Trade Update - UYG, SSO

The markets were up again, so I sold my UYG for a very nice 30% gain in 1 week. While that sounds sweet, I had such a small amount invested in it that it really didn't do much for my portfolio.

SSO finally climbed back up to my purchase price, and I exited my position. At one point on Friday I was down a whopping 40% on this trade, and that scared me enough to get out while I could today without a loss. I can't tell which way the markets are going to go. Is this just the beginning of a much larger rally? I'm too chicken to take any chances, especially after having being down so much, and now with the markets being up 4 days in a row. So I'm happy to get out now even if it continues to rally.

Trades (Nov.26):
Sold UYG @ 6.00 (bought on Nov.19 @ 4.62), a 30% gain.
Sold SSO @ 5.80 (bought on Nov.12 @ 5.65), a 2% gain.

P.S. I should note that with the current crazy commissions I'm paying, you can usually subtract about 5% off the posted trade gains to arrive at what I really made. E.g. I actually took a very small loss on the SSO trade. The variations in the CAD/USD exchange rate over the length of a trade also affects what I really make on these ETFs that trade on the american exchanges.

Trade Update - SSO

Yesterday I bought some SSO (2x S&P500) at 25.65. Why? The S&P was around 870, almost at the lowest point it had reached in recent times back on Oct.27. There has been a lot of recent market negativity and continued bleak news reports, but it was the 3rd day in a row of quite significant market losses. With that alone I thought/hoped it was due for a short-term bounce, possibly before the end of the day. Also, I noticed theMarketSpeculator was buying too, which gave me some confidence.

Well, it continued dropping yesterday after I bought. Then the markets dropped more today -- at one point I was down 10% on the trade. But the markets took off like crazy out of nowhere at 1 pm and finished up a whopping 6%. DOW ended +550 at 8835, the 3rd largest 1 day point gain. What's crazy is that from 1pm to the 4:30 close the Dow gained almost 1000 points from it's midday low! Talk about volatility. Within that time frame my SSO holding went from being -10% to +9% ($28.10 close)-- almost a 20% swing in 3 hours. crazy.

Side note: I never know where I should place stops. I didn't place a stop on this trade and I'm glad I didn't. If I had placed one at say 10% below my entry, or at a support level around $24, I would've been stopped out at the lowest point today right before it took off.

I may place a stop now around break-even, and don't know when I'll sell.

Trades:

Nov.12,2008 - bought SSO @ 25.65

P.S. Google Finance links are now broken for many ProShares ETFs that moved to another exchange. Yahoo Finance works. Hopefully Google will fix it soon.

Trade Update: SSO, DIG

The market plummeted today, and energy and gold stocks got hit the worst. I got stopped out of the rest of my SSO at 29.02 today, which was right around my break-even, for an average of +7% on that trade. I never did end up placing a stop on DIG like I said I would to lock in 30% gains, and now it's only about 3% above where I bought.... oh well. Stops are great, and I really should start using them on all my trades since I can't pay attention to the markets throughout the day, and even if I could, I have a tendency to not be able to force myself to sell :)

I have no idea what's going to happen tommorrow, but I'll probably hold on to DIG even if it drops more, because I don't have too much in it, and I believe the upside potential to be huge.

Trade Status:
SSO - stopped out of the rest at breakeven, with first half +15% = +7% average gain over 5 days.
DIG - holding on...

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%)

Jumping in

So it's Thursday, October 16th and I've been itching to get into something. The markets have double-bottomed and all signs point to a temporary rally. Yes, Sprott still thinks we're just in the 4th inning and is still extremely bearish on the general markets long term, and bullish on gold and energy.

I don't want to borrow more money to invest, and I don't want to sell any of my Sprott gold and energy as I believe it's at the bottom. So what do I do? Well, lo and behold I happen to have some cash in my investment accounts that I was unaware of. I thought I was fully invested and never check my account details since I know exactly what I hold and roughly what is happening with it. But this last Thursday, I happened to look more closely and noticed the cash sitting there. It wasn't much money to trade with, but it was a start.

Since my brother believed in a market rally and was buying SSO (and call options on it), I bought into this 2x leveraged ETF too. I agreed it looked like a temporary market bottom.

Also, that day oil had dropped to $70 (from a high of almost $150 3 months ago). Energy stocks had come down so much and were sitting incredibly low this whole week -- about 60% off their highs! It seemed almost too obvious:

• Most oil predictions are around $80-90 for 2008, with Sprott and Merryl Lynch and others still predicting $150-ish oil in 2009-2010. Oil could go to $50 short-term due to lower demand, but that could not last long with the depleting oil reserves and continued increase in world-wide energy needs due to China and other emerging economies.
• OPEC moved their emergency November meeting up to Oct.24th as they are panicked about the crash in the oil price. They are predicted to slash production by $1-$3 million barrels per day to stabilize/increase the price. The market doesn't seem to be reacting to this yet.
• There are many energy companies that will be profitable even at $50-70 oil, and they seem way oversold right now.

I figured there was a potential for big gains here, but I didn't have much money to invest, so I looked for a leveraged ETF and found the Ultra Oil&Gas ProShares (DIG), which I bought on Thursday as well. The only thing I didn't like about this ETF is that Exxon Mobil makes up about 30% of the index; I don't like indexes that have such a large percentage in one stock.

Trades - Oct.16, 2008:
Bought SSO @ 28.63
Bought DIG @ 26.07