Wednesday, May 20, 2009


I made a grand 1.2% yesterday. Woo hoo! No. Yesterday was a complete waste of time for me. I should have just taken a nap.

Anyway, my allocation is 48% long (ANPI, AXL, BLTI, CTIC, LEA), 10% short (QID), and 42% in cash. For those that think the dollar stock circus packed up it's shit and left town, you are mistaken. I will be buying more stocks today.

The market (SPX) is simply consolidating, churning in a large 50 pt range. It is possible that the market may be forming a triangle as seen on the 2-month chart. Who knows? Most of my dollar stocks don't move with the general market anyway. They have minds of their own.

My strategy is very simple. It is to buy $1-3 stocks that present great opportunities while hedging my portfolio with one short unit. The dollar stocks should breakout on an up day, and even though the short will decline, the portfolio should be net positive. If the market goes down, the dollar stocks should not get hit as hard as the general market, and the short obviously will give me a buffer against loss.

If there is a loss, and the chart gets fucked up on the daily, then cut your losses immediately. I've taken many losses during this circus, but the thing that separates me from most traders is that I keep the positions small and I do not hesitate when I need to sell. Take your losses and move on. Similarly, take your gains and move on. Stop fucking around wasting valuable working capital.

Since the COMP is churning at the 200-day, I cannot and do not expect the market to steam roll higher day after day. You have to expect some down days (duh). You must already prepare for them, otherwise, you will panic. In addition, oil is showing a high-and-tight bull flag, which is a characteristic of an imminent breakout. If oil heads higher, then the market goes higher.

I urge everyone to not commit to one side, but have a hedge as an insurance policy. If you notice, I am regularly X% long/X% short. While it may be your goal to make as much money as possible, my primary goal is to preserve my triple-digit gains.

Wait, actually, my goal is to make as much money as possible. Sorry for the confusion.

No comments: