I picked a bad week to start sniffing glue.  Things are all over the freaking map, thanks to the Fed dicking with dollar devaluation.  Almost everything is trading strictly based on various views of whether and how much the Fed will continue to devalue the dollar.  Fundamentals?  Common sense?  Bankrupt companies being forced to tell the truth about their balance sheet and actually go under?  I wish.

One thing about my portfolio is clear -- it's way too concentrated in certain places, so I need to rebalance and diversify.  To that end:

• Closing the short bank position at a mark of 46.03, a loss of $429.07
• Closing the NASDAQ short at a mark of 2,436.95, a gain of $195.86
• Closing the short EUR / long USD position at a mark of 1.3734, a gain of $438.69

This leaves me with my long gold and long S&P 500 positions, and a cash balance of $75,205.48.  I don't want to have a zillion positions, but I need to spread the risk out a bit.  New and re-established positions:

• $20,000 short banks (KBW bank index mark of 46.03)
• $5,000 long Goldman Sachs (Symbol GS, marked at 156.72)
• $5,000 long JP Morgan Chase (Symbol JPM, marked at 37.69)
• $10,000 long oil (Nymex front month mark of $79.52) 
• $15,000 short EUR / long USD (mark of 1.3734)
• $10,000 short NASDAQ (mark of 2,436.95)
• $5,000 long Google (Symbol GOOG, marked at 607.83)

That's much better and I'm left with a cash balance of $5,205.48.  Essentially I've got a bunch of pairs-type trades, in an attempt to capture value between strong and weak parts of the current insanity.  I'm trying to stay relatively neutral in regard to dollar devaluation -- currently I have a slight bias towards further devaluation.  My main focus is, as stated previously, capital preservation (independent of Fed action).  Hopefully I won't need to do major daily rebalancing, but if things keep whipping around 2 to 5 percent a day, it might be inevitable.

Posted by: Hermit Dave at 12:45 PM | Comments (2) | Add Comment
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