Friday, November 21, 2008

Yee Haw!!! - Riding the Wall Street Bull

For a day anyway.

Got beat yesterday. With the Dow dropping 440 points to near 7,500, my *spread* went against me.

I am essentially long oil and oil stocks which got hammered. I am also short long term Treasuries through TBT. Both of those positions killed me.

Against that I have my massive short position in Wells Fargo. With Citigroup dropping like a stone, Bank of America threatening single digits, and JP Morgan falling off a cliff, Wells Fargo dropped a mere 1.87 yesterday. If it traded in line with the other banks, down 3-4 points, I'd have fared okay.

Instead, I lost a good chunk of money Wednesday and Thursday.

Luckily, today I made it back.

The Dow rallied 500 points in the final 90 minutes to close at 8,046.

Here's what I've been doing since Tuesday:

With the market tanking, I went *bargain* hunting.

I bought Simon Property Group, yeah the mall REIT I've been short most of the year, at 41.86. Sold it yesterday at 43.65. Today it traded as low as 33.79. That stock was $100 two months ago!

I added to TBT, my long term Treasury short ETF. Was a horrible purchase. Bought at 57.74. This thing dropped below 50 the next day! Remember, this is a long term disinvestment. Who's going to keep buying 30 year Treasuries yielding 3.7% going forward? Can't wait to see the international reaction to our *Federal tax receipts* come the new year.

I got long the XAU synthetically at 77.00. In this *baby with the bathwater* selloff it fell to 67.48 yesterday. This morning it opened up 6 or 7 points. I dumped my position at the equivalent of 76.70 in the index. And, what do ya know, it ran up another 10 points. The index closed up 18.72 today to finish at 88.80. [Gold, the physical commodity, rallied 54 bucks today to close at $799 an ounce.]

I bought a smidge of FSLR at 104.57. Was trying to buy a little *alpha*. It didn't work.

On Thursday, just about the only good thing I did was sell my NASDAQ-100 position, the QQQQ at 27.22. It closed yesterday, at the multi-year low of 25.56.

Then today, I bought it back at 25.46 and sold it at 3:51pm - after the big rally, at 26.42.

Now as for Wells Fargo....did I pick the wrong bank to short or what?

It was down 4.5 points the past two days. Meanwhile, JPM dropped 9 points between Wed and Thur, AND was down another 3.5 points today.

Furthermore, Bank of America fell 25% over Wed and Thur. AND Citigroup positively imploded falling from 8.66 on Tuesday afternoon to close at 3.77 today - a loss of 57%!!!

For kicks, I bought 1,000 shares of Citigroup at 6.28 on Wednesday. I figured, what's the worst that could happen? I could lose $2,000-$3,000.

So here I am, two days later down $2,500!!!

It's a real test of fortitude not to buy a *chunk* more and try to scalp it. So far I have resisted.

Make no mistake...this is scary. If depositors start lining up to take their money out of Citi who knows what that will do to our fiat ponzi scheme. This keeps me up at night - AND I don't even own anything; no home; no mutual funds. Ignorance is bliss!

Another from the *alpha seeking* file was STP - Suntech Power Holdings - a Chinese Solar Company (who cares what it is really?). I bought some at 5.80 on Thursday. I was actually reading an *old* Forbes magazine and I read Jim Oberweis' recommendation to buy it. In the October 27th issue, he said to buy it AT $35 PER SHARE!!!!

In his defense, he wrote the column on October 2nd. So that 83% he lost his readers actually occurred over 1.5 months. So he's vindicated, right?

Oh yeah. In that same issue Ken Fisher said to buy Bank of America at $34. What a total bleepin' idiot!!! BAC flirted with single digits today (down to 10.01) before closing at 11.47. The sheeple have given this man, what, something like $46 billion to *manage*?

Also, Ken Fisher said to buy Citigroup at $25 in March. Listening to this guy would have absolutely killed you!!!

I covered my tiny BAC short at 13.84 the other day. It was tiny because it was hard to implement with all the *rule changing* (i.e. short banning) in September. I was short from 30.50.

I added to my erstwhile, flailing oil long, DXO. My average price is now 4.18. Funny Circus Bears was absolutely right when he claimed, 11 days ago, that I was a "little early".

However, I left myself plenty of room to average down. Still have more bullets if needed.

As for being early....I was early on SKF too. Early getting in, and waaaay too early getting out. That thing traded above $300 today. Of all the bunker-digging, end-of-the-worlders that I read, NO ONE, I mean NO ONE had a $300 target on the SKF. $200 or $250 are the high numbers I recall.

I almost forgot. I covered two-thirds of my Wells Fargo short today. I sold my January 22.5 puts for an average price of 4.91. Bought em at 1.55 in July.

And I covered my short stock position in WFC at $21.75. My cost bases I'd have to dig up - though the profits on this were far from spectacular. If memory serves me, I started putting some of this short on at 23.95 back in July and then some more around $27.00. Recall this stock spiked to the insane level of $44 in September. Of all my trading losses over the years, that *paper loss* was the most brutal. So it was a victory just get the money back.

This stock is definitely heading lower. I just needed to lighten up on it given my presumption that the overall market is due for a bounce. Of course I could buy the *market* against it - as I've been leaning that way on a short term basis, BUT I'd rather just clean up my account. I still own Jan 30 and April 30 puts on Wells.

The stuff I have now - oil and short Treasuries - are *investments* as much as they are trades. I'm comfortable holding them 6 months to a year.

One last *alpha seeker* I bought Google at $253.95. Dumping my long term holding near $450 has proven prescient, to put it mildly.

1 comment:

Funny Circus Bears said...

Last year I set a buy price of 250 for goog but I still could not get myself to pull the trigger on it. You will most likely do well and I may have missed an opportunity.

I am not as pessimistic about WFC as you and have been waiting for a sub $20 long entry but didn't buy yesterday.

Obama's massive jobs plan announced this morning and some sort of resolution on C could have quite a dramatic effect on the market Monday.