Thursday, October 26, 2006

Recent portfolio actions

I haven't written much recently for two reasons. Fistly, I've partnered up with Frugal at Initially, I have been updating my series on asset allocation there. In the future most of my posts will be published at both sites. However, monthly portfolio updates will only appear here for now.

Certainly the biggest reason I haven't been writing was simple: I had little to say. The major indices have been going up like the "Energetic Bunny" which I confess completely befuddles me. To show that I'm not alone, I quote from Jeff Saut of Raymond James:

Amazingly, those nine sessions [7-19 (+212); 7-24 (+182); 7-28 (+119); 8-15 (+132); 8-16 (+97); 9-12 (+101); 9-26 (+93); 10-4 (+123); 10-12 (96)] accounted for 1155 of the Dow’s 1200-point gain from the July lows. Even more amazing is that on ALL of those nine trading days, according to our notes, showed that the aforementioned “mysterious” futures buyers were at work with the attendant arbs’ action. When we combine this “mysterious” equity action with the “mysterious” re-balancing of Goldman Sach’s (GS/$180.40) much institutionally indexed commodity index (GSCI), from a 7.3% gasoline weighting to 2.5% into the November elections, we find ourselves “mysteriously cautious.”
With observations like that, conspiracy theories are flying like mosquitos on a summer night. I'm not that naive to think such is beyond the powers that be. Be as it may, I have never based my investment decisions on manipulation theories for the simple reason that they allow me to transfer accountability to the nebulous "manipulators". I have kept some inverse funds which have cost me. For that I take full responsibility.

Yesterday, I closed out my shorts in BZH and LEND when they rallied on very negative exhisting home sales numbers. It turned out to be a good move as they continued to defy gravity in the face of even more disastrous new home sales numbers today. Well, what can I say. Any news is good news in a bull market. Since I put on the BZH shorts at $66.59 and $43.825, and LEND at $34.49 I turned a decent profit. Consequently, I also took the oppotunity to exit the double inverse funds to offset the gains.

I'm still as bearish on the economy as ever. The September real PCE will likely show acceleration on the down side since both the retail sales showed an outright decline, and the durable sale ex-transportation was only up 0.1% in nominal terms. In the past week I have picked up some PDS and PWI, both Canadian oil/gas income trusts. I remain fully committed in PMs. Other than natural resources and select foreign stocks I can't imagine buying anything now. I don't know how long this insanity will last but for now I'll stand aside and watch the lemmings run up the hill.