Thursday, October 2, 2008

Review of 3rd Quarter 2008 Sales

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There continues to be carnage everywhere and there are simply no sustainable rallies on the long side. I wanted to look back at the stocks we completely sold out of in the 3rd quarter 2008; I eliminated many positions as I wanted to get protected especially in August and September. All in all, 61 positions were eliminated. Of these 61, only 3 are higher today than they were when I sold them - some of which I sold last week and are already down an additional 40%. That's a 5% win percentage over the past 90 days from stocks I sold - the market was only down 10% at the same time. Put another way - holding any stock in the portfolio generated a 95% chance of losing. This is quite amazing action aka a horror show. When stocks with PE ratios of 5 can lose 35%, there is simply no way to make a consistent dollar in this market which I've repeated weekly but need to listen to my own advice. As bad as I feel about performance the past 4 months, I realize now if I held almost anything I'd of been demolished so at least some of this was mitigated by high cash levels, and some short exposure.

The lesson from the data below is "It is never too late to sell"

Truly nowhere to run, nowhere to hide



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