Tuesday, February 10, 2009

Bookkeeping: Adding to Lennar (LEN)

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Why am I buying Lennar (LEN)? No good reason - it's down 15% today. Which means sometime in the next few weeks it will be up 15% for no good reason. Trading market. Just making trades. Increasing the position from 0.3% of fund to 2.1%. in the $7.40 range. This name was $10 two sessions ago - for you keeping track at home that's a 26% loss in a day and a half based on... nothing. Just another week of HAL9000 trading making "beta" (returns) out of thin air. If it goes to $6 I'll load up more I suppose.

At some point people will get giddy as there is a $15,000 handout to any person who wants to buy a home coming in the stimulus 2.0. They'll run up housing stocks talking about bottoms in 6 months. We'll sell. At some point they will realize no bottom coming; they'll sell. We'll buy. Yawn. I don't even bother to use technical analysis on a company like this. Buy panic sells - guesswork where they bottom; sell euphoria - guesswork where it tops out. Rinse. Repeat.

We're back at S&P 840 so I have no conviction either way as the index is now back in the middle of its range (roughly 800 to 870). White noise area and I need to balance my book with some long positions in case the next direction is up. Took some profits on the ETF shorts (that were underwater). We're on a road to nowhere fast. And stuck here. After a miserable few days last week watching the market surge 5% while we were flat, today we're flat with the market down 3%. I seem to be perfectly hedged if nothing else. Ultimately I'd like to be a bear south of S&P 800 or a (ahem) bull north of S&P 880 but we're not getting the chance. We're stuck in nowhere land.

For any of us who trend trade or buy breakouts this past year and has been heartbreaking -- once the commodity trade died last summer. That whole style of investing has gone out the window. So now you buy dips, sell rips. And keep repeating. The problem is some of these dips have no bottom to them which is why I hate the style. But this is the only thing working.

The Casino bars anyone with more than a 7 day holding period.

Now we await the hype about the stimulus plan as a reason to talk about mustard seeds....

Long Lennar in fund and personal account

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