Category Archives: Model Portfolio

Model Portfolio Update: Down But Not Out

It’s been a few weeks since my last Self Investors Model Portfolio update, but now that the IPO Community is up and running for the most part I’ll have more time to dedicate to the blog.  I haven’t been doing too much trading since the last update, choosing to remain in a large cash position while  cutting losses and locking in gains quickly on a few positions.  It’s just difficult to make any head way in this volatile market, so my strategy is to just chip away at the losses that my big cap holdings in Google, Cisco and Microsoft have handed me.  I’ve been relatively successful with the strategy of playing both sides of the market and have gained significant ground on the S&P in recent weeks with gains in AUY (17%), FCSX (9%), CYNO (14%), HCBK (8%), CLHB (9%), PWRD (8%), TOL (8%) and DHI (10%).  Not large gains, but you take ’em where you can get ’em in this environment.  For much of the year, I had been lagging the S&P by a few percentage points but have made up significant ground and am now outperforming the S&P by 3%.  The losses are still there and a bit of a hole to dig out of if I’m going to repeat my performance of last year, but I’ve remained patient for the right time to get more aggressive and am confident I’ll greatly outperform the S&P again this year.

I did get a bit more aggressive today and added a few long positions with the big pull back.  In fact, I added more long positions today than I have in several months.  I just like the way the market reacted to the Bear Stearns situation and managed to hold at the January lows.  We were overbought in the short term with the indices hitting some short term resistance, so today’s pull back wasn’t too surprising and the lack of severity in the volume indicated a good spot to dabble in a few longs.  If I’m wrong I’m out with small losses and riding my 2 short plays down.

I now offer buy and sell alerts in the Model Portfolio through Yahoo or MSN instant messenger.  If interested in tracking my trades in near real time along with the IPO, ETF and breakout stock tracking features, the Gold membership here might be right for you.  Your membership is greatly appreciated and helps to support the long hours of research and implementation of new features and products.  Thank you.

Existing members may upgrade their accounts here.
New members may create a new account here.

Model Portfolio Update: Big Tech Is Killing Me

It’s been one of the worst starts to a year ever for the market and it certainly caught me off guard a bit.  If I thought I could coast a bit for a couple weeks after a somewhat grueling 2007, I was sorely mistaken.  Admittedly I haven’t been as prepared as I should have been while dealing with a move and a constant cold and it’s resulted in being out of synch with the market.  It’s been one of the worst starts to a year for me.

I’m getting the feel back though and beginning to trade more in synch with the market but man these big cap techs are killing me!  I managed to dump most of my Google near the top but didn’t do the same with my Cisco or Microsoft.  It’s clear that whenever I attempt to deviate from the strategy that has been successful for me over the years (trading momentum) and move to more of a buy and hold strategy in "good companies" that are good long term holds, my performance suffers.  It happened in 2006 with a purchase of Yahoo and again to begin this year.  It looks like Cisco is going to get crushed yet again after the bell, so I’ll be digging out of larger hole from tomorrow on.

Despite Cisco and Microsoft being significant portions of the portfolio, I’m still ahead of the S&P and well ahead of the down and out Nasdaq with a loss of 9.2% this year (compared to a 14% loss for the Nasdaq – yowza!).  Yes, it’s unacceptable but at the same time I recognize I’ll have bad months and great months and that by the end of the year, continuing with my strategy, sticking to my rules and remaining confident WILL result in great returns once again.  It’s a long year and I’m not concerned. 

I’ve initiated several new shorts in the past few days, all of which (except for one) are profitable, but will cover and lock in gains quickly as we get closer to the lows of this correction.  Today, my short in DR Horton (DHI) was covered for a quick 10% gain ahead of its earnings report tomorrow morning but I’m still holding my Toll Brothers (TOL) short and think I can squeeze a few more percent out of that one over the next few days, particularly if DHI misses expectations by a wide margin in the morning.  Soon, it will be time to start thinking about the long side but it’s still too early.  I put on a very small position in COIN after it broke out of a bullish triangle formation yesterday, but closed it quickly today after yet another reversal off the highs.  There just isn’t much working on the long side right now and until new leadership emerges I’m not willing to get aggressive.

The biggest mistake that traders make is trying to make up for losses by taking on even more risk.  They begin averaging down, taking on excessive risk or trading penny stocks to try and recoup losses quickly and regain their pride.  If you are doing that now, STOP!!  Think about why you have the losses you do.  Did you get into a buy and hold mentality in "good" companies like Apple, Baidu, Google, Garmin, Research in Motion, etc after getting in near the top?  Did you not cut losses quickly?  Were you bottom fishing?  Rather than trying to make it all back in one trade, get more conservative and take this time to learn what you can do better next time.  There will be ample opportunity to recoup the losses and make extraordinary games, so preserve capital and learn, learn, learn.

Portfolio Update: Hello I Have Losses

Hello my name is Tate Dwinnell, founder of and I have losses this year.  Yeah the SelfInvestors Model Portfolio while outperforming the S&P, is still down for the year.  I’m down 7.6% this year and have not played this market meltdown well. .. and I’m fine with that.  I wish that I could say I’ve been 100% short this market and bathing in dollar bills but I can’t.  It would be nice to say hey look at me, look how smart I am but I can’t. 

I know it’s a veeerrrrrryyyy long year.  I know that I didn’t do well for several months last year but still killed the S&P with a 30% gain.  Losses let me know I’m alive and human.  Without them I would have less incentive to hone my craft further and learn from my mistakes.  No excuses.  I did a good job of staying away from big losses in the small cap high flyers (such as solar) and did sell most of Google and all of Mastercard but rode some core positions (whats left of my Google, Cisco and Morningstar) too long.  I also took off my short trades much too early and got into a couple big cap so called defensive medical plays too early.  I didn’t expect the market to sell off so quickly this January without any kind of significant bounce.  The opportunity to put on a new round of shorts never came.  There was nowhere to run and nowhere to hide.

However, I didn’t killed and didn’t panic.  I was still in 50 – 60% cash the entire time and didn’t panic sell some good long term holdings at what could have been the bottom.  I’m in good shape to profit big once a new round of leaders emerge in a new round of leading industries.  It will take some time for that to happen but hey it’s a long year and I fully expect to greatly outperform once again.

Final Portfolio Review – SelfInvestors Up 30.2% in 2007

2007 was quite a year, perhaps one of the most difficult years to trade the markets in a very long time maybe ever.  I think 2008 could be more of the same, with traders scoring the biggest gains.  2007 was a good year for the SelfInvestors Model Portfolio, following up a 2006 gain of 27.6% with a 30.2% gain this year.  I think more important than the gains, were the lessons learned along the way.  It’s what keeps my job fascinating (if you can call it a job).  Every day presents new challenges, every year provides lessons and can highlight areas of improvement.  The important thing is to track your trades, review your trades, write about your trades in a journal.  It’s amazing what you can learn by going back and reviewing your thoughts over the course of the year and looking at the things you did right and the things you did wrong.  That’s one thing I have been doing more of right here at the blog for all to see. 

I believe in 100% transparency here at SelfInvestors with a review of my Model Portfolio every week.  I do this not only because I’m disgusted with the way that this business promotes itself (by highlighting a few big winners), but because it allows me a place to track my thoughts and more importantly so that my readers can learn from my triumphs and certainly my tribulations.  Reviewing the portfolio, writing the market analysis reports, the IPO updates and everything else on this blog has made a big difference in my trading.  Here’s a tip:  if you want to improve your trading set up a blog.  Who cares if nobody reads it.  It’s for you.  It’s a place to vomit your thoughts out in a permanent place and review at the end of the year.  Your results HAVE to improve.  It doesn’t even need to be public.  Set up a private blog if you have to.. whatever you do, set up a blog in 2008.  Email me if you need help getting set up.  It’s not as difficult as you might think.  Go do it now.

Enough rambling out of me.   I just wanted to highlight a few key points from the Model Portfolio this year and throw out some stats to squash some very common misperceptions about trading the market.

First and foremost.  Forgive the BOLD and UNDERLINE but you need to remember this.  I often get asked the question "What is your winning percentage?".    I cringe everytime I hear this.  It’s NOT ABOUT WINNING PERCENTAGE.  Let me just tell you right now what my winning percentage was this year.  I’m right a bit more than 50% of the time and I’m proud of that.  If I can be right 50% of the time I know I will do extremely well year after year. 

Why is that?  It’s all about money management.  I’ll say it again.  IT’S ALL ABOUT MONEY MANAGEMENT.  If my profit to loss ration is 2:1 or 3:1 I only need to be right half the time.  How do you succeed by failing so much?  BY KEEPING LOSSES SMALL.   In a difficult market like we had last year, my profit loss to loss ration is about 2 to 1.  Actually it was a little less than that as you’ll see below.  In a raging bull market, I can kick it up to 3:1. 

The bottom line is that in 2007 I failed half the time, but managed to outperform the S&P500 by nearly 10X!
– IN 2007 I put on 186 positions with a winning percentage just over 50% (94 winners to 92 losers)
– My average gain was 12.5%, while my average loss was 6.45%

It was a very good year, but I’ll be the first to admit I can improve.  For one, my shorting strategy was unsuccessful period.  That can’t happen again this year so I’ve looked at the number in great detail to find out where I went wrong.

– I put on 51 short trades this year, but on average each trade represented a loss of .43%. 
  (Yes my shorting strategy did not work this year!)
– I discovered that my Nasdaq Ultra Shorts (QID) were a problem this year with losses of -10.95%, -20.21%, -10.53, -1.06%, -12.37% and -4.73!  Yikes. 

Taking out the failed QID positions and my average gain on the 51 short positions jumps from a loss of .43 to a gain of .72%.  My style of trading is more successful with individual stocks.  That’s clear from the results, so I won’t be hedging with any of the Ultra ETF’s this year.  That’s one way I plan to improve my results.

Improvement Plan

Capture bigger trends!!!!!!  Few profits captured in solar on the long side this year and even fewer profits (ZERO) captured in shorting financials, realty and homebuilders.

Avoid the leveraged Ultra ETF’s of the major indices.  I’m better trading the inefficiencies of invidual stocks.

What Did I Do Right?

First and foremost as I mentioned above I kept losses small for the most part.  That part of my strategy will never change from year to year.  I don’t care what kind of market we are in.  If you’re not keeping losses small you won’t succeed.  Actually my average loss was a bit too large this year.  I like to be closer to 5%, so another area I will work on this year is staying away from the occasional 15 – 20% loss which can happen quickly in my Quick Strike Profit plays.

Supplementing the portfolio with higher risk, higher reward low priced stocks.  I began implementing what I call Quick Strike Profit plays in 2006 which has added a boost to the portfolio.  These are purely technical swing trades in big momentum stocks where I’m looking for a quick 15 – 30% gain in just a few days or weeks.  Examples of these kinds of trades in 2007 were CRDC (45% gain), MVIS (38%), NEXC (15%), BZP (17%), MSI (27%), ALTI (16%) and ZICA (20%).

Trading IPOs.  In previous years I found that I wasn’t doing a good job of keeping track of the best companies to market and missing out on some extraordinary gains.  In 2007 I did something about it, by developing the new IPO Tracker and IPO Portal  as well as adding an IPO section to the Weekly Reports to highlight the best upcoming IPO’s.  I didn’t catch them all this year, but scored some nice gains in LULU (26% and 23%), WX (36%) and PWRD (18%)

No leverage, lots of cash.  I didn’t use one penny of margin this year and maintained an average of a 40 – 50% cash position for more than half of the year!  That’s right, the portfolio outperformed the S&P nearly 10x with VERY LITTLE risk.

Diversified.  I carried around 10 positions across a variety of industries and hedged with short positions for nearly the entire year.  My short positions hurt me this year because of the QID failures but this year I will succeed on the short side.  I have to.  Having a short strategy is key to killing it in a tough year, so I’ll avoid the Ultra ETF short plays and stick to shorting individual stocks, which is where I did have some success in 07.

Google.  It was 10 – 15% of my portfolio this year.  A portion of my portfolio is made up of core positions and Google was the pillar this year, returning about 50%.

Stripper Stocks.  RICK and PTT (now VCGH) both took off this year.

Model Portolio Commentary Highlights

The following are some highlights over the year which captures my frustrations with my underperformance in the middle of the year, my trust in my strategy, a few lessons along the way and ultimately an achievement of my goal for 2007. 

May 28
After leaning the wrong way for much of the past several weeks, I’m still looking to get back in synch with this market after a strong performance in the first few months of the year.  With the YTD performance at 4% (compared to 6.9%), I’ve got my work cut out for me in the latter half of the year.

June 18
With the long overdue selling setting in, the portfolio is beginning to  get in better synch with this market and beginning to close the gap of underperformance.  I mentioned last week that I began getting short way too early and that hurt my performance, however I expect my current positions/strategy to begin paying dividends.  The portfolio was off just .2% last week, but still significantly lags the S&P with a 3.5% YTD return.  I’ve certainly got my work cut out for me if I’m going to whoop the S&P again this year.  I’m 15% cash.

July 15th
I still don’t regret the decision to hedge my bets with these Ultra Short ETF’s, despite te fact it hurt my performance considerably.  I have to trade what I see and what has worked well for me over the years.  From a technical perspective, my analysis was showing some trouble ahead.  It hasn’t panned out that way but I’m still in good position to beat the market by keeping pace during what has been a highly irrational (from a technical perspective) and volatile market.  A sizable portion remains in cash (30%).  UP 8.9% year to date.

Aug 12
As I’ve been saying for the past several weeks here, I starting hedging with short positions a bit too early and it hurt my performance as I misssed out on much of the rally from April to July.  A few people were even kind enough to remind me that they weren’t missing the rally.  Gotta love the gloating.  You won’t find me gloating much in this segment of the Weekly Report when I’m right just as you won’t find me kicking myself for lack of performance when I’m wrong.   Keeping your emotions in check and remaining level headed is critical.  The main purpose of this segment is to provide 100% transparency in my performance in the hopes that maybe other advisory services will have the balls to do so.. and as a reminder that it isn’t always easy to profit big in the market (despite what what many services will have you believe).  Hopefully, you can learn from my successes and failures just as I continue to learn from my own successes and failures.  I won’t always be right, but I will continue to remain confident and trust what the charts are telling me.  In all, the portfolio surged again last weak, vaulting 3.4% higher, bringing the YTD performance to 9.7% which is nearly 4x the performance of the S&P.  What a difference a couple weeks make.  While it may seem like I’m way too aggressive in this environment it should be noted that I’ve been trading small positions and am carrying what might be my largest cash position in a few years.  Overall current allocation is 52% long, 5% short and 43% cash.

Sept 23
Every couple of months or so, there is what I would call a major shift in the portfolio from short to long or long to short.  Considering I was treading lightly with just a few long AND short positions and evenly balanced on either side, I wouldn’t call last Tuesday a dramatic shift in the portfolio, but I certainly acted quickly and decisively by closing out my four small short positions immediately following the Fed decision.  The Self Investors Model Portfolio year to date performance increased to 10.9% and the allocation stands at 37% long, 0% short and a large 63% cash position.

Oct 7
For a few months I hadn’t been playing too many of what I call QSP (quick strike profit) trades which are basically swing trades where I’m looking for big profits in momentum stocks in a very short time frame.  However, while the market has gained strength over the past several weeks I’ve begun to play these quite a bit more and this week the strategy paid off in a big way.  The KEY: cut your losses quickly in these volatile plays and eventually that one big run will wipe out a few small losses and really accelerate your returns.  In addition to some nice gains in QSP trades recently, the portfolio continues to be led by Google (GOOG) a long term holding as well as IPO plays LULU and WX.  For the week, the portfolio surged to a 4.3% gain bringing the YTD gain to 15.6%.  Now that certainly isn’t world beating performance, but as I’ve said before, the market has been unusually difficult to read this year and I missed much of the move in the first half of the year.  I feel like now I’m catching up and in great position to at least double the return of the S&P by the end of the year just as I did last year.  I’m still carrying a decent cash position at 32% and probably won’t move too much more to the long side until we get some kind of pullback/consolidation.

Oct 21
My strategy of playing cautious with a large cash position of near 50% but initiating positions in fairly aggressive stocks continues to pay off extremely well. If you’ve been following my review of the portfolio here in 2007 you know that I struggled a bit in the middle of the year so this is a big turn around and hopefully is a good reminder to all who trade their own accounts that there will be peaks and valleys along the way.  The key is to keep emotions in check, stick with the strategies that have been successful in the past  and remain confident!

Nov 4
The overall market dipped a bit last week but the Self Investors Model Portfolio continues to surge higher tacking on another 3.2% for the week, bringing the year to date performance to  27.6% (exactly where it closed 2006).  I’m continuing to tread lightly in this volatile, unpredictable trading environment.  As I’ve mentioned before, it really is one of the most difficult markets to read I’ve seen in quite awhile so I’m not willing to make large bets on either side (currently sitting on 55% in cash).

Dec 2
With the volatility and uncertain market, I will continue to keep the portfolio sitting on a sizable cash position of around 50% (it’s currently at 46%) as well as hedge with short positions.  It’s a strategy that has worked extremely well in 2007 and I don’t anticipate deviating from it too much over the next several months.

Dec  19
At this point, I don’t really care what the market does from here to the end of the year.  I’m going to maintain a conservative approach and sit on around 40% cash.  If I don’t make another dime from now until the end of the year, I can be satisfied with the 30% gain here in 2007 and looking forward to next year when I anticipate a shorting strategy will be critical.  I’m ready and waiting.  Bring it on bears!

If you’ve read this far, thanks for sticking with my rambling vomitarium of free flowing thought on my performance.  I hope it helps you as much as it helps me. 

Good trading to you in 2008!

If you’re interested in trading along with SelfInvestors in 2008 have a look at my membership options or send me a shout.  I’d be happy to discuss the service that can be most beneficial to you. 

Model Portfolio Update

It was another good week for the Self Investors Model Portfolio and I continue to tread lightly here, not making large bets on either side.  For the week, the Model Port outperformed the S&P500 which was down 2.2% over the past week, VS. down .6% for my portfolio.  That drops the year to date performance to 29.4% which is still 10 times the return of the S&P

The losses were mitigated this week with my short hedge positions, led by AIRM which was closed this week for a quick 14% gain.  I am looking to replace this short position with another possibly tomorrow, depending on the action of the overall market.  Today, I did add a small long position in a leading stock.

The longer we stall here, with the Dow and S&P submerged below their 200 day moving averages, the greater the likelihood we’re testing those November lows BEFORE testing those December highs.  The market seems to be a bit in no man’s land with the bears exerting some control, but the bulls looking like they could strike and stage a year end holiday rally at any time.  If the bulls are going to run, they better do so very soon.  If we take out yesterday’s lows, I may close out a couple long positions as well.

At this point, I don’t really care what the market does from here to the end of the year.  I’m going to maintain a conservative approach and sit on around 40% cash.  If I don’t make another dime from now until the end of the year, I can be satisfied with the 30% gain here in 2007 and looking forward to next year when I anticipate a shorting strategy will be critical.  I’m ready and waiting.  Bring it on bears!


Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at  Look forward to having you aboard.

Stock Market Model Portfolio Review 12.12.07

I used to provide the weekly Self Investors Model Portfolio review in the weekly market reports but will begin publishing these every Wednesday night as a stand alone post.  That should help ease the work load on those Sunday afternoons when I’d rather be on the couch with football and a few beers.

The last review of the model portfolio was a week and a half ago as the market was reaching the tail end of an oversold bounce.  Since that review, I haven’t really deviated from my plan of sitting on a sizable cash position (currently at 34% of the portfolio) and hedging long positions in leading stocks with a few short positions.  I did add a decent sized core position in Microsoft (MSFT) to go along with existing core positions in Google (GOOG), Cisco (CSCO) and Mastercard (MA).  Core positions are stocks I generally hold for longer periods and add to the position on the dips.  In addition I initiated a position in one of those high flying stripper stocks looking to score another round of big gains.  Both RICK and PTT were traded for gains of 54% and 19% in October and my current postion in PTT is already up another 18% in just a few days.  To hedge these long positions, I’ve been playing the short side as well and initiated two new short positions since the last review.  One short position in SBAC  was just closed this afternoon for a quick 10% gain.

As I’ve been mentioning in recent months I’ll continue to tread lightly as long as this market remains volatile and unpredictable.  It’s a strategy that has certainly paid off in the latter part of the year.  If you’ve been a reader of the blog for awhile you might remember that the Model Portolio struggled to keep up with the S&P in the spring and part of the summer as I missed much of the rally.  However, I stuck to what has worked for me and didn’t lose confidence in what I was doing.  I can’t stress how important that is. 

Despite sitting on nearly 50% cash for almost the entire year and NEVER using a dime of margin, the Model Portfolio is still up over 6 times the S&P with a year to date performance of right at 30% (a rise of 3% in the last week and a half).  Just goes to show that you don’t need to take on excessive risk to generate outstanding returns!  You have to pick and choose your time to get aggressive and leverage with margin.  My technical analysis this year just never provided a clear entry point to get overly aggressive.  There will come a  time again when a fresh bull market begins and I have the opportunity to double my portolio by leveraging with margin but that time is not now and probably won’t be for at least another couple years.   That’s OK, I’ll gladly take the 30% returns until that time comes.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at  Look forward to having you aboard.