Friday, November 17, 2006

Shat-tacular Performance!

I checked my year-to-date performance last night, and found that (drum roll) I am beating the SP500 by .50%. I don't check that often, because it can lead to an emotional response in either direction. Either I get too much ego or performance anxiety. This one led to the latter.

I made three major moves this year. In April, I sold down my beta, increased lower beta holdings and increased cash. This worked out well as the Spring correction began in earnest in May. I reloaded the beta and went 100% into stocks near the lows in June, which also worked out quite well. By September, the portfolio was rock 'n roll for the year.

Then the Black Box misfired and gave a sell signal. I again sold the beta, increased lower beta holdings, and increased cash. This is my current position. Why my portolio has advanced as the market has been in a straight line up since the summer lows, it has underperformed the market. Hence, my goal of outperforming the SP500 is on shaky ground right now.

Going forward, I don't see this as the time to increase beta or throw new cash at the market. If the market continues to advance day after day, then my small edge over the SP500 will evaporate. If the market faulters and pulls back, then I'm in a good position to take advantage of any opportunities.

Thanksgiving week is normally a good one for investors. This is no secret. Will the historic trend continue again this year, with the market extended? I've run some scans and limit the results to stocks that are not too extended above the 50dma, and there isn't much out there.

These are my thoughts, and serve as a journal of my trek down The Learning Curve of investing.

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