I Eat Bear

Well, you could say, heed me not, as my portfolio is down more than 55% in just a year.

Then again, there is another way to look at this. 7 out of 12 months, I seriously out-performed the market as a whole. Ok, the other months were bad, and I do mean REALLY bad, but at the same time, those were the months that were bad for almost everyone.

Now, this is for YOU to decide. If you think we will have a bear market EVERY YEAR, consider me a fool, and move on. If you think, this last few months of the market is a little abnormal, you might want to give some of the rest of this some thought.

Two things I maintain. One is fully invested. The rules of strategy lab do not require fully invested, but more like 80%. I exceed that in both intent, and actuality. The second, is I maintain a diversified portfolio. I do that not only for the best investment strategy for the long term, and it is, but for the opportunity, to find greater growth, in both single stocks, and sectors.
Most lab winners, do so on 5 stocks, or less. Great for a game, but a POOR way to manage your portfolio.

So, without further ado, at present, I am recommending the dry shipping sector. The sector is simply pounded down too far. I am increasing the percentage of my portfolio of them. Now, they do have risks. Most have a significant amount of debt. Significant, but not insurmountable. The margins, have in the past, made those a reasonable risk, that not only will debt be covered, but that there will be funds for future investments in newer vessels. Notice my caveat, in the past. I am an optimist, and I think they will again. Maybe not so much because I believe in companies, but because I believe in OCEANS. Then again, there are a few decent dividend providers in this sector too. It is a VOLITILE sector, and if you are at all squeemish, this is NOT for you. It does offer some "oooh wow", returns possibilities for the long term, and if you time it right, you could become FILTHY RICH, just to mostly day trade it. Or you could lose the shirt off of your back if you miss, especially day trading. Buy good ones, and hold, for most of you.
TBSI, DSX, DRYS, GNK. Not a long term loser in the bunch. ATW is a good stable tanker company too, but not so much of a dry shipper. It could appreciate, in a better market.

I am violating one of my personal rules right now, and I do NOT believe any sound investor should have more than 5% in a single stock. But, I do. TNH, is approaching 10% of my portfolio. Many times, I have touted diversification, but in THIS market, it is just too good of a company, and the dividend simply can not be ignored. At this time, even I may be adding to it, for the SHORT TERM. It is SECURE,, or as close to anything I have found. Ok, they are pulling back on production, and that could be a bad thing for revenues. Or is it a good thing, for costs? I like the Agriculture sector, for the long term. Prices are showing signs of recovery. I would not wait much longer to get into this one. The stock price is NOT cheap, but I don't see it getting much cheaper either. A 10+% dividend? You have to believe in something. It is high, but even if it fails for a short term, the dividend is the company orientation, and it will be returned later.

CVX (Chevron) and FSLR (First Solar), I have a fair amount of. Largely because I had the shares already, and I did not sell. The good side there, is they lost little (compared to others).
Now, they could fall, to be more in-line with the market, but I doubt that. More likely, I think the market will recover, and they will recover faster. Despite the massive fall of oil, and my personal disfavor with COP (Conoco Phillips) (it simply is not the best at what it does), I have to call COP a buy right now too, and I am adding to it.

Add positions of GOLD and SILVER. Currently, the dollar is on the increase, and they are suffering. But, the "economic stimulus", has a price, and the dollar will fall. Don't bet the farm on these metals, or miners, but a reasonable investment in them would be hard to lose on, for a LONG TERM investor. AUY, GG, EGO, and HL might be things to look into.

Stocks I just plain LIKE. BHP (BHP Billiton), and DO (Diamonfd Offshore), just have too good of a history to be ignored. They will outperform again, in ANY kind of market, up or down. They are VERY well managed companies. Keep an extra percent or two, just for that. If it falls, take your lumps. AND, WAIT. You will not be dissappointed. Now, Diamond Offshore, is itself a subsidiary, but still a sound investment.

Bouncers, is another reason to keep a sound percentage in your portfolio. They usually have a technological advantage that keeps them strong. For these three, I like JOYG (Joy Global), NE (Noble Corp), and SII (Smith International). It is unforntunate, that NE and SII, have been hit by the oil price downturn, but if it even marginally hits a decent price, these companies will SERIOUSLY outperform.

Lastly, this is a very good time to be investing in SMALL companies. IF they bounce, you stand to gain, some EXCEEDINGLY LARGE percentage gains. The risk is high, but if you select wisely, you limit a lot of that. Pick secure sectors, and look at them for acquistions targets. Long term investing, is about large percentage gains. Dividends help, but, many of the smaller companies will simply blow away the dividends and stock price gains of larger more stable companies. The smaller stocks may get more on stock price gains alone, than some bigger counterparts For these, I like AXAS (Abraxas Petroleum) HL (Helca Mining) and GLBL (Global Industries). All have a history, of higher stock prices.

I have mentioned only a few, of a multitude of stocks available. I wish I could say I am always right, but I am not. Still, I do believe these few stocks could be the beginning of a good portfolio, and will enhance an existing one.

Do your OWN research, and when you do, let me know, how much you beat me by. I am not too old to learn. Just these,,, well experience tells me. My chances of market beating returns, are decent at best.

Chances. They are just that. So, Invest as much as you can feel comfortable with, and no more.

Then do one more thing. Imagine what you "think" you would do, if you were really rich. Probably, and hopefully, that is not what you would really do, but some part of that may not be all bad.

Expect to lose, and if you don't,,, you should be VERY HAPPY.

Money does NOT buy HAPPINESS. It might help though, to buy your way out of UNHAPPINESS!

Comments: View Comments |  Tuesday January 13, 2009