Sunday, November 23, 2008

11/23/08 Bottom Fishing Portfolio Update - Financials are Toxic

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 50% from its high and its seed and agricultural businesses are still very strong.

On November 12, 2008, I sold one put contract to open on Energy Conversion Devices (ENER), which was down significantly this month.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008. This week financials demonstrated that the industry is toxic.

A new bottom occurred, due mainly to the financial stocks. The overall portfolio declined again last week and is down 45.30%, surpassing the low of -29.78% from last week. Monsanto is also now down 24.23%, after being profitable or break even for several weeks.

Bottom Fishing Portfolio
Stock [purchase date]SharesPurchase Price

Price on 11/21/08

Bank of America(BAC) [10/3/08]100



J.P. Morgan (JPM) [10/3/08]100



Wells Fargo (WFC) [10/3/08]50



Monsanto (MON) [10/3/08]50



The Energy Conversion put contract expired worthless this week, enable me to pocket a $69 premium. I also sold another Monsanto put contract, the December 40, for $1.19.

Put Contracts Sold Short to Open
Option [short date]SharesShort Price

Price on 11/21/08

Monsanto Nov 60 put (MONWL) [10/3/08]100


closed on 10/29/08 for $0.91

Energy Conversion Nov 20 put (EQIWD) [11/12/08]100


expired 11/21/08 at $0

Monsanto Dec 40 put (MONXI) [11/20/08]100



In spite of the Geithner rally on Friday, the market and these stocks are still declining. I am considering selling a new put contract on Energy Conversion Devices, since the November contract expired. For now, I will hold the financial stocks, but make no additional purchases. If President-elect's announcement on Monday cause financials rally significantly next week, I may sell some of the financial stocks.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares. I also am short one put contract on Monsanto.

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

Copyright © 2008 Achievement Catalyst, LLC

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