Monday, September 29, 2008

9/29/08 Stock Position Update - Political Gridlock Drives Portfolio Down

I continue to take no further action based on my buy list and short list of 7/7/08. So far I have taken four long and one short position, which has been closed. Given the extreme volatility of the market, I continue to be cautious for both purchases and selling short.

Due primarily the perception of a government gridlock with respect to the bailout, the holdings lost about 7% from last week. The overall portfolio is down 12.3% and the remaining holdings are down 21.9%. The only other positive still has been the gain from shorting Las Vegas Sands.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for Williams Cos. (8/8/08), Range Resources (8/22/08) and Research in Motion (9/12/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

From My Wealth Builder 7/7/08 Buy List

[purchase date]
SharesPurchase Price

Price on 9/26/08

Range Resources(RRC) [7/10/08]*50



Potash (POT) [7/18/08]10



Southwestern Energy (SWN) [7/18/08]50



Potash (POT) [7/24/08]10



*Range Resources received a sell signal on August 22, 2008. I plan to sell it once it reaches the original purchase price.

At this point, I will continue to hold these stocks. Although I am extremely tempted to buy more as the stocks decline, I will make no additional purchases at this time.
From My Wealth Builder 7/7/08 Short List
Stock [short date]SharesShort Price


Las Vegas Sands (LVS) [7/7/08]100


closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I won't be shorting Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted. Too expensive for me to short. I need to find other stocks for shorting, but have not identified other good candidates as of today.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $38.25 on 9/26/08 . I'm waiting for it to approach the 50s again, before taking another short position.

The market continues to be choppy. All three indices have been in bear market territory. As of the close on 9/26/08, the Dow, Nasdaq and S&P 500 indices were respectively down 14.34%, 17.68%, and 16.06% year to date. The three indices are only slightly above the third bottom of 17.70%, 17.81%, and 18.77% in my 9/15/08 Stock Position Update. If a bailout agreement is reached this weekend, I expect a short term rally in the markets. However, I think another bottom will occur before the market recovers.

I continue to believe that the probability of a recession in 2008 is relatively high, if we are not already in one. The multitude of negative factors will eventually outweigh any actions by the government and financial institutions. Originally, the Fed interest rate cuts and other actions led me to expect that the bull market would last through summer, 2008. However, the economic data of the first half 2008 has caused the bull market to end earlier. I expect the market to continue to be choppy in the remainder 2008 with many short term rallies and declines.

For now, I am shifting to more cash and I will also try to create a short portfolio in my trading account. I will continue to maintain my holdings managed by our financial advisor, and plan to sell a duplicated funds during any strong rally which may occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Research in Motion, Range Resources, Williams Companies, Hess, and Sears Holdings.

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This is not financial or investment advice. Please consult a professional advisor.

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