I lost a nauseating amount of money at the end of last week, thanks and praise to the REIT space which decided to totally crimp itself. Couple that with my steadily increasing a UCO short into a crude oil melt up and I am not what you might call “happy.”
Last week, my accounts lost over 7% of their value. That’s a huge three day drop and puts me temporarily back in the range of losses for the year. That’s the sort of action you get when you’re hanging out in two polar kinds of positions; long key equities (some with midsize market caps) while short extremely volatile commodities.
You get a bi-polar account.
It is a great mental act of force to ignore the numbers and remember what’s really important; the stuff. My position sizes have steadily increased into one of the most massive selloffs of our lifetimes, while my net account value has not changed nearly as much, in the big scheme of things.
I am pleased where I’m at, despite the losses. However, in the back of my mind I also know that this is not going to cut it outside of the realm of private investors. I have a great luxury in being solo. I can ignore losses, opting instead for longer term growth strategies.
But a loss is still a loss and I fully understand if you’re a first time reader and a little skeptical. Just keep your eye on the ball.
This rally pains me; I want to see it roll over so that my oil short will turn profitable. If this happens in the right way, then I will be back to break even for the year (which given the year, is more than enough to please me).
I’ve mentioned my strategy in terms of what I’m buying and shorting on numerous occasions. But I’ve decided to refine my strategy a little further.
In addition to owning all the companies which I currently do (AEC, CLP, AWK, BG, CCJ), my other key goal is to see all my ownership positions double without impacting my net value.
Let’s say I have X shares of AEC right now, at a value of Y and an account value of Z. Near the bottom, I want to be in the position of having 2X shares of AEC still worth Y and an account value that’s still worth Z. Now repeat for all my longs.
This way, all my position allocations will remain about 1:1:1..:1. In order to make this happen, my shorts need to perform remarkably well, and lots of other random variables need to fall into place.
It’s a tall order, but I think it can generally be pulled off. Obviously, knowing when to hit the after burner (margin) is going to make all the difference.
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