March 2012 Trading

March was a modest month.  I was able to collect dividends and make one sale.  As reported in February, this added to my best quarter to date. 

No new purchases.  Several stocks were approaching my sell price at the end of the month, but the market turned before I executed sales.  But this is fine as I have plenty of cash to buy back in.  Looking for a small correction to allow me to reinvest. 

Purchases this month:

• None 

Sales this month:

• SPDR S&R 500 - 7.5% gain.  Liquidated remaining half of these holdings.  

Current holdings and unrealized gains/losses are as follows. Still pretty deeply in the red for most holdings.

Dividends this month

• Exelon Corporation
• Life Partners Holding, Inc 
• Harris, Corporation
• Encanta Corp

Dividend Downgrade

For the first time, I've experienced a downsizing of the dividends for one of my holdings. Life Partners went from $.20 per share to $.10. Obviously this reflects the downward spiral of the stock and generally poor prospects.  Nonetheless,  the price has staged some minor rebounds (probably because the dividend was cut more), and I'm in for the log run as I've already held this stock for over a year. 

February 2012 Trading

February was a great month for sales.  I closed out positions in most of my index holdings and almost doubled the previous monthly high for realized gains.  In fact, I've already broken the prior record for a quarter with a full month to go in Q1.  This month alone exceeded the opportunity cost  for the whole year (based on 5 year CD rate).

I did make my first new stock purchase in over three months (since 11/21/11), but I'm still down to 34% invested.  This is due to many sales, a transfer of a 401k into my trading account and 2011 Roth IRA contributions.  So lots of cash to play with now and incentive to dip back into the market more strongly.

Purchases this month:

• EnCana Corp. - Although I've not been actively looking for new opportunities, this price was so attractive I couldn't pass it up.  This decision was borne out by the 4% gain in the first three days.  I have a rather high sales price on this at the moment, but I may adjust once I cross the standard 5% threshhold. 

Sales this month:

• SPDR S&R 500 - 6% gain.  Liquidated about half of these holdings.  
• iShares S&P 500 - 4% to 27% gains - I liquidated all holdings in four different accounts over the course of the month. 

Current holdings and unrealized gains/losses are as follows. Most of the remaining holdings are pretty deeply in the red.

No dividends were collected in February, but several are expected in March. 

January 2012 Trading

January represented a fairly good month for both unrealized and realized gains.  Also, a few dividends were collected, but no new acquisitions for the second month in a row, leaving my percent invested continuing the downward path to 76.7%.  It would be nice to get this a little lower, but I am now better prepared to look for other opportunities.

Most noteworthy this month is that I left my enployer of 4+ years, so I have a significant amount from a 401(k) that can be rolled in the investment pool for active trading.  This should add about 10% to the investment pool.  Also, since I had a few gaps in empoyment in 2011, I'm eligible to make Roth IRA contributions for my wife and I for last year.  These factors will further reduce my percent invested.

Sales this month:

• Harte-Hanks, Inc - 9% gain.  Liquidated final 80% of these holdings.  Took several sessions to liquidate further reinforcing my feelings about small caps. 

Current holdings and unrealized gains/losses are as follows. 

The following dividends were collected. 

• Navios Maritime Holdings
• SPDR S&P 500
  

2011 results

2011 was another year of education for me.  As I've indicated in previous posts, I've realized a lot of gain, but I've also maintained higher levels of unrealized losses than in the past, so it's hard to call 2011 and unqualified success.

The graph below represents the positive side of my 2011 results as compared to 2009-2010.

Blue - monthly realized gain

Yellow - 6 month moving average

Red - 12 month moving average

I also learned (or re-learned) the following lessons.

• Take profits when you can.  There are several underwater holdings that were once well in the black.  Shoulda, Coulda, Woulda.
• Be wary of small cap stocks.  These cannot be quickly liquidated in quantity at market price.
• Stick with dividend stocks that pay on a quarterly basis.  TSYS and NOK are exceptions to this rule that have resulted in marginal reductions in my dividend income.

2012 is off to a slow start and I have not made any conscience changes in strategy as I did in 2011.  I find myself with significant holdings in market index ETFs and I'll need to decide if this approach continues to make sense in a (hopefully) rising market.  I also expect to have funds from a relatively large 401k becoming available and I'll need to decide if I want to put these finds into the investment pool and handle them in some other way.   

December 2011 Trading

December capped a very interesting 2011.  Like the rest of 2011, I took profits in December and collected dividends.  I also found myself with considerable unrealized losses for most of my holdings, although I'm well off the lows.

December did hold one surprise that I didn't recognize until the month was over.  This was the first month since I've been trading when I did not make a single purchase.  This, along with sales lowered my percent invested to less than 85% for the first time since July.  This leaves me better prepared to take advantage of buying opportunities that might arise.  But I'd be happy with a bit of a rally that would allow me to become considerably more liquid.

Sales this month:

• Entergy Corp - 7% gain.  After holding some shares for over a year, I finally was able to close out this position with the desired gain. 
• Harte-Hanks, Inc - 7% gain.  I was able to close out about 20% of these holdings before the stock dropped again.  This has reinforced the lesson I had previously learned about small cap stocks.  These are challenging to unload at the desired prices and should be avoided if possible. 

Current holdings and unrealized gains/losses are as follows. 

The following dividends were collected. 

• Entergy Corporation
• Harte-Hanks, Inc.
• Exelon Corporation
• Life Partners Holding, Inc 
• Harris, Corporation
• iShares S&P 500 Index Fund

November 2011 Trading

November was very volatile, with no gains being realized until the last day of the month.  And even those were quite modest.  But the month ended on a significant up-note as did October, so the expectations for December are quite high.  As with October, I continue to be about 91% invested.

The only sale this month:

• Lockheed Martin Corporation - 7.4% gain - small gain, small holding, but not bad for a nine day holding.  Second month in a row to sell my LMT holdings. 

Current holdings and unrealized gains/losses are as follows.  Very similar to the end of October.
 

No dividends were collected during the month. 

October 2011 Trading

October represents another mixed month, but most of the news was good.  Although unrealized losses still exists, things moved in the right direction leading me to my highest ever market values and net worth in both absolute and adjusted terms.  I was also able to collect gains for a couple of small holdings.

Sales this month:

• Intel Corporation - 15% gain - nice run up on a four month holding.
• Lockheed Martin Corporation - 7% gain - small gain, small holding, but 7% is 7% on a three month holding. 

Current holdings and unrealized gains/losses are as follows.  All holdings moved in a positive direction and 3 holdings are actually in the black including IVV which is my largest holding.  ETR and EXC are also relatively large holdings.

The following dividends were collected. 

• Navios Maritime Holdings
• SPDR S&P 500

September 2011 Trading

It was the best of months....

........it was the worst of months.

September was the single highest revenue month that I've experienced to date.  I had the single largest percentage gain on a stock (85%!) and the largest revenue associated with dividends in a month.  

September was a horrible month for the market, my unrealized losses have approached, but not surpassed the absolute and percentage highs experienced in September.  And given the fact that I've been nearly 100% invested (95% at month end), I' was limited in my ability to use my remaining cash to buy in at the low prices.  

Sale this month:

• Harleysville Group Inc. - 85% gain!  I bought into this stock in a small ways about 6 months ago.   At the time, I expressed concern that I was putting too much money into small caps, so I did not double-down as the stock price dropped after my initial buy-in.  Although my holding was small, I was very happy to hear the buyout rumors, then the actual announcement of a buyout tender from Nationwide at a very lucrative price.  As I noted above, this pushed my realized gain above the previous monthly high.

Current holdings and unrealized gains/losses are as follows.  Another challenging month with lots of ground to make up.  Several stocks poked their head above water during the course of the month, but most sank again just as quickly.

The following dividends were collected.  Best dividend month to date.

• Entergy Corporation
• Intel Corporation
• Harte-Hanks, Inc.
• Exelon Corporation
• Life Partners Holding, Inc 
• Harris, Corporation
• Lockheed Martin Corporation
• Harleysville Group Inc.
• iShares S&P 500 Index Fund

August 2011 Trading

August was a rough month, but it had some interesting moments.  Despite the generally downward direction of the market,  Life Partners staged a very nice rally pulling out of a deep, deep trough.  In fact, it rallied to the point where I was 10% up.  Alas, I did not sell, so I'm back in the red for that holding at month end. 

The depressed market of early August had me buying into the market very heavily.  At one point I was nearly 100% invested.  By the end of the month, I was down to about 91.5% invested because of new funds that I brought in as well as a single sale late in the month.  Realized gains were modest and unrealized losses remain high at the end of the month, but are up from mid-month losses.

Sale this month:

• Universal Corp - 9% gain for three month holding.
  

Current holdings and unrealized gains/losses are as follows.  Definitely took a step backwards, but the market seems to be rebounding in the last week of the month.  I'm still a bit overbought in small caps for my taste.

The following dividends were collected.  September stands to be a strong dividend month.

• Universal Corp

July 2011 Trading

July brought lots of excitement.  The political situation with the debt ceiling led to lots of political volatility.  At one point, the value of my holdings skyrocketed to a new all-time high only to dive again after a change in the political winds.  However, the end of the month found me advancing over June levels.

I sold a few holdings and decreased unrealized losses from June levels.  I also increased my percent invested from 80% to 82.5%, so those percentage losses are smaller still in terms of percentage loss.  So things are turning in a positive direction although the markets continue to be troubled by the debt ceiling issue.

Sales this month:

• iShares S&P 500 Index Fund - Sold more than half of my holdings in this index fund gaining 5% in the process, then bought back in to most of this position as the price dropped later in the month.
• SPDR S&P 500 Index Fund - I sold out of a small percentage of these shares.  I had a sell order at a certain prices, but only a few shares sold as the price peaked at this level leaving much of the order unsold. 
• Turkcell Iletisim Hizmetleri A.S. - I flipped a small position in this stock over three days late in the month.  As noted in earlier posts, I'm trying to back off of small-caps, but this stock presented a very attractive price and I had to jump on it in a small way.  Three days later it had gained 5%, so I liquidated.  Small potatoes, but it yielded a few bucks.
  
  
  
  

Current holdings and unrealized gains/losses are as follows.  This currently looks quite negative, but it looked much better at several points during the month. I'm very excited to see Exelon in the black for the first time in over a year. Note new holdings of Harris and Navios Maritime.  Navios is another relatively small cap that I might normally avoid, but it is a small holding. 

The following dividends were collected.

• SPDR S&P 500 Index Fund

June 2011 Trading

June was another interesting month that confirms that old adage "sell in May and go away."   I realized no gains through stock sales and turned slightly more negative for unrealized gain.  However, I had the most substantial dividend month to date. 

I've continued to buy-in to the downward trend which might be good as thing have potentially bottomed out with Greece and the EU seeming to have put their house in order.  This is evidenced by the four session bull run over the last week.  But I remain only 80% invested, so I can buy in more if things continue their downward slide.

Sales this month:

• None.

Current holdings and unrealized gains/losses are as follows. Note new holdings of Universal Corporation and Intel Corporation.

The following dividends were collected.  In dollar terms, this is the biggest dividend month to date.

• Entergy Corporation
• Intel Corporation (from previously sold holdings, not from new purchase)
• Harte-Hanks, Inc.
• Exelon Corporation
• Life Partners Holding, Inc 
• Harleysville Group Inc.
• iShares S&P 500 Index Fund

The Swoon Continues

June has been no better than late May.  Unrealized losses continue to pile up, as the market finished the sixth down week in a row.  But there is a ray of sunshine.  I've been able to buy in on a few stocks at good prices.  While these shares have continued to drop, I still feel good about my buy-in prices and am hopeful that I'll be able to profit from these in the near future.  Another positive note is that June is a good dividend month for most of my holdings, so I should have something to show at the end of the month.

May 2011 Trading

May has been the best month ever!  I established several new high water marks, best gains for a month, best gains for a quarter and highest rolling 6 month average gain.  And I also passed 6% earnings for the 2011 calendar year.  So even if I don't earn another penny this year, I cleared the bar at over 6%.

May has been the worst month ever!  Unrealized losses have reach near record heights and for a long period of time, seven of my nine holdings were in the hole.  While I have been this far underwater before, this seems a bit more dire than in the past.  Most of the losses are attributed to a single stock (Life Partner Holdings, Inc.) and it seems quite possible that it could go to zero and I could lose my entire investment.  Realizing such losses could put a significant dent in my 2011 gains. 

After selling some stocks, I'm now down to about 59% invested.  I only collected one dividend this month although several holdings went ex-div.

Sales this month:

• FirstEnergy - 13% gain, some shares have been held for over a year, so it's nice to finally close out this position with a nice profit.  In fact, In absolute term, this was one of my largest gains to date.
•  Intel Corp - 15% gain,  rather large holding acquired over two months, dipped on bad news allowing multiple buy ins, then nice run-up based on improving analyst reports culminating with announcement about new 3-D chip and I sold the next day.
• SYSCO Corp, 12% gain, sold on good earnings news.  Held for only two months but also collected on dividend.

Current holdings and unrealized gains/losses are as follows.  As noted above, LPHI represents a significant risk to the portfolio.  Nokia also delivered a bad earnings report, so this is perhaps also a bit risky.  Although there are other stocks in the red, I'm general confident that they will recover and/or hold their dividend payout.

The following dividends were collected:

• General Mills, Inc - went ex-div immediately before I sold near the end of April.

Two Years of Trading

I've been actively trading for two years as of today. As noted in previous posts, the trend has been upward in recent months with the 6 month moving average being at an all time high.  I'll be very happy if I can maintain this pace.

Another Best!

Sale of my remaining Intel holdings make May the best month ever in terms of realized gains. Two record months in a row! However, all this recent profit taking make it unlikely that this trend will continue. I'm now 53% invested, so I feel pretty good, still plenty of profits to take if the market rises and I have plenty of money to invest if the market goes down. So I feel pretty good about the current position.

Best Quarter to Date!

A sale for FirstEnergy today makes Q2 2011 the best quarter to date in terms of realized gain surpassing Q4 2010 with Q3 2009 holding a close third. 

Nice accomplishment considering the quarter is just over a month old.  Hope this bodes well for the rest of the quarter and year!

Overinvested in Small Cap?

Although it was not premeditated, I find myself more heavily invested in small cap stocks that usual.  I've held two stocks (TSYS-Telecommunications Systems and LPHI-Life Partners Holdings) for a while and have about 6% of my funds in each of these.  I've also recently purchased HHS-Harte-Hanks (6% of funds) and HGIC-Harleysville Group (2% of funds). 

Each of these individual purchases were sound and met my standard criteria.  However, I'm not sure that I'm comfortable with about 20% of my funds in small cap.  I've already had experience with TSYS and LPHI being underwater for long period of time.

I've always had the normal resistance to small cap stocks as they presumably have greater risk than large cap by virtue of their size.  But I've discovered a more practical concern in recent years.  There is simply less trading activity and it's sometimes challenging to buy/sell at your desired price due to this low volume.  But even this has a positive side as there is sometimes a quick run-up during periods of high demand and low supply. 

So I think it's time to be even more diligent in early profit taking should the opportunity avail itself.  Also, I think I'll avoid taking the plunge into additional small caps until I liquidate some of these holdings. 

April 2011 Trading

April has proven to be a rather exceptional month...best to date!  I was able to take profit on a rather large long term holding (NGG) with a large gain as well as several smaller, short term holdings of primarily "premium" purchases with more modest 5-6-7% gains.   As a result, I've turned over the most holdings since mid-2009 as well as being the number one month in terms of realized gain.  I've also seen my unrealized losses eliminated.  I stand poised to match or surpass the April realized gains in May.

I remain at about 65% invested down from a high of over 80%.  I'm happy with this, but have mixed emotions.  On one hand, the market has been moving upward, and I wish to continue to benefit from this.  However, I'm also concerned that the timing is right for a correction.  I'm especially pleased that I was able to liquidate part of my index holdings before such a correction takes place. 

Dividends were modest this month and will be so in May.  If I continue to retain most of my current holdings, June will be the next large dividend month.  But as noted above, there are several holdings that are nearly due for liquidation.  But I'm always happy to trade large capital gains for small dividends.

Sales this month. 

• Colgate Palmolive Corporation - 5.5% gain, "premium" purchase held for a month.
• National Grid plc (ADR) - 12% gain.  Finally, after holding some of these shares for almost a year, I was able to make a sale for a nice gain.
•  Nokia Corp (ADR) - 5.5% gain, bought on bad news at very low price for very small quantity.  Since this purchase was based on bad news, I was pretty quick to get my 5% and get out which took a little more than 1 month.
• Merck & Company, Inc. - 5.5% gain, another "premium" stock held for less than a month.  I actually planned to hold this for a higher gain, but sold on the day before a likely government shutdown when most of the market was dropping like a stone.  Thought other purchase opportunities would be on the horizon, so opted to make my profit, sell out, then hopefully buy into something else in the coming days/weeks.
•  Johnson & Johnson - 7.5% gain, yet another "premium" stock held for about a month and a half.  Received big bump after earning announcement.
• General Mills, Inc - 6.5% gain, "premium" stock held for almost 3 months.
• iShares S&P 500 Index Fund - 5% gain.  First turnover of Index fund holding.  As a small bonus, Firstrade ceased charging a commission of this fund and a few other ETFs just before this sale.  That's another $6.95 in my pocket!
• Intel Corp - 15% gain, sold about 20% of my Intel holdings for nice gain.  These were held within my Roth account and I still have other shares in traditional IRA.  Although I only held for 15 days, this sale generated more income than I would have received if I had the whole account in CDs for over a year.

Current holdings and unrealized gains/losses are as follows. As you can see, there are several holdings at or near the 5% sell threshold.  And Intel is over 14%, so I expect to make several sales in May if this trend holds.  I also added two new holdings in the last few days of April.

The following dividends were collected. 

• SPDR S&P 500 Index Fund
• Sysco Corporation

Psychology of Round Numbers

I suppose it's human nature, but I've always set my limit amounts at round numbers.  For example, I've always bought at $14.00 or sold at $35.75.  Recent events have told me that this is not necessarily a good idea.

Last week I set a buy price for Nokia at $8.25. Unfortunately, the price bottomed out at $8.26 and I lost out on the run-up that occurred since then.  I've also noticed on several occasions that I hit a sell/buy price, but the order did not execute.  I suspect that this is because there were so many other orders set on the same price.  My transaction didn't fire because my order was in line after others.

Yesterday I had a a vivid demonstration of this effect.  I had a buy order for Harte-Hanks set for $9.70.  I carefully watched the Bid/Ask quantities as the price drifted downward.  The batch sizes were consistently under 10 until the bid reached $9.70.  At that point, the bid quantity was about 90.  Since my order was placed yesterday, my order did not execute until the price was hit many times and many other orders executed at that price.  If my price had been set at $9.71, my order would have fired much earlier with minimal additional cost.

Of course this lesson has mixed impact.  In the case of Nokia, I missed out on a nice gain.  But in the case of Harte-Hanks, the price continued to drop later in the day, so I would have paid extra for no benefit.

So, what's the practical benefit of this knowledge?  If I'm keen to execute an order immediately, I should set my limit price at non-round numbers.  One cent higher for buy orders and one cent lower for sell orders.  The exceptions are orders that are placed well in advance since I would be at the front of the queue for that price. 

Addendum:

Intel passed the $23 threshold today and demonstrated the same behavior described on the sell side.  The number of shares for sale at $23 exactly was an order of magnitude above those offered at $22.98 and $22.99. But this is another case where the number of shares was not an impediment as the price quickly passed through this threshold to close at a higher price.