Sunday, November 30, 2008

11/30/08 Bottom Fishing Portfolio Update - Market Rally Reduces Losses

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.

As part of this portfolio, I have also been selling put contracts to open on specific stocks. On October 3, I sold a November 60 put on Monsanto. On November 12, 2008, I sold a November 20 put contract to open on Energy Conversion Devices (ENER). On November 20, I sold the December 40 put contract to open on Monsanto. Finally, on November 25, I sold the December 20 put contract to open on Energy Conversion Devices.

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.

The portfolio shot up 28.69%, due primarily to the big market rally after the Obama economic team announcement. The overall portfolio is down 28.42%, after reaching a low of -45.30% the previous week.

Bottom Fishing Portfolio
Stock [purchase date]SharesPurchase Price

Price on 11/28/08

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



Currently, I have profited from two put contracts which have been closed or allowed to expired. I sold two more put contracts to open and both are currently profitable due to the market rally.

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

Price on 11/28/08

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



Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]100



The Obama economic announcements have caused a significant rally in the market, which rose four days in a row for the first time since April, 2008, It was also the first five day rally since July, 2007and the largest five day percentage gain since March 16, 1933. Hopefully the rally will continue to the end of 2008, which may allow me to sell my positions in 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 put contracts on Monsanto and Energy Conversion Devices.

For more on New Beginnings, check back every Sunday for a new segment.

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

Copyright © 2008 Achievement Catalyst, LLC

No comments: