Wednesday, January 11, 2012
Sell High, Buy low
Since looking at my portfolio in aggregate and making some mental decisions, I have fortunately pulled the trigger on part of my plan. After the week of November 14 in which we saw huge gains in the market and the Dow hitting in the mid 12,000, I dumped some of my Red Hat and (sigh) half my Under Armour. My timing was extremely fortuitous as both stocks were near 52 week highs. Since that time, Italy's debt has bubbled to the forefront and unlike Greece, which could be bailed out, the back and forth on will it or will it not be saved will not occur with Italy. The market, of course, fell the much ballyhooed greatest amount for any Thanksgiving week since 1932. So now I have cash on hand and, after ping ponging back to its cyclical low of 11,100, dare I pull the trigger on Mosaic and Teva? The issue is do I think that "solutions" to Italy's problems will pop up sending the market up, or is Italy and the European union a lost cause and were heading for a Lehman like fall?
Well, I did pull the trigger near the lows, and diversified by taking my $52 Red Hat money and buying Mosaic, and my $82 Under Armour money and buying Teva. Since that time, Red Hat has falled to about $43 and Under Armour has fallen to $75 whereas Mosaic is up to $55 and Teva up to $43. So my diversification plan worked so far. I will point out, I still love Under Armour as a long term hold, and if it falls below $70, I would try to accumulate more of it.
With the leftover money, I increased my Brigus Gold holding. That has since fallen. Mining stocks took a bath in 2011, and I was mildly exposed. Although Northgate went way up when it was purchased, Brigus and Crocodile have fallen. Indeed, Crocodile has recently been the target of a major stock purchase by a holding company. They want 85% of the stock and are sadly offering less that what I payed. So, either I hold Crocodile and hope they don't get taken and keep that with Brigus as my undervalued mining stocks while dumping Aurico (the company that bought Northgate) and purchasing another mining stock (maybe silver). Or, I accept Crocodile gets bought, I lose on that high/risk high reward investment, and look for another mining stock. My long term goal is 3 stocks totaling 12% of my portfolio. In the meantime, I really like Brigus and look for strong gains this year.