We did one after the first 10 days of the year, when I was worried I was being too bearish but it turned out I wasn't too bearish at all in picks, but certainly in tone as I had (and still have) grave concerns about the sustainability of this "recovery" (as does David Fry, obviously). In that post, I emphasized the need for BALANCE – no matter how bullish or bearish you are and, from what I hear in chat – not everyone gets that message so we'll try it again and see if we can make a little progress with the education thing.
Keep in mind that, no matter how bullish or bearish we are, 70/30 is an extreme mix in a portfolio, 60/40 is preferable but the closer we get to the top of our range, the more we tend to bet the other way. When and if the range does break, we will, of course, be caught on the wrong side but even if you lose 20% of 70 (14) and make 20% of 30 (6) it should not be a devastating event.
We regularly put out trade ideas on both sides and it's important to get a sense of if you are too bullish or too bearish – at which point you can make an adjustment by adding to (or subtracting from) one side or anohter. These were the trade ideas since Wednesday's review:
Wednesday (in order of posting):
- Shorting oil Futures at $102, now $98.50
- SCO Feb $34/40 bull call spread at $2.10, selling $34 puts for $1.60 (net .50), now $2.80 – up 460%
- WFR 2013 $5 buy/write at $2.11/3.56, now $4.62 – on target
- WFR 2014 $3/5 bull call spread at .45, now .90 - up 100%
- WFR 2014 $3 puts sold for .80, now .63 – up 21%
- SCO Jan $36 puts sold for $1.20, expired worthless – up 100%
- SCO Jan $35/36 bull call spread at .45, expired at $1 – up 122%
Thursday: We also reviewed our fairly bullish Income Portfolio that morning, I won't count those…
