Wednesday 12 March 2008

Buy low Sell high...Citi

Sold out of the Citigroup long I put on 2 days ago, selling at $22.37 for a profit of $1,422 and a 2-day gain of I said on a previous trade...annualize that!

Nice timing as well, as the stock promptly dropped to close at $21.21.

Away from that, I've been distracted a little from actively trading lately. I've got 5 stocks in my personal portfolio that have been a DISASTER (all longs)...4 of them I have as I think long (LONG) term the technology they offer will be world-changing, and the stocks could have multiple gains. And one of them I just think is stupid cheap. But literally 3 of them are down 50%, one is down 40% and one is down 70% from my average price. Maybe I should stick to day trading. I may elaborate on some of these in a future post.

And aside from that, this Oil short I have is f*cking frustrating. I can't believe this stuff is trading at $110 today (my short is at around $87). The data that's coming out seems to show that oil use is DOWN in the US, which accounts for around 25% of all oil use I understand, and also the trade deficit would be coming down if it wasn't for the price of oil. Since I think that the markets will eventually do what it takes to save the US from complete meltdown, I think oil will fall and cause the deficit to drop somewhat. But it's certainly a tough ride at the moment.

Tuesday 11 March 2008

Who Dares Wins

Well, that was an interesting day...the biggest up day in the stock market in 5 years...a sure sign of a bear market. I knew yesterday was a day of fear, hence me buying C, FRE and LEH. However I was also slightly fearful, so didn't put as much in as I usually do on a trade. So now I'm taking it on the chin on my shorts (which are thankfully much less than they were a week ago at least), whilst making some back on the the longs I put on.

I took my profits on Freddie Mac (FRE) not long into the open, selling at $19.30 for a profit of $1,218, a one-day percentage gain of 11.75%. Annualize that! If only I wasn't such a chicken, that could have been huge.

Also sold my Lehman long, selling at $46.25 for a profit of $450, a one-day percentage gain of 5.1%.

Citi also looking good ending up 9% today. I think this is the type of stock you buy when the world feels like it's falling apart. If it can get through this credit crunch, it has significant earnings power, a large dividend yield and could be a great long-term investment.

I'd also like to reiterate here how much I like 2 of my shorts...Hormel Foods (HRL) and General Mills (GIS)...these guys sell packaged foods. Think about it. They have to PAY for commodities (wheat, corn, sugar, meat etc) and turn them into cans/packets of stuff to SELL to consumers...I am thinking that there is no way they can pass on the size of price rises they are having to pay for their input costs, so margins must fall. Looks like the stock market doesn't buy my theory though, as these two have crept up marginally since I put them on a month or two ago. We'll see how this plays out, I'm pretty confident.

Monday 10 March 2008

Fighting the Fear...buying C, FRE, LEH

Financial stocks are taking a BEATING today, following Bear Stearns liquidity rumours, taking the stock down the most since the 1987 crash, and battering other financial stocks. Lehman also out saying they are laying off 5% of their staff globally.

Well, I like to step in to buy when fear seems high, so today could be the day. I just paid $20.00 (-4%) for Citigroup (C), $17.27 (-12%) for Freddie Mac (FRE) and $44.00 (-5%) for Lehman Brothers (LEH). I was also going to buy some Bear Stearns, but it was 5-6% off the lows of the day so I'll just wait that one out. I bought around $10k worth of each stock.

Whilst the fundamentals are still clearly disgusting for the financial sector, when fear is high you can sometimes get great entry levels, so looking for a good near-term bounce in all of these, purely on technicals. Lehman seems a decent one though, I still think them and Goldman are pretty well run banks, so will probably whether all but a complete financial meltdown (something I am definitely not ruling out).

Portfolio updates

OK so as I just mentioned in the previous post, I got a little lazy with the blog over the last couple of weeks. Here's what I've been doing (and if you've any doubt I'm making this up, I'll just point out now that if I'd actually waited til today for most of these trades I'd have made a lot more money, so hopefully you'll believe me on this! Anyway this blog is here for me to keep track of my EXACT P+L, so all numbers completely reflect what I make, including all expenses)...most of it was covering existing positions:

March 4th, bought Downey Financial (DSL) at $24.04, having originally sold it on Feb 1st at $33.95, for a profit of $1,982. Was literally just a few hours early to cover this one, as the stock proceeded to plummet even further, and is currently at $19.78. Oh well, can't argue with a 29% return in one month. Still think this company goes bust, but thought I could trade it around a little.

Same day, I covered Vornado Realty Trust (VNO) at $82.34, having sold on Feb 1st at $90.70, giving a profit of $836 and a return of 9.2%. Like some other trades I closed out that I'm about to mention, I felt the size I had on was too small, so taking my profits and if it gets close to my original entry I'll get in in bigger size.

March 5th, I covered my Vodafone (VOD.L) short at 157.7p, for a total profit of $2,921. I'd sold a couple of times, some at 187.5 and some at 171.5.

March 6th, covered Mohawk Industries (MHK) at $69.64, making 11.2% in one month for a profit of $1,758. Again, still hate the company, but am a sucker for a profit and will sell any strong rally.

Same day, covered Hovnanian (HOV) at $8.51, making 15% in just over a week for a profit of exactly $3,000.

Also covered Centex (CTX) at $20.76, making 11% in just over a week for a profit of $2,540.

And covered Lennar (LEN) at $16.20, making 18% in one month for a profit of $1,065.

And FINALLY, covered General Growth Properties (GGP), making 11.9% for a profit of $902. Again, was just too small in this one unfortunately.

Phew! Back up to date with everything...current P+L ~$40,200, damn that Crude Oil short...


Feb P+L recap:

Have been away travelling plus also a little lazy with the blog. Was also having some problems with the spreadsheet, but I've fixed it now. This Google Docs thing is rubbish, they are kidding if they think they'll ever get people to move from Excel to an online application...

First up...February P+L was $15,463, pushing the total P+L since inception at the start of December to $39,433.

Most of the money was made being short equities and indices, and most of the equities I was successfully short was in sectors pretty close to this credit crisis (financials, reits, homebuilders etc). Also took some money out from selling options on GBP, and a little from being long 10y Treasury futures briefly, a trade that I'd intended to get back in on but I hated the price action as yields went from 3.55% to 3.90% pretty quickly. On the losing front, I got a good kick in the nuts from being short Oil, dropping around $15,000. Very frustrating, like I said I'd been on the road, and literally didn't even see it between ~88 to ~98. I'm mildly nervous on this one, although I think eventually fundamentals will kick in and take it all the way back down. We're already seeing fuel use fall in the US (can't remember where I read it so no link). Demand drop CAN take even oil prices down, and I don't think many people appreciate that.

My next post will follow shortly, detailing trades done over the last couple of weeks.