Schmacko (96.99)

Hedging and building cash

July 07, 2008 – Comments (1) | RELATED TICKERS: GLD , SSG , WWE

Recently decided to add some hedge positions to both my caps and RL portfolio.  I dumped my gold miner stock and started a small position in the GLD ETF with some of the generated cash.  Reasoning being the big motivator behind the miners ups and down was generally the price of gold so I figured why not go with the straight gold play.  Figure gold prices might drop some more though before going higher so I'll wait a little before picking up some more.  I tought briefly about SLV instead but I think silver is for people more enthousastic about precious metal than I am.  Plus GLD has a more negative beta, which is what I'm looking for.

Also started positions in two ultra-short ETFs... why did I not do that months ago?  I don't short in RL.  I'm not knocking it as a viable way to make money, it's just not something I do.  I think the potential of unlimited losses would haunt my dreams, plus I get skittish just red thumbing things in CAPs and there's no money involved in that.  I seem to like closing red thumb positions in the red instead of waiting two more weeks for them to be deep in the green... cause I'm dumb.  Anyway going long in a fund that lets people who are more smarter (and more braver) than me at shorting is something I can wrap my head around and still sleep easily about.  It's shorting for people who don't short.  And you can target specific sectors, bonus!

Other than that I've just sold off a few positions so that I can focus more on my core holdings and while I'm still transfering new money into the account I'm letting it sit until I either see something that looks real attractive or the market calms down more.  I expect a short term rally to start soonish the catalyst will probably revolve around financials reporting their earnings.  However I expect the top of the rally to be lower than the las top followed by another plunge lowere... still there's moeny that can be made in those types of swings.

Also WWE is kind of a stealth defensive play.  I've owned the stock a while and it's generally pretty boring.  It spikes every once in a while toward $18-19 but generally falls back down pretty quick.  However they pay a nice dividend and it often runs counter to the market as well.

Also checking out updown.com to see how I would do if given a million dollars to piss away.