MarketBook 3/18/08

In the last edition, I said that I am either really stupid or really smart.  In general, the verdict is still out on that; however, I can say that the investment/trading strategies I was referring to ended up going pretty well (so far). 

There’s no way that you could have been alive within the world of finance and not hear about the fall of Bear Sterns this weekend, as well as JP Morgan’s premium buyout after the Fed’s bailout.  I was one of the 4 or 5 people that had CNBC on Sunday night when the news came in that one of the country’s oldest financial services company that ended the week trading in the 30’s (and just a few months ago was much higher than that) was being sold to another well-known bulge bracket firm for $2 a share, and a total of $236mm.  Everyone, including me, thought this was a typo, but it was not.

I was one of the few people who profited off of the news, though, because as the market had a horrible day on Monday, my portfolio did very well.  To add insult to everyone else’s injury (except mine), oil wasn’t having a good day, and again, that helped me a lot. 

Today, I’m down, but it has been a wild day.  The pre-market opening news about financials and retailers having good reports, along with the Fed just cutting rates, has boosted the market, and since I have a defensive portfolio, I am in the red for today, but that’s fine. 

What I am looking forwards to is options expirations, which takes place this week.  Most of my portfolio right now is made up of options plays, most of which should play out well, assuming the rest of the market does not crash.  The worst play I have made recently is shorting (with options) XLE, but I guess that’s the beauty of options. 

I’m also still short on DUG, which is the ultra energy short, and needless to say, I am down on this right now, but I am still saying oil will fall, probably in early summer.  So, this strategy is focused on holding to this until oil sees its temporary decline and then purchasing as much oil ETFs (i.e., USO) as I can get my grubby little hands on, because it will be moving up higher after that (>$120). 


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