Wednesday, September 10, 2008

Bookkeeping: Closing 5 More Small Positions

I am continuing to sell out positions until this market begins to become rational again. What I am finding is being in this market is causing more pain on the downside then gain on the upside. Or put another way, the bounces do not make up for the losses on the down day. So we just give up profits week after week. That's a bear market. Without the ability to short individual names we have a major handicap in this market. The short ETFs simply do not capture the type of gains one can make in individual names. I simply don't have the ability to make consistent money in this market from the long side, so it makes no sense to continue having a lot of exposure.

Since the global growth names are so beaten down, we'll see if we can get a bit of a bounce and then begin to layer out of those as well. This market is just destroying capital.

This continues what we did Friday, Monday, and Tuesday

#1 Apple (AAPL) - everyone knows the name, I think the Mac story is great but fundamentals don't matter and until they do, there is no reason to own it. We've owned this name since day 1 in August 2007, and somehow managed a measly $400 gain - mostly due to a large position going into earnings in January 2008 that decimated us. We're selling the last 0.1% stake today. The stock can bounce to the mid $160s from here, but that is only 9% higher and with a 0.1% stake it won't matter. Frankly, it is a short if it bounces to the mid $160s based on the chart (not that I can do it)

#2 Research in Motion (RIMM) - see Apple. It's the identical chart and identical set up. It can bounce up to mid $110s but is then a short around $116. That's what the chart says. It's broken technically. We started this position in November 2007 and walk away with a $4800 loss. This is the last 0.1% stake.

#3 China Medical (CMED) - after making a valiant stand the chart is beginning to look ominous and once more frankly is a short, not a long using technicals. We started this in August 2008 and lost a quick $5700 as the company announced a convertible and just killed us. Out goes the remaining 0.1% stake.

#4 Energy Conversion Devices (ENER) - this is one of our solar names and we actually made money on it, but we're selling the last 0.6% in today's rebound. We bought this in July 2008 and despite giving back a lot of gains in the past week are up $3300. I like this name, but not this chart. This can bounce to the mid $60s or so, so we're giving up some upside potentially but at this point I am not going to bother.

#5 Cummins Engine (CMI) - this is our 2nd go around with Cummins Engine which is simply an excellent company kicking doors down and taking names globally. But no one cares and it's considered "global growth" so hence it is not nearly as good as buying nearly bankrupt US financials. This is our 2nd time in the name and we restarted it in April 2008 - the way is set up I only have a cummulate gain/loss, so I cannot break out easily the lots just from April forward without spending a lot of time on it - we made some good money on this one since it jumped immediately after we bought it and we locked in a lot of the gains, but I don't know how much. This was a 0.2% stake. Once again this stock should rebound to about $60 and then frankly it's a short.

As I'm pointing out in the prose above, we have broken chart after broken chart across this market. Many are now oversold to the downside, and will bounce. But when they do - they are shorts - not longs. Without the ability to short these names individually, all I can do is run to cash in the account. So we are coming to a sword fight without a sword.

The market remains very dangerous to me, and acting horribly. The largest socialization act in history, and we get a 1 day rally. Pathetic. Complacency runs high and I could see a very large swoosh down - again.

No positions

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