I Eat Bear

Once again, I added some stocks, and increased positions in a few more.

I added TBSI and added shares to DSX. Shipping is a very volatile industry, especially in stock prices. To add these now, is a little like being a day late and a dollar short, as they went up significantly today. But, that is telling me the beating that shipping has taken lately, may be the beginning of a significant turnaround.

Solar also had a stellar day today, so I added LDK, ASTI, and FWLT. This is another volitile group of stocks, with Foster Wheeler (FWLT) being by far the most stable of this group, and the best diversified. All of these stocks have great chart patterns. Ascent Solar Technology is the riskiest in my opinion, as they are not making money, and have yet to produce anything. But, the stock price is reasonable. It is $12 under it's 52 week high, and $15 over it's 52 week low. So, it is in the midpoint, and if the market is kind, I should get good stock price growth. LDK is a Chinese solar wafer producing company. It is one of the most pure plays on the solar industry, but not quite the market leader, which I think is First Solar (FSLR - also already in my portfolio). But, the stock price on LDK is much more reasonable than FSLR, so rather than add more of a stock with an expensive price, I added one with a more reasonable stock price. It also adds more diversity to the portfolio.

I also took this opportunity to add shares to RIO and FCX. They are both good companies. RIO produces iron ore, and FCX is in gold and copper. I simly did not have enough of that in this portfolio.

And I might take a moment to defend the down-troddon in my portfolio again too. As luck would have it, two of my favaorite holdings are currently my biggest dollar losers. Yes, they are BHP and DO. No, I do not plan to get rid of them for short term under-performance. These are EXCELLENT long term holdings. BHP is the largest, and most diversified miner in the world. Investors simply have not had faith in the BHP plan to take over RTP (Rio Tinto). I think this aquisition will occur, and it will be a good thing, in the long term. In the short term however, the cat fight will hurt the BHP stock price. But, BHP is a good fundamentals company, and has excellent long term growth potential. Diamond Offshore Drilling (DO), simply had an earnings miss. Not a big miss, but a miss none the same. And the stock price is suffering for it. As one of the best deep water drillers for oil, in a year with projections for increased drilling activity, I have to believe this stock will take a positive turn in the near future. OK, because they took the big dip down early in this game, I may not get the nice returns on them that put them at the top of my dollar winners. They have some ground to make up first. But, I continue to believe in long term investing, and as a long term investor, to fail to have positions in BHP and DO would just be foolish, in my mind.

As I look at my portfolio, I am beginning to like what I see. It is reasonably diversified. Not in all sectors though. It has no banking, limited health care, no real estate, and very small consumer staples. I can live with that. Those may be becoming turnaround industries and sectors, but I just don't think they are ready to contend with mining, industrials, and energy, which my portfolio is loaded with. So, I am counting on slow and steady wins the race. Now, I do have a fair number of very volitile stocks in this portfolio. They could shoot either direction, on any given day, and likely will. I live in hope, that they go up in the short term particularly. I also have many good dividend stocks, so there should be some growth there as well. I have recently reduced my cash position, and am now pretty close to fully invested in stocks, which is what this game is all about.

I am not a "day-trader", so you will not see me making a lot more trades. I did my homework, and picked what I consider to be many of the best stocks for the next two years. Yes, the game will be over before then. Picking good companies is about long term growth, and ultimately, that is part of the game too. Especially for your own portfolio.

And lastly, I would mention I have a reasonable number of stock picks, not a ton of them. I have no doubt a few winners of the round will have fewer stock holdings, and be sector limited. While it may win the game, it is a poor way to manage a portfolio. One should never have so many stocks, that you can't keep up with the fundamentals of each on. In short, don't over-extend yourself, but stay diversified. Probably, if you have more than 50 stock holdings, you have too many. Keep in mind, you still need time to evaluate companies that are not current holdings, as well as the ones that are.

Comments: View Comments |  Wednesday February 13, 2008