12/7/08 Bottom Fishing Portfolio Update - Expecting an Auto Industry Bounce

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.

Last week, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. On December 2, 2008, I bought the December 5 call and on December 3, 2008, I bought the January 7.5 call.

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.

The portfolio was unchanged in the past week. The overall portfolio is down 28.38%, after reaching a low of -45.30% two weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 12/5/08
Bank of America(BAC) [10/3/08]	100	$38.00	$15.24
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$33.35
Wells Fargo (WFC) [10/3/08]	50	$37.07	$29.94
Monsanto (MON) [10/3/08]	50	$88.97	$74.92
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	$0.05
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	$0.07

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.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 12/5/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91
Energy Conversion Nov 20 put (EQIWD) [11/12/08]	100	$0.69	expired 11/21/08 at $0
Monsanto Dec 40 put (MONXI) [11/20/08]	100	$1.19	$0.20
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	$0.50

Unfortunately, it appears the rally from the Obama economic announcements has ended. The rally was the first five day rally since July, 2007 and the largest five day percentage gain since March 16, 1933.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares and call options for Ford. I also am short put contracts on Monsanto and Energy Conversion Devices.

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

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