The coffee-pot is gurgling and sputtering, the smell of fresh coffee wafting across the room. Sunlight is streaming in from every angle into the 3rd floor bay-windowed living room of the 3-story Hatteras summer home. Everyone else is still asleep, last night’s Scrabble game is sitting on the dining room table beside me, and a beatiful large retriever dog is baying outside a neighbour’s house to be let back in. Less than half a mile away, the ocean rolls up onto the Kitty Hawk shores in powerful rollers that I’m sure surfing trader (or is it trading surfer) Jeff Watson over at masteroftheuniverse would appreciate. The crow’s nest above beckons for a summer morning’s mug of coffee and ocean panorama in the warm morning breeze. Life is good. At least here.
In the markets life is not quite so good - especially for the longs. With mortgage back-stops Freddie Mac and Fannie Mae teetering on life-support, the pace of investors streaming toward the exits has quickened, to say the least. I believe it was Baron Rothschild who long ago counseled ”to buy when blood is in the streets”. For the financials, I think we’re there (though Rothschild never specified how much blood, and how much to buy). Who would have thought that impressive-sounding institutions with names like “First Fourth Fifth Bank with lots of Granite Pillars” would all be jostling for elbow room amongst penny mining stocks? But there you have it.
So with some serious down-leg in the financials, and a bit of a pullback in natural gas, we finally get one of the energy short ETFs turning around and producing some cash instead of sucking it up. In today’s trade, the Horizons Beta-Pro Natural Gas Bear+ ETF conspired with the fallen ProShares Ultra Financials ETF to turn some hard assets into … worthless paper? Just my luck to be averging down the melt-down of the century. 
| REAP TRADES | ||||||||
| # | Trade | Qty | Stock | Symbol | Price | Grp | ||
| 58 | Sold | 33% | HBP NGas Sht ETF | HND | @ | $8.30 | 1 | |
| 58 | Bought | 58% | PrSh Ultra Financ’l | UYG | @ | $16.36 | 1 | |
| Reap methodology detailed in the blogroll under “My Portfolio” | ||||||||
| Qty % are amount by which shares counts are decreased/increased | ||||||||
Although the portfolio surrendered another muddy trench, it again held up better than the Canadian dollar adjusted S&P500, to restore it’s gain over the latter by 6.5% in calendar 2008. So the non-correlation is working to some extent, though not all that well of late, because the heavily-weighted short commodities have been mostly correlated with falling stocks in the past couple of months.
| PORTFOLIO SUMMARY | 14-Jul-08 | ||||
| (in $C, adjusted for $US exchange rates) | |||||
| PORTFOLIO | S&P500 | S&P500 | SP500 $C | REAP | vs S&P |
| Reference Date | Start | Last | % | % | Var. |
| Inception MAR 07 | 1395.4 | 1228.3 | -28.3% | -29.8% | -1.5% |
| Re-start OCT 07 | 1565.2 | 1228.3 | -20.3% | -17.5% | 2.7% |
| 2008 Year to Date | 1468.4 | 1228.3 | -14.6% | -8.0% | 6.5% |
| Discretionary Trading P&L (included in above results) | -5.8% | ||||
| Dividend Yield (current) | 0.90% | ||||
| Canadian dollar | Last | Inceptn | Var. | Restart | Var. |
| 0.9941 | 0.8547 | -16.3% | 1.0069 | 1.3% | |
| Currency Mix | |||||
| Canadian Investments/Cash | 31.6% | ||||
| US Investments | 60.4% | ||||
| Other (country ETFs) | 5.8% | ||||
| Market Bias | Long | 48.7% | |||
| Cash | 0.8% | ||||
| Net Short | 24.1% | ||||
| Net Long | 72.8% | ||||
| Theme Mix | |||||
| Energy / Commodity | 10.7% | ||||
| Short Commodities | 15.7% | ||||
| Environment / Infrastructure | 10.5% | ||||
| Financial | 10.7% | ||||
| Health Care | 10.4% | ||||
| Technology | 13.9% | ||||
| Short Equities | 8.4% | ||||
| Transportation | 7.8% | ||||
| Hospitality | 3.0% | ||||
| Asia | 5.8% | ||||
| Cash | 0.8% | ||||
| Portfolio Notes | |||||
| Inception date is when I started tracking portfolio performance in | |||||
| this blog. I track it to reflect total performance after initial mistakes | |||||
| and discretionary trading losses. A more accurate representation | |||||
| of REAP’s “pure” performance is as of 10 Oct 07, when I | |||||
| re-established it after selling out the portfolio twice due to | |||||
| sub-prime systemic concerns. | |||||
| CANADIAN MARKET HOLDINGS | |||||
| Stock | Sym | Cost | Last | Gain % | Weight |
| Husky Energy | HSE | $42.33 | $45.00 | 6.30% | 2.2% |
| HBP NGas Sht ETF | HND | $10.77 | $8.22 | -23.65% | 3.8% |
| HBP Gold Sht ETF | HGD | $9.98 | $7.57 | -24.12% | 3.2% |
| ING Canada | IIC | $41.12 | $35.27 | -14.23% | 3.4% |
| HBP Ag Bull+ ETF | HAU | $16.53 | $19.30 | 16.79% | 1.3% |
| HBP Oil Sht ETF | HOD | $11.13 | $6.52 | -41.44% | 4.8% |
| IGM Financ’l | IGM | $42.08 | $37.72 | -10.36% | 2.5% |
| HBP Ag Bear+ ETF | HAD | $22.35 | $19.32 | -13.54% | 3.9% |
| Precsn Drilling | PD.UN | $17.65 | $25.32 | 43.46% | 4.4% |
| HBP NGas ETF | HNU | $23.56 | $37.02 | 57.11% | 1.3% |
| US MARKET HOLDINGS | $C Adj | ||||
| Stock | Sym | Cost | Last | Gain % | Weight |
| Broadcom | BRCM | $26.12 | $27.77 | 6.95% | 1.9% |
| Gen & Wyom | GWR | $25.56 | $34.96 | 37.61% | 4.1% |
| PrSh Ultra Financ’l | UYG | $25.14 | $15.65 | -37.39% | 4.9% |
| ISh Australia ETF | EWA | $26.59 | $25.45 | -3.73% | 2.8% |
| Formfactor | FORM | $26.57 | $18.08 | -31.54% | 2.9% |
| Harley Davidson | HOG | $49.90 | $33.07 | -33.34% | 3.7% |
| Roch. Medical | ROCM | $12.37 | $10.10 | -17.87% | 2.6% |
| Forest Labs | FRX | $35.70 | $35.35 | -0.40% | 4.7% |
| Nvidia | NVDA | $23.05 | $11.14 | -51.39% | 3.5% |
| PrSh Rus2000 Sh ETF | SKK | $81.18 | $78.32 | -2.95% | 2.9% |
| Buff Wld Wings | BWLD | $29.29 | $25.30 | -13.11% | 3.0% |
| Cree Inc | CREE | $26.96 | $19.85 | -25.94% | 2.6% |
| PrSh Dow Sh ETF | DXD | $54.46 | $68.09 | 25.76% | 1.2% |
| iSh Asia ex-Japn | EPP | $135.60 | $130.83 | -2.95% | 3.1% |
| Credo Petrlm | CRED | $10.59 | $12.40 | 17.79% | 1.5% |
| Q-Logic | QLGC | $15.95 | $15.65 | -1.31% | 5.7% |
| PrSh NASD Sht ETF | QID | $45.37 | $46.55 | 3.22% | 4.3% |
| PrSh Ultra Health ETF | RXL | $56.38 | $53.97 | -3.71% | 3.1% |
| Sun Hydr’lics | SNHY | $24.85 | $33.69 | 36.39% | 2.6% |
| Trina Solar | TSL | $35.67 | $30.31 | -14.52% | 5.3% |
Things are moving quickly now, so there should soon be more REAP trading signals as this volatile period progresses. Who knows how many more financials we’ll be buying, but my biggest decision at the moment is whether I should take surfing lessons or not.
Happy Bastille Day.
Cheers,
Allocator
a.k.a George Parkanyi
gparkanyi@hotmail.com
