1/4/09 Bottom Fishing Portfolio - Up due to last week's three day rally

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. I have been selling put contracts at one to two months from expiration on Monsanto and Energy Conversion Devices (ENER). Since the market rallied last week, I have selling these options on hold.

Three weeks ago, 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. Since the automaker bailout did not cause a large bounce for Ford, the December calls have expired worthless.

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. Of the three financial stocks, Bank of America has been the worst pick. It also appears that I had been overly optimistic about the market impact of the automaker bailout.

The portfolio was up 7.6% in the past week, a little more than the 6%-7% advance in the market indices. The overall portfolio is still down 29.88%, after reaching a low of -45.30% three weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 1/2/09
Bank of America(BAC) [10/3/08]	100	$38.00	$14.33
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$31.35
Wells Fargo (WFC) [10/3/08]	50	$37.07	$30.0
Monsanto (MON) [10/3/08]	50	$88.97	$73.72
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	expired 12/20/08 at $0
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	$0.01

Currently, I have profited from all four put contracts which have been closed or allowed to expired. Next week, I will consider selling some January put contracts short for both Monsanto and Energy Conversion Devices.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Closed Price
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	expired 12/20/08 at $0
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	expired 12/20/08 at $0

The last three trading days have been a mini year end rally. Perhaps, these stocks may participate in a January effect rally which some experts predict is very likely this year. If these stocks stocks should rally significantly, I will look to close out the positions in the financial stocks.

Disclosure: At time of publication, I own shares of Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares and call options for Ford.

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