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.

No comments: