Up-to-date

Okay, I'm finally caught up on this blog. I've given a brief overview of my investments over the last 5-10 years or so and can now finally blog "real-time".

It's Monday, and 3 days after my purchases of SSO and DIG, things are looking pretty good. DIG is up an astounding 41% and SSO is up 17%. Today I sold half of my SSO at a 15% gain. I just wanted to lock in some profits in case things take a turn for the worse tomorrow. I'll be setting a stop-loss order to make sure I at least break-even on the remaining half; but otherwise, I'll let the profits run for a bit if the rally continues.

The reason things could take a turn for the worse is because, as my brother brought to my attention, all the CDS's are being unwound this week from the Lehman bankruptcy. As my brother puts it:

All the people who sold credit default insurance on Lehman now have to pay up because Lehman defaulted. Most of the people who sold this insurance are other financial companies, so they could take a huge hit. This is how it cascades. If even one of these companies can't pay out on the insurance, then they go bankrupt, thus defaulting, thus causing all the companies that wrote insurance on them to pay, on top of what they already have to pay for Lehman, which causes others to default, etc.

The settlement for these payments is supposed to begin tomorrow, Tuesday. So who knows what will happen this week.

I would've sold some of my DIG, but I own so little that I didn't want the transaction costs taking away from my profits (since RBC still charges $29 per trade. I'm just too lazy to open up an account with a cheaper online brokerage and having everything in one place is nice). On Oct.24th, if OPEC announces only a 1 million barrel per day cut, oil could drop to $60, but if they announce a 3 million barrel per day cut, oil could go to $90. If oil continues to rise up to the meeting date, I plan to sell the day before as expectations could be too high, otherwise I'll probably hold with a stop-loss order in place to lock in at least 30% gains.

Trade Status:
SSO - bought 2008/10/16 @ $28.63, sold 1/2 on 2008/10/20 @ $33.00 (+15% return)
DIG - bought 2008/10/16 @ 26.07, still holding, currently at 36.83 (+41%)