Tuesday, June 2, 2009


Huron Blackheart, Tyrant of Badab, Chapter Master of the Astral Claws, Servant of Warmaster Horus

Well, if you saw ADLS and CTIC, then you know that I had a small down day yesterday. I got into ADLS at $1.14 on 5/29, and for some reason, I sold only half my position yesterday at $0.85. The other half? I still have it. Ridiculous right? Well, I will sell the remainder today.

ADLS was a 5% position. I took a -25% hit on the first half, and I'm holding the other half, a -62% loser, which makes up 2.5% of the port. Not bad. Then BZ came and saved the day, cancelling out CTIC's losses. It could have been a disaster, but I was never in any danger.

This is the most simple lesson in position sizing that I can give you. It will save you from utter destruction. If you had a much larger position, then you aren't having a really good day right now. Taking losses is ok, but only when they are contained.

My holdings are cash (52%), ADLS, CTIC, ACAD, TGB, MRGE, BZ, PLLL, AXL, and OCNF. You guessed it, they all make up approx. 5% each. Within minutes, I went from being 100% long to 48% long and cut a lot of positions simply to raise cash. It was a necessary emergency defensive measure I had to take. My goal is to preserve my gains, so after this ADLS incident, my risk tolerance for biotech went way, way down.

But hey, I'm still up +10% for June!

I wanted to bring up ADLS specifically because this is the first time I lost so much on one stock in a single day (by percentage) in the biotech sector. For this reason, I will be making the following changes immediately:
  • Focus on higher priced stocks with a limit of $20, instead of $3.
  • Cut the biotechs and get into other sectors.
I respect the market and listen to what she tries to tell me. ADLS was a warning against buying so many lotto tickets and I will heed it. That's how I roll.

In addition, I will post charts of potential breakouts on the blog from now on until I get tired of doing it. I'll give them to you, but it is your responsibility to make good judgment calls on them. You can thank me later. These are only setups which must be confirmed intra-day. Don't buy shit indiscriminately just because I post a chart.

Finally, I want to say that I am really proud of everyone that contributes on my blog. Your picks and ideas are golden. Everyone's making money here (or should be, if not, shame on you), and that's a really great thing. I can honestly say that I am making money from some of your picks, so keep it up and thank you for your contributions. You all know who you are.

4:30AM EST - I only got through A to C stocks because it's 4:30AM and I didn't get any sleep yet. These are only setups. Trade accordingly.

1 comment:

mikeinalona said...

When I first started reading your blog late last year charts only told me where stocks had been and where they were now. Now I can look at the charts you provide and see the potential in where the stocks will go. Hopefully I will be able to contribute potential breakouts in time. Thanks for the education.