Invest. Get Rich.

2010 Investment Portfolio Performance Review

2011-01-03T19:18:00.000-08:00

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The Wilshire 5000 closed the year at 13,360.12, up from 11,497.41, or 16.20%, for 2010. The Wilshire 5000's 200-day moving average finished the year at 11,953.73, or 11.77% the year-end close.

Now for the portfolio...
1) Verizon ($VZ) I sold at $35.75 this week, up 16.653% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.73/share, worth $68.11 to this portfolio currently.

2) AT&T ($T) closed at $29.38, up 5.11% for the year, inclusive of dividends.

3) GE ($GE) closed at $18.29, up by 20.55% for the year, inclusive of dividends.

4) TBT, ($TBT) the doubleshort U.S. Treasury ETF closed at $37.04, down 15.15% since my buy.

5) January 2012 Dupont ($DD) $45/$55 CALL spreads purchased a few months back closed at $4.90, up 34.25% since my buy.

6) Apple ($AAPL) closed at $322.56 up by 66.48% since my buy.

7) January '12 Citigroup ($C) CALLs closed at $.12, down by 72.73% since my buy.

8) Citigroup ($C) closed at $4.73, up by 18.84% since my buy.

9) Goldman Sachs ($GS) closed at $168.16, up by 23.51% since my buy.

10) January '11 S&P 500 ETF ($SPY) $127/$120 PUT Spread that I purchased on Wednesday at $2.92 closed at $1.76, or down 39.73%.

11) June '11 doubleshort 20-year U.S. Treasury ETF($TBT) closed at $3.62, down by 22.15% since I purchased it on the 29th of December.

Overall, the portfolio finished up by 16.52% (16.31% for the DOW Dogs), versus 16.20% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, was up 2.55% year-to-date. The spread between my performance and the overall market (Wilshire 5000) was .32% outperform.

I thought I did a fairly good job of running this portfolio this year, and I look forward to seeing how I can do in 2011. I think I have learned a lot this year, and have not only been able to test my own trading strategies, but have been able to discover a few new ones as well.

As you can see from the data above, I was basically at a market-perform, with no commissions taken out. However, the two trades I made in the final two weeks of the year cost me roughly 6% in outperformance. Had I rested easy at the end of the year, and sat on my stack of cash, I would have been in much better shape. Oh well, live and learn.

My Best and Worst Trades Of 2010

2011-01-02T20:40:00.000-08:00

As we close the book on one year, and open the book of a new one, a lot of people take an introspective view. I am no different. As 2010 has come to a close, I thought it would be productive to take a look at my top five best (and worst) trades of 2010. I have tried to link each trade back to the post I made announging the trade and my logic. As you go through, please click through the links and read about what I was thinking, and how wrong (or right) I was. My hope is that this makes for an interesting read. Here goes:

The Best:
1) Apple (AAPL). I purchased Apple for this blog on 2/4/10 at $193.75, and am still holding this stock. As of the close on Friday, Apple was at $322.56, up by 66.48%. I spent a lot of time in the malls through the Fall and leading up to Christmas. I have got to tell you, that store is always packed at all times of the day. I am anxiously awaiting the introduction of the iPad 2, and the Verizon iPhone. I see no reason to sell this stock at this point.

2) Whirlpool (WHR) $75/$85 December 2010 CALL Spreads. I purchased these call spreads on 9/20/10 for $4.78, and sold them on 12/7/10 for $6.50, up by 39.78%. I purchased this call spread after analyzing Whirlpool's stock using a stock screen that looks for names that are trading with a higher dividend yield than their historical average yield percentage. I also used a similar strategy on another name which I will discuss later. In going back through the blog, I have noticed that I did not talk in-depth about this strategy, which is something I will vow to do in 2011, as I have found it to be exceptionally logical and profitable over the last year.

3) United States Steel (X). I purchased U.S. Steel on 2/4/10 for $44.11, and sold it on 3/11/10 for $60.42, up 36.98%. At the time, U.S. Steel was trading near it's historic low, and it was an economic recovery play for me. It was a quick turnaround, as the stock quickly increased almost 37%, and it was time to take profits. Today, this name is trading at $58.42.

4) DuPont (DD) $45/$55 January 2012 CALL Spreads. I purchased these call spreads on 9/20/10 for $3.65, and am still holding them at $4.90, up by 34.25%. This was the trade that I put on which was similar to the Whirlpool (WHR) trade. When analyzing the historic yield of this stock, I noticed that when it trades to it's upper range, the underlying stock does not move as quickly as Whirlpool's, which is why I used the longer-dated options. Again, this one has worked out quite nicely thus far, as DuPont is trading at $49.88 currently.

5) S&P 500 ETF (SPY) $102 December 2010 CALLs. I purchased these deep in-the-money CALLs on 8/10/10 at $12.90, and sold them on 11/3/10 at $17.31, up by 34.19%. During the summer, I thought (correctly) that stocks were overly cheap, and due for a move upward. This was a leveraged play on the overall market moving up. Obviously, it worked out just as I had planned. Most likely, I will employ this strategy at least one more time in 2011.

The Worst:
1) Citigroup (C) $7.50 January 2012 CALLs. I purchased these LEAPs on 5/2/10 for $.44, and am still holding them at $.12, down by 72.73%. While I am way, way down on this trade, the catalyst for this trade just occurred roughly three weeks ago. I see the broad market going up through 2011, as well as Citi's earnings per share. I am going to continue to be patient with this trade, at least for a few more months.

2) S&P 500 ETF (SPY) $127/$120 PUT Spreads. I purchased these PUT spreads on 12/15/10 for $2.92, and am still holding them at $1.76, down by 39.73%. I put this trade on believing the market was due for a correction, and am still holding firm on that belief. When it will come, I do not know, but am going to remain patient with this trade for at least another week or two. In hindsight, I should have waited until 2011 to put this trade on, as it was one of two trades that I made near year-end which greatly hurt my overall 2010 performance.

3) Doubleshort 20-year U.S. Treasury ETF (TBT) $35/$47 CALL Spreads. I purchased these CALL spreads on 12/29/10 for $4.65, and am still holding them at $3.63, down by 22.15%. I echo all of the sentiment from my #2 worst trade on this one, and it is way too early to tell how this will shape up. I am going to continue to be patient.

4) ProShares Ultrashort FTSE China 25 ETF (FXP). I purchased this ETF on 1/15/10 for $43.10 (adjusted for the 1-for-5 stock split), and sold it in the Fall for $33.26, down by 22.83%. This was my lesson for the year on why ETFs are not always what they seem. In the beginning of 2010, I believed (correctly), that China's stock market was going to hit the skids. I was right, as China's market was down over 10% for the year. The S&P 500 was up double-digits this year, for comparison. The FXP is currently trading at $30.08, about 10% below where I sold it. As I said before, this was my play on the downturn in the Chinese market. While my market analysis was correct, my pick in the ETF to play that move was not. Lesson learned.

5) Doubleshort 20-year U.S. Treasury ETF (TBT). I purchased this ETF on 1/3/10, and added to my position later in the year. My current adjusted price is $43.66, and the ETF is trading at $37.04, down 15.15%. I am going to continue to hold this name, as I have detailed here.

Welcome to 2011! With any luck, we will be able to watch the stock market, and our collective wealth continue to increase throughout the year. If you've been reading this blog for awhile, please continue to read, and tell your friends. If you're new to this blog, please continue to read, and tell your friends. In addition, in 2011 I hope that this blog becomes more interactive, with the readers sharing their trades and comments with the rest of us. As I detailed in my goals for 2011, I also hope to increase the revenue from this blog. While you're here, please click through some of the links and information which the advertisers have placed on these pages. It helps to keep this blog free to everybody, and it helps the advertisers to get their name out and teach you about their products.

Hopefully in 2011 I will learn from both my trading successes and failures in 2010.

Happy New Year! 2011 Is Here!

2011-01-01T19:30:00.000-08:00

Happy New Year everybody! If you have been reading this blog regularly, thanks for your patronage. If you are new to the blog, please keep reading as I make new content available. If you've been reading regularly, you know that this marks the one year mark of this blog. I love writing this blog, and look forward to many more years doing so.

As it is a new year, it is customary for people to write down their goals. Well, I am not different, so here are my top five goals for "Invest. Get Rich" in 2011:
1) Beat the market. I will post my total performance for 2010 within the next few days. However, the goal of this blog has been, and will continue to be, to provide stock picks and investing advice which consistently beat the market. 2011 will be no different. As I continue to research the markets and refine my investing knowledge and strategies, I am hopeful that my success rate will continue to improve.

2) Increase my Alexa rank. I posted a while back that I was taking the Yakezie Challenge, and as part of that challenge my Alexa rank must increase (or decrease, depending on how you look at it) quite a bit. Please help me in this challenge. Currently I sit somewhere north of 6,000,000 - not good.

3) Post more frequently. A few times this year I took extended sabbaticals. I am going to try my best this year to make sure that does not happen.

4) Post more content on strategy. I started this blog to help people learn how to invest, and more specifically, pick stocks. While much of the content on this site is focused on the trades I make and the blog's portfolio, in 2011 I want to make sure I get more into the "why", as opposed to the "what".

5) Increase the revenue produced by this blog. Part of this will be achieved through heavier traffic to the site. If you're reading this, please take a look around and notice the ads and the paid posts around this blog. The advertisers are what help to keep this blog free to everybody. So, please, please, please click on the links and check out some of the great content provided by the advertisers, I'd greatly appreciate it.

My Latest Trade - 12/29/2010

2010-12-29T19:51:00.000-08:00

This morning I purchased one June 2011 TBT $35/$47 CALL spread for $4.65 (x100 shares = $465) to supplement the (38) shares of TBT that I am currently holding in the portfolio. My cash position in the portfolio is now $781.42, down from $1,246.42 after the purchase.

I have been saying for quite some time that I believe interest rates will continue to rise, especially with Mr. Bernanke's QE2 which is scheduled to purchase near-dated bonds through June of next year (notice the date I picked on the options). While TBT has made an impressive move upward since the announcement of QE2, I believe it has a long way to go. I purchased the (38) shares of TBT currently sitting in my portfolio on 1/3/2010, the date I started this blog. Back then, the yield on the 10-year was 3.85%, and the TBT was trading at $43.66. Today, the 10-year closed at 3.35%, down .132%, and the TBT closed at $37.81, down 3.30% today. Obviously, I took a bit of a hit on the aforementioned trade today.

To put this all into a bit of historical perspective, the average 10-year rate from 1962 to the present (a pretty big sample size) is 6.81%. Furthermore, the average rate from 2000-2009 was 4.46%. You can download and analyze all of this data for yourself here.

Just to tie a pretty little bow on this whole conversation, not only are the historical rates still low, but the U.S. Government itself has already told us it is going to prop up rates through QE2, and we there are also other forces at work which may drive rates up (see my post from yesterday here, more specifically, China and oil). As inflation begins to creep into the economy, and I am not saying it will, so too will the interest rates increase. Actually, just the fear of inflation is all that's needed.

What Will Cause The Coming Market Correction?

2010-12-28T19:00:00.000-08:00

In the past few weeks I have said that I believe the market is overbought, and we are headed toward an early 2011 correction. Well, it is my opinion that such corrections are usually brought about in the media through the proliferation of "bad news", and then traders use that as an excuse to take the market lower. Here is my list of the top ten news stories (in no particular order) that I believe will spur our move lower:

1) The conflict between North and South Korea
Today, South Korea declared North Korea it's enemy. Big shock there. Quite frankly, that tiny man with the crazy here in North Korea is crazy. Tension has been boiling over between them and the rest of the world for quite some time. I believe that any sort of military action in that region would weigh on the markets if it came to pass.

2) Rising interest rates - both in China and here in The United States
While the media will tell you that rising rates here in America are a problem, truth be told, the rate on the 10-year could rise 15% from a 3.50% yield to 4.00% and still be at historically low levels. The problem is, as rates go up, so does the cost to service and obtain debt. Credit cards, adjustable mortgages, new mortgages, you name it. All of those reasons could be tough on American consumers.

On the other hand, China has a similar issue. Anything seen as a negative in China is seen as a negative for the rest of the world. I don't so much buy into this theory, but it's true. Rising Chinese rates will have the same effect on their economy as the reasons I just stated above for the U.S. economy.

3) The Euro Zone's debt problems
We've already had Greece and Ireland. I promise you, they are not the only ones on the other side of the pond with trouble. Portugal and Spain are also going to be an issue, and Spain is a much larger economy than the others.

4) Slowing or no perceived job growth
To quote Adrian Van Eck's most recent publication, "weekly jobless claims remain much improved from their levels of six to twelve months ago. They have been running in the area near 420,000 to 430,000 for a while now. A year or two ago, many economists were saying that weekly jobless claims would have to break below 425,000 before any kind of meaningful improvement in the monthly employment picture could take place." Now that we are at that level, the media and economists are going to want lower numbers. All in due time. Jobs are the last things to come back during an economic recovery.

5) Rising oil prices
Oil is currently around $91 a barrel, and many analysts are saying it's going to $100 or maybe even higher. Such things are sometimes a self-fulfilling prophecy. Higher oil will be seen as an added "tax" on the American consumer, and will drive up the prices of everything from goods to travel.

6) Rising inflation in China
The Chinese economy has been on a tear the last few years, fueled by gobs and gobs of money pumped into the economy by the government. With that came increased real estate and food prices, among other things. As inflation on basic items rises, demand will decrease and I ultimately feel that the huge labor force in China will demand higher wages. As wages increase, so does the cost to produce things, and so does the cost to buy Chinese made goods. The world, especially the U.S. consumes a lot of Chinese goods. See where I am going with this one?

7) Profit-taking
Honestly, the link says it all. The market has made a huge run, and most everybody is bullish as you can tell from the sentiment data I publish in my portfolio updates. Traders will want to lock-in profits at some point...

8) Municipal and State debt problems
A couple days ago, Meredith Whitney went on television and forecasted a major state and municipal debt problem here in the U.S. Meredith Whitney is famous for her call of the Financial Crisis of 2008. While she was right on her predictions then, I think she is borderline fear mongering. While I believe there will be some debt problems, in my opinion, they won't be as soon nor as deep as Meredith is forecasting.

I do not mean to downplay Ms. Whitney's work. I read this story on an obscure news site a few days back, and was astounded that this did not get more national play. Surely, this small Alabama town is not going to be the only one...

9) Iran
See: Korea, North. These folks have a crazy leader with nuclear capabilities too. 'Nough said.

10) Home price instability
October home price data came out this morning, and it wasn't good. Foreclosures are going to weigh on the market for quite some time. However, I can tell you that a realtor friend of mine told me she had her best November ever this year. While the real estate market is quite soft, as I have observed personally, I don't think it's as bad as it is made out to be in the media.

To conclude, while I do not think that all these things are going to happen, and while I think that many of these things have little to no actual economic bearing or consequence to our economy or our markets, I do think that at least one of these stories is going to be played up in the media, and I also believe it will coincide with the market correction I am forecasting.

I Have Joined The Yakezie Challenge!!!

2010-12-19T18:58:00.000-08:00

Dear Readers,
As of today, I am joining the Yakezie Challenge. The Yakezie Challenge is the process you have to go through to get your financial blog listed on Yakezie. For those of you who don't know, as I didn't five minutes ago, Yakezie is one of the top financial blogs on the interwebs. In order to get your blog listed with them, you must complete a simple process, listed here.

Basically, in order to get my blog listed, I have to 1) install the badge (see at right, a little ways down the page), 2) write consistently 2-4 times per week for six months (I should be doing this anyway, and have failed over the last two months. This will be good motivation to maintain my pace.), and 3) get my Alexa rank above 200,000 (I am currently at an abysmal 12,506,744).

How you can you help?
Read my blog. Please. If you like it, keep reading, tell your friends and write comments. If you hate it, do the same. I would love to hear what readers think either way. If you comment, please leave your name and website/blog address so we can get it some exposure and engage in constructive dialogue.

Portfolio Update - 12/19/10

2010-12-19T17:14:00.000-08:00

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The Wilshire 5000 closed the week at 13,203.03, up from 13,175.94, or .21%, this past week. The Wilshire 5000's 200-day moving average currently sits at 11,878.70, or 11.15% below Friday's close.

This week's reading of the Investor's Intelligence Survey was 56.8% BULLS, and 20.5% BEARS, for a spread of 36.3%. This is in comparison to a reading of 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9% back on December 7th.

The Volatility Index ($VIX) closed Friday at 16.11, down from 17.61 last Friday.

Now for the portfolio...
1) Verizon ($VZ) at $34.64, up 13.03% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.25/share, worth $64.75 to this portfolio currently.

2) AT&T ($T) closed at $29.21, up 4.50% for the year, inclusive of dividends.

3) GE ($GE) closed at $17.70, up by 16.84% for the year, inclusive of dividends.

4) TBT, ($TBT) the doubleshort U.S. Treasury ETF closed at $38.13, down 12.66% since my buy.

5) January 2012 Dupont ($DD) $45/$55 CALL spreads purchased a few months back closed at $4.85, up 32.88% since my buy.

6) Apple ($AAPL) closed at $320.61 up by 65.48% since my buy.

7) January '12 Citigroup ($C) CALLs closed at $.12, down by 72.73% since my buy.

8) Citigroup ($C) closed at $4.70, up by 18.09% since my buy.

9) Goldman Sachs ($GS) closed at $164.04, up by 20.53% since my buy.

10) January '11 S&P 500 ETF ($SPY) $127/$120 PUT Spread that I purchased on Wednesday at $2.92 closed at $2.58, or down 11.64%.

As you see above, sentiment data has gotten way overdone on the upside. To put things into perspective, the BULL/BEAR spread of 36.3% is the highest it's been since 5/4/10, right at the beginning of the 15+% correction that we saw over the summer. While the upcoming correction will not be as deep or as long, it has to be coming at some point. The VIX is currently at 16.11, with the 25-day moving averageis at 19.27, historically pretty low. In addition, every moving average of the Put/Call ratio is more than 1 standard deviation below the historical average. All of this is pointing to the market being overbought.

As I said last week, I believe the market will continue to melt up into year-end. I am going to continue to raise cash into year-end, but don't see any reason to do it right this second. As you see, my SPY PUT Spread is down 11% since I bought it. I am not worried. If the market looks like it refuses to break in another three weeks or so, I may have to liquidate that position at a loss. Until then, I will remain patient.

Overall, the portfolio is up by 19.72% (13.56% for the DOW Dogs), versus 14.83% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.

Time To Get Short!

2010-12-15T06:33:00.000-08:00

I have been writing for a few weeks now that I am beginning to get bearish on the market in the short term. That doesn't mean I am bearish on the economy on the market, it just means that I foresee a correction coming, and I want to profit from it. As such, here is what I am going to do...

I have an order in to purchase a January 2011 SPY (Ticker - $SPY) $127/$120 PUT spread at $2.86. As you know, the SPY is the ETF that tracks the performance of the S&P 500. If the order fills today, I am going to add four positions to the portfolio, using about $1,144 of my available cash.

You can follow me on Twitter to get the status on this trade. I will be updating this space in the next few days to fill you in on the portfolio's progress. Happy trading!

Second Update In A Week! Portfolio Up 20.95%!!!

2010-12-12T17:04:00.000-08:00

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I'm feeling rather productive lately, and I thought it would be a good idea to update you on the status of my portfolio. As I've stated in the last few posts, I have begun to raise cash into year end. While I think we are going to continue to melt up into the new year, I am beginning to believe that the data is pointing to the fact that we may see lower prices in the not-so-distant future. Make no mistake, I am very bullish on the market going forward. Very, very bullish. However, what goes up must come down...at least momentarily on occasion.

The Wilshire 5000 closed at 13,175.94, up from 13,009.05, or 1.28%, since Tuesday. The Wilshire 5000's 200-day moving average currently sits at 11,830.03, or 11.38% below Friday's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9%. This is in comparison to a reading of 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6% back on November 30th.

The Volatility Index closed Friday at 17.61, down from 17.99 on Tuesday.

Now for the portfolio...
1) Verizon at $34.04, up 11.07% for the year (please note, this is inconsistent with the percentage in my last post. Forgive me, but I had a formula error in my spreadsheet that incorrectly understated Verizon's performance to date), inclusive of dividends. FTR, the recent spinoff, recently closed at $9.37/share, worth $65.59 to this portfolio currently.

2) AT&T closed at $28.89, up 3.35% for the year, inclusive of dividends.

3) GE closed at $17.72, up by 16.97% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $38.28, down 12.31% since my buy.

5) January 2012 DD $45/$55 CALL spreads purchased a few months back closed at $4.54, up 24.38% since my buy.

6) AAPL closed at $320.56 up by 65.45% since my buy.

7) January '12 Citigroup CALLs closed at $.15, down by 65.91% since my buy.

8) C closed at $4.78, up by 20.10% since my buy.

9) GS closed at $168.47, up by 23.78% since my buy.

Overall, the portfolio is up by 20.95% (12.62% for the DOW Dogs), versus 13.94% for the Wilshire 5000. The current basket of nine stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.

In the week or two ahead I am most likely going to start raising a bit more cash. As is now, I have roughly $2,400 in the portfolio in cash. With the upcoming pullback/correction I am forecasting, I believe I will most likely sell AAPL, VZ, T, and GE. I will most likely be buying some SPY PUTs with part of the cash, and leaving the remaining for a better entry point into some names, including new DOW Dogs. But, as I said before, I believe we will continue to melt higher into year end. How high we go and how quickly we go in the next two to four weeks will determine how hard and how far we fall after that.

2010-12-07T18:57:00.000-08:00

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I'm back! I have not posted on this blog in a month and four days (by my count), and it was about time for an update!

The Wilshire 5000 closed at 13,009.05, up from 12,323.47, or 5.56%, since October 12th. The Wilshire 5000's 200-day moving average currently sits at 11,813.05, or 10.12% below today's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6%. This is in comparison to a reading of 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3% back in October. Bullish sentiment is now in what I would consider to be a dangerous range, as it's been well over 50 for three straight weeks, and the 4-week moving average has been over 50 for the second straight week.

The Volatility Index closed Friday at 17.99, down from 18.93 back on October 12th. It is also worth noting that the 25-day moving average has closed below 20 for the third straight trading day, what I consider to be dangerous territory.

Now for the portfolio...
1) Verizon at $32.95, up 7.60% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.11/share, worth $63.77 to this portfolio currently.

2) AT&T closed at $28.54, up 2.10% for the year, inclusive of dividends.

3) GE closed at $17.03, up by 12.41% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $37.49, down an abysmal 14.12% since my buy. However, it is worth noting TBT has gained significant ground since my last portfolio update, and I think it will continue to do so for the foreseeable future. Remember, the 10-year is still only down near 3%, historically still very low.

5) January 2011 WHR $75/$85 Call spread purchased a few months back I sold at $6.50, up 39.78% since my buy.

6) January 2012 DD $45/$55 Call spreads purchased a few months back closed at $4.70, up 28.77% since my buy.

7) AAPL closed at $318.21 up by 64.24% since my buy.

8) January '12 Citigroup Calls closed at $.13, down by 70.45% since my buy.

9) C closed at $4.62, up by 16.08% since my buy.

10) GS closed at $161.59, up by 18.73% since my buy.

Overall, the portfolio is up by 19.03% (9.47% for the DOW Dogs), versus 13.15% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is up 7.62% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 5.88% outperform.

Overall, my portfolio has done quite well this year. As I have detailed a bit above, I am getting a bit worried about where the market is. I think we are due for some sort of a dip or correction in the near future. As you can see from this post, and my prior post, I have raised quite a bit of cash, and I may be putting that to work on the short side in the near future, maybe as soon as tomorrow. As I make trades, I will update this blog going forward.

Trades For This Week

2010-11-03T09:41:00.000-07:00

Greetings all! I am sorry this space has not been updated in quite some time. Unfortunately, life has gotten in the way. However, I did want to update you on the trade I am making:

I am trading out of my December SPY $102 CALLS. I am exiting this trade at $17.31 for a gain of 34.19%. I think we are set for a pullback post-election/FOMC meeting, and will look to add some longer-dated in-the-money calls in SPY if and when the conditions present themselves. I may even buy some out-of-the-money PUTS in the next day or so. We'll see. I will update this space more thoroughly this week, as time presents itself.

CSX Options Gain 108%, C Options Still Up BIG

2010-10-13T15:34:00.000-07:00

Last night I wrote that I had purchased some CSX October $57.50 CALLS for $1.20. As I had suspected, and wrote about last night, the market moved appreciably higher today on the backs of earnings from CSX, Intel, and JP Morgan (the latter two stocks did struggle today). Going higher with the broad market was CSX. I traded out of my position in CSX CALLS at roughly 11:30am EST this morning for $2.50. This represented a gain of roughly 108.33% in 22.5 hours (roughly), a new record for me.

I am still holding on to my C $4 October CALLS which are well in the money. Earlier today the options, traded up to $.30, along with the stock that traded for a while in the $4.29/$4.30 range. However, the stock got killed in the last hour, and traded back down to $4.25. In the after hours, the stock is currently at $4.24. The intrinsic value of the options is currently $.25, representing a gain of 317%. I suspect C will continue to trade up through Friday's close with the general market. If C gets around $4.30 tomorrow or during the day Friday, I may strongly consider trading out of that position. We'll see.

My Portfolio Beating Market, Up 8.80% This Year

2010-10-12T18:07:00.000-07:00

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The Wilshire 5000 closed at 12,323.47, up from 12,072.58, or 2 .08%, since October 2nd. The Wilshire 5000's 200-day moving average currently sits at 11,659.37, or 5.70% below Tuesday's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3%. This is in comparison to a reading of 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5% on September 28th. Bullish sentiment has now turned higher in five consecutive weeks.

The Volatility Index closed Friday at 18.93, down from 22.50 back on October 1st.

Now for the portfolio...
1) Verizon at $32.54, up 6.50% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.63/share, worth $60.41 to this portfolio currently.

2) AT&T closed at $28.03, up 1.62% for the year, inclusive of dividends.

3) GE closed at $17.19, up by 14.28% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $32.32, down an abysmal 25.97% since my buy.

5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $5.05, up 8.60% since my buy.

6) December 2010 SPY $102 Calls closed at $14.92, up 7.98% since my buy. It is worth noting here that the bid/ask prices for these options is well above the "last" price of $14.92. This is due to the fact that these options are well into the money right now, and as such their volume is exceptionally light.

7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.76, up 3.01% since my buy.

8) AAPL closed at $298.54 up by 54.09% since my buy.

9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.

10) C closed at $4.24, up by 6.53% since my buy.

11) GS closed at $155.21, up by 14.04% since my buy.

Overall, the portfolio is up by 8.80% (8.41% for the DOW Dogs), versus 7.18% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 1.56% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.62% outperform. It is also worth noting that this portfolio is up 4.70% since my last post, versus 2.18% for the Wilshire 5000 in the same time period.

What I Traded Today

2010-10-12T15:58:00.000-07:00

Today I bought some $57.50 October 16th CALLS of CSX (Ticker: CSX) at around noon for $1.20. Unfortunately, I did my analysis of the stock late yesterday evening, and did not get the time to post on the blog about it. Given the state of the economy, and what I deemed to be "softish" earnings expectations by analysts, I thought this stock would be a good earnings play. As of now, 7pm EST, CX is trading at $58.52 in the after hours after posting earnings of $1.08, beating the Street's estimates of $1.04.

I suspect tomorrow we will see decent earnings from JP Morgan (JPM) before the bell, and we will also be buoyed by earnings beats by Intel and CSX, as well as the Fed's QE2 guidance this afternoon. I am expecting to see a high volume day in CSX tomorrow, and potentially a move up and through $59 in the stock. So far my thesis on a pop from earnings is correct, we will see how my options play pans out in the days ahead.

233% Gain!? I Hope You Jumped On Citi $4 Options

2010-10-10T16:20:00.000-07:00

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Unfortunately, I have been exceptionally busy lately, and have not had time to update you on some of the stock and options picks I have made in the past month or so. I will try to do so this coming week, however, I wanted to update you on the Citi position I am currently in.

As you recall in this post I stated that I would be buying C $4 October 16th CALLS. I did so at $.06 the following day. If you're following the stock, you know that it closed at $.19 this past Friday, and moved to $.20 in the after hours. The options I purchased closed at $.20 on Friday. As is now, I believe we are going to see a continuation of the broad market rally this week. I also believe the lack of government selling will continue to buoy C into earnings next Monday. As such, I am going to leave this trade on. Currently, the C options I am in have an intrinsic value of $.20 (using the after hours close), and a time value of $.00. I suspect the options will open somewhere in the $.21-.22 range tomorrow, and continue to move higher throughout the week. So far my gain is 233.33%. I'll update you as the week progresses.

Market, Portfolio Still In The Black - Finish Week Flat

2010-10-02T12:21:00.000-07:00

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The Wilshire 5000 closed at 12072.58, up from 12,062.80, or .08%, since September 24th. The Wilshire 5000's 200-day moving average currently sits at 11,636.13, or 3.75% below Friday's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5%. This is in comparison to a reading of 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1% on September 21st. Bullish sentiment has now turned higher in four consecutive weeks.

The Volatility Index closed Friday at 22.50, up from 21.71 back on September 24th.

Now for the portfolio...
1) Verizon at $32.89, up 7.64% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.18/share, worth $57.26 to this portfolio currently.

2) AT&T closed at $28.81, up 3.13% for the year, inclusive of dividends. (Note: apparently in a few of the most recent portfolio updates I had given some inaccurate prices. I use two "portfolios" in two different websites to quickly access prices for this blog, and in one location I had ATT, and the other I had T for this equity. As it turns out, T is the stock, and ATT is the debt. My apologies for any confusion.)

3) GE closed at $16.36, up by 8.76% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $31.54, down an abysmal 27.75% since my buy.

5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $4.84, up 4.09% since my buy.

6) December 2010 SPY $102 Calls closed at $13.93, up 7.98% since my buy.

7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.28, down 10.14% since my buy.

8) AAPL closed at $282.52 up by 45.82% since my buy.

9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.

10) C closed at $4.09, up by 2.76% since my buy.

11) GS closed at $147.70, up by 8.52% since my buy.

Overall, the portfolio is up by 4.10% (8.41% for the DOW Dogs), versus 5.00% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is down 2.84% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .90% underperform.

Is Citi About To Make A Move?

2010-09-29T19:08:00.000-07:00

On Sunday evening I wrote this post about a trade I was venturing into in Citigroup (C). In that post, I stated that I was going to be buying October $4 CALLS, for $.05 - $.06. Well, I entered into the trade on Monday at $.06, the high end of my range, but I'm ok with it nonetheless.

Today, the beautiful office of the U.S. Treasury came out and said they are selling $2.2b bailout Trups in Citigroup, thereby making an uninteresting morning awesome as I watched Citi trade all the way up to $3.99, and my CALLs trade up to $.09. The article on the Treasury sale can be found here.

All of this is fine and dandy, but my thesis for why I think Citi will eclipse $4.15 by the middle of October has not even begun to take effect yet. As I stated in my prior blog post, the Treasury is going to suspend their sale of Citi common stock due to their blackout period before earnings after tomorrow's trading. From there, through the next two weeks I am suspecting that C will make a nice move upward. Even more validating, Bryan Kelly said today on CNBC's Fast Money that he entered into the stock today for the same reason that I bought my CALLs on Monday. While there is barely a mention of it on the Fast Money recap page here, you can watch the episode later this evening, or on your TiVo (if you're sick and obsessive and DVR this show like I do) and check out his recommendation.

I will keep ya'll posted on this trade in the next two weeks, with any luck, it will be very profitable.

U.S. Government To Exit AIG Stake

2010-09-26T17:19:00.000-07:00

First Citi, now this. This makes AIG an interesting stock again, potentially. I still think it may be wise to look at how Citi's stock acts as we come to the conclusion of that government sale, and take that into consideration when analyzing AIG. Here's the link:

http://www.bloomberg.com/news/2010-09-26/treasury-said-to-ready-plan-to-sell-aig-stake-recoup-taxpayer-investment.html

What I'm Trading Tomorrow (Monday)

2010-09-26T08:48:00.000-07:00

Tomorrow I will be buying October 15th $4 Citi CALLS. Citi is currently sitting at $3.90, and the Calls are trading at $.05. I am going to put an order in at $.05, but am willing to adjust up to $.06 if need be. I am going to see what the market futures look like later on this evening and in the pre-market tomorrow, and make a decision from there.

As you know, the S&P 500 crossed above important resistance ~1,131 this week. The S&P 500 currently sits at 1,148, and I believe is poised to test the April highs around 1,200 in the near term.

Citi will be reporting earnings on October 18th, and as such the government's blackout period for selling shares of Citi begins on October 1st, and lasts through options expiration. Looking back to July when the government had their blackout period, Citi ran from $3.80 all the way up to $4.30. I am not going to bore you with all the math, but my analysis suggests that Citi can make a run to $4.15 and maybe higher before expiration based on the market move I am expecting, and the past history of what happens during the government blackout period.

Portfolio up 1.94% This Week, Wilshire 5000 Up 2.13%

2010-09-26T08:35:00.000-07:00

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The Wilshire 5000 closed at 12,062.80, up from 11,811.39, or 2.13%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,619.35, or 3.82% below today's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1%. This is in comparison to a reading of 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1% on September 14th. Bullish sentiment has now turned higher in three consecutive weeks.

The Volatility Index closed Friday at 21.71, down from 22.01 back on September 17th.

Now for the portfolio...
1) Verizon at $32.64, up 6.82% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.07/share, worth $56.49 to this portfolio currently.

2) AT&T closed at $27.03, up 3.01% for the year, inclusive of dividends.

3) GE closed at $16.66, up by 10.76% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $32.50, down by 25.55% since my buy.

5) January 2011 WHR $75/$85 Call spread purchased on Monday closed at $4.85, up 4.30% since my buy.

6) December 2010 SPY $102 Calls closed at $14.02, up 8.68% since my buy.

7) January 2012 DD $45/$55 Call spreads purchased Monday closed at $3.58, down 1.92% since my buy.

8) AAPL closed at $292.32 up by 50.87% since my buy.

9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012. See a post that I am going to do later on in regards to Citi.

10) C closed at $3.90, down by 2.01% since my buy on Monday.

11) GS closed at $147.28, up by 10.93% since my buy.

Overall, the portfolio is up by 5.74% (8.74% for the DOW Dogs), versus 4.92% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 1.37% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .82% outperform.

Trading Update - 9/20/10

2010-09-20T16:46:00.000-07:00

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After a weekend of analysis I posted here last night that I was going to take up positions in DuPont (DD), and Whirlpool (WHR). I also noted that I would be trading out of NLY and FXP. Well, the market helped in some regards, and hurt in others. While it was nice to be seemingly right in my research of both these names, I wish the market would have held off another day so I could get in at better prices.

If you noticed, the market was up big today, and DD and WHR were no exceptions, especially WHR which was up 7.24% vs. 1.52% for the S&P 500. As such, I didn't get into or out of any of the positions at the prices I wanted. I was able to trade out of FXP at $33.26, as well as NLY at $18.02.

With the proceeds, I purchased three (3) DD $45/$55 January 2012 CALL spreads for $3.65/each, or $1,095. I was also able to buy one (1) WHR $75/$85 January 2011 CALL spread for $4.65, or $465 total.

Due to the jump in DD options today, I was unable to buy the second WHR call spread. Therefore, I have ~$300 left in cash. I do not want to leave that money on the sidelines, so I am going to by seventy-five (75) shares of Citigroup at $3.98. As you recall, I owned this stock earlier in the year, and did quite well with it. I suspect that this name is going to make a huge move after the government sells all of it's shares. We'll see.

What I'm Trading Monday September 20th, 2010

2010-09-19T17:03:00.000-07:00

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I think it is time to take some action with my portfolio. Tomorrow, I will be selling all of my shares in FXP, as well as NLY. FXP is down 22.12% year-to-date, and I suspect the shorts are going to have some fun with this one as the market trends up. NLY is up 4.04% year-to-date, and I believe it is time to invest in something a bit more aggressive. I am putting in orders to sell at $33.85 and $17.92, respectively.

In their place I am going to buy three $45/$55 January 2012 CALL spreads in DuPont (DD). I am putting in an order for $3.13 for this trade.

The second trade I am going to make is to buy two $75/$85 January 2011 CALL spreads in Whirlpool (WHR). I am putting in an order for $4.78 for this trade.

We'll see how I do in the time ahead. In the meantime, I will be writing more this week about some of the names I have recently mentioned in this blog. Stay tuned, and don't forget to subscribe! Go Colts!

Good Week For My Portfolio, Overall Market

2010-09-18T13:32:00.000-07:00

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The Wilshire 5000 closed at 11,811.39, up from 11,698.90, or .96%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,602.84, or 1.80% below today's close.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1%. This is in comparison to a reading of 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1% on September 7th. Sentiment continues to turn higher since our low of 29.4% BULLS back on August 31st. The 4-week moving average of BULLISH sentiment still sits at a low for the year of 33.2%. I see these as bullish signs.

The Volatility Index closed Friday at 22.01, up from 21.21 back on September 14th.

Now for the portfolio...
1) Verizon at $31.68, up 3.68% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.96/share, worth $55.72 to this portfolio currently.

2) AT&T closed at $27.57, up 5.07% for the year, inclusive of dividends.

3) GE closed at $16.29, up by 8.30% for the year, inclusive of dividends.

4) TBT, the doubleshort U.S. Treasury ETF closed at $33.80, down by 22.58% since my buy.

5) FXP, the doubleshort China ETF, closed at $33.86, down by 22.12% since my buy, and after a 1:5 reverse split.

6) December 18, 2010 SPY $102 Calls closed at $12.45, down 3.49% since I purchased them a few weeks back.

7) NLY closed at $17.92, up by 4.04% since my buy, inclusive of a reinvested dividends

8) AAPL closed at $275.37 up by 42.13% since my buy.

9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.

10) GS closed at $150.98, up by 10.93% since my buy.

Overall, the portfolio is up by 3.80% (7.57% for the DOW Dogs), versus 2.73% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 4.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.07% outperform.

More later.

Short Squeeze Screen Produces Good Results!

2010-09-16T17:21:00.000-07:00

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As you all know I have been beating the drum that the stock market is going higher for a while. A rising tide lifts all boats (allegedly), so I always want the fastest boat. That was the point for my experimental stock screen to find short squeeze opportunities which I posted here earlier this week. Let's check in on the results:

Cabela's Incorporated (CAB), Retail (Specialty)
   9/10/10 Close - $16.72
   9/16/10 Close - $17.29
   Four Day Return - 3.41%

Children's Place Retail Stores, Inc. (PLCE), Retail (Apparel)
   9/10/10 Close - $47.71
   9/16/10 Close - $48.21
   Four Day Return - 1.05%

True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
   9/10/10 Close - $19.07
   9/16/10 Close - $19.63
   Four Day Return - 2.94%

The average return for these three stocks is 2.47%. Compare that to a return of 1.36% for the same time period for the S&P 500. After Monday's close I posted here that the three picks were up 3.84%, and had I been trading them I probably would have taken profits using short dated options.

Well, today I decided to see if I could find any more of such opportunities. I have modified my stock screen criteria to be as follows:

1) Asset Class > Small Cap. This includes all asset classes larger than small cap, it just excludes the micro caps.

2) Price Performance vs. S&P 500 Last 4 Weeks = -20% to 0%. The market has been going up the last few weeks, and I want laggards.

3) Component of NYSE. This ensures these are legitimately traded companies, and should provide some liquidity assurance.

4) Beta > S&P 500 volatility. Detailed in my post from Monday morning.

5) Price/Cash Flow Ratio < 10x. Also detailed in my post from Monday morning.

6) Short Interest as Percent of Float > 20%. Also detailed in my post from Monday morning.

The results:
1) Barnes & Noble (BKS), $15.90, Retail/Specialty
2) Boyd Gaming Corporation (BYD), $7.19, Casinos & Gaming
3) GameStop (GME), $18.59, Retail/Technology
4) Genco Shipping & Trading Limited (GNK), $16.15, Water Transportation
5) Life Time Fitness (LTM), $37.51, Recreational Activities

Over the next few days I am going to watch these names and see how they do. If they perform well, that is, better than the market, this might be a strategy that I begin to employ. We'll see.

Why Do You Blog?

2010-09-16T16:44:00.000-07:00

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This is a paid post.

I am writing this post to tell you why I blog. I needed a creative outlet where I could share my investing thoughts and experiences. While my long-term goal is to open my own hedge fund, and run money, that is not happening anytime soon. This is the next best thing.

Ironically, shortly after beginning this blog, it came to my attention that you can get paid to blog. This was a new revelation for me. There are many ways to make money blogging, some of them I use, some of them I don’t. Among them are Google AdSense, Adwords, private advertisers, or blog advertising. While my blog covers popular topics, I have found it a chore to get the word out about this page, and to use specific keywords so my blog would get noticed. (Called SEO. If you don’t know what that is, check here)

So far, the best means to make money blogging that I have found is the Blog Advertising Store. It’s easy to sign up (it took me less than a day), and they feed you opportunities for paid posts (like this one) regularly. When you’re done, you post the link to their website, and they send funds to your PayPal. It’s pretty easy. They also have a blog, check it out here.

I write this blog because I love finance, and the world of investing. The fact that blogs can make money is a bonus. If you are reading this blog, and you currently write one of your own, I encourage you to post your experiences in the “comments” section of this page for all to share.