Rape, Pillage and Book Losses

Last week of the year is very simple. ‘Tis is not the season to build long term portfolios. You may not understand me now, since you are novice as fuck, dumb to all things having to do with proper asset management. But, trust me when I tell you, the first week of January will be high energy and it can decapitate you, if caught leaning the wrong way. I have my hunches, as to what might occur. But, it’s all a guess right now. So, putting this eventuality on the front burner, you have a few things to do.

1. Scalp. Try not to attach yourself to any new name.

2. Got losses? Book them. It makes no sense to hold unrealized losses, especially if you have giant gains like me.

3. Get light.

The reason why I sold half of my MOTR today had nothing to do with stop losses or being “fed up” with the price action. I am stubborn as HIV and do not fold tent easily. It came down to a choice. Was I willing to up the ante on MOTR? My position was down 13% and the stock was stuck in some fucked up downtrend. Typically, I’d double my position, if I really liked the story. Believe me, I really, really like the MOTR story and feel they will blow the doors off earnings in early February.  Bottom line: I was unwilling to commit to the stock and NOT book that sweet tax loss. Plus, if I sell now, I can get back in the name, prior to earnings, and avoid wash sale rules.

I allocated about 10% of assets today, lowering my cash to 30%+. In my personal aggressive account (the one you do not believe), I am 220% levered long, in just 6 positions. I am purposely concentrating my assets, very aggressively, in order to take advantage of the “power period” we find ourselves in and it allows me to quickly go to cash, if I so choose. Hypothetically, if the market reverses badly, I can easily sell three positions and allocate said funds into 3x levered, fucked up, Direxion ETF’s, much to my dismay.

The moral of the story: read the fucking post and you will understand what the hidden messages are.

We are not talking rocket scientry here, What we are talking about is actual science, based upon the laws of mathematics, regarding the $100 roll.

If you do not know what we speak of, stick your torso into a cannon and light the fuse. Specifically, I am speaking about OXY and how it cannot escape its fate of “rolling” past $100, straight to $104. It’s a moronic plan of action at best; but it must be respected. In the land of freedom and democracy, all I ask is for a small roll, so that I too can make many thousands of dollars, as it is my right.

Into the bell, I bought a little OCZ, just because. And, I was up for the day to the tune of 1.7%, led by REXX and EXK.

I made some wholesale changes to the old portfolio. Here’s what I did:

I sold out of BPFH, EDMC, ATPG, half of that stupid MOTR, 15% of EXK and10% of PWER.

With the proceeds and some cash reserves, I bought loads of OXY for the $100 roll. I bought CMP (rock salt), WTI and a healthy portion of RAS for a squeeze. Oh, I also added to REXX.

There is a reason behind ever sale and purchase, none of which needs to be explained on this here forum. Just know and understand, there are smarter men than you out here, making life better for those of you who live in housing tenements.

I bought 5,000 WTI.

Disclaimer: If you buy WTI because of this post, small midgets will pick pocket you on your way to work. And, you may lose money.

All of you dick-suckers who talked shit about the buck in 2010 were disillusioned.  Like a magician, Bernanke managed to print a “fuck-load” of new dollars and manage to post a year to date gain, for the dastardly currency. All of that, AND MORE, is about to change in 2011. I realize our resident gold bug, Senator ‘Gint is now bearish on silver/gold stocks; but that doesn’t make him right—just like when I was pining for the world to get sucked into some sort of laissez faire deflationary vortex. It never happened.

Going into 2011, you have a decision to make: book the tax loss on some losers, in order to offset winners. Or, leave them in place, hoping that you will get an instant pop after 1/1. You can’t buy said names back until after 30 days of sale, in order to avoid a wash sale. But, everything trades in a convoy these days, no? Let’s say, hypothetically, you had an unrealized loss in XOM. Why not sell that fucker and buy COP? Get my drift? As the year winds down, go through your portfolios and look for losses. Take them and put the proceeds into comparable companies.

As for me: I am doing numerous things, all pertaining to the arts of proper money management. I hope you realize and understand the gravity of my situation, booking mid double digit returns, following several high double digit returns. I hope you do realize how such wild and unchecked success in the markets might affect a person, such as myself.

For the remainder of that day, I will scrounge around for new idea.

From GM to CIT to AIG to C to LEA, 2010 was the year when moral hazard went out the door. Companies with fucked up balance sheets, like SIRI, CPWM and FTK, stared into the abyss and spit, pissed and shit in it. It was a year that transformed losers into winners, sort of like black magic, but only cooler. We threw hundreds of billions at the wall and prayed for it to stick. Luckily for us, it did!

I understand why investors were hesitant to invest this year, as the normal order of things disconnected. Markets aren’t supposed to go higher on the prospects of sovereign nations going belly up; but they did, nonetheless. At the same time, the main drivers of growth, namely China and Brazil, sat out the great rally of 2010, allowing western nations like Germany and the United States to steal their plantain fried rice. It all makes sense, if you think about it. Like it or not, we are highly levered to Chinese growth, same with Germany. And, like Senator Gint likes to say, “as long as China is pegged to the U.S. dollar, we are their central bank.” In essence, Bernanke is the overlord of all things Chinese, raping and pillaging along the way, a local magistrate if you will.

Commodities were big standouts, with outsized gains in Cotton, Corn, Coffee and pretty much everything but Natural gas and Cocoa. They went up on the prospects of a weak dollar; but the dollar went up too, so go figure. Treasuries were a non-event, year over year, and tech stocks surged higher, led by lunatics invested in NFLX, PCLN, AMZN, CRM, APKT and FFIV, just to name a few.

As the year winds down, expectations are very high for 2011. You will see my predictions for 2011 in about a week. To summarize my notes, I think it will be a mixed bag.

At the moment, I am thinking about adding some dollars to municipal bonds, in light of robust January seasonality. And, I am pulling in the reigns here, upping my cash position close to 40%. It is tempting to short a little, if only for a hedge. However, I’ve been burned too many times this year, banking on disaster. I’d rather lower my beta, via large cash position, and buy dips. If I was interested in hedging, I’d bet against oil. But that seems like a lunatic trade now, especially in light of all the snow on the ground and asset allocation models pining for $100 crude.

In short, celebrate the New Year’s without fear. Lighten up the load and take some hard fought gains. There will be plenty of time in 2011 to buy Maseratis and new homes, off of equity gains.

I bought 5,000 EDMC.

UPDATE: I took a shot in the dark and added to MOTR, like an old sailor.

Disclaimer: If you buy EDMC or MOTR because of this post, it will snow again. And, you may lose money.

What a mess, all this NYC snow. Today’s market looks weak. But I must admit being a bit distracted, thanks to my duties, all to do with shoveling 10,000 pounds of snow from the front of my house.

I sold out of VLNC this morning, for a 13% profit. I’ve been holding it for a few weeks and will gladly use the cash to finance future endeavors.

By the looks of it, I am receiving the tail end of the fucking MOTR boat, as the blades gently massage my face. However, I will have you know, my face is made from old oak, impenetrable to some bullshit MOTR boat blades. I will not add to the position, nor will I sell it. I will simply behave myself and wait for a better entry point. It may sound sacrilegious to some of you mosquito brains; but I have enough time left in my expectancy to let stocks breathe a little.

Having said that, I like banks and I can not lie. Go for the ones with p/b ratios under 1, with high ROE’s. 2011 will be the year of regional bank mergers and executions. Proceed with caution. But proceed nonetheless.

Finally, I am raising cash into year end. I do not like the idea of waiting until 2011 to book gains, just to avoid paying taxes. That sort of thinking causes world wars. Like I said a few weeks back, my target cash allocation is 50-60%. At the present, I am at 35%.

China raised interest rates, for the second time in 10 weeks, in an effort to contain inflation. Frankly, it doesn’t matter what they do, since all of the hot money fucking up their matrix is coming from western printing presses. In other words, if they put the breaks on their communist banking system, we will simply send over a few hundred billion of “investment capital” to fill the void.

The way I see it, we are attempting to destroy China, vis a vis cheap money, cocaine and hookers. In Hong Kong, real estate prices have risen by 50%, YEAR TO DATE. Think about that. On top of that, it is widely believed that the Chinese economy is 60% construction. So, if you were trying to really, really debilitate an enemy, what better way than to create a massive bubble, of tulip proportions, that will one day capitulate and collapse?

Naturally, the ramifications will be widespread, as China is the main driver behind commodity prices. Eventually, Copper, Oil and and a variety of commodities will plunge by 50%, before recovering. However, as long as the carousel turns, the current scheme will continue and we will continue to get “rich as fuck” off Bernanke Bucks inflating everything but U.S. real estate.

Near term, the Chinese rate hike may spook investors, for about 1-2 hours. Once people understand that China’s rate hikes are the equivalent of Nancy Reagan saying “just say no to drugs,” the party will be back in full force, up to the biggest jerk-off party of all time: New Year’s eve.

NOTE: Thursday’s sales pushed my cash position up to 30%.

Celebrate life with loved ones and avoid driving stupid aka drunk.

Get the kids to visit this site: Norad Santa

Happy Coca Cola day!