Wednesday, November 08, 2006

Portfolio October 2006

This is a belated summary due to my vacation last week. The portfolio fared much better last month compared with September, gaining 3-4% in both the actively managed and asset allocation accounts. On the other hand, the general market performed very well also, so my accounts really only kept pace. At the end of last month, the cumulative returns from Jan. 11 were 13.15% for the AM accounts, 8.14% for the AA accounts, and 11.06% combined.

Mea culpa
I finally closed out my double short ProFunds. It was a capitulation of sorts. I’m as bearish on the economy as ever, but in trying to imposing my view on the market I maintained my hedging positions for way too long. I remain short in home builders and mortgage lenders. I’m also staying with BEARX that has a gold component. Other than that, it will take several high volume distribution days and a cleat break of uptrend lines for me to short the general indices again.

echanical trading
In addition to the asset allocation and active managed accounts I’m considering trying my hand at purely mechanical trading. To start with, I’m a big fan of diversification, in terms of asset classes as well as investment approaches. More importantly, recent experience exposed several weaknesses in my trading/investing: overly emotional, not strict with taking losses, and failure to keep abreast all sectors of the market. A more rule-based trading methodology should remedy some of that. I will write about more of that adventure as definite actions take place.

Major portfolio transactions
10/3 Sold SU (100 sh @ $68.21, +4.9%)
10/3 Sold SPYVU (20 contracts @ $0.05, -96%)
10/3 Bought CEF (800 sh @ $8.10)
10/16 Bought PDS (200 sh @ $28.30)
10/17 Bought PWI (300 sh @ $25.28)
10/25 Covered BZH (400 sh @ $43.58, +26.5%)
10/25 Covered LEND (200 sh @ $ 31.24, +10.1%)
10/26 Sold USPIX, UCPIX ( ~-15%)
10/27 Short BZH (200 sh @ $43.79)
10/27 Short CTX (200 sh @ $52.55)
10/30 Short NEW (200 sh @ $38.95)