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Wednesday, January 23, 2008

Speaking of Opposite Day

Posted by Mark at 3:40 PM TweetThis
As I wrote earlier in the month I slashed 2 long held positions (around 0.3% of portfolio at this time) since they were acting washed out. [Jan 9th - Ratcheting Back Ultrashort Real Estate Severely]

Ultrashort Financial (SKF)
Ultrashort Real Estate (SRS)

Despite the market carnage since, I think these only briefly hit (yesterday) levels seen since I cut back... especially SRS.

Now that we are in opposite mode....

The opposite of these two are
Ultra Financial (UYG)
Ultra Real Estate (URE)

Both up around 13-15% today.

Just fyi if you are interested in an easy way to play "easy money days are back again". I was considering adding UYG for the fund but was too busy staring into the abyss. I did mention this as a "trade" on the 13th of January

The stocks that did move this week were many times sectors I would not touch except for a very short term trade - hence not really in the style of this fund. For example, we are seeing some bottoming action in financials. I've scaled back my Ultrashort Financial (SKF) to almost nil due to this. In fact, for those with very short time frame (say 1-3 weeks), the exact opposite - Ultra Financial (UYG) might be a good trade - it closed Friday @ $36.51 - it would not surprise me to see something like this bounce 20% as we get an oversold bounce in this area. Same with some retail, homebuilder, and restaurant stocks.

Again it did dip in the worst of the carnage, but now is above those levels (in $37s) and if we get the long awaited change in character, confidence, and animal spirits this is one that should run very well. Again, for a trade. I do leave a small portion of the fund for such opportunites but prefer to focus on things that we can hold for the long term. But with these groups so oversold, and the government finally coming around to the 'bailout attitude' (free market capitalism and all), we could see something very nice here.

Long Ultrashort Financial, Ultrashort Real Estate in fund; long Ultra Financial in personal account

Posted by Mark at 3:40 PM Comments (6) | Edit This Post | Create A New Post

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6 comments:

Pankaj said...

Finally, we are there - short term bottom that is.

Cheers..

January 23, 2008 4:23 PM  
T-Rader said...

So how long do you ride this rally before flipping the long to short positions.

January 23, 2008 4:28 PM  
Zach said...

I think you have a good idea here - the names that have been beat up the most are likely to experience the swiftest rally - but watch out, they will probably not be the names to be in long-term.

Rising Tide Growth Fund looking pretty sharp!

Zach

January 23, 2008 5:01 PM  
TraderMark said...

Zach, its been a tough few weeks. :) I was better positioned in August - December for January then I was in January! Doh.

Pankaj - finally.

T - let's wait and see. The market does what most least expect. We were expecting the downturn to last shorter and less ferocious but it just kept going. Now I imagine many will expect a 2-3 days rally and than fizzle out. So maybe we'll get a surprise and it can go for a while. Or we could sell off tomorrow. No victory declared with a few hours. But a good intraday reversal. Which usually portends better things ahead. Also some talk WIlber Ross might buy one of the monoline insurers... good thing if true. (not sure why he would do it, but I don't ask those questions)

January 23, 2008 5:22 PM  
hieunguy said...

Mark, what you do in the next few days is interesting to watch. First of all let me say that, i enjoy reading your blog everyday. My comments sometime can be direct and sound critical, but by all means, i am here to express my opinions and it may worth less then a penny.
Looking back, i did mentioned to you tripple bottom rarely hold (i think my exact words is never hold)!!! you could reduce long, increase cash, maintain short exposure going into 1370 zone, but you adamently believe in the 1400- 1500 zone trade. Well, that cost you a lot. Now let look at the actions in the last 2 weeks. We break supports (multi years trend line) is today turn, the bottom for a another new high? or even a new trade zone, let call it 1300 to 1400? well, reread all the things you wrote, it all support a declining market (at least in the short term, until corporate profit can grow again) Well today 500 points turn around lead by what stocks: ABK, MBI, are you kidding me? what happend to aapl, Goog, POT, FWLT... they are at the brinks of go below 200days. Yes they will bounce (if this market has more then 2 days legs) but will i see new 52 weeks high in them in the next 3 months??? aka MON types in this kind of environment?? i don't know, it could but what is the chance??? well you ask me what is my top stock for the next 9 months. I am an individual investor, i am not a fund manager, i have the luxury of going all cash. I have been all cash since november (thanks to you. Your fundemental pieces convince me, this market is in big trouble, and combine with cisco earning tell me things is not the same.) I have no top stocks, until market show me higher high, higher low. I get no ideas. The top stocks will be the one holding up best in the next 9 months. In the mean time, index is the only reliable (less painful cuts)i can afford to take. Hey your solar valuation pieces is come true too. Look at FSLR 280 to 150 without a bounce. I can see that you hang on to BCSI for a while, so i know you have patient, but you have other winners to ride out the bad one, you won't have that luxury in the next few months if your top 5 holdings are not outperform the market. I guess that why focus fund is the way to go in the bull market but suffer the biggest loss in the down market. Your themes is good, there nothing wrong with it, and it will return, i still believe emerging market will rebound first. In the mean time, i just take a more conservative approach, more cash, more inverse ETF, less sectors exposures, until i can see which sector is doing good. I will start layer in the TWM, SRS, QID in the next fews days.

January 23, 2008 11:38 PM  
TraderMark said...

Fair enough. Obviously I have to be "invested" on the long side to a large degree no matter the circumstances for this fund. I do expect further downside as we go into the spring, and will be drawing down positions on long side and building back up the short exposure, hopefully on a decent rally. Since you are in cash for the next 10 months or so I will then have to compare MOS performance to cash, I will give you a 5% 1 year yield so MOS must do $74 * 5% to outperform.

I was a lot more bullish on solar a year ago then I am now. I think once the industry shakes out over next 3 years whomever is left surviving will have a wonderful market opportunity. I think it will be about 6-8 companies (down from 80+) who will be ultimate winners in this sector.

January 24, 2008 10:15 AM  

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