Bookkeeping: Taking Some Profits in Coal

We just discussed the coal names yesterday [New Coal ETF (KOL) Introduced], and the stocks are up (I don't see any specific news) 3-4% across the board this morning in a tough tape, continuing a nice bounce off oversold levels from 5-6 days ago. While this bodes well for the sector (relative strength), I did add quite a bit of exposure from those oversold levels to raise some cash I am going to cut back a bit on this group among Massey Energy (MEE), Consol Energy (CNX) and Peabody Energy (BTU). These are sell offs of about $7000-$8000 each (less on Massey since its the smallest position).

Since my cash position is essentially nil, to buy one long position I need to sell down another. This is the rationale behind selling these names, which are up about 10% from where I added to the positions last week in the height of the selling pressure, so I am just downsizing back to the position size these names were a few weeks ago. More out of necessity due to lack of cash.

I also took a bit more Mosaic (MOS) off the table (about 15% of the position) as the stock put on yet another 10% move yesterday and (again) I need to sell down one long position to add another due to low cash positions. These sales were around $107 (I was buying this in the low $80s last Wednesday). The move has been quite extraordinary in a very short period of time in this name. Hopefully it pulls back and allows a better entry point.

All these sales go under the category of "sell when you can, not when you're forced to."

Unlike a real fund, where people would send fresh cash in, I only work with a fixed amount of money so I cannot rely on "fund inflows" from investors to make new buys. So I'll sell off some of the stronger positions and redeploy into other positions I like just as much, but the market is selling off. However, now that the S&P has broken 1400 yet again I am not to antsy to redeploy cash yet.

It continues to be a very tough market from the long side. It is very reminiscent to middle to late 2001 where we ground downward, interspersed with some hopeful rallies. Hopefully we don't have a repeat of 2002 ahead of us. That was a backbreaking year for many bulls.

Long all names in fund; long Mosaic in personal account