HarryCarysGhost (99.77)

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A simple plan

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March 22, 2011 – Comments (9) | RELATED TICKERS: EXK , GPL , SLW

Hi Everybody,

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

9 Comments – Post Your Own

#1) On March 22, 2011 at 11:27 PM, dragonLZ (99.34) wrote:

Being focused on long term, you don't think you made a mistake selling Alcoa, BofA, Citi, and Ford? I find it interesting.

Good luck with your 5-phase plan. Sounds like a good idea.

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#2) On March 22, 2011 at 11:46 PM, checklist34 (99.79) wrote:

I love the concept of this post, reflecting on past performances and how one went wrong. Its sometimes an important part of life to look back and gloat, reflect on victories, and just feel good about them and dwell on your success... but its more important to think about mistakes.

My 2010 was also extremely mixed. I started out, like you, sticking to my plan of selling out of most of the things I bought in Jan, Feb, March, and April 2009 when they cleared a year so as to move to cpaital gains tax. And for the most part I did. I sold ASH, most of my GNW, much BZ, much TCK, some AA, most of my USG, etc etc etc.

I kept all of my cno, hig, xl, dow, and the majority of my BDC shares.

I made a bet documented here last February or March that big divi paying stocks wouldn't drastically decline (T, VZ, MO, LLY, PFE), selling puts and buying long term just-in-the-money calls.

And then, ... the market kept marching up in April and I got impatient with my cash hoarde and pissed that I was missing out on returns and ... bought large stakes in OTE, NBG, and IRE, and a mini stake in AIB.

When the big correction came last summer I was hit hard. I took a huge 25%+ drawdown due to the fact that, for a while, those bets on big divi-paying stocks went horridly awry, and my hig/xl/cno/and BDC shares (business development companies, not the ticker BDC, if such a ticker exists) took gigantic dumps.

I didn't sell anything last summer, and eventually I made a huge bet on TCK, and a big one on GOOG, largely via calls in both cases, and when the market rebounded I rebounded with it.

My huge, glaring mistake was that I wanted out of the market because I figured it was due for a dump, and I wasn't bullish at all, but I left my portfolio possessing a high beta anyway, and got absolutely hammered into the downdraft last summer.

My saving grace was that I didn't bail out and did eventually make a big bet into that correction.

I really want to improve my ability to avoid massive market downdrafts in the future, because frankly I think we are going to have another memorable one before this secular bear is over, and ...

its buying the next big dip that will define returns over the next 5 years, not screwing around for 1 or 2 or 5 percent here and there.

2010 was a mixed year, I wound up ahead by 30-odd percent, but it was extremely ungratifying and I was extremely dissapointed in my performance. Extremely.

And RJET pizzed me off all year. And is pizzing me off so far this year. In fact, that thing is always pizzing me off.

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#3) On March 23, 2011 at 12:01 AM, checklist34 (99.79) wrote:

in fact, I hated 2010. it felt like I got everything wrong all year.

and, for the most part, I did. I got everything wrong, and really just 4 things right:

-my bet that the extremely low yields on bonds would support big boring low beta divi stocks paid off huge

-my bet on TCK, GOOG paid off huge

-it was correct to raise cash into the march/april ramp. (it was just really, really wrong to blow that cash on PIIGS bank stocks IN APRIL, and then NOT take any profits when they hit their yearly highs and I was up 50% in 3 weeks. AAAAAAGHHHH. then ride them down 80% from their yearly highs before tax loss selling).

-shorting levered BEAR ETFs into last summers meelee was an extremely good idea

I failed at everythign else. I even failed on my good bets in some ways, selling 1/2 of my TCK calls when it hit the mid 40's for example. Selling my ASH for an average of just over 50 bucks, then watching it march straight to the mid 60s. Dumping much of my LVS in the 20s.

I failed left and I failed right. fail fail fail fail fail fail fail.

In fact, I failed so much that it shook my confidence. Even winding up a big winner for the year (30 odd % isn't bad) didn't erase the feeling of failing.

The market dished out EXACTLY what I had wanted: a huge dump to buy after I'd raise huge cash). And I failed to properly capitalize on it. It wasn't 40% that could have been made from last summers mess, it was 100%+. In reasonably low risk ways.

But in any case, this is a fundamental truth of the market, an extreme truth:

-you don't have to get them all right

-you don't even have to get half of them right

-if you get 40% of your big bets right you will be a big winner in this game

-the trick is to not make too big of a mistake. avoid the epic fail. Its ok to fail, just avoid the epic fail and you'll come out ok.

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#4) On March 23, 2011 at 12:07 AM, NOTvuffett (< 20) wrote:

Harry, I am stunned that those Chinese whores gave you the clap, lol.

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#5) On March 23, 2011 at 12:09 AM, checklist34 (99.79) wrote:

with respect to NOTvuffet's post...

I want to go on record as saying that I hate everybody who got to be 18-25 in the 60s, 70s, 80s. Screw you guys (think Eric Cartman voice here) Screw you very much.

They hadn't even invented most STDs in your day.

That is all

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#6) On March 23, 2011 at 12:23 AM, NOTvuffett (< 20) wrote:

lol

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#7) On March 23, 2011 at 1:00 AM, HarryCarysGhost (99.77) wrote:

Being focused on long term, you don't think you made a mistake selling Alcoa, BofA, Citi, and Ford? I find it interesting.

Dragon, not at all. Oddly enough I have a story for the reson why- :)

My first investment was Visa because of the IPO. That was April 08.

Next step was to buy Bud. Price kept on going up because buyout spec. Before I got the funds together the takeover went down.

Things were looking dicey at this time so I made a list of sectors not to invest in-

1. Financials

2. Automotive

3. Aerospace

4. Real Estate

5. Anything else

S@P 666 turned that into a buy list. (Have to admit that I was way early with Ge, but with DCA it worked out).

Never viewed those co's as ltbh. I can't stand big banks, not a fan of Alcoa management (have'nt looked at it in a few years) Maybe if F put out a divi I'd look at it again.

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#8) On March 23, 2011 at 1:21 AM, HarryCarysGhost (99.77) wrote: