THE BANKER’S SONG
To paraphrase a popular children’s song …
10 banks in the index
and the first one said
“My equity’s gone; the deposits have fled.”
Roll over. Roll over.
9 banks in the index
and the second one said
“The MBS and CDO bids are dead.”
Roll over. Roll over.
8 banks in the index
and the third one said
“The stock price down; another digit shed.”
Roll over. Roll over.
7 banks in the index
and the fourth one said
“I need more cash but they widen the TED.”
Roll over. Roll over.
6 banks in the index
and the fifth one said
“Hank picked another bank to save instead.”
Roll over. Roll over.
5 banks in the index
and the sixth one said
“For the next ten years we’ll be swimming in red.”
Roll over. Roll over.
4 banks in the index
that’s all that’s left,
“but not for long cause we’re all bereft”.
Roll over. Roll over.
All together. Roll over. Roll over.
I digress.
Where was I? Ah yes, big sigh of relief. Not so much from me, because I’ve been doing relatively OK, but the market and the Feds I’m sure. In Canada and the US we’re heading into a long weekend – it would have been quite a nail-biter had we again closed on the lows. However, after being down as much as 65 points, the S&P500 rallied late to close down “only” 10.7 points. So the shorts covered from 3PM to 3:40PM driving the market at one point 25 points into the green, and and then the longs, after overcoming their initial shock at seeing a rally at all, quickly did some covering going into the close.
REAP had another busy day. We went through the batting order with all six groups trading. Group 5 then traded again, and would have traded a third time except for a stupid computer glitch in ScotiaMcLeod’s system that prevented me from doing it. What volatility! Here’s the play-by-play.
| REAP TRADES | ||||||||
| # | Trade | Qty | Stock | Symbol | Price | Grp | ||
| 121 | Sold | 50% | ProSh UlSht SP500 ETF | SDS | @ | $114.73 | 1 | |
| 121 | Bought | 56% | ProSh Ult Financ’ls ETF | UYG | @ | $8.73 | 1 | |
| 122 | Sold | 33% | ProSh UlSht Dow ETF | DXD | @ | $99.28 | 3 | |
| 122 | Bought | 88% | CME Group | CME | @ | $372.93 | 3 | |
| 123 | Sold | 100% | HBP TSX60 Bear+ ETF | HXD | @ | $35.22 | 2 | |
| 123 | Bought | 188% | Genesee & Wyoming | GWR | @ | $24.86 | 2 | |
| 124 | Sold | 50% | ProSh UlSht QQQ ETF | QID | @ | $82.60 | 4 | |
| 124 | Bought | 100% | IGM Financial | IGM | @ | $32.36 | 4 | |
| 125 | Sold | 32% | HBP Gld Shs Bull+ ETF | HGU | @ | $13.12 | 5 | |
| 125 | Bought | 100% | ProSh Ult Healthcr ETF | RXL | @ | $34.52 | 5 | |
| 126 | Sold | 47% | HBP NASD Bear+ ETF | HQD | @ | $44.54 | 6 | |
| 126 | Bought | 73% | Arc Energy Inc Trust | AET.UN | @ | $15.28 | 6 | |
| 127 | Sold | 0% | HSD placeholder cash | HSD | @ | $44.07 | 5 | |
| 127 | Bought | 96% | HBP Gld Shs Bull+ ETF | HGU | @ | $9.58 | 5 | |
| Sold | 100% | HBP Gld Shs Bull+ ETF | HAD | @ | $45.10 | 4 | ||
| Bought | 100% | CME Group (error) | CME | @ | $370.87 | 2 | ||
| Sold | 100% | CME Group | CME | @ | $370.00 | 2 | ||
| REAP methodology detailed in the blogroll under “My Portfolio” | ||||||||
| Qty % are amount by which shares counts are decreased/increased | ||||||||
The gold shares ETF (HGU) made an impressive intra-day short sale. In the first trade it sold at $13.12; in the second it was buying back at $9.58. REAP does stuff like that. I would have never figured that out.
Although I like the holding, I opted to sell the grains short ETF (HAD). It is very thin and barely trades. It’s bid all day was down around $41 or $42, with the offer up around $47. When I saw someone come in with a bid at $45.10, I figured here’s my chance, and liquidated. That position has been very profitable. With the market this volatile, I want to make sure I’m only trading liquid securities, so I can get in or out quickly without worrying about getting jumped. I’ll scratch around for something to replace HAD until the market stabilizes.
I had to move quickly to get the trades done, as I was working, and made an error buying CME in the wrong account. That’s what those two trades are about.
Here are the stats after another wild day, and a very wild week.
| PORTFOLIO SUMMARY | 10-Oct-08 | ||||
| (in $C, adjusted for $US exchange rates) | |||||
| PORTFOLIO | S&P500 | S&P500 | SP500 $C | REAP | vs S&P |
| Tot Retrn | |||||
| Reference Date | Start | Last | % | % | Var. |
| Inception MAR 07 | 1406.2 | 899.2 | -32.6% | -25.6% | 7.0% |
| Re-start OCT 07 | 1526.7 | 899.2 | -23.9% | -13.4% | 10.5% |
| 2008 Year to Date | 1468.4 | 899.2 | -21.6% | -3.9% | 17.7% |
| Discretionary Trading P&L (included in above results) | -5.4% | ||||
| Canadian dollar | Last | Inceptn | Var. | Restart | Var. |
| 0.8523 | 0.8547 | 0.3% | 1.0069 | 15.4% | |
| Dividend Yield (current) | 2.50% | ||||
| Intrinsic leverage (from 2x ETFs) | x | 1.41 | |||
| Currency Mix | |||||
| Canadian Investments/Cash | 58.6% | ||||
| US Investments | 38.1% | ||||
| Other (country ETFs) | 3.3% | ||||
| Market Bias | Net Long | 42.8% | |||
| Cash | 22.4% | ||||
| Short | 17.4% | ||||
| Long | 60.2% | ||||
| Theme Mix | |||||
| Commodity ETFs | 15.0% | ||||
| Short Commodity ETFs | 10.5% | ||||
| Short Equity ETFs | 6.9% | ||||
| Energy | 7.8% | ||||
| Agriculture | 0.0% | ||||
| Alt Energy/Infrastructure | 5.2% | ||||
| Financials | 13.7% | ||||
| Health Care | 4.0% | ||||
| Technology | 8.7% | ||||
| Transportation | 2.5% | ||||
| Restaurants | 0.0% | ||||
| Country ETF | 3.3% | ||||
| Cash | 22.4% | ||||
| 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. | |||||
| *** S&P Comparison is total return to reflect dividend re-investment | |||||
| REAP GROUPS | |||||
| Stock | Sym | Last | Gain % | Weight | Yld |
| Group #1 | |||||
| HBP DJIA Ag Bull+ ETF | HAU | $6.36 | -34.92% | 3.7% | 0.00% |
| HBP NGas Bear+ ETF | HND | $24.47 | 0.00% | 0.0% | 0.00% |
| Husky Energy | HSE | $32.35 | -23.21% | 1.7% | 4.74% |
| Apple Inc | AAPL | $96.80 | 0.00% | 0.0% | 0.00% |
| PrSh S&P Sh ETF | SDS | $110.88 | 86.52% | 1.5% | 0.98% |
| PrSh Ultra Financ’l | UYG | $9.48 | -27.63% | 7.0% | 3.00% |
| Group #2 | |||||
| HBP CrOil Bull+ ETF | HOU | $12.94 | -40.42% | 1.4% | 0.00% |
| HBP TSX60 Bear+ ETF | HXD | $35.43 | 0.00% | 0.0% | 0.00% |
| Harley Davidson | HOG | $29.54 | 0.00% | 0.0% | 0.00% |
| Formfactor | FORM | $17.31 | -9.85% | 3.3% | 0.00% |
| Gen & Wyom | GWR | $25.77 | -0.23% | 2.5% | 0.00% |
| Eli Lilly | LLY | $31.36 | 0.00% | 0.0% | 0.00% |
| Group #3 | |||||
| HBP Gold Bull+ ETF | HBU | $15.98 | 2.86% | 2.0% | 0.00% |
| HBP CrOil Bear+ ETF | HOD | $17.24 | 40.16% | 4.0% | 0.00% |
| Potash Corp Sask | POT | $102.50 | 0.00% | 0.0% | 0.00% |
| CME Group | CME | $393.12 | 10.72% | 5.0% | 5.64% |
| Cree Inc | CREE | $20.93 | 0.20% | 1.2% | 0.00% |
| PrSh Dow Sh ETF | DXD | $94.00 | 78.32% | 3.2% | 1.69% |
| Group #4 | |||||
| HBP DJIA Ag Bear+ ETF | HAD | $45.10 | 0.00% | 0.0% | 0.00% |
| HBP NGas Bull+ ETF | HNU | $9.20 | -42.91% | 4.2% | 0.00% |
| IGM Financ’l | IGM | $33.02 | 0.75% | 1.7% | 6.26% |
| FTSE/Xinhua China ETF | FXI | $27.43 | -23.98% | 3.3% | 3.09% |
| Nokia | NOK | $15.73 | -13.63% | 2.5% | 4.28% |
| PrSh NASD Sht ETF | QID | $81.80 | 96.18% | 0.9% | 0.88% |
| Group #5 | |||||
| HBP GoldSh Bull+ ETF | HGU | $10.20 | -14.93% | 3.6% | 0.00% |
| HBP S&P500 Bear+ ETF | HSD | $39.19 | 0.00% | 0.0% | 0.00% |
| Precsn Drilling | PD.UN | $10.90 | -39.23% | 1.8% | 11.42% |
| PrSh Ultra Health ETF | RXL | $33.73 | -4.90% | 1.9% | 1.21% |
| Sun Hydraulics | SNHY | $21.42 | 1.44% | 1.1% | 1.71% |
| Claym Gl Solar ETF | TAN | $11.68 | -4.46% | 3.0% | 0.00% |
| Group #6 | |||||
| Arc Energy Inc Tr | AET.UN | $15.20 | -18.10% | 4.3% | 15.52% |
| HBP GoldSh Bear+ ETF | HGD | $10.76 | 2.94% | 6.4% | 0.00% |
| HBP NASDAQ Bear+ ETF | HQD | $42.70 | 59.18% | 1.2% | 0.00% |
| ISh Australia ETF | EWA | $14.41 | 0.00% | 0.0% | 0.15% |
| Forest Labs | FRX | $21.80 | -27.07% | 2.1% | 0.00% |
| Nvidia | NVDA | $6.81 | -37.29% | 2.9% | 0.00% |
At one point the Canadian dollar spiked down below 83 cents, but then closed back above 85 at the end of the day. It’s been really pushing against me in US dollar terms. Nonetheless, REAP’s lead over the S&P500 (with a little help from my earlier cash-raising) increased to 17.7% for this year. I feel beaten up but incredibly am still only down 3.9% on the year in Canadian dollars.
So I’ve been holding my ground basically, but the interesting bit is that in this past week, the total share count in the portfolio went up by 25%. That’ll provide a nice boost if the rally continues for a while – as I’m sold out of 3 of the 6 short equity ETFs in the portfolio. But if we keep going lower, I still have some hedges and cash for deeper-discount buying. The portfolio bias is still only 43% net-long.
Was today’s action a capitulation? No. Except for a little while in the morning, trading was much too orderly. I didn’t have any trouble getting filled at or near the bid-offer with market orders. If the rally continues it will be a normal-course bear market rally at best. There’s nothing on the horizon right now to suggest that the fundamentals have changed. The two monkeys on our back – credit and real estate – are still there. And by the way, Pakistan may also be bankrupt.
This is really interesting. Ace trader Jeff Watson, over at his blog masteroftheuniverse, posted this chart of the assets of the Federal Reserve since 1995. How about that little spike there at the end? If and when that money gets into the mainstream economy … (or, $50 latte anyone?)
So everyone have an enjoyable week-end, but be ready to strap on again next week.
Cheers,
Allocator
a.k.a George Parkanyi
gparkanyi@hotmail.com
Copyright 2008 – all rights reserved
1 Comment
October 13, 2008 at 4:41 pm
Great song! You should record yourself playing it and post it on youtube.
http://directory.stocksbuyorsell.com