Tuesday, June 03, 2008

Portfolio May 2008

I booked another solid month as commodities, led by oil, had a tremendous run. The AM accounts gained 4.28%, or 7.93% YTD. The AA accounts gained 1.67%, or 0.32% YTD. Overall, the gain was 3.1% for the month and 4.43% YTD. With these results I have widened the lead over the benchmark indexes. I'm now beating the SPY by almost 8 percentage points. Among the equity index ETFs that I track, only EEM has a gain for the year -- a fact that lends some credence to the "decoupling" theory.

Looking ahead however, there are plenty of dark clouds on the horizon. The most ominous being the blazing, unsustainable run in oil. A fall from such lofty heights could be as spectacular as the move up. Not to mention the potential for oil to take the entire commodity complex down with it. On the other hand, I'm quite happy to stay with the energy, agricultural and base metal stocks that I have. As such, I wrote a number of covered calls on them in the past two days. I also used some of the proceeds to buy put options in XLB.

The portfolio mix hasn't changed much. One notable sell was GS which was before the big downgrade from Dick Bove. I'm still looking at GS and C for an entry point. Elsewhere, rebalancing of the AA accounts is almost completed. I did all the necessary selling which was the hard part. There are some changes in how I implement some allocation objectives which I'll write about once all is done.