Stock Portfolio Rebalancing - 07.07.2008

Today I rebalanced my Stock Portfolio on the Bulgarian Stock Exchange - Sofia.

I dumped the old holdings of:
1. Alcomet
2. Doverie United Holding

they were both very poorly performing - the Alcomet P/E has risen above 58 and the basic materials were giving it a huge toll over earnings.
Doverie I believe is watering the stock holdings as he new shares are in the market the value has long ago disappeared.
>>> I know I was dead late for this move - worse I don't find any reason for consolation - I was reckless and overstayed bad trades

Alcomet - long average at 1760 for around ~ 9.30
liquidated ~ 6.70

Doverie - long 2000 around 10 - liquidated at 6.60-80

>>> all the freed capital is invested now in the doubled position of Eurohold - today 8888 shares.

Possible Double Bottom formations - 30.06.2008

Here are the major and the broad indices - Sofix & BG40.

The charts suggest possible Double bottom formations >>

thus I decided to hold my investments in the major companies.

The portfoilo consists of 9 positions with slight bias to the financial sector as I suspected a rebound there to be stronger than the market as a whole.

However I realise the stock market is actually dominated by the infractructure companies and financials seems to have lost their shine.

The plan is to liquidate the BSE stock holdings on the subsequent rallies as I expect the overall economic conditions to get better for the time being in the US and the Euro zone but the Autumn to bring some very bad consequences of the credit crisis expansion.

25.06.2008 - EURJPY 2.3 mio short trade

>>> What a day today - we had a historical High in EURJPY at ~ 169.49

Somehow I feel those old tricks now seem a bit plain to be fooled.

Anyway I had like 10 exhausting hours of waiting until EURJPY grinded down and finally it just broke --> then I covered the short.

I was originally short ~ 169.15 but also added 169.30 lower highs - there I saw confirmation that was weak trend so I added 169.10 - last add was 168.81 where the action was still not so strong but whenit broke 168.50 I was sure and just waited for 168.28 to cover.

Today US Stox broke the recent bottoms badly and it was evident that we see a liquidation in carry trades. But now in hindsight it is easy to say..

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A word of caution to myself:

"Dude, why the fuck did you forget to put a stop to that stupid Gold trade, you silly punk!!!"

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I know it is useless to point this after the fact but it is absolutely important that I put a stop at every single trade and start with only a mild leverage until I gather enough conviction and have a profit in the trade until I start to commit more!!

Today besides my perfect trade in EURJPY and the previous short in AUDJPY which I closed way too early I LOST and actually HAVE A NEGATIVE BALANCE in my other account which I have to cover now!!!

All just because I entered a stupid Short gold trade without any conviction and didn't pay enough attention - but above all because I just carelessly left it without stop!

You silly boy!! Never do that again!!

23.06.2008 - trading against the trend

Today I had the strong conviction to trade conservatively and protect my capital after the last Friday 2.5 mio trade in Sterling/Yen.

No matter I started testing the market with only 100k positions the 3 consequtive attempts to long the bottom in EURUSD & GBPUSD with tight 30 pips stops proved to be expensive.

Also it was my impatience to wait for confirmation that those trades were advancing properly and I added leverage too soon which weighted additionally to the testing cost.

However I traded strictly with stops and adjusted them for the position size and location.

Given the average trading ranges I got very confident that I must see some reaction from the lows -- that is why I entered in my last attempt a considerably sizeable position from the outset:

400k in EURUSD & even riskier

500k in GBPUSD

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I had a sore realization that while I am incessantly looking for trends and constantly convince myself that I am on my steady way to spot and manage trend following trading style I seem to be going for contra/reactionary style.

I found myself today trying to pick the bottom instead of getting on the trend and just riding it...

Well, after I see these weak spots in recent times much more clearer I feel I am at least a step closer.

Baron Rothschild quote.

>> Old Baron Rothschild when asked how he makes so much money:

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon."

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Again just to reiterate and confirm for my own conviction:

> Always try to bend against common logic!
> Always do the HARD thing as the easy way always leads to ruin.
> There is no easy way for the common human being as the mainstream Joe is always too busy to study and live in accord with nature >>

so 95% of people always live against the natural way and that's because choosing the easy way is wrong as this is just the wrong human perception..

>>> Just as one evolves and finds energy and courage to live by the natural way he finds that the HARD thing and the RIGHT thing converge - and then the simple is not easy but correct.

That's why in the beginning there is always necessity to apply unhuman portion of intent to change the life, the rules, the perceptions, the decision-making process, the thoughts, the areal, the people.

A TURNAROUND doesn't happen in one day - it is a PROCESS. Such as LIFE - it is a constant process of evolution, change, transformation and sublimation.

Just need an vigilant eye and courage to appy change.

20.06.2008 - 2.5 mio trade in GBPJPY

>> This was a bit of a wild card trading as I overleveraged in a purely declining market that was obvious in the chart.

Certainly I will remember however that the most easy looking trades always turn to be actually the toughest. I sure shot I thought turned into an all day grinder -- anyway the averaged short around 212.49 was covered 212.08 before the Friday close because the rollover would be considerable expense.

Well, that was it - now going back to risk management and trend spotting.

19.06.2008 - 3 mio trading as usual...

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>> Yesterday /18.06.2008/ I made a mistake as I abandoned the disciplined trading process and engaged in some overleveraged positions as I ultimately realised I was PUSHING the market.

The problem was I got some view that I was trying to validate thru increasing my positions while was impatient to get a clear confirmation from the market and the price action itself.

Logically this was followed by a large drawdown in the Equity as I was switching directions too fast and while trying to get the right opportunity the leverage size appeared to be very expensive >>> ultimately by the end of the day my account was -42%.

At the end of the day I went short EURUSD, GBPUSD, AUDJPY & EURJPY.

Those positions were held overnight but they all were in loss in the morning.

The 3 trades on the picture were the last ideas I had and I actually bet the farm on them as after I had the 1 mio trade back in April >> now I did my 3 mio trade. Congratulations as at the exit my trading return was approximately 128% and I reached Breakevenpoint from the peak on 17.06.2008.

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The ultimate lesson learned is respect your risk management rules, trade consistently and never engage in a such an over leveraged gamble until you have an equity base that would not be hurt in a case of adverse market reaction!

>>> While I had Feb & March 2008 a very good trading period > then till June 2008 I actually was constantly losing while I was very diligently researching Trend following methods and traders.

I lot of information on Ed Seykota, Richard Dennis and Richard Donchian was digested to give me a better idea of the prospective direction of further development.

A search for an EDGE and disciplined PROCESS somewhat seem now a bit closer.