Saturday, June 18, 2005

 

Trading Experiments!

Given my large cash position (now over $80,000) and the dearth of great value stocks out there, I've decided to put some of that money to work by doing something fun, informative, and hopefully profitable. I am going to use 10 percent of my capital and create four portfolios of $10,000 each. Each portfolio will adhere to a different trading strategy. The four portfolios are:

1. "The Good News Bear"

This portfolio will buy beaten down stocks after they have released good news. The idea is that investors will price in the good news only slowly, which will generate high returns to those who get in quickly.

Open Position: None

Closed Positions:
ZEUS bought at $15.20. Sold at $15.95 (Profit: 4.9 percent)

2. "Momentum Moose"

The Momentum Moose portfolio will buy stocks that are displaying strong upward momentum and a significant increase in trading volume.

Open Position: None

Closed Positions:
AE bought at $20.89. Sold at $21.95 (Profit: 5.0 percent)
MNTA bought at $24.01. Sold at $24.11 (Profit: 0.4 percent)

3. "Short the Pig"

As the name suggests, this portfolio will short some of those smallcap stocks that have been bid up by daytraders to unsustainable levels. To limit risk, I will only short stocks that have soared despite no discernible news and that are starting to show signs of breaking down.

Open Position: None

Closed Positions:
HOTT sold short at $20.90. Covered at $18.74 (Profit: 10.3 percent)

4. "Cuz Cramer Said So"

This portfolio will buy stocks that are being hyped by Cramer. I will not buy them at the open. Rather, I will wait for any dips in the stock price.

Open Position: None

Closed Positions:
TWX bought at $16.20. Sold at $17.21 (Profit: 6.2 percent)

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