Monday, July 14, 2008

7/14/08 Stock Position Update - Long and Short

I have started purchasing and shorting stocks from my buy list and short list of 7/7/08. So far I have taken one long and one short position. Both were profitable at the end of the week. However, given the volatility of the market, I continue to be cautious for both purchases and selling short.

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 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 7/11/08

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



Originally, I was not planning to purchase any of the four oil and gas stocks: Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). However, this week's decline in oil prices caused me to reconsider and actively try to buy Southwestern Energy and Range Resources (done). In addition, Potash briefly dropped intraday below my target price 200. Unfortunately, I missed the dip and Potash is back up to the 220s.

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

Price on 7/11/08

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


closed 7/11/08 @ 33.69

I was only able to short Las Vegas Sands. When I tried to short Sears Holdings and Lifetime Fitness, my broker cancelled the order since the "stock is not available to sell short." This seemed strange since both stocks have trading volumes between one and three million shares per day. I may need to change brokers if I continue to have this issue.

For reference, I closed my short position since I believe the Fed may take action over this weekend to mitigate the most recent financial crises with Fannie Mae, Freddie Mac and IndyMac and cause market to rally next week. Thus, I took my profits on Las Vegas Sands before the weekend.

The market continues to be choppy. As of the close on 7/11/08, the Dow, Nasdaq and S&P 500 indices were respectively down 15.2%, 15.58%, and 14.63% year to date. Two of the three indices are significantly below the respective lows of 9.37%, 16.58% and 11.86% in my 3/17/08 Stock Purchase Update. In addition, all three indices are down 20% from the 2007 peaks, putting them in bear market territory.

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 will create a long and short portfolio in my trading account. I will continue to maintain my holdings managed by our financial advisor, and plan to sell of small portions during any short term rallies, which hopefully will occur.

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

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

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