Well unfortunately, my portfolio has not held up as well this last week as it did in the beginning of August. While I still maintain a decent size of hedging, because I cut my UCO short in half, I am definitively losing value. It doesn’t help either that the REITs in my holdings, AEC and CLP, are not resilient at all.
This is most likely due to their small size. They are easily battered around; I had presumed this would aid them as people covet their awesome performance and refrained from selling them. This was a miscalculation on my part.
But really, what can you do in an environment such as this? Everything is being liquidated; even my AWK water utility company is grinding lower. What’s really important in days like today and yesterday is to (a) look for what will happen after the selling subsides and (b) survive long enough to see it.
In this case, I think we all know that AEC and CLP are winners, as are AWK. CCJ and BG too, frankly…but because everything is being sold to raise cash, you need to be in a position to average down and wait out the storm.
As I sit here in my office, munching on biscotti with my morning coffee, I accept that I am in no position to embrace this selloff with buy orders. I have already committed to the bounce-that-wasn’t and although my net cash position remains intact, it is not the 20% free and clear that it was. Also, by covering as much UCO as I did, I missed out on a good chunk of change which could have given me more breathing room.
So unless we proceed down another 10% from these levels, across the board, I cannot risk picking up the missed value. It would overextend me while leaving me in a virtually no-cash situation, which is not where anyone wants to be in this market.
Yesterday, I nibbled on CCJ and covered UCO. Thus, that is the closest thing to playing the developing bounce I will get, for the foreseeable future.
Now to the title of this post, take a look at MGM! That company is dying. I wish I had more than the scant 4% of my initial entry short. Someone asked me why I had bothered to short MGM at all where I did, when I could have just waited for the bounce.
I think the real developments adequately explain my reasoning. There was no bounce…
Going forward, I expect I will up my UCO short when I get a good entry, raise my MGM short to a full sized position, and perhaps nibble some more on AEC and CLP if they should bleed out another 10% from these levels. I may also nibble on my other core positions if they drop far enough.
I will also add another 2% onto my TLT short if it moves up past $127 a share.
My portfolio remains: AEC, CLP, AWK, BG, CCJ, short UCO, short MGM (small – 4%), short TLT (small – 2%), 15-20% cash, and physical silver.
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I don’t know if we’re close to a bounce, but today has definitely had more of a “get me the fuck out of here” feeling.
I’m leery of AEC. They seem to be overpaying for their apt. complexes.
You’ve brought that up before, I believe.
Please remember, Class A luxury apartments. If you’re not into that sort of thing, I fully understand.
Thanks for the insight into your thinking. Hope you don’t mind a few questions:
Are you hedging your silver position? (I have a few puts because the volatility is killing me.)
Is the TLT short more short-term or long-term oriented?
I am not explicitly hedging my silver position, although you could probably argue that it’s covered somewhere in the rest of the hedges. I very badly desire silver to drop to $20 an ounce; I will be loading up if it goes low enough.
TLT is a very long term oriented trade. It is small and I intend to build it in incremental steps. I actually expect I may hold this short and increase all through next year; but sometime in the coming year to year and a half, treasuries are done for.
Thanks for the answers, esp on TLT. Kind of my thinking on bonds in general – I have a ton of them in the 401k, but those things are awfully expensive. Unless we see a depression, at some point they are going to get creamed.