TRADING UPDATE #55
The fast-and-furious action continues as all hell has broken loose and continues to prevail in the energy markets – particularly natural gas. I’m usually satisfied with 7 REAP trades a month. This week we’ve had 7 in four days, and for the month of July a total of 13, a record I’m sure won’t be topped for quite some time. The reason – incredible volatility in commodities. Natural gas especially, and to a lesser extent grains and oil have all plummeted in the past couple of weeks. After today’s trades, I’m almost out of natural gas short ETF.
To illustrate the extent of this volatility, at one point last month the long gas ETF was up almost 100% and the short ETF was in the hole by almost 50%. As of today’s close, the long ETF was down 20% and the short ETF ahead by 22.7% – with a lot of profit-taking on the way up and now on the way down. These types of moves are typical of the natural gas market, though not usually to these extremes. I love this behaviour!
The big spike in financials has also made a difference, allowing me to unload a sizeable and very profitable chunk of the ProShares ETF. Some of the money from the energy shorts and financials profit-taking has shifted into the long side of the commodity ETFs and energy stocks (Husky Oil and Credo Petroleum), but the most has been deployed into technology, creating sizeable positions in each of Q-Logic, Broadcom, FormFactor, and Nvidia. The latter two are deeply under water now, but when the market turns, these will rocket off the lows.
The equity rally so far hasn’t gone far enough to drive down the equity short ETFs far enough for any accumulation. The hedge is a little light if we’re in for another sharp downdraft in stocks. Having said that, REAP’s 2008 lead on the S&P500 is now at 9.1%. Over 7 months, REAP is handily beating the market - a crappy market for sure, but the market none-the-less.
To grease the skids a little, I swapped Broadcom and Formfactor between Groups 1 and 2. This allowed me to take advantage of the spike in HND, and create a fairly evenly distributed swath of tech stocks. It also shifted a little equity from Group 1 to Group 2, balancing that out as well. It didn’t affect the correlation dynamic in the groups, because I swapped tech for tech.
| REAP TRADES | ||||||||
| # | Trade | Qty | Stock | Symbol | Price | Grp | ||
| 66 | Sold | 31% | HBP Ag Bear+ ETF | HAD | @ | $24.14 | 4 | |
| 66 | Bought | 55% | Credo Petroleum | CRED | @ | $11.71 | 4 | |
| Moved | 100% | Broadcom | BRCM | 1->2 | ||||
| Moved | 100% | FormFactor | FORM | 2->1 | ||||
| 67 | Sold | 50% | HBP NGas Bear+ ETF | HND | @ | $13.54 | 1 | |
| 67 | Bought | 49% | FormFactor | FORM | @ | $16.68 | 1 | |
| Reap methodology detailed in the blogroll under “My Portfolio” | ||||||||
| Qty % are amount by which shares counts are decreased/increased | ||||||||
And the stats …
| PORTFOLIO SUMMARY | 24-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 | 1252.5 | -25.5% | -24.7% | 0.8% |
| Re-start OCT 07 | 1565.2 | 1252.5 | -17.8% | -12.4% | 5.3% |
| 2008 Year to Date | 1468.4 | 1252.5 | -12.0% | -2.9% | 9.1% |
| Discretionary Trading P&L (included in above results) | -5.4% | ||||
| Dividend Yield (current) | 0.85% | ||||
| Canadian dollar | Last | Inceptn | Var. | Restart | Var. |
| 0.9849 | 0.8547 | -15.2% | 1.0069 | 2.2% | |
| Currency Mix | |||||
| Canadian Investments/Cash | 30.1% | ||||
| US Investments | 63.7% | ||||
| Other (country ETFs) | 6.2% | ||||
| Market Bias | Long | 56.1% | |||
| Cash | 0.6% | ||||
| Net Short | 21.6% | ||||
| Net Long | 77.8% | ||||
| Theme Mix | |||||
| Energy / Commodity | 15.2% | ||||
| Short Commodities | 13.2% | ||||
| Environment / Infrastructure | 8.6% | ||||
| Financial | 9.0% | ||||
| Health Care | 10.3% | ||||
| Technology | 16.9% | ||||
| Short Equities | 8.4% | ||||
| Transportation | 8.4% | ||||
| Hospitality | 3.2% | ||||
| Asia | 6.2% | ||||
| Cash | 0.6% | ||||
| 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 | $42.12 | $41.44 | -1.62% | 3.2% |
| HBP NGas Sht ETF | HND | $10.76 | $13.14 | 22.07% | 2.0% |
| HBP Gold Sht ETF | HGD | $9.98 | $9.89 | -0.87% | 3.9% |
| ING Canada | IIC | $41.12 | $36.74 | -10.66% | 2.2% |
| HBP Ag Grains Bull+ ETF | HAU | $16.07 | $15.00 | -6.69% | 2.0% |
| HBP Oil Sht ETF | HOD | $11.13 | $8.62 | -22.58% | 4.1% |
| IGM Financ’l | IGM | $42.08 | $41.10 | -2.33% | 2.5% |
| HBP Ag Bear+ ETF | HAD | $22.35 | $25.15 | 12.55% | 3.3% |
| Precsn Drilling | PD.UN | $17.65 | $21.46 | 21.59% | 3.5% |
| HBP NGas ETF | HNU | $27.24 | $21.99 | -19.27% | 2.9% |
| US MARKET HOLDINGS | $C Adj | ||||
| Stock | Sym | Cost | Last | Gain % | Weight |
| Formfactor | FORM | $28.51 | $16.57 | -40.99% | 4.5% |
| Gen & Wyom | GWR | $25.56 | $40.53 | 61.03% | 4.4% |
| PrSh S&P Sh ETF | SDS | $63.30 | $69.36 | 11.25% | 2.0% |
| PrSh Ultra Financ’l | UYG | $25.16 | $20.90 | -15.65% | 4.3% |
| Broadcom | BRCM | $25.99 | $23.71 | -7.38% | 3.3% |
| ISh Australia ETF | EWA | $26.59 | $25.88 | -1.19% | 2.6% |
| Harley Davidson | HOG | $49.90 | $36.99 | -24.74% | 3.9% |
| Roch. Medical | ROCM | $12.37 | $11.56 | -5.12% | 2.7% |
| Forest Labs | FRX | $35.70 | $35.05 | -0.32% | 4.4% |
| Nvidia | NVDA | $23.05 | $11.03 | -51.42% | 3.2% |
| PrSh Rus2000 Sh ETF | SKK | $81.18 | $73.00 | -8.69% | 2.6% |
| Buff Wld Wings | BWLD | $29.29 | $28.52 | -1.14% | 3.2% |
| Cree Inc | CREE | $24.35 | $19.70 | -17.85% | 4.1% |
| PrSh Dow Sh ETF | DXD | $54.46 | $64.09 | 19.48% | 1.1% |
| iSh Asia ex-Japn | EPP | $45.20 | $44.70 | 0.41% | 2.9% |
| Credo Petrlm | CRED | $11.49 | $11.10 | -1.90% | 3.7% |
| Q-Logic | QLGC | $15.95 | $19.11 | 21.63% | 6.6% |
| PrSh NASD Sht ETF | QID | $45.37 | $45.76 | 2.41% | 2.7% |
| PrSh Ultra Health ETF | RXL | $56.38 | $57.75 | 3.99% | 3.1% |
| Sun Hydr’lics | SNHY | $24.85 | $37.57 | 53.52% | 1.6% |
| Trina Solar | TSL | $35.67 | $25.67 | -26.93% | 2.9% |
Still being significantly down in absolute terms, REAP may not look like much yet – but it is working exactly the way it should. It’s just masked by a really lousy market. (Reminds me of a favourite expression of my good friend and business associate Mark Brady of Jacksonville, FL – “It may be a dog, but it’s my dog.” )
Cheers,
Allocator
a.k.a George Parkanyi
gparkanyi@hotmail.com
Copyright 2008 – all rights reserved
