My High Beta Allocation

With the remaining 10% of my assets divvied up between high beta tech and life sciences, I decided to buy ICPT, JAZZ, SGEN, N, YELP and PANW.

The allocation is now complete.

I had second thoughts about my second thoughts and decided to allocate dollars earmarked for long term capital appreciation. We are talking about a wide swath of securities, so I will not inundate this blog with the details. If you are curious as to what I bought, all trades are posted and listed inside of The PPT.

The details are fairly straight forward. No position is bigger than 5% of holdings. Everything is divvied up between the 7 principal sectors of the market. 66% of the stocks earmarked for long term capital appreciation  are mega caps, greater than $10 billion in market cap. The median cap in the S&P 500 is $18 billion. I am purposely imitating the index.

33% of the stocks are under $10 billion in market cap. I set aside 5% of my capital for short term trades and another 10% will go towards high beta stocks, intended to be long term holds. The mantra of the allocation is GARP (growth at a reasonable price). And, finally, 25% of the capital is reserved for cash because of seasonality. In the event of a market pullback, the 25%, which is now placed in TLT as a cash equal, will be liquidated and allocated amongst the current holdings.

The only thing left to do is position into the high beta names, which I will attempt to time perfectly.

This is a large purchase, which is replacing my cash for the time being.

I only bought ZPIN, which is a trade. I don’t want to micro manage entry points in what will probably be 5 year holds. However, the news about new and effective Russian sanctions, followed by a sharp sell off in the markets, has me waiting for lower prices.

This is a trade.

I will begin allocating capital today, self funded, for the explicit purposes of achieving extreme gluttony through stock market winship. I will be doing this in stages, with some dollars earmarked for short term opportunities, others for high beta longer term holds and finally a portfolio that is designed to last the test of time–even very cold nuclear winters. It is my belief, very sincerely, that the market is on the verge of going ape to the upside, banana and all. Therefore, virtually anything that I buy now, sans an earnings shortfall, should be profitable within days or weeks of my actions.

For the time being, the hottest short term stocks lies in China (pun intended). Their markets have done very well over the past two months and we are seeing strong momentum to the upside. I have one particular name that I want to buy and will talk about it shortly.

Stay tuned.

I sold out of RUBI today for a sizeable loss. It was a bigger loss, when the stock was scuba diving down in the 8’s last week. Nonetheless, whether it was a loss on paper or realized for my p and l, it had to be taken now. Reason being: earnings are coming due tomorrow and I have no idea what they might say. Humans tend to avoid conflict, tuck their heads away in the sand, hoping everything will sort its way out. I embrace it.

RUBI can explode by 30% if they beat and guide higher. If I bought the stock for its fundies, I wouldn’t care about this report and would simply buy any dips. But it was a trade, so I have to be loyal to the mantra. Of course, I should have sold out a few weeks ago; but the stock was knifing lower and the volume was thin. The best thing to do now is to keep moving, pick up where I left off and make the money back elsewhere.

I also sold out of JMEI today. I sold it late afternoon, after the stock had rallied more than 2 points off the session lows. I booked a 7% profit and rolled that money into VNET.

I will not hold onto losers into earnings and will try to avoid any and all earnings plays–because they’re fucking toxic beyond belief. It’s literally like rolling dice at a rigged table. I’d rather play in the Chinese burrito sand pit of hell, than guess on whether some jackass CEO at some loser start up can meet and exceed Wall Street’s retarded estimates.

With less than 40% of stocks higher today, most people lost money. There was significant deterioration in biotech and tech stocks, as the small capped melt down continues to take hold without any cause for alarm. The overall indices looked fine. Apple and other mega cap stocks did well, so there is nothing to worry about–yet.

I fully expect this rout to come to an end soon, once earnings are out of the way. In the meantime, you’d be wise to avoid holding stocks through earnings, unless of course you have actionable information–provided to you by insiders at the company you are invested in. If that’s the case, feel free to buy call options and place a large deposit at a securities law firm, as a retainer, for you will be needing it shortly.

One of you savages called into question my purchase of VNET, as if he knew anything at all. It’s unusual for stupid people to cast such wild eyed opinions. Let me help you help yourself: concentrate on your own money and cease offering financial advice to someone who doesn’t need or want it. That’s a life lesson for most of you out there, big mouthed folks trying to save others via advice that is ill tested and sourced from the well of a god damned garrulous road slob.

I started a position in VNET.

There was a rumor that JMEI was caught selling fake products through its website. Do you realize how abundantly ridiculous it is to sell this stock for that reason? How many times have we heard AMZN or EBAY being accused of selling counterfeits, ripping off Joe Shmoe for the hell of it. Did that stop the upward surge of those stocks? Naturally, because it’s a chinese company, everyone panics out and assumes the worst. People like that should be flayed and roasted over hot coals (no Hannibal).

JMEI is a buy; but the market is heading towards a trough. I believe we will reach an oversold point soon, at which point you’d be wise to start buying aggressively. As always, The PPT will be my guide.

Until then, raising cash on profitable trades might be a good idea.