Monday, September 08, 2008

9/8/08 Stock Position Update - It's Ugly

As with last week, 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 volatility of the market, I continue to be cautious for both purchases and selling short.

With the declines of the major indices last week, this holding continued to decline. The overall portfolio is down 11.1% and the remaining holdings are down 20.2%, matching the low point on 8/8/08. The only 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). On August 8, 2008, the system gave a sell signal for Williams Cos. and it has dropped off the buy list. 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
Stock [purchase date]SharesPurchase Price

Price on 9/5/08

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

$58.17

$44.31

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

$215.09

$162.05

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

$39.46

$33.79

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

$192.02

$162.05


*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, but will make no additional purchases.

From My Wealth Builder 7/7/08 Short List
Stock [short date]SharesShort Price

Price

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

$38.10

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.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $42.62 on 9/5/08. If it rallies into the mid 50s, I may short it again next week.

The market continues to be choppy. All three indices have been in bear market territory. As of the close on 9/5/08, the Dow, Nasdaq and S&P 500 indices were respectively down 13.81%, 14.95%, and 14.14% year to date. The three indices are barely above the second bottoms of 15.2%, 15.58%, and 14.63% in my 7/14/08 Stock Position Update.

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 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.

Copyright © 2008 Achievement Catalyst, LLC

3 comments:

Anonymous said...

I am curious to know what your goals are for the brokerage account that you manage. Thanks

Ray said...

Super Saver, have you ever considered using options to hedge your investments?

Super Saver said...

@ Anonymous,

For the brokerage account I actively manage, my goal is wealth preservation since it is the account from which we will draw retirement spending funds over the next five years. Therefore, our portfolio is relatively conservative and is currently at 9% stocks, 54% cd/bonds and 36% money market. For the stock portion (which may get as high as 20%), I try to beat the market and our managed stock accounts.

Year to date, the account I manage is up 0.3% and I estimate the stock part is down 2.5%, versus indices with are down 12-15%. While the portfolio is doing well in this down market, the account may only gain 3-5% when the stock market is up 8-10%.

@ Ray,

Great point. For these investments, I don't hedge with puts or covered calls since I own less than 100 shares. In cases where I own over 100 shares, I sometimes use covered calls. I am not a big fan of buying puts.