Employee 8 made a comment earlier and I just want to expound and clarify my position on [[CNX]], and why.
I didn’t sell CNX today. I’m still holding it.
CNX, being part of the group of focus stocks, aka “fuckus stocks”, has a 30% trailing stop loss. All the ten stocks do. As of yesterday’s close, I was breakeven on CNX. I won’t sell it until it closes down to $77.25 at some point—-a 30% drawdown from it’s recent high close on 06/20.
My thinking here is to hold highly “resilient” stocks in leading sectors that show high volatility, and let them run through the ups and downs. I did research awhile back on this strategy, and the results were astounding.
The first group of focus stocks, started last June, is up 94.30% as of yesterday. The current 10 focus stocks in that group are: AKS, ANR, SID, BAP, GTE, LSR, LNN, MTL, MOS, POT. Number of trades: 26.
POT is up 204% since 06/04/07; MOS 117% since 11/5/07; GTE 193% since 1/17/08 and ANR 147% since 3/4/08.
I wouldn’t have these kinds of returns if I was too quick on the trigger in selling everytime a stock got “hammered”. It does take some balls to hold stocks using this strategy. But the payoff can potentially be grande.
This tells me that a portion of my portfolio needs to be allocated to this kind of strategy. Picking the right stocks in the right sectors and holding is everything.
I’m either out with a target of a 1,000% return, or a 30% loss from the highwater mark. Otherwise, I hold.
I wouldn’t do this as a total portfolio strategy because the volatility can keep a person up at night.
The current one I started in May is up 7.62% as of yesterday for the 10 stocks.
I’m doing one of these a year (give or take) and the whole strategy is going to be no more than 20% of my investable assets. I’m only disclosing the activity on the current one from May on this blog.
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