A Hurdle I Haven't Overcame

In general, I've been very pleased with the results of my trading.  The financial rewards are the primary evidence of this, but also, I've been pleased with my ability to adjust my strategy to be more flexible for dealing with various market conditions.  Even though my current holdings are in the tank, I'm convinced that I'm doing the right thing.

However, there is one aspect of my strategy that I'm not comfortable with.  I don't feel that I'm doing a good job of adjusting to long term changes in individual stocks.  For example, I bought and sold Pfizer (PFE) several times during the first few months of trading.  I bought in the $14 range and sold in the $15 dollar range.  Given this, I have a hard time with the idea of buying this stock at a higher price.  So it's now effectively outside my trading universe even though it still meets all of my trading criteria and if fact has increased it's dividend in the last year. 

I'm not sure if it's a good thing or not, but the recent tumble in the market has actually increased my unwillingness to overcome this hurdle.  Many stocks under consideration have hit 52 week lows and have fell back into my price range, reinforcing my unwillingness to raise my buy price.  And of course, my inherit "thriftiness" is also a factor in my unwillingness to raise my buy prices.

Perhaps more importantly, I'm concerned that I'm missing downward signals. I bought and sold Nokia last year in the $13-14 range, so when it fell within this range this year, I was sorely tempted to by. Fortunately, I overcame my initial temptation, but I eventually bought in when it fell below $10.  I knew enough to keep the purchase small.  But was even that too much.

I guess awareness is a good first step, but my hope is to analyze my ongoing assessment of stock value to match and improve on my past success.

May 2010 Trading

To start with the good news, May was a good month for accumulation.  I processed 10 buy transactions which is the fourth highest month to date.  At month end, I'm 97.5% invested and would have been further soaked if not for a need to reserve some cash for an expected need at the end of June.  And dividends will begin flowing from these accumulations in June which will have no less than 4 dividend payouts.

However, I made no sales and collected no dividends in June.  Thus, no gains were realized for the second month since trading began.

My current holdings and unrealized gains/losses are as follows:

• Exxon Mobil - Down 9.6% - Div payable in June
• Exelon Corp - Down 14.3%- Div payable in June
• FirstEnergy Corp - Down 7.0%- Div payable in June
• Telecomunicacoes de Sao Paulo - Down 2.9%
• Telecommunications Systems - Down 17.1% - Expanded holdings during the month to have a fairly substantial holding, purchased at attractive prices.  Unfortunately, the stock is quite depressed at the moment.
• National Grid PLC - Down 9.1% - Goes ex-div in early June
• Total SA - Down 2.1% - Semi-annual dividend payer, took a bit of a dip when it went ex-div in May, but took lots of other market driven dips too. - Div payable in June
• Sempra Energy - Down 2.3%
• Harsco Corp - Up 3.3%
• Nokia - Up 1.1% - Small holding.  This one actually scares me a bit.  Lots of bad news lately, but the price was too good not to dip a toe in.

1 Year and 1 Month Report Card

Wow, what a horrible month!  I started the month underwater and things went south from there.  I've been as low as 12% in the red when the Dow dipped below 10,000 yesterday.  And I've been in a negative position for all my holdings for most of the month.  Thanks goodness for a strong day today and hopefully a strong day tomorrow to finish up the trading month.

Although the market has been terrible, I'm pleased to say that this has not caused me to stray from my strategies or lose sleep.  I bought a lot of bargains on the way down and I'm still very confident that all my purchases can be sold for my usual profit one day.  I wish I could say the same for my long term holdings of BP.  I'm also pleased that I will be able to collect dividends (as planned) while I'm waiting for the market to rebound.

So yeah, I'm in a hole at the moment, and am looking at some slow months in the future.  But this has not shook my confidence in my strategies and this is very reassuring.