Bookkeeping: Weekly Changes to Fund Positions Year 2, Week 16

Year 2, Week 16 Major Position Changes

Fund positions of 1.0% or greater can be found each week in the right margin of the blog, under the label cloud and recent comments areas; I highlight weekly the larger position changes.

Being a long only fund, via Marketocracy rules, the only hedges to the downside I have are cash or buying short ETFs. I cannot short individual equities.

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash (2 positions [SHV/BIL] + cash): 37.0% (vs 44.1% last week)
36 long bias: 55.0% (vs 38.5% last week)
7 short bias: 8.0% (vs 17.4% last week)

45 positions (vs 41 last week)
Additions: Joy Global (JOYG), Baidu.com (BIDU), UltraShort iShares Lehman 20+ Treasury (TBT), Ultra Real Estate (URE)
Removals: N/A

Top 10 positions = 30.7% of fund (vs 32.2% last week)
23 of the 41 positions are at least 1% of the fund's overall holdings (56%)

Major changes and weekly thoughts
Technical note - we did not do a weekly update last week; after last week's technical glitches which ruined our historical performance data I was still in a state of disgust. I've had quite a few people email to ask to continue the portfolio summaries to see the fund positioning even if the tracking is now shot. So I'll continue to do that. With that said the above data compares to the data set 2 weeks ago, since we didn't update this last week.

As for the market, the casino continues - going back to paragraph one the inability to have stop losses in the Marketocracy.com account really sticks out like a sore thumb now when I watch this casino change directions by the hour, by the minute, etc. You need to have even a 10% trailing stop on these Ultrashort ETFs or you can suffer immense losses in a matter of 20 minutes. So even with the results I was putting up, this lack of a very common tool for any individual or institutional investor is a huge weight. That said, at least this time around I happened to be watching and was able to get out (with a 10 minute lag) of some of the Ultra short positions so we didn't get destroyed in that last hour Friday, although the efficiency of getting in and out of positions is poor in such a fast moving market.

Our current weightings look a lot more bullish than it really is - once the market began to turn, you know 2% rallies turn into 8% rallies in minutes nowadays so you have to lighten up short exposure immediately. That's how the casino works. Even better, now you only need to show up at the casino at 3 PM because the only hour that matters is 3 PM to 4 PM. And you don't need to know anything about stocks - just switch your allocation from long ETFs to short and roll the dice. 40% of all trading is now in ETFs up from 20%. It really is very pathetic what the stock market has turned into; as a stock picker I am horrified by it. Knowing what the government is going to announce, or CNBC is going to say is more important than knowing anything about individual companies - again, it's a joke and I am not being facetious or exaggerating. There is no advantage in learning about individual companies or discerning from one to another - it's all herd trading.

I'll continue to post this list every week until it changes - we need these conditions change to have any belief in this market other than for daytrading and rolling dice.

1. reduction in volatility
2. separation of "benign" sectors from "poor" sectors
3. separation of "solid" companies from not so solid within a sector
4. the end of "student body left" (sell everything!) and "student body right" (buy everything!) trading
5. the ability to invest in 98% of stocks with more than a 2-48 hour time frame
6. the emergence of any sort of sustained leadership
7. stocks that go up on bad news (bad news priced in) .... or at least stocks that respond to good news!
8. individual company metrics mean more than government announcements
9. a 20 second comment on CNBC doesn't move the stock market 5%

Technically, the market broke below 2002 lows (S&P 770) and we said it was important for the market to regain that level quickly if we are to have any near term hope. Obama is learning well from previous administrations on how best to affect the markets, with a 3 PM announcement on a Friday - and we got the Geithner rally. How real it is - who knows. The world is still the same with or without this announcement. But sentiment is all that really matters nowadays. I did expect the government to have this Citigroup bailout cleaned up by 7 PM tonight but it seems it's still in progress. So maybe the Monday morning "bailout" rally won't happen after all. But again, this whole line of thinking reflects all that is wrong with the market - bailouts and appointments mean more than anything the companies themselves are doing.

Technically, which is the only thing that appears to matter, eyes are on S&P 770 and S&P 840. S&P 770 is the level we broke, and retook Friday in the last hour. It was providing to be resistance all day Friday until the last hour announcement. Now it will be a temporary floor - depending on the market mood we'll see if it holds. If there is any sustained rally we'd look at S&P 840 as the near term ceiling. And we can't look past that because the market works on 10 minute increments now. And don't bother to show up until 3 pm...


Again, our allocation at this "moment" is different from our normal allocation of late - we cut back short exposure late Friday.

I'll update the specific transactions by tomorrow.