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.

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