Archive for September, 2011

The Fed ” Twist “

Wednesday, September 28th, 2011

September 28-2011

Just when I thought we were all set till November…..The Fed has changed the game by announcing it will be an ongoing buyer of  long term Treasuries to decrease its reliance on short term borrowing.

This action will reduce yields on long term Treasuries ( a big new buyer ) and reduce prices on short term Treasuries because a large  buyer will not  be buying.

Our portfolio has $453,744 of what the Treasury won’t be buying. That undercuts our goal of making 3% plus in dividends and interest  and making a ” safe harbor profit ” of another 4.5% from May / November.

I’m not about to fight the Fed, so I am selling out entire positions in BND, BSV, LQD,BIV, VCSH and VCIT. This will result in a realized  loss of $ 1,994 which can be added to the $15,364 in losses we have already taken. Thus, we are down $ $17,058 realized from May 31 ..offest by interest and dividends of about $12,000.

Not bad when you consider we took $116,000 profits off the table May 28 and the S&P 500 is down $134,890 since May 31 versus our  approximately $5,000 loss.

But ” not bad ” doesn’t put food on the table and as of right now with 30 days to go till November we would have been $5,000
better off if we had done nothing with our $1 million on May 31

Another Helping of VXX….Please

Friday, September 23rd, 2011

September 23, – pre market

Those of you who are copying my actions know that I sold my 219 share HYS position on Sep 20 ( loss $815 ) to buy 942 VXX ( including cash adjustment for the sudden change in AOL portfolio construction methods ) And, now I take a loss of $2,293 to sell 843 ALD and raise capital for a further 830 shares of VXX.

Thus since May 28 on a $1,000,000 portfolio I have realized losses of $15,364 offset by un-realized gains of $6,450 and income of pproximately $10,000.

As repeatedly stated previously, our mission was to sail our capital safely through waters notorious for September and October financial
storms protecting our interest and dividend ” catch “.

As of today, we are still in deep water, but much closer to the coastline, and much closer to our home harbor with no financial damage to report and with a portfolio I would characterize as ” seaworthy “.

Going forward, we will keep one eye on this market. but begin to consider the portfolio choices for a November – May Portfolio and proper entry points.

Richard Maurice Gore

Forty Five and Counting

Monday, September 19th, 2011

September 17, 2011

With forty five days remaining until November 1, we are taking VXX profits and using part to help fund a protective portfolio re-alignment.

On May 28, 2011, with $ 1,000,000 in cash, we had 3 choices.

#1 – Stay fully invested in the equity market. Usingthe S&P 500 as a market surrogate, we would now be down $90,000, unrealized, offset by $6,700 in dividends resulting in a net negative result of  $83,000 – ( minus 8.3% ) ….or

#2 – Totally withdraw to the sidelines and go to cash via money market funds of banks or brokers, watch our capital earn virtually nothing and be eroded by inflation.

#3 – Design a $1,000,000 May / Go Away Portfolio, ( which we did ), and watch it lose only $171 – while earning interest and dividends of $ 10, 929 for the 4 months ( positive 3.28% per annum )

Since May 28 the May / Go Away design has beaten the S&P 500 by 11.58%.

Call it luck, or good timing or we can just say maybe the ” Play till May ” refrain continues to have some relevence as an action guide.

For us, there is nothing slavishly compelling about this idea. We say Go Away in May unless there are compelling techno / fundamental reasons to stay invested. We will re-enter the market in November providing there aren’t compelling reasons to be defensive.

We are now ( unequally % ) invested in the symbols shown below. To determine our percent allocation for each symbol…just ask.

As always this information is free to family, friends, former associates and those new to self directed IRAs.

ACC, AGNC, ALD, BIV, BND, BSV, GLD, LQD, NLY, PSA, RYU,
SH, VCIT, VCSH, HYS

RMG@RichardMGore.com

3 Month Update from May 28 + Tweak

Sunday, September 4th, 2011

September 3, 2011

S&P 500 …….. $ 1,173.97

52 Week High …$ 1,370.58

52 Week Low … $ 1,091.15

Our minimum stated goal for the May / November time frame ( even though we didn’t enter the market until May 28 ) is $ 7.5% per annum, $37,500 – by November 1, 2011.

Here is the update through Friday, September 2, 2011.
$1,000,000 portfolio.

Realized Losses…………….. ( $13,478 -)
Unrealized Gains……………… $12,982 –
Dividends + Interest………… $ 9,007 –

Thus, after 3 months investing, our net total return is $ 8,511 –
3.4% per annum versus a negative real return ( after inflation )
for those letting their money rot in brokerage and money market
accounts. ( return is 2.55% from May 1, 2011 )

With two months till November, Housing, Jobs, Europe and Government
Inertia issues overhang the market. And, to say the investing enviornment is uncertain almost seems charitable.

Under the circumstances, and with the chill investing winds of October
just over the horizon, I expect plenty of volatility, I see the need for
a Tweak and I’m willing to accept some Tweak losses to position the
portfolio to ride out what I regretfully expect.

The following sales create Tweak losses of $10,468 –

Selling 2,475 shares AMJ @ 34.90
Selling 841 shares JNK @ 38.32
Selling 363 shares XOP @ 51.06

These shares will be replaced by the following purchases

Buy 616 shares VXX @ 41.58
Buy 314 shares BSV @ 81.68
Buy 228 shares LQD @ 112.69
Buy 677 shares ACC @ 37.82

If you want to see the updated May- Go Away Portfolio as updated
e-mail me at rmg818@aol.com ..as always, no charge.

Bye for now Richard Maurice Gore ( Dick Gore )