3SOF

The first glimpse of this scenario (outlined by La-Onda) playing out will occur over the next 6-8 weeks. Earnings reports are coming out reflecting business for the 4th quarter 2008. In addition, 1st quarter forecasts (as well as 2nd – futures) will reveal a lot. Combined with several government reports from the various sectors we should see if this Armageddon may in fact materialize. The mortgage sector is pretty beat up – I think this is the worst I've seen in my lifetime – I can't believe it can get worse. I sure hope not.

Bush spread panic across the order by painting the gloom and doom scenario. His plan is to give money to the suckers who lost money making wrong bets in the first place. It's Alan Greenspan and Bush that originally allowed Freddie Mac and Fennie Mae to mix up the sub-prime mortgages with the conventional ones and Bush removed the limitations to the derivatives trading. Now they can't figure out what properties are tied to what obligations. I think they should let those ill banks kick the bucket and focus on helping investors with benign agenda.

  As for the market, this is where big boys make money. The more turmoil they cause, the more they shake off the little guys like us on setting panic. They will return, I bet soon with "good news" and lif the stock market. Stock market trades paper. I can't see how the economy immediately relates to speculation, other than through moving the capital...

I listened to the brief address by President Bush yesterday at 9pm on ABC news. Well, he explained it quite simply, the government is going to use $700bln of the tax payers' money to buy assets associated with bad credit. The rationale is buying the assets while the market is depresses, wait out for better times and then resell the assets into a healthier business environment at a high market price to recover the money spent. Sounds simple, and this intervention is probably quite necessary, the question remaining how and when national and international investors will become ready to regain control over the ailing assets the government is trying to bail out. Any more thoughts on this?

Hi Aussie,

  It seems there has been some correlation to the stock price of the solars with the oil prices. I guess, the logic traders use is "oil gets cheaper, there is less incentive to develop or buy solar based energy products". In this case, we should address the longer term picture in which case it becomes apparent that given oil prices should not drop dramatically, solar should also hold up and eventually grow independently. At some point, when solar market achieves a certain size, the profits of the solar companies should continue growing regardless of the oil prices.

  What's your view on this?

Thanks,
Berloga

Could you please provide an update? Why a sudden jump of 15% 2 days ago... Can you also remind why would ASTI be a compelling investment choice for an investor into solar sector? This may help keep one's head straight. Thanx!

Hi Aussie,

  In your opinion, will LCC share price follow or reflect the current oil price going forward? I know oil retreated sharply, but what if it rises again?

  In general, what is a good indicator to watch that tracks the oil prices? Also, could you please comment on a possible outlook for the oil price (I believe which way USD goes may affect the price as well...).

Thanks!

Hi,

I like these type of patterns. They are more or less easy to determine a failure in and hence to set a stop loss.

I also like the fact you're not buying many stocks these days.

After I took the blow this year, I only keep OIS and MUR which I am about even at this moment. Whatever happens to oil prices, consumption grows globally, so profits of oil companies should grow, in my opinion.

POT sure looks scary by performing this Olympic style exponential run up in the past couple of years! But, what matters is the World economy change. Food becomes more expensive as peoples' appetite grows due to improved standard of living. 2.5bln east Indians and the China-men need lots of food. Thus, in my opinion, albeit looking scary, POT can turn out to be a sound investment. Their CEO said before, that POT enjoys fat profit margins due to its dominance at the market. POT dictates the sale price and the customers have no choice but to pay. Envious type of business!

Good strategy outline, Aussie. Thanks. How the portfolio performs in the tough times on the market will be an excellent test to predict its performance when the market takes the upside.

I do keep the oil stocks still (OIS and MUR), but my VPHM position was closed as a result of some freak trade several days ago. I placed stop higher than yours though... Don't want to get back in now.

I hope you guys have solved the issue that realcoolhead had had. He seemed rather upset. I believe one of the reasons is that this year has been especially frustrating due to the 3SOF underperformed by a wide margin and moreover the strategy and management have been inconsistent.

I am willing to give Aussie and Rams the time they need to re-establish the reputation of this service.

I believe I am past despondency myself. :-) SPY seems to have retested the double bottom and rebounded on a greater than average volume. Remember? Speculation. Big guys need to make money, stock exchange is their pasture. I think our stops have been executing due to the market negativity. If, on the other hand, the market were moving up, the stops would only be upgraded in most cases.

Do you think folks our stop on AEZ was kind of stupid? We saw the stock hit $5 intraday and then wait for it to tumble to $3.69!!! This is an extremely large spread. The reason you buy stocks is to make money. The way you make money is when a stock goes up. If the stock changes the momentum while you're in profit, and goes steeply down, doesn't it defy the original plan, "to see the stock grow"? AEZ sets a particular example, it is very volatile, but it gave signals by showing, "I am sliding, sell me". Instead of a break even scenario, we lose 13%. Not that much, but all trades lately have been in the similar mode. Buy, hold, sell at 20% loss; buy, hold, sell at 25% loss. Since market is so volatile these days, can't we try to determine a bit earlier that a particular trade is turning sour, instead of waiting it to hit the low-low mark?

For example, GST is set sell if hits $1.8. That is ~30% below where it is now. Won't you be able to tell sooner that the trade isn't doing what it's supposed to? I'd rather buy and sell several time before seeing a stock bring in profit, than sit and wait for my 25% loss to come.

It's been pretty frustrating this year, since the loss has been the largest at 3SOF so far and I do not see a clear way of rectifying the situation. My capital is drying out and soon I will have to stop any activity at the market to simply preserve what's left.

Isn't an OB stock better suited for the Speculative portfolio? Are you applying similar trading rules to the OB stocks as to the regularly traded shares?

Hi,

Could you guys try to publish the "buy" and "sell" signals at least around 9am EST?! The problem is that I usually receive your Update email after the market open on my Yahoo! account, so I usually resort to constantly updating the 3SOF page to see if any new comments will appear.

  Also, in regards to NOEC, the ATR indicator shows $0.47, which is ~6% from $7.35. What amount of volatility will you be expecting going forward for the Diversified portfolio?

Thank you!
Berloga

Oh man, I just found out that my stop limit order did not execute on TDAmeritrade.. Damn it. Now I am 30%+ in loss in this position. What a disaster! During the past month all I've been seeing is the consistent decline in my account value....

I believe David is taking a long leave of absence. I hope he can provide an additional insight and help once he's recovered from the neurotic stress. I checked his profile and:

Last Active:    June 09, 2008, 06:44:20 PM

So, David must be stopping by, just not posting anything...

I trust in Rams and Aussie and their abilities, so let's give them time!