Saturday, May 13, 2006

 

Weekly Summary: Buying Opportunity

Another tough week for the portfolio: down $14,885 (2.0 percent). However, unlike last week, my portfolio outperformed the S&P 500 (down 2.6 percent), the NASDAQ (down 4.2 percent) and the Russell 2000 (down 5.0 percent). I know many of you are scared by how much the market dropped over the past few days. Don't be. If your view isn't "I eat corrections like this for breakfast" then you probably haven't been in this market very long. If you were smart, you would had used the strength of the market over the past few months to build a nice cash position, which would position you well to pick up shares from all the panicky investors out there. While I continue to keep a defensive posture and will keep my buying limited, I do intend to use any further weakness in the market to add to some of my favorite positions.

Comments:
"If you were smart, you would had used the strength of the market over the past few months to build a nice cash position ... "

Quite a condescending comment from someone who only has a cash position of $100K vs. over $700K in positions, virtually all in very low volume stocks that are difficult to liquidate in a crunch.

$100K in cash doesn't sound like much vs. the over $700K in positions, only 14%. Maybe you should re-read your advice and take it yourself.
 
Or maybe it's 100K in cash and 600K in positions, can't tell for sure from your website. That would be a little better, but still would only be 17% cash, still very low considering the risk of all your illiquid positions.
 
I agree to a point, best to drop any weak stocks, hold the stong ones with tight stops and keep adding to a watch list of stocks to buy. I would not add to any positions or take any new positions until the market has finished its correction and is headed back up. Yes you may not catch the exact bottom but its cheap insurance. I went from 100% invested to 85% cash Friday morning, will protect my 36% gain this year, was up 40% and should have sold Thrusday, but was out of town.
Chris
 
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