Tatnic's Terrific Trades

[Lyehopper]

China and Big Mouth Greenspan...I thought he retired???

I was thinkin' the SAME THING!.... Wonder what he shorted last week?

[Tatnic]

Day 2?

...futures ticking up somewhat. Yesterday's meltdown was blamed not only on greenie, but on a computer glitch that exaccerbated the move. I'm pretty sure we ain't seen the last of selling...I'm thinking those who got caught holding the bag yesterday will be looking for an opportunity to unload during any little rallies that come along.

[Tatnic]

...futures ticking up somewhat. Yesterday's meltdown was blamed not only on greenie, but on a computer glitch that exaccerbated the move. I'm pretty sure we ain't seen the last of selling...I'm thinking those who got caught holding the bag yesterday will be looking for an opportunity to unload during any little rallies that come along.

If you haven't unloaded or found some protective shorts, your time is running out.

[peanuts]

If you haven't unloaded or found some protective shorts, your time is running out.

QID is testing overhead resistance from earlier today, right now... looks like it wants to go higher

[Tatnic]

QID is testing overhead resistance from earlier today, right now... looks like it wants to go higher

Good eye....I agree with you that this is a good one to watch....and a good one to buy for insurance since it pays double the downside. But if you're wrong, then you lose twice as much, kinda like buying puts on the qubes.

My guess is that if we have a true stage 3 downturn, that it won't be a text book decline...expect alot of give and take. For instance, Bernanke was out today trying to calm things down after his predecessor screwed things up yesterday. I'm guessing that the markets will weigh greenie's opinion much heavier than Ben's. Boy isn't this interesting!?

[peanuts]

Good eye....I agree with you that this is a good one to watch....and a good one to buy for insurance since it pays double the downside. But if you're wrong, then you lose twice as much, kinda like buying puts on the qubes.

My guess is that if we have a true stage 3 downturn, that it won't be a text book decline...expect alot of give and take. For instance, Bernanke was out today trying to calm things down after his predecessor screwed things up yesterday. I'm guessing that the markets will weigh greenie's opinion much heavier than Ben's. Boy isn't this interesting!?

Ya, I caught a few minutes of the news from the standard station, and they sure were kissing Ben's butt on TV... I wonder what they were saying off the air, though.

[Tatnic]

If you haven't unloaded or found some protective shorts, your time is running out.

HOly molie...naz futures of 28 pts. so far this am. The whole world is red, except for the iceland exchange and a few others.

[Tatnic]

Goog

...is one of the big keys here. 455 was the key level. If it can close above that today then maybe, maybe the market will get out of its funk.

Greenie's attempt at a mea culpe yesterday helped a little but I think the damage was done and is most likely irreparable. Take that Bernanke.

[Tatnic]

...is one of the big keys here. 455 was the key level. If it can close above that today then maybe, maybe the market will get out of its funk.

Greenie's attempt at a mea culpe yesterday helped a little but I think the damage was done and is most likely irreparable. Take that Bernanke.

Here are what I see as important closing levels today on the indices:

naz--2400 (currently at 2399 just before 11 am)

dow--12,200 (currently at 12,237.................)

spx--1400 (currently at 1401........................)

all nice round numbers. We may actually close above one or more of these levels today, but that just seems to be delaying the inevitable..ie these levels will not hold for long.

I can't iimagine that too many will want to hold too much over the weekend, so I expect these levels to all be broken by the close. If all close comfortably above these levels, then maybe the governor (in this case, the FED governor) has issued a reprieve! Seems like wishful thinking to me.

[Tatnic]

Throw some darts

....and pick some shorts. No time to be buying stocks. Remember that the AVERAGE downdraft lasts about 3 months, give or take, so that means around Mother's day (which ironically was when last years meltdown was just getting started) start watching for signs of improvement. My own gut tells me that given the incredibly bullish rise we just had, that the fall will be equally impressive so there's absolutely no need to be impatient.

[Tatnic]

Slightly different

I've been playing with some models based on Swenson's book. What I've found is very interesting and has to do with bad timing more than anything. (This model portfolio had 32.5% US Treasuries, longer term, with a mixture of small caps, REITS, foreign equities and some emerging markets...all based on Swenson's mix and methodology of selling winners and buying laggards in the port)

I set up the model going back just over 10 years and 8 months (I would prefer to set it up for a 30 year period but cannot find quotes for that). Since its inception, a buy and hold strategy has produced decent returns vs. the actively managed approach (adjusting the mixture of funds monthly), but still lags the active approach by just over 6/10% point (yearly, compounded return). The actively managed yearly return was around 11.6% to date, buy and hold 11%.

But if you change the model so that it starts right before the Asian meltdown of '98, the actively managed approach yields 3% points higher (again, yearly compounded returns) than the buy and hold strategy.

And if you set the model to start during the '02 recession, on April 30th of 2002, the active approach yields a yearly return of 7.5% points better than the buy and hold (13.2% vs. 5.7%).

The conclusion is that bad timing can be overcome (after about 5 years) if the account is actively managed. The model assumed that tax consequences were not part of the equation...ie in an IRA or similar account. And I further concluded that over the long run, an actively managed account produces slightly better returns than a buy and hold account and more importantly will be more RESILIENT than a buy and hold portfolio.

Previously I had concluded that a buy and hold approach was better than the actively managed approach, but this conclusion was based on bad quotes which skewed the model.

[Tatnic]

Timing your shorts

Yesterday right before the close I bought some more index puts. Why? Because when you shorting you've got to get prices at or near important price levels. We closed right at important levels (see my post from last week). The other day we got right down to the top of my next important level, but the market had just gotten too oversold already to make any new lows, so it bounced off those levels and is now up to the last breached support, now turned resistance, or so the theory goes. We'll see how the day turns out. If I'm wrong I'd rather be wrong at a point I know is important so I can call Uncle quickly.

[Tatnic]

Next level of support breached

Dow 12,000 was important support. Naz 2330~2340.

I haven't checked the sp500 but if you got 2 out of 3 breaking support that's significant, and I'd venture a guess that sp500 and others have either broken or will be week's end.

Yesterday right before the close I bought some more index puts. Why? Because when you shorting you've got to get prices at or near important price levels. We closed right at important levels (see my post from last week). The other day we got right down to the top of my next important level, but the market had just gotten too oversold already to make any new lows, so it bounced off those levels and is now up to the last breached support, now turned resistance, or so the theory goes. We'll see how the day turns out. If I'm wrong I'd rather be wrong at a point I know is important so I can call Uncle quickly.

[Tatnic]

I don't believe I've made more than a couple of trades over the past month or so. Bought some oil/gas stocks (fto and tlm). And I haven't been looking at any shorts either which could be a mistake...I think I'll start looking a little about now. But to be honest, unless you are day-trading, its been hard to find decent shorts that will maintain their downdrafts long enough to make any serious money....why bother?

I can find stocks that I'd feel comfortable buying, many that I would not want to own, but I have not found a list that can make me any decent money on a regular basis on the short side. IN the past I thought IIG was such a candidate,but further review has not proven that to be true. Its in too much demand, for whatever reason(s), and so far has just been a sucker short. That could change obviously, but so far the bears have been burned in that one (me included).

The home builders had been good short candidates....I just missed my chance with them and as of right now they look like they want to be bouncing from these levels. Of that bunch, NVR stands head and shoulders above them all...it has really never participated in the downtrend and is as respectable looking as many stocks out there.

Commodity plays have been taking a breather here lately, I hardly think they're done, just resting.

I've started a "new" paper port of 30 stocks (62.5%) and the rest index bond funds (U.S. treasuries). I started it at the beginning of '07 and am interested to see how it compares to the hedge fund universe (which for the year 2006 had returned just under 12%...nothing too exciting, more like mutual fund returns). So far this paper port is up around 10.5% ytd, and I expect it to post in excess of 25% yearly returns. Its a very simple buy and hold port, no trading or rebalancing at all, just buy at the beginning of the year and hold.

If you're interested in some of the other paper ports I've put together over the past few years, I think I posted them here on this site somewhere. One of the best ones performance-wise was a paper port of 10 dividend paying stocks that I found and started right during the meltdown last June. Its currently up just a hair over 32% in less than a year's time. The other dividend port I put together around thanksgiving is up around 15% when I checked the other day.

I'm guessing that the reason these dividend ports are up as much as they are is that people want the security of dividend paying stocks so they flock to them and drive up the prices. The dividends are not that high...I believe the net payout is just over 5~6% but I'm going by memory here.

[billyjoe]

Tatnic,
I'm interested in dividend ports and am buying several these past few months : Here are 4 I like and the yields which are real nice when compounded in an IRA.

RPM---3.22%
MO----4.91
NLY---4.98
CNE--14.95-----they are paying monthly and the shares are multiplying fast

RPM is my only loser at about 7%, but I'm confident in its rebound.

--------------billyjoe