Offbeat Trading

Finally, my first blog

Rating: 1.16 not yet rated(85 votes)    Vote:

You are logged in as | Logout

Well, I finally figured out how to start blogging. I guess it is not too late because I haven't been disqualified yet.

I don't really expect to win the competition-that would require more skill than I have, more time than I have and more luck than I expect to have. I also suspect it will require taking a lot of risks. Instead, my overall investment goal is to try to beat the indices. I tend to favor companies with low price to earnings ratios and companies involved in resources. Everything that we have seen recently, including the subprime crisis and the interest rate cut point to the continuing debasement of our currency, the dollar. It is no wonder that the metals keep going up; actually they are probably staying the same but the dollar is going down; either way it looks the same.

So far, my best performer has been Freeport McMoran Copper and Gold (FCX). Too bad, I don't own it in real life. Even though FCX is up 17% since I picked it up, the P/E ratio is still under 13! Enough said.

Another big gainer has been Fording Coal (FDG, over 13.5% to date), although it has been up and down a lot. Another resource play, I do own some of this in my IRA. The PE on Fording is still only about 14.4 and they pay a 7% dividend as well. I don't know for sure that dividends are included in the results of Strategy Lab, but I assume that they are taken into account.

After the market dropped at the beginning of the competition, I wanted something that would go up a lot on a rebound. I thought that it would be fun to buy some Berkshire Hathaway, since in real life, even one share is too expensive. Even so, I had to buy the B shares (BRK.B), and could only get 30 of them since even one A share would be too large a part of my portfolio. So far they are up almost 9%.

A while ago Ken Kam asked me by e-mail why I chose Valero Energy (VLO). Even after the runup (I am ahead almost 7%) it has a ridiculously low PE of 7.2. Valero has the capacity to refine the lower grades of crude oil and should do well as oil prices increase (I think that this is a long term trend that must be reckoned with, both because of the problems with the dollar mentioned above and because of the fact that the world is running out of the "easy oil" and "hard oil" costs more).

My fifth best performer is Titanium Metals (TIE), a very volatile stock that I do own and like to write covered call options on because the return is high. You can't do that in this SLO competition, but the stock has the capacity to give a good pop to the upside. So far, it has popped up about 5%. The PE is only about 18.5 and the earnings seem to be rising.

That is it for now. Next time I will try to cover the rest of my holdings. Hopefully, they will be up by then, as the market continues to follow the "two tumbles and a jump rule" (two tumbles in interest rates results in a jump in stock market prices).

Comments: 0