Personal
Portfolio
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A month dedicated to Bulimia
Nervosa
Binged: GE,
MAS, C, RF, AIG
Purged: AEPGX, FECAX, FCPGX, PSPFX, ARTIX , FSESX
Panic selling into a downward spiral is a losing proposition.
Selling
losing funds into an up tick, having a bit of patience and then buying
bargain basement stocks on a down tick can yield some interesting
results.
Call it a sideways move with emphasis on the negative for the long term
positive. Will this have been a prudent path?
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Hindsight into Foresight
Broad
diversification over a wide spectrum of mutual funds has not been
working real well during the last twelve months, unless of course you
like staring at the color red.
Hindsight is good for something
if a repeat opportunity presents itself. I've spent the last nine
months looking at financial stocks and thinking back to the bottoming
process after the Dot.Com bust in early 2000. Financials appeared to be
ripe for the picking and a way to
stop the general bleeding that has been going on since late last year.
The
problem was how to determine which banks were going to go under next,
which banks would be too big to let fail and which banks appeared to be
doing relatively well, all things considered. If a bank
failed
and its assets were picked up on a Monday by another bank, I considered
that bank a prime candidate for purchase.
How to
finance these buys....
I
was heavily weighted in commodities and international funds.
The
commodity bubble appeared to be bursting earlier than I thought so I
started selling the commodity fund into market rallys. I am now out of
commodities.
Mutual funds with an emphasis on Europe were prime
candidates as well. These funds were outstanding performers the last
couple years. Interest rates there have been too high too
long
and Europe's economy is beginning to suffer. These funds were sold into
market
rallies as well. I am now officially totally out of Europe
and international exposure has been reduced to less than 10%.
The
incredible market gyrations provided numerous opportunities to buy
quality stocks at what I view as rock bottom prices, prices I may not
see again in my lifetime, especially with respect to Financials.
As
of this writing, congress failed to get the votes for the bail out
package and the market cratered @ 700 points, which provided the ideal
time to put the rest of the cash to work. There doubtlessly will be
more opportunities before this is behind us.
Here is my
list of stocks worth considering:
Buy on
Weakness as a hold: Bank of America (BAC), Citigroup (C),
Regions Financial (RF),GE (GE), Masco (MAS)
Buy on
weakness as speculation: Ambac Financial (ABK), MBIA
(MBI), ETFC (ETRADE Financial), AIG (AIG).
Spilt Milk:
Washington Mutual (WM) - I am now the proud owner
of 1k bankrupt shares valued somewhere @ .16 cents apiece.
Other:
Silicon Imaging (SIMG) - Worth it I think, at these prices.
Wireless Ronin (RNIN) - maybe.
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Thanks
to the large gains in the Financials and a little trading, losses
currently sit at around 12% which is considerably better than the
market as a whole. It has however skewed the investment
allocations in ways I am unaccustomed to. The 5% rule in any one stock
I think is going to have to be waived until we see some kind of
normality.
The
mutual funds have been moving inversely to individual stocks, which
means the stocks are in some cases rapidly moving past that 5%
recommended allocation. Selling to maintain that recommended percentage
means buying what.....
The best course of action it seems to
me is to do nothing for a while and let everything sort itself out. It
may be some time well into next year before we see some kind of
normality.
In the mean time, all dividends are set to reinvest
and perhaps there will be some more great deals at the time the
dividends are issued as stock.
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Anything else?
How about a 5% stake in Ginny Mae's. Seemed like a good idea
to me.
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There is no
bias in the media in preference for presidential candidates, right?
I have been residing in a motel for the last week that has extremely
limited TV coverage of anything financial.
CNN
is the only channel available and what a bunch of garbage. Their
juvenile coverage of just about everything of importance is enough to
make one gag.
Anyway, CNN on their early morning show has this
changing montage of images as a backstop for their intellectually
challenged reporters and reporterettes.
A reporterette was
spewing her fourth grade level tripe (not meaning to denigrate 4th
graders) at a so-called financial expert who was displayed in the
montage in a small panel on the lower left corner. You could
hardly see the guy.
In the center of the montage at the top in a
large panel were colorful images of a dynamic Obama moving, gesturing,
speechifying and appearing very vivid and dramatic - a man on the
move.....a man of action.
On the lower right side
of the montage was a smaller panel which showed stills of McCain in
repose, contemplative.....reflective perhaps. These images were
subdued, a couple were in black and white. The effect was one of
looking at photos in a history book.
No bias,
right?
What
a choice this election year - a socialist liberal trying to pass
himself off as a Kennedy, and a progressive liberal trying to pass
himself off as conservative.
To add insult to injury, neither of these candidates know anything
about finance.
What to vote for....100% symbolism or 50% substance.
I can hardly wait. |
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