October 2009 Trading

Unfortunately, October set a new low for realized gains, although it was only slightly lower than September. Yields were also down a bit, but still at about 8%. The bad news is that I'm holding some unrealized loss. This is concerning, but not anything that I haven't seen before. Fortunately I'm only 35% invested, so I anticipate there will be buy-in opportunities at low prices on the horizon.

In October I sold the following:

• McGraw Hill Publishing
• Exxon Mobil Corp
• Eli Lily and Company

At the end of the month, I'm invested in:

• Lockheed Martin Corp - Down 5.9%. I was up 5.2% at the end of September, but didn't sell! Another demonstration of the wages of greed. This represents about 75% of my current holdings and about 25% if my available funds. Also, I've been holding some of these stocks for nearly 3 months, the longest holding period to date.
• Public Service Enterprise Group Inc - Down 1.1%
• Nokia - Down 3.9%
• Owens and Minor, Inc. - Up 2.2%. This purchase was made at a discount after a bad earnings announcement, and the stock partially recovered after I bought in. Hopefully not a dead-cat bounce.

No dividends were collected this month

Dow 10,000

The big news in the Market yesterday is that the Dow returned to the land of 5 digits. The surge of recent months has been generally concerning as there have been few buying opportunities. And of course, if the market stays bullish and roars to 12,000, those opportunities will continue to be sparse. So that remains a concern.

However, there was a lot of commentary about the event yesterday and I was quite pleased to hear all the pundits be quite wishy washy on the subject, so hopefully some volatility is still forthcoming. I was especially pleased to hear that the the 10,000 threshold has been crossed about 50 times (on closings) since the original passage in October of 1999. So I take this as a good sign that the roller coaster may continue. I'm less than 20% invested at the moment, so I sure hope so!

Metrics

Listed below are several Metrics related to my trading to date. As has been previous discussed, yields and holding periods have risen in recent months. Monthly investments and gains have been reduced, but the ultimate result has been an ongoing increase in overall funds. Although this is somewhat overstated due to an IRA CD that matured and was transferred into my investment funds in September. I also expect this to recur in the coming months as I have several IRA CDs maturing. Although I do have some hesitation since I haven't been fully invested recently.

Another Tweak to the Strategy

During August and September, ideal buying opportunities were few and far between. So, I was forced to adapt my strategy or stay out of the market altogether. So I've actually broken up my by criteria into three different groups and split up my available funds accordingly. The breakdown is:

• Buy in above my established buy price - 25% of funds
• Buy in at established buy price - 50% of funds
• Buy in at bargain prices below my established buy price - 25% of funds

This gives me a viable strategy for most markets:

• Bull Market - I will buy in at higher prices than I typically would, but I would have a maximum of 25% exposure and I would continue to gain some thin profits as long as the market stays positive.
• Up and down market - I would buy in at 25% and a high price and up to 50% at my standard price. I would then invest a maximum of 75% and receive my expected profit for most of these purchases, but some would be thin profits.
• Bear Market - I would continue to buy in as the market slides below my target price range and get bargain prices on 25% of my investments, while 50% would be bought at standard price and 25% would be bought at premium price. On average, I would get my standard profit on 100% of my funds although this might require and extended holding period. But since I'm averaging 8% profit on each flip, this is a respectable return, even if the bear market would last a full year. Plus, dividend income would be significant during a long holding period.
• Flat Market - As noted in previous post, volatility is important for my strategy. So a totally flat market offers few buying or selling opportunities, so this would be a bad scenario if I'm minimally invested. But even this would be acceptable if I'm able to collect dividends on invested funds.