Watchlist review & weekly perf, 1st week after Black Friday

When I underperform for a week or in a critical timeframe where a profit opportunity was much greater given the opportunities presented, I update the watchlist to determine how the best performers did and whether they may be a candidate for the trade or swing portfolio at some point.

Normally, I watch 100 stocks on 5 separate screens at a given time, but I've found in the most recent two years that when I'm doing really well, I'm able to condense it to one list of 20 stocks and watch only that list.

Given the lack of capital I put in the markets, I'm looking at about a $600-$700 gain before taxes. Although it is in the green, it is underperforming the market because it translates to a return on capital of about 1.21% pretax because I had at most 25% invested during the week. The averages are looking at gains from 3-4.5% for the week, so let's see what I missed and what I can do for next time.

1) Alternative Energy, Energy, Materials, Utilities

Ironically, solar was a dog for the week even when you include that one day pop. The weekly winners were four casy stocks and some familiar names:

FWLT - up 5.8%, new 52 week high, casy would be so proud.
POT - up 4.4%, new 52 week high
STLD - up 5.5%, new 52 week high, it would figure I would mention this one to a trader the night before it gaps up.
JOYG - up 3.2%, casy would wonder if I would get back in. It might be a industry bet for their earnings release later this month but I don't believe its the top pick in its sector.
BUCY - up 1.3%, fair warning, i have 300 shares, and I may add another 150 if its stays green.
ARD - up 4.5%, one of the traders has liked this stock at 22. This should show up on my watchlist for January 2008.
NOV - up 3.4%, the same trader rode the most recent bounce. Same for January 2008.
D - up 2.7%, a casy utility play.

2) Index ETFs

While I had difficulty with the sector ETFs in November; I've had success with the following:

QLD - up 4.8%, I think for the future that should I believe that there's an uptrend in the market and if I don't have any ideas, I should park 20% of free cash here just so I don't give up free money.
EWZ - up 3.6%, Ishares-Brazil, while RIO comprises 43% of this index, I would tend to trade both securities to ride its trading range.
FXI - up 2.5%, Ishares-China, the Jim Rogers safe play, just be aware of the quick 10 point moves in this etf.
MOO - up 4.5%, agriculture, the same trader who introduced ARD, mentioned this at 49. Seems to be a longer term candidate.
DBA - up 2.6%, agriculture, the Jim Rogers agriculture play. Although volume is thin.

3) Retail & one Financial

While casy would balk, yes I paid my $300 tuition for being stupid on PCLN, there were winners for two good reasons: a) Generation IPod can't balance a checkbook because I learned that the junior and senior high schools where I grew up no longer teach a personal finance class. b) Generation IPod will shop because they know they can always ask their parents to bail them out of anything. After all, if the U.S. government, aka we the taxpayer, are bailing out a couple of thousand imbeciles from paying mortgages that 90% knew they didn't qualify for, what kind of precedent are we setting the next time something like this happens in another industry.

GME - up 6.6%, the must have item for this Xmas, a Nintendo Wii. Nintendo trades as a pink sheet stock and is up about 170% ytd.
AAPL - up 5.0%, whether its laptops or IPods, it and Google represent the current shopping generation of tech-heads.
COST - up 3.5%, ironically I mentioned this to one of the traders before Black Friday that this is the only retailer I would consider going long for a trade. In hindsight, it has only made its weekly gain in the past two days. This past Thursday was the weekly sales numbers.
CMG - up 5.8%, people have to eat while they shop.
MA - up 2.7%, people don't have the money so obviously they're going to charge it.
BLK - up 5.9%, the only asset manager benefitting from all the subprime nonsense.

4) Special situations or possibly stubbornness.

ISRG - up 6.3%, this is on the ytd list for best performers
SIGM - up 3.2%, same as above, one of few tech companies outside of AAPL, GOOG, RIMM, to show big gains ytd.
ESRX - up .7%, fair warning, long 800 shares, they report mid-qtr guidance later this month.
BIDU - up .5%, the Chinese version of eBay and Google.

At least one more add at close

BUCY looks like its holding on to its gains. So we'll make our 2nd purchase of 150 shares at the close.

Almost feels like tomorrow's jobs reports was leaked as the S&P is back above 1500 with some people front running the move.

Stop Loss, Sold 100 PCLN 117.25

I am being reminded by casy. What the hell are you doing buying a sissy retail stock.

Dow up 196 today, two more adds

In hindsight, this was 401k add day. Most U.S. corporations select one day in the first week of the month to make their monthly 401k matching contributions to their employees. Since most 401k plans are registered with a small number of transfer agents such as Vanguard or Fidelity, they tend to purchase or sell securities at the same time.

Just before the close, added more longs:
1) 4th purchase of ESRX, 200 at 72.47.
2) 100 PCLN at 119.81

3rd Purchase, 200 ESRX near close, 71.50

Lots of divergences. Averages are down about 1/2 to 3/4% today.

Keep plugging away. Be prepared to drop BUCY and ATW without warning since the two steps forward, two steps back is not working.

10 lessons from a Billionaire

Recently, Forbes published their 2007 list of the 400 richest people in the world. #54 on this list is C.D. Spangler Jr. With a net worth over $2 billion USD, one would hardly recognize Spangler from any person in the Charlotte, NC suburbs where he resides. While I rarely, acknowledge anyone willing to do business with Bank of America, he did share some of his life's lessons in an interview with a Harvard Business School columnist back in July of 2001, http://www.hbs.edu/entrepreneurs/pdf/dickspangler.pdf

1) Make your mistakes while you're young so you can learn and recover from them.

Like the stock market, there are times when you must make decisions without complete information. Harvard Business School taught students to quickly assess alternatives and choose the best one before a competitor swooped in and stole your ideas and your edge.

2) Leverage wisely.

You won't always know if an investment will yield higher returns than your borrowing rate, but understanding current market conditions will help you determine when it is time to be aggressive or conservative in your leveraging decisions. Borrowing money to build apartments or warehouses in high demand locations and offering rentals at attractive prices can result in monthly cash flows during uptrending markets.

3) Know what the worth of the business or item you want to sell.

With the availability of the Internet, it's much easier today to determine the fair market value of any item or service. Especially when the prospective buyer will always say, "That's a little high."

4) Get rid of lousy leaders and ineffective managers.

Notice he said, get rid of the ones RUNNING the organization. NOT the people working for the organization.

5) Hire people who are smarter than you, especially those who have talent in specialized fields.

Most hiring managers don't hire the best candidate for open positions and what usually happens is the lost candidate is hired by their #1 competitor.

6) Don't hire or hang around people just like you are.

Diversity in thought and action is needed to prevent a groupthink atmosphere. Ever heard of the phrase, "if one jump off the cliff, they all jump off" An organization (such as one of Trump's divisions, where everyone dresses (in $3k suits that nobody can afford) and acts (if they work for Trump they think they're invincible), that is an organization built for disaster. Does someone want to explain how Trump Taj Mahal went from being the destination casino of Atlantic City in 1990 to just another casino by 2003?

7) Prioritize your challenges.

It is ok to defer or delay an important decision if you making progress on solving a challenge. Sometimes its better to have ten small challenges on your plate than one all encompassing challenge.

8) Look at the numbers from the real world, NOT from projections.

The market is the final arbiter in any decision. Stubborn refusal to accept what the market is telling you results in losses and lost opportunity in another area.

9) Get financing for business ideas if you want to earn a return on investment.

Having a business line of credit allows you to focus on generating sales and profits versus figuring out how to meet next month's payroll or fund inventory purchases to meet orders.

10) Let someone else be first to come up with a solution, so you can second it and make everyone feel they collectively came up with the decision.

In the "Me" generation, seems everyone wants to feel special. Ever notice, when you propose a great idea that there's a lukewarm reception to it; but then a few days later, someone else, will pitch the same idea and generate great euthusiasm. While its disheartening, you have to decide if the benefits of working with the group exceed the costs of dealing with office politics. If the answer is yes, then this is one of those sacrifices you may have to endure. But at least, don't sign away your patent, copyright, or trademark.

Two buys at close

Dow down 60 as we speak but one of my positions up 4% on no news.

1) 2nd purchase of ESRX, 200 at 70.50.
2) New position, Long ATW, 150 at 89.70.

Both at 52 week highs. Will figure it out tomorrow.