A simple plan
For the last couple of months I've been reflecting on 2010 and how I fared while investing, here are some of my thoughts.
Year started out great since I dumped all the stocks bought at the 08-09 lows. I saw dow at 11,000 and that seemed like a perfect time to get rid of anything that was not viewed as a longterm hold. Bye-Bye Alcoa, Bofa, Citi, Fannie, Freddie, Ford. Sorry to let you know in this way, but I was just using you for monetary gratification.
Next step was also a good move. Bought more of my long term loves V, BRK-B (I would add Bud, but I'm pretty sure it was over $40 and thats when I stopped buying). Had a horde of dry powder in case Mr. Market decided to go down like a chubby chick wearing a blue dress.
Heres where things turned south, found myself hanging three Chinese whores CCME, HEAT and NEP. Maybe I got cocky from my past sucesses, but this was a massive mistake and my portfolio has the cold sore to prove it. Those girls took me for a ride, luckily my sniffer picked up that not everything seemed right so the losses were mitigated. What can I say, fell for the allure of a sexy balance sheet.
Inuendo aside, heres the plan-
A wise man once told me- Keep it Simple Stupid.
So I go back to what has worked for me in the past.
Phase one- Pick a commodity that you deem undevalued. (Oil at $35 was a perfect example). Set a price where you would sell it all (In our example I picked $75). I've also done this with natty gas and am currently working on Silver trades.
Phase two- Decide how you wan't to invest in the sector. This takes some work If your desk is not completley clutterred with stock quotes and 10 8's and K's your not doing it right. But look at everything and whittle it down to two or three stocks or ETF"s.
Phase three- If a stock doubles and you can cover taxes and commisions immediatly sell half. All risk has been removed.
Phase four- ?
Phase five- PROFIT!
Okay I just love that joke so I could'nt resist, the real phase four is if said commodity hit's your target price go ahead and and take phase five. Let's say you called a bottom on silver at $17 and were expecting it to hit $50 stick with the plan even if it looks like it will go higher.
As always this is not investment advice. I'm just a regular dude with no formal training