Friday, October 13, 2006


Weekly Summary: Cash is King for now

This week was much like the last few weeks. The portfolio continued to push ahead, rising 1.8 percent to a new all time high, but in relative terms, I continued to lag the Russell 2000. One of the things contributing to the drag on my relative performance is my large cash position, which is now nearly 25 percent of my portfolio. On top of that, I have some stocks (CNSI and OLGR) that are being bought out and hence aren’t moving. Although this is making it difficult to outperform in a rising market, I am satisfied with my portfolio allocation. My long-term thesis is that this is a sideways market and given the run up in the indices over the past few months, I think we may be close to the top of the trading range. Although I have been nibbling on a few stocks (buying a bit more VTEK, PEAK, and starting a new position in PTG), on the whole I am not finding a lot of “value” out there, so I prefer to maintain a large war chest in case the market corrects and more bargains appear.

So I see MNCS.OB fell another 50 percent today (I guess not too many people read the Vancouver Sun article when this stock was still over $8?). Though it’s hard not to gloat, I must confess I got suckered into the same sort of stuff when I first started investing in 1998. I would tell you the names of the companies but almost all of them were BB stocks and every single one of them has disappeared from the face of the earth. Fortunately, being a college student, I didn’t have much money back then, but it still really hurt (in total, I think I lost about $10,000 during my first foray into the market, this during the biggest bull market in history). Luckily, I didn’t give up. I picked up the pieces and started putting money back into the market in late 2000 (good timing, eh?), but this time I was able to avoid many of the traps that novice investors fall into. And so far so good.

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