocky. In particular, its clear that the market believes that quantitative easing has worked. And indeed, the US economy is getting better. Whether the economy, and the financial markets, can continue to improve without massive injections of money is an open question. But until that question is answered, which could be 6-12 months away, the working assumption appears to be that it will, and that is going to be bad for gold.

A number of reasons led me to foray back into gold stocks last week. First of all, the debt ceiling appeared to be and finally did get settled on what seems to be a pretty temporary basis. Second, Janet Yellen was announced as the Fed Chairman beginning next year. Third, the latest economic data for the US economy is looking pretty milk-toasty, and fourth, the gold stocks I look at were at or lower than the levels in June and thus were reflecting none of this. I tweeted the following on October 15th.

Oct 20

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Vonage’s Free Cash Flow Story

I have a tendency to go overboard when I’m writing up a new company. There is so much to say. The business, the growth opportunities, the competitors, the financials, the risk factors, it goes on. I get half way through the write-up, look at the novel I’ve written and say, what am I doing here?

This is a blog. Its meant to be bite sized quips. Its intent is to share the investment ideas I have, discuss the reasons behind them and hopefully get feedback from others that help me distill the ideas down further and maybe get a few new ones as well. I’m not getting anything for, nor do I think anyone is looking for, an exhaustive multi-page diatribe outlining every nuisance of the idea at hand. If you are you should probably pay for it.

So after I’ve written a rambling soliloquy that no one is going to read, I take a step back and ask myself: what is the most important point here? What’s the thing that makes this investment worthwhile? Read more

Oct 13

Week 119: Getting Back on Track

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 always write words like those in the title with some trepidation. I’m never really sure if things are back on track, or just bouncing on their way to oblivion.

Nevertheless, the tangible evidence is that my portfolio has recovered and made new highs in the last month. I had a blip to the downside in August, and when I look back on that blip, I can attribute it to a few bad decisions. There was Niko Resources, Walker and Dunlop and Dex Media obviously and to a lesser extent Vitran and AMBAC. All of these stocks had flaws that I should have recognized and gave greater consideration to, and none of these stocks deserved to be allocated outsized starter positions, yet in the case of Niko and Dex Media that is exactly what I did.

I’ve gone back to the drawing board since then. I’ve tried to be more careful with my stock selection, tried to spend more time thinking through each idea before adding a position, and tried to work with the attitude that an opportunity passed up is better than one taken and lost on. Read more