October 08, 2008
– Comments (7)
For months I was in the top 100 players on CAPS.
Now I am no longer in the top 300.
Worse yet, my bad luck here is mirrored in my real life portfolio.
It would seem you are not short. I caught this downdraft and am at 112. Similarly, IRL using SDS my portfolio is rising.
Gave you a rec for sharing your pain ;)
You're getting killed in a market panic. However, I think you mostly have the right idea - picking up bargains.
On thing you might want to do though is close out and re-pick some of your loser green thumb picks. For one thing, you can turn your 0% correct on them into 50% correct. Then you also can get the compounding effect in your points when the market turns back up. Do this with the stocks you picked that dropped 40% or more of their value. They are already deep underwater as incorrect picks, so you'll help your ranking a lot if they go from 0 for 1 to 1 for 2 on correctness.
I know many top fools have high CAPS scores because of a preponderence of red thumbs, but I have noticed a problem with red thumbs. Yes I have some. But the catch is that to get a positive score from them they have to perform worse than the S&P. Stocks that look bad are not the ones with the overinflated prices -- it is the well-thought-of stock that have been high flyers than really come crashing down. This makes picking them a very risky proposition.Thanks, Biotechmgr, for the rec.
One word = deleverage
Most of your green thumbs are popular stocks, that are getting deleveraged. CASH is king
EXM is pump and dump garbage. You should have known to get out that.
China is down 60%, commodity and oil rich Russia is down 50%, the US is an empire of consumers and debt, we are ONLY down 30-40%. We also have an incredible deficit and a fiat currency. Does this help?
AresFinancial: Thank you for your comments. I have added you to my favorites.
Hey there Noticed your Blog from JMvalue...on my list.I Read what you've Written.
I Agree with what's been mentioned above...Deleveraging.
Also ever heard of the BDI..?Baltic dry index..a good site for it is capitallinkshipping.com a free site theres others that charge or go to DRYS home page and check there.
1]Basically I am gonna suggest getting smaller...like 50% smaller.
2] Another suggestion is you have no Bonds..ok they've been killed Recently..but with the Yield @6-10% that will allow some Diversification..add in that with this bailout,as Mr Paulson mentioned today,coming in 2-3 weeks when they actually "BUY".Credit spreads will start to get back to more normalized basis...and thought they maynot outperform at times..will in " REAL World" offer a dividend with some Cap Appreciation..say 10-15% there.
3] As others have mentioned...Downside protection..!!!
SEF,SKF...financials...or buy " PUTS"..as theres so much volatility but as I mentioned above..soon the buying of DEBT/CDS will begin...and maybe that won't be necessary...
Also use SDS,RSW...and like 20 others.
Another suggestion...Long a stock in a Sector you like..Short one you Don't..or use that Sectors "ETF" long/Short to hedge that position
As I looked at your caps...it seems 80% or more " Outperform" vs S&P...in an up market sure mostly you " Might" Outperform but in a Down market your 80%....is going against you from the start too large percentage especially when your NOT Hedged to the downside,hedging that " RISK" allows you to maintain some assembalance of Sanity when/As the market slides and make Money as it does go down to apply at some point and cover.
I am not trying to put you down as I know as well as anyone the " Failure" on my part to cover my Butt to the downside..a problem with Caps is...hedging you have to wait 7 days to cover that postion..and it may go against you before you can get out.
But in Real world thats not a problem,mostly.
Also have you looked at Technical charts as to when to " BUY/SELL...and where the S&P/QQQQ markets are Relative to those.?and the Stock,ETF,..or " Sector".as I'm sure you Can tell " Sector" Rotation by hedge funds is a huge part of what works and what Doesn't.
on Cnbc a Chart guy showed where we might be VS past Recession type charts...basically were in the first third,going down,Though not all are the same as the Conditions,market forces of each are abit dissimilar as are/Were the savings rates,Home ownership percentages..Savings rate...FED Responses,Global banks responses..employment scenarios..Inventories..Hedge Funds and the Federal Rate..ETC...Also the FEDs keep changing the " Rules" on shorting..ETC...causing unforseen consequencesin many stocks/Sectors .
As mentioned last night by Jim cramer..like in the " bubble" years of Tech...it took a long time for Inventories to be worked off...Such as is the case again in that sector and many others.And the Borrowing costs of many companies is what's been affected recnetly,as I'm sure you know another reason for the Sell off...I am not saying to use..State bond funds.but rather Company/ones..as I believe as ,California ,mentioned last week..borrowing costs are Extremely high when they try to BUY/Sell those bonds...also the market is Very Nervous of..the Election...if obama wins..Higher taxes and Removal of Cap Gains/Dividends benefits...so How can the market.Me/You Value those Dividends vs the Higher TAX Rates that maybe be coming in a few months..so what looks like a Good Yield/Dividend now...in a few months may be cut in Halfor by whatever percentage obama's..people deem to be necessary...whew. thus slowing down investors in stocks for those dividends...even a high paying LLC/Pipe company paying 15%...may be reduced..forcing investors to a Choice
Growth and a chance of Captial appreciation of the Stock vs a Good Dividend/Company...
I hope that something here will help you along your path in Life.