We should have sold DECK today, since it violated it stop loss at $54.23.
We bought it at $50.81, so we gained only a 6.7% with it.
What's next? Who knows... maybe DECK will skyrocket now or maybe it will move sideways for a while.
We will watch it and may buy it again, since its fundamentals are still good.
Tuesday, May 12, 2009
An update on Stop Loss orders
In this volatile market we should pay attention to protect our gains, specially for those positions on which we are gaining well.Let's take our four best performers: TRLG (up 105%), AFAM (up 81%), IPHS (up 61%) and WDC (up 42%).
I would suggest to:
- Almost Family, Inc. (AFAM) move the stop loss from $21.22 to $21.45
- Innophos Holdings, Inc. (IPHS) move the stop loss from $12.21 to $12.60
- True Religion Apparel, Inc. (TRLG) move the stop loss from $14.01 to $14.37
- WESTERN DIGITAL CP (WDC) move the stop loss from $20.51 to $20.52
Monday, May 11, 2009
Correlation - Is our portfolio well diversified?
In probability theory and statistics, correlation (often measured as a correlation coefficient) indicates the strength and direction of a linear relationship between two random variables [1].
We can use correlation to evaluate how our stocks are prone to move together.
A well differentiated portfolio should have stocks that do not behave the same over time. Every day we should own stocks that win and stocks that lose (ideally more of the former and les of the latter) so that on average we gain more than the market in good times and lose less than the market in bad times.
Two stocks are perfectly correlated if there is a linear relation between them. Let's suppose to own stock A and stock B. If stock B gains X% everytime stock A gains X%, and stock B loses X% everytime stock A loses X%, then stock A and stock B have a correlation factor of 1. The same if stock B gains/loses 2, 3, 4 or n times X%. There is a linear dependency between the two stocks price.
Let's take as an example some of our stocks, starting from ADBE and FLS.
We can use correlation to evaluate how our stocks are prone to move together.
A well differentiated portfolio should have stocks that do not behave the same over time. Every day we should own stocks that win and stocks that lose (ideally more of the former and les of the latter) so that on average we gain more than the market in good times and lose less than the market in bad times.
Two stocks are perfectly correlated if there is a linear relation between them. Let's suppose to own stock A and stock B. If stock B gains X% everytime stock A gains X%, and stock B loses X% everytime stock A loses X%, then stock A and stock B have a correlation factor of 1. The same if stock B gains/loses 2, 3, 4 or n times X%. There is a linear dependency between the two stocks price.
Let's take as an example some of our stocks, starting from ADBE and FLS.
If we represent on a chart the prices of ADBE and FLS as points over one year (axys X is ADBE price and axys Y is FLS price) we see that these points lay on a sort of a line. Correlation for ADBE and FLS is 91%, meaning that they move in a very similar way. ADBE goes up, then FLS goes up too.
Let's look now at the correlation between AFAM and DECK.
In this case a linear pattern cannot be identifies. In fact the correlation factor in this case is around 7%.
As a further example let's have a look at the correlation between IPHS and some other of our stocks:
If we consider all the correlation factors in our portfolio we get an average correlation of 62%.
From sone research I did it seems like a good portfolio mix has a correlation between -80% and 80%. But, of course, I would like to read your comments on this.
Sunday, May 10, 2009
Current Portfolio
May 10th 2009
| Symbol | Last Trade | Price Paid | Gain/Loss % | Stop Loss |
| ADBE | $25.42 | $18.70 | 35.93 | $23.32 |
| ADM | $26.97 | $25.40 | 6.18 | $23.20 |
| AFAM | $31.55 | $17.41 | 81.21 | $21.22 |
| DECK | $59.00 | $50.81 | 16.11 | $54.23 |
| ENDP | $16.34 | $17.38 | -5.99 | $14.89 |
| FLR | $45.17 | $37.99 | 18.89 | $36.61 |
| FLS | $74.38 | $52.57 | 41.48 | $59.19 |
| GIGM | $6.43 | $6.53 | -1.53 | $5.64 |
| IPHS | $15.81 | $9.47 | 66.94 | $12.21 |
| MVL | $33.24 | $24.35 | 36.50 | $27.35 |
| NCTY | $9.24 | $9.30 | -0.65 | $8.10 |
| NE | $30.90 | $24.39 | 26.69 | $26.04 |
| NRG | $21.19 | $18.98 | 11.64 | $16.35 |
| RECN | $19.77 | $14.04 | 40.81 | $16.49 |
| TRLG | $21.97 | $10.53 | 108.64 | $14.01 |
| VPHM | $6.03 | $4.71 | 28.02 | $4.82 |
| WDC | $23.71 | $16.20 | 46.35 | $20.51 |
Thursday, May 7, 2009
GIGM to watch
May 7th 2009
GIGM looks interesting. I am currently watching it and may decide to buy it soon.
Happy trading from
Humble Trader
UPDATE
I am going to buy GIGM today with an initial stop loss at $5.64
GIGM looks interesting. I am currently watching it and may decide to buy it soon.
Happy trading from
Humble Trader
UPDATE
I am going to buy GIGM today with an initial stop loss at $5.64
Wednesday, May 6, 2009
Good news for our AFAM and TRLG
Both AFAM and TRLG posted good earning surprises.
We bought them cheap last month (AFAM at $17.41 - now around $30 - and TRLG at $10.53 - now around $20) and we are now in a very positive territory.
We bought them cheap last month (AFAM at $17.41 - now around $30 - and TRLG at $10.53 - now around $20) and we are now in a very positive territory.
Tuesday, May 5, 2009
Updated Stop Loss
May 6th 2009
ADBE: stop loss $23.14
ADM: stop loss $23.20
AFAM: stop loss $20.83
DECK: stop loss $54.59
ENDP: stop loss $14.89
FLR: stop loss $36.61
FLS: stop loss $58.45
IPHS: stop loss $11.99
MVL: stop loss $26.77
NCTY: stop loss $8.10
NE: stop loss $25.42
NRG: stop loss $16.35
RECN: stop loss $16.02
TRLG: stop loss $12.97
VPHM: stop loss $4.71
WDC: stop loss $20.09
ADBE: stop loss $23.14
ADM: stop loss $23.20
AFAM: stop loss $20.83
DECK: stop loss $54.59
ENDP: stop loss $14.89
FLR: stop loss $36.61
FLS: stop loss $58.45
IPHS: stop loss $11.99
MVL: stop loss $26.77
NCTY: stop loss $8.10
NE: stop loss $25.42
NRG: stop loss $16.35
RECN: stop loss $16.02
TRLG: stop loss $12.97
VPHM: stop loss $4.71
WDC: stop loss $20.09
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