Thursday, September 30, 2010

Bookkeeping: Closing Out Three "Generals" Positions

I probably should explain this more often (perhaps every 6 months) since newer readers don't have the benefit of historical information but I often keep a 0.1% allocation in stocks I want to buy back in the future on a pullback.  The reason I don't sell completely is my watch lists are pretty big and I find that when I leave a stock completely out of the portfolio and only in my watch lists I don't want it as closely.   Therefore many times I have more positions than I am actually focusing on as 3,4,5 of them are simply 'holding positions' as I call them.   This often happens during big runs in the market as I liquidate stocks I was buying at lower prices into strength.

That said, we are now at the point with some of our stocks that the stocks have run so far, there is not any reasonable near term area I'd be interested in buying them back.  That does not mean they can't keep running and running and running since some of these names are now firmly in the hands of momentum traders and the moves won't stop.... until they do.  But certainly for someone looking for "growth at a reasonable price" and or like to trade around a core position, buying on backfills - the opportunities for me are sparse.

Hence, rather than doing my normal and holding onto these... with the prospect of no near term price I'd be interested in buying back... I am going to sell them out completely.  So while most mutual funds are engaged in 'window dressing' (buying stocks in the closing week of the quarter they did not own the entire quarter just so they can create a false impression to shareholders during quarter end statements on what they owned) I suppose I am engaging in anti-window dressing.  If you had no idea what my moves were the past 90 days, the statement on Sep 30, 2010 would show I did not own any of these names which have become the market darlings.

This morning I am closing (PCLN), (AMZN), and Netflix (NFLX).   All 3 positions were restarted in the portfolio in the summer doldrums and have had (obviously) amazing runs.  If someday in the future the market goes down (Bernanke permitting) and these stocks come in, I'll consider adding them again of course.

No positions


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