Rational Blog

I am taking money off the table in advance of the summer doldrums. The market has made an impressive move higher from the lows and may go higher still. I'm not worried about missing some upside here. Instead, I'll remove some of the more aggressive positions including my small cap ultra etf position (RRY). I sold that entire position today. In addition I liquidated my long oil etf (DIG). Oil prices should go higher for the summer driving season, but if stocks suffer so too will oil. Finally, I sold half positions of my IGM and SPY. Nothing to drastic, but I'm more comfortable with less exposure at the moment.

Comments: View Comments |  Wednesday April 29, 2009

Last Friday, I deployed 10% of my portfolio into the S&P 500 spider exchange traded fund. Today, I will be doing more buying. I'm encouraged by the reduced volatility that we have seen at the end of the week. In addition it would seem plausible that the market has already priced in a long and deep recession. I'm reducing my cash to about 30% with today's buying. Here is what I added to the portfolio today: Utility ETF (XLU), Semiconductor Fund (XSD), Preferred stock fund (PFF), Materials ETF (XLB), Oil Long ETF (DIG) and Global Infrastructure (IGF). I opened positions with $50,000 each. I also added $25,000 to the existing positions - IAT, IYK, ITB, IYT, IGM.

The model portfolio is down 1.5% at the moment. November has typically been a strong month. If so, I still have a chance to finish the year in positive territory. The election, no matter the winner, should be a good catalyst as it removes one big uncertainty.

Jamie Dlugosch
The Rational Investor

Comments: View Comments |  Friday October 31, 2008  |  Stocks: DIG, IGF, PFF, XLB, XLU, XSD,

Fasten your seat belts. The market looks like she is crashing today as futures traded limit down this morning. World markets are all down some 10% and the U.S. looks to follow suit. Where she stops is anyone's guess. I have 75% of my portfolio in cash and will use some of it today to buy. I want to see where the bottom is first. It may be early it may be late. If it is late I will buy near the close. What will I buy and how much will I buy? Good question. I'll probably treat this as a trading opportunity. As such I'll use 10-20% of my porftfolio and use to buy an exchange traded index fund of some sort. I'll report back after I make the trade.

Other housekeeping will include the liquidation of my remaining DUG position. Oil is nearing my target of $60 per share. OPEC cut production by 1.5 million barrels. It was not enough as oil is down some $4 in the early trade. I don't like the OPEC move and I feel fortunate that they did not go further in their cut. More is coming and my oil short could be manipulated by their actions. Best to lock in the huge gains and move on from there.

Jamie Dlugosch
The Rational Investor

Comments: View Comments |  Friday October 24, 2008  |  Stocks: DUG,

I sold one half of my position in the Oil Short Exchange Traded Fund ticker symbol DUG. With oil hitting my target of $80 per barrel earlier in the day I thought it would be prudent to sell some of this highly profitable position. As for the rest of the portfolio, keeping my powder dry has been a wise choice. The Rational Investor model portfolio is down less than 1% since the start of the year. That is huge outperformance as compared to the rest of the market. It may be time to start some buying. I'm alarmed that the market moved so quickly to the downside. It would have been preferable to see the losses over time as I believe the recession will be longer and deeper than most expect. This is not panic selling by the way. The market is moving Rationally on pricing given the profit expectations of the future. I'm just surpized at the quickness of the move. At times the market is efficient. I expect a strong bounce back rally, but I am not ready to deploy new capital at this time. I'll stay with 75% cash in the portfolio although that may change at any moment.

Jamie Dlugosch
The Rational Investor

Comments: View Comments |  Friday October 10, 2008

In a prior life I worked in the credit markets and I have a very good understanding of various debt structures that have ultimately resulted in the current credit crisis. Some of the most intelligent people I have ever met worked in this space. These people are not just bright they are geniuses. Of course that genius does not equate to riches as we are now finding out, but these people are very smart and much of what I do as a Rational Investor includes following the credit markets for clues on direction and such. Without rehashing we now know that the credit markets were in complete disarray last week. We were truly staring at the abyss. If so, the stock market apparently had no clue. Instead of Rational selling, the stock market stood there like a deer in headlights. Forget the problems and solutions thereof for a minute. You need to understand that there is a huge disconnect between stock and credit expectations over the future. Such a state is very disconcerting to me. Going further I cannot see how we avoid a recession given the expense of cleaning up the mess. That means future profits will be lower than currently expected. In addition we don't even know if this solution will even do the job. I am not one prone to panic, but I can see the writing on the wall. I do not foresee a crash in the market, but I do think valuations must go lower before we recover from this malaise. I'm raising cash immediately. With this post I am liquidating 100% of my financial services etf, alternative energy etf, and broker/dealer etf. I will also sell 50% of my construction etf, retail etf, regional bank etf, technology etf, and transportation etf. The game has changed in my opinion. As a result the timing for the next bull market will be delayed by at least 3 months and possibly more.

Jamie Dlugosch
The Rational Investor

Comments: View Comments |  Tuesday September 23, 2008