WHAT TO DO IN THE MARKET NOW? KEEP IT SIMPLE STUPID
You have to make it simple for yourself here. It is the only way to get past this period unscathed. Yes, unscathed. You cannot make money in every single market environment. There hasn't been a man on Earth who has been able to accomplish this feat over a long period of time. Those that have tried typically end up being talked about in the past tense with respect to their financial careers. Get out of difficult periods in one piece and you are 10 steps ahead of the competition. How do I plan on making it simple for myself here? I discussed earlier this week how I have developed ways of dealing with weaknesses I have in trading and investing. I have created mechanical methods to take ME out of the equation completely. This way I will not, under any circumstance, allow the market to do exactly what it is trying to do at such junctures within the greater trend: Confuse, dismay and create a smoke screen that causes me to begin giving away my gains for the year as if I was an bikini manufacturer in Afghanistan. My short-term (3-4 weeks) trend indicator turned down on Tuesday for the first time since November. This is part of the systematic portion of my investing that takes over during difficult periods. I have learned not to go against it. Seasonals, technicals and fundamentals are all screaming CHOP here. Chop is meant to throw you off course. It is the equivalent of throwing a well-seasoned, 8oz. steak in front a hungry guard dog. No matter how hard it tries to guard the fort from that point, the confusion of hunger will drive the dog to do its job much less effectively. You are much the same. No matter how smart you think are, choppy seas will have a profound effect on your psychology. A sideways range creates self-doubt, anxiety and worst of all over-analysis of the situation at hand. You begin to over-think. You begin to rely on the opinions of others. You begin to dwell on decisions you make or choose not to make. You begin looking at the market through a completely different lens than the one which made you money in the past. This is all by design to force you off balance so that you will take your eye of the ball, missing the big move that lies ahead. Every experienced trader has different ways of dealing such periods. The key word is experienced. You can always separate an experienced trader or investor from an amateur from observing how he or she deals with such periods. The...
MORE CHANGES: WHERE THE PORTFOLIO IS AFTER TODAY’S ACTIVITY
I'm going to getting a lot more active in the coming months. Again, Twitter is the best means of following in real-time. I'll be updating the website with all the daily activity around my usual time each night. Here are my tweets sent out during the trading day today: The liquidation of GSIG was purely a function of the stock underperforming all other names in the portfolio since January. I wanted to raise cash and I decided to cut out the weakest first. I wouldn't at all be surprised to see this company substantially higher by year end. Fundamentals are great. Management is magnificent. The recent earnings report was wonderful. I don't get what is pressuring the stock and/or why it hasn't been recognized yet? When I start scratching my head I have found that I should just bail out. I bailed with a 5% profit. Can't complain really. I took a long position in LGF today. It is a company I have been bearish on for the past couple of weeks. I nailed the blowoff top to the day but didn't take a position due to my market stance at the time. I am hoping some of you took advantage of the call. I decided to get long today based on what I believe will be some impending short covering. LGF has quite a bit of short interest and I know that short sellers aren't necessarily in "let your profits run" mode. The type of pattern the stock is exhibiting can get reversed quickly and I am expecting this to be the case here shortly. My entry point was off today, which was annoying. But I am willing to give the stock some room to work itself out. This is one that I will, more than likely, be out of before the end of the week. And it should be with a profit. Here are the individual positions as of the close today: PTGI http://www.zenpenny.com/?p=3412 SYNC http://www.zenpenny.com/?p=3794 CIS http://www.zenpenny.com/?p=3777 DPTRQ http://www.zenpenny.com/?p=3759 LGF - a short term trade The portfolio of champions and you don't even need...
IF YOU HAD A BRILLIANT FIRST QUARTER SHUT UP ABOUT IT ALREADY
The first quarter of 2012 was like a Grateful Dead concert if you are into dropping acid and experimenting with mushrooms. There were plenty of opportunities available to get what you wanted. The results were immediate. And everybody walked away with great experiences to talk about for years to come. Here is how it went for my individual stock picking during the first quarter: -- PRGS position initiated on 1/17 (position liquidated on 3/28) +26% -- PTGI initiated on 1/17 - 1/18 (still holding) +28% -- GSIG initiated on 1/17-1/18 (still holding) +10% -- SPRT position initiated on 1/29 (position liquidated on 3/29) +20% -- DPTRQ position initiated on 3/22 (still holding) +34% -- CIS initiated on 3/26 (still holding) +15% -- SYNC initiated on 3/29 (still holding) +6% I'd love to talk about how my in-depth analysis led to these opportunities that leave me in rarefied air that cannot be matched by mere mortals that I laugh at while petting a striped cat from my castle in the sky. But that would be bullshit. That would be giving myself more credit than I deserve. That would be playing the game that so many others with a keyboard and an ego like to play. This was the best first quarter in 14 years for the US equity markets. That means that the environment was extremely accommodating and forgiving to anyone who decided not to get in his or her own way. The more aggressive your strategy, the more favorable your returns. That is as long as, again, you didn't get in your way. And that was my genius in the first quarter. It wasn't my stock picking. Not even close. It was the fact that I came into this year bearish after being bullish since the bottom on October 4th when I loaded the boat with leveraged ETFs. Right before Christmas, I believe it was, I began buying inverse leveraged ETFs planning for the market to tank into January and beyond. I had sentiment data that was corroborating with technical data and further confirmed by fundamental data telling me the market was on its way down. And now here is the real genius of my first quarter. Are you ready? This is going to blow you away. My genius and my secret to success in the first quarter was that I changed my mind. Yes, that was it. On January 10th, I took the losses on my inverse leveraged ETFs and I didn't look back. The market was telling me that I was wrong and I didn't argue with it. I could have stuck to my guns, dug my heals...
HERE IS THE BREAKDOWN ON WHY I PURCHASED SHARES OF SYNC TODAY
Took profits SYNC position on July 10th in the mid-14 range for a 100% plus profit. Bought shares of SYNC today in the low-7 range. A small starter position to begin. I will increase as the performance warrants. I mentioned SYNC briefly last week. I wouldn't call it an investment, as it doesn't possess the value/restructuring angle that I look for when I profile companies in "The Gun". I wouldn't call it a trade either, as I am willing to hold it for longer than a few weeks. I guess you can call it an "investitrade". It's a mix between an investment in a concept company that has some real potential and a trade in a company that is exhibiting a good deal of technical strength. Insiders were very active in buying the company after it IPO'd at the low end of its expected range recently. They were snapping up shares all the way up to $6 per share. They have been consistently growing revenues while achieving profitability in 2011. Their major source of revenue comes from advertising as a result of a partnership with Google and shared with the companies they count as their clientele. Major customers include Verizon, Toshiba and Charter. Given the fact that they are in the high profile and increasingly popular world of facilitating online video content they do make for an acquisition target for a company looking to expand their reach in this field over the coming years. Acquisition will come with growing their customer list, adding more sources of value for those customers and becoming an indispensable part of those companies online presence. As those initiatives take off, which I believe they will, so should the stock price. This comes from the S-1 filing for SYNC: Well-positioned in large and growing market . The market for Internet-delivered content has grown rapidly over the past several years. We have been delivering online solutions to customers since 2000 and, as of September 30, 2011, had over 45 customers, including some of the nation’s major high speed Internet service providers and one major consumer electronics manufacturer. We continue to make ongoing investments in our platform to expand its functionality. We believe we are one of the only companies that has a platform solution with the scale and functionality to allow the largest high-speed Internet service providers and consumer electronics manufacturers to develop or expand their online video or other online and content offerings. As a result, we believe that we are well-positioned to gain share as the market for these services continues to grow. Established customer base with predictable search and display advertising revenue . We have long-term...
AND EVEN MORE PORTFOLIO CHANGES………
As the first quarter winds down, I am feeling compelled to reevaluate the portfolio from a risk/reward basis. This has caused me to liquidate some of the profitable positions taken during the quarter, in favor of allocating those funds into other assets in the coming quarter. Here is what took place today. During the trading day I tweeted the following: SPRT has further upside, however, there are better opportunities for gains in the months ahead, which is why I sold out of the position today after holding it for two months with a 20% profit over that time. SYNC I have more details on here. As I mentioned some weeks ago, the fact that the first quarter has experienced some generous gains in the portfolio allows me the opportunity to really push the envelope for gains in Q2. I am setting myself up to do just that with these...
CURRENT PORTFOLIO POSITIONS
During the morning I tweeted the following: This marks the first time in 2012 I have liquidated an equity holding since accumulating individual positions starting in January. I did so more to make room for some other ideas I have rather than an overall bearish perception of the market. However, I will say this: If we do manage to close below Monday's low, marking a red cloud in the field of green I described over the weekend, I will put a hold on any new buys. I will raise more cash if the market weakens from there during the weeks that follow. In bull markets you wait for the market to tell you to act. If you attempt to guess every top according to each and every signal that crosses your path, you would have been out of this market in February. It's not the way to play the game...not in a bull market, at least. Here is the current portfolio after the recent addition and liquidation: Long SPRT http://www.zenpenny.com/?p=3451 Long PTGI http://www.zenpenny.com/?p=3412 Long GSIG http://www.zenpenny.com/?p=3412 Long DPTRQ http://www.zenpenny.com/?p=3759 Long CIS...
CURRENT PORTFOLIO POSITIONS
I made a small addition to the portfolio this week. It constitutes less than 2% of the portfolio since there is a chance that I can wake up one day and the bid could be 80% below where it closed the previous day. The position is DPTRQ, a company currently in bankruptcy. The explanation behind the buy can be found below. Otherwise, everything remains the same. The current portfolio has been working so well this year that I would be crazy to consider changing anything drastically until the market tells me to. Long PRGS http://www.zenpenny.com/?p=3394 Long SPRT http://www.zenpenny.com/?p=3451 Long PTGI http://www.zenpenny.com/?p=3412 Long GSIG http://www.zenpenny.com/?p=3412 Long DPTRQ...
CURRENT PORTFOLIO POSITIONS
The current portfolio looks like this into the close on Friday: Long PRGS http://www.zenpenny.com/?p=3394 Long SPRT http://www.zenpenny.com/?p=3451 Long PTGI http://www.zenpenny.com/?p=3412 Long GSIG http://www.zenpenny.com/?p=3412 Long EDZ (this is an inverse ETF so it is a short position effectively) http://www.zenpenny.com/?p=3700 In doing my research this weekend, I must say, that it is a confusing picture at this point to say the absolute least. This type of muddled picture is typical of a market that is pausing in search of its next bonanza. Whether that bonanza will be for the bulls or bears is the purpose of this investigative mission. I'll be posting my weekly chart review later today in order to clarify my confusion.....if that makes any...
TRADE UPDATE – EDZ
It has been a couple months since I last had a trade in an ETF. I'm going to be touching on the culmination of events thus far in 2012 that have led me to this point. It will be a good refresher for myself and hopefully of benefit to readers. That's the next post. For the time being, I did initiate a short position via leveraged inverse ETF in EDZ. Emerging markets have been relative underperformers recently. There is weakness in the commodity markets and Dollar strength both of which are contributing to the obvious pressure being applied to emerging markets. I will be going over the technical details in the weekly chart review tomorrow. Here is the tweet sent out before the close yesterday: It is simply a hedge versus long exposure. I am holding onto all long positions. In addition, I will be tuning up the frequency of short-term trades over the coming weeks and months as I have a nice cushion of gains so far in 2012 from which to launch an offensive...
WHAT’S YOUR FAVORITE POSITION?
I received an email in response to my post last night asking what long positions I was talking about in the last paragraph of the posting? I tend to focus on small-cap names in my own portfolio and the more aggressive portfolios that I manage. Since a lot of these names lack real liquidity, I like to stay away from disclosing trades in the names. I'd much rather settle on a simple review of a company as I have done several times since the beginning of this year. Here are the names I have reviewed over the past couple of months. I have positions of varying sizes in all of these stocks: - January 16th: PRGS reviewed at $18.68 per share. Here is the link to the review http://www.zenpenny.com/?p=3394 - January 18th: PTGI reviewed at $12.38 per share. Here is the link to the review http://www.zenpenny.com/?p=3412 - January 18th: GSIG reviewed at $11.02 per share. Here is the link to the review http://www.zenpenny.com/?p=3412 - January 29th: SPRT reviewed at $2.70 per share. Here is the link to the review http://www.zenpenny.com/?p=3451 - February 15th: NYX reviewed at $29.17 per share. Here is the link to the review http://www.zenpenny.com/?p=3580 NYX is a position I have added to conservative accounts. BAC is another position that I have added to conservative accounts over the past couple of weeks, although I haven't done a formal review of the name. NYX and BAC are both names with 5 year + time horizons. The small-cap names mentioned above have time horizons of anywhere between 6-12 months. Given my opinion of where the market is currently, I probably won't be taking on any new long positions unless I see the opportunity as being tremendous. Those types of tremendous opportunities do come along, which is why I perform a scan each night to see what is potentially out there. As always, if I have anything new to share, it will be on here as soon as my fingers can catch up to my...