Lehman: A Frog Turned Prince In the Making

There's a very fine line between love and hate. Back in the day, when AMD was sitting near its 52 WL for an exteded period, I hated it with every fiber of my being. Then, it all changed as the magic of high beta touched its soul and AMD turned from a frog into a prince. I had been in AMD for at least a year and a half - perhaps two. Then, over the course of a few months, it practically tripled in price and I got out at exactly the right moment. Fact! No need to downplay such an accomplishment especially when I was wrong for two years to begin with.

Now I get the feeling that my Lehman bonds will enjoy a similar fate one day. Lehman and JP Morgan have reached a deal for billions on claims. As part of the deal, Lehman will receive $9 billion worth of illiquid securities whilst JPM gets $557 million in cash and keeps $7.7 billion in collateral. This is fantabulous news for any Lehman bondholders. But I think it's also fantabulous news for JPM, which would have kept all of the most valuable assets, leaving the Lehman estate with the less valuable ones, since it is one of the smartest banks on the planet. This is the part that's unfair and let's hope that Lehman's lawyers are worth their weight in gold diggin'. The major bit of good news out of this deal is that the $29+ billion proof of claims that JP Morgan filed will be obliterated.

Either way, the market is in a different place now. The $9 billion worth of illiquid securities will have a better recovery rate now than it did in 2008/2009.

I have implemented a contingency plan for my Lehman bonds by paying up for a smaller position in a bond issue that is supposedly higher quality in an effort to recoup my investment should the sub bonds become worthless. However, I am fairly optimistic that there's going to be value left after the battle's over.

Initially, I started with a lot of sub bonds in Lehman. Recall I bought these bonds up starting from several weeks after Lehman filed for Chapter 11 through to about the present moment. Looking back, I made a fatal mistake by not buying higher quality bond issues because my knowledge was limited. I only purchased sub bonds in 2008, but the market was flooded with all types of Lehman bonds and I could have probably paid the same amount for a higher quality issue had I known about it.

I promised to post my bond ladder here, so here goes...


5249087M6
524908UB4
524908UB4
524908R44
524908R36
524908R44
524908R36
524908BF6
52517PNZ0


Junk bonds are not all fun in the sun, though. Recently, my Ion Media bond issue got obliterated in the reorganisation process. Figuring out the details that make a bond issue work vs. just blindly buying based on the premise/promise of value is the fundamental diva dilemma. Is there really value here? Based on my previous conservative estimate, if Lehman is able to collect all its receivables, then bondholder value is $0.35 on the dollar. So, for me, any higher quality issue that can be obtained for $0.25 on the dollar or below would be a good buy. I have to consciously limit my investment. I don't want to go too OTT and get over-excited about this and get left with half a carrot.

In the Confessional Booth with ForexDiva... Volume 260210

I ended the week:

+0.3% on the standard brokerage
-0.93% on the Roth IRA

I added another two Lehman bond issues to my Roth IRA. Once I have some more time, I'll post my bond ladder here so people can make fun of it / comment on how I can improve it / admire the boldness of it.

Now to the fun part...

Welcome to my new feature: In the Confessional Booth with ForexDiva, where I will confess my trading sins and air out my dirty laundry of the week and hopefully learn from them.

This week, I took profit on a few positions, including BGCP, AA, and IPG. I also made a secret GBP/USD trade that I didn't blog about.

BGCP... I made a good 10% net profit on this trade, but this could have been the trade that took me from staid to maid if I had done but two other things and that is to trade a bigger lot and also to move my stop rather than just get out with a limit.

AA... I was in this trade for far too long and there was a point when I could have taken a larger profit, but did not get out. My profits on this trade were tiny. Good thing I received dividends on it and it was placed in my Roth IRA.

IPG... I basically repeated the same mistake of not moving my stop here and got out with a limit even though I netted 5.24% on this trade. Who knows if this could have been the beginning of a trendship with benefits? I guess we'll never know, but I plan to get back into position on a pullback.

I also did a top secret GBP/USD long trade the other day. It got to about two pips profits when it started reversing. So I decided to do a S&R and quickly got slammed with another minor loss. I remember getting out at a total of about a 10 pip loss. Had I stayed in the trade longer with my second order, which was a short, it would have been pretty climactic. My biggest mistake: not having any trading conviction whatsoever. My even bigger sin: drawing out levels on the chart and not really following my trading plan.

So that's this week's episode of In the Confessional Booth with ForexDiva. Join us next week, dear Happy Shiny Forex Traders, for some more toe-curling trading pleasure in the form of smokin' hot profits.

Harry Is Too Sexy for This Nurse!

Harry Winston has been standing still lately, which makes me ponder whether he's too sexy for ForexDiva's portfolio. Possibly...

But no worries as IPG was another big winner today. I took profit already at 5.24% net and will be looking for a pullback to buy into another position.

I also took profit on AA. It doesn't much move, so I'm really not into that. Another one of those minor profits requiring a magnifying glass to see the profits.

Yay... I also added to C. I can finally say I've got thousands of shares in C. Not too many thousands, but enough to make me really oh so happy if it goes to $6. Even after paying back its TARP obligations and doing the $5 billion share issue, C will still have value and I'm in good company here with George Soros and John Paulson - not that I would ever buy something just because my mother's best friend's daughter's boyfriend's cousin bought it.

Beautiful work, IPG!

That's BX!

Surprisingly, today's sell-off didn't have that much of an impact on my portfolio.

-0.83% on the standard brokerage
+0.14% on the Roth IRA

BX didn't move much, closing at -0.57% even though its earnings beat estimates. Why did BGCP move so much yesterday whilst BX actually reversed today even though came out today with earnings that beat market estimates by $0.09 per share? I think it's a matter of trend on trend action. Yesterday, Bernanke used the two OMG magic words: "extended period." The overall market was up. BGCP came out with better than expected earnings, resulting in every trader's dream come true.

Today was an entirely different story as the overall market was down and people used the good news on BX to sell rather than to buy.

The market is still emotionally scarred from being held at double-edged sword knifepoint after Lehman collapsed. Please, don't hurt us! The 10,000 maniacs are back and the big question on everyone's minds is probably: should we all get the fork in the road out of here with our 5 carrots before we get left with 2?

Come on! This is going to be the second biggest shopping opportunity of our lifetime! But keep the trading legs closed for a while. I think if we fall below 10,000 again, we will get the "extended period" Bernanke promised us - an extended period of range-bound action, that is.

I am sitting pretty and hiding behind this coral reef right here. Franc, save us!

Not Quite!

My portfolio ended the day with the following results:

+1.6% on the standard brokerage
+0.9% on the Roth IRA

I'm not quite pleased with the results because BGCP traded back up to close at $5.03, which means I missed out. At least I didn't become Chicken of the Sea though - as was the case with BNHNA. I'm still trying to sell it in after hours trading.

In any case, my BGCP position was way too small for it to have made much of a difference, but it really got me thinking... my positions are sort of all over the place. I trade lot sizes that are pretty much inconsistent. In order to simplify my trading, I really need to standardise my positions. It'll be easier on the brain since I've got a relatively small one.

Thanks for the rally, Bernanke!

Next up: BX earnings announcement before the market opens tomorrow.

Now Where Are Those Binoculars?

Yes, binoculars are required because BGCP went from deplorable to adorable... from flab to fab... from joke to smoke! Out of the park...

Up over +17% today at one point, but I only got out of the trade at $4.83 since I didn't have access to my trading platforms till now.

Not exactly the +35% run I was expecting, but good enough for now.

Since it was such a small position, you'd need a magnifying glass to see the profits though.

Still...

And Harry Winston? I meant 5 carats, not 5 carrots!

Crikey!

Blimey... and all those other British words.

-3.56% on the standard brokerage account
-1.35% on the Roth IRA

I guess this is what they would call an Oops There He Goes... Oh No Setup...

BGCP earnings out already...

My TETSOB is on the line here, but other than that, it's a very small position. Still...!

BNHNA = Very Big Wok

My position in BNHNA didn't turn out to be very delectable and as some cute Cantonese guys from HK would say, it's very big wok (i.e. a big disgrace), so I'm trying to get rid of it. I'm testing out something new. Usually, I don't trade during extended hours, but since there is much less liquidity during extended hours trading, I'm going to place an extended hours order to sell BNHNA at a very crazy price. Crazy as in a price that's ridiculously high.

For whatever reason, sometimes orders go through during extended hours at prices that are really far off from regular market hours.

Harry, You Missed A Few Buttons...

Shall I give you a hand there? -5.5% so far with the latest button-popping wardrobe malfunction...

I woke up today and said to myself: I am not giving up on my trading! I am not giving up on myself! And I am definitely not giving up on my future financial security! Moreover, I have no illusions about my trading now. The thing I'm not quite getting is the profit-taking part, which is a big part of the equation, but at least I'm making good entries now. It might look like I have no standards, but I reckon I do! I've studied about a hundred balance sheets these past few weeks and I might not remember their symbols, but I remember their assets.

It's kind of hard to be your own cheerleader when your very own Angel Made In Heaven suddenly surprises you with... a bouquet of wilted flowers?

I know it's a recession, but recycled carnations? Where are they from? Wait, I don't want to know! Oh, Harry! Thankfully, it appears lots of investors want to get there hands on some more HWD since bid sizes are much bigger than usual.

MS was equally shocking! It hit a high of $28.42 today. It hasn't touched this level since I sold it back in January. Wow, that was a good move in hindsight. I bought it back at $26.20. If only every trade could be this fabulous / smokin' hot / fulfilling...

I Reckon Hate My Trading!

I finally figured out my 2009 trading results... what would have been a mediocre 8.3% pre-tax profit from stocks, savings, and bonds combined - completely obliterated by one major loss in ABK bonds. Not quite the climatic moment I was hoping for, but at least I know now which areas are contributing to my bottom line and which areas should be repositioned for next year. Yes, I had negative trading results in 2009... a major blow to my TETSOB.

Stocks = 77.28% of gains
Dividends = 11.85% of gains
Interest = 10.85% of gains
Forex = 5.1% of losses
Bonds = 94.86% of losses

Overall results: down -7%...

I hate my trading!

Bimbo as I may be, I have to look at my 7 winning positions at the moment and semi-smile... I think my portfolio is well positioned for more upwards price action with AA, BAC, C, BX, HWD, IPG, MS, and my other top secret restaurant stock which I am still building a position in!

This year, I reckon I'll be laughing all the way to the bank - finally!

1 + 1 = Calculator

Other than a relaxing trip to my local Hermes boutique on Saturday to visit my beautiful Hermes Kelly Sellier handbag, I had a rather boring weekend involving lots of balance sheets as well as preparing all my tax documentation for my accountant (snore). I swear I have never looked at so many balance sheets in my life and it made me wonder why I didn't pay more attention in Intro to Finance. And this is the time of year when everyone has a right to resent the IRS!

Anyway, how do you know when you've become a nymphomaniac market slut? When you can't even remember the symbol of the stock you just bought on Friday!

What was it... BGCP or BCGB? In any case, I am so tempted to sell it right now at a minor loss and get into some more C. George Soros' and John Paulson's investment in C has driven bid sizes up to a high seven figures at times. I swear I saw a bid block of over 9 million at one point. I'm not exactly amused because I am still building my position in C, but I should have thought of that last Friday when I got into BGCP (or is it BCGB)? This is what they would call a Monday Morning Quarterback, right?

Right... I thought BGCP could potentially break its 52 WH of $5.68 right before its earnings announcement, which would give me about a 35% gain in just a few days. So, should I do the whole trading ego the size of Belgium thing and stick with my trade or get into C? I think I'm going to do the whole TETSOB thing.

I'm also trying to get rid of BULIF (Bulgari). I still love Bulgari the brand. However, with a beta of 0.9, I would be lucky if I even get to sell it.

One thing's clear: I love high beta...

BGCP: My Smokin' Hot New Position

I didn't exactly close the week laughing all the way to the bank, but I did make some good moves. Thanks to Franc... I'm using USD/CHF as a confirmation to my equities trading.

The market's clearly saying: Take this, King Bernanke! We're going to continue to dance... and sing... locally, or globally. Notice the Shanghai Composite Index is above 3000 again and Nikkei is above 10,000, as is DJIA.

I took this as an opportunity to add a hopefully smokin' hot new position to my portfolio. A very warm hello to BGCP, which has positive EPS and ROE. It's currently trading at a Price/Sales ratio well below 1. The real reason I decided to get into this position at this particular moment of my timeline is I noticed that its earnings announcement is on 23 February 2010, which pretty much means guaranteed action - price action, of course. It has 2.5 times more cash than debt and a dividend yield of about 7.62%. Beta is much lower than I'd like, but at one point pre-Lehman, it was trading above $20. I got in at $4.20 with a very small position.

My boss told me my trading ego's getting really big. I didn't even really notice.

I'll try to be more cautious, but my portfolio rebalancing is paying off. I now actually have some positions that are showing small profits, which although minor, make me OHD (One Happy Diva). I mean, even BNHNA bounced back slightly today.

Remember... BX earnings announcement is on 25 February 2010.
IPG earnings announcement is on 26 February 2010.

I wish my fellow Happy Shiny Forex Traders some more toe-curling two hour massages - or at the least Wake the Neighbours type profits...

BNHNA = Food Poisoning

So this is what happens when you don't do enough homework! I got into BNHNA yesterday. I thought I'd done my due diligence by carefully analysing the balance sheet for a few days before getting into the trade. In fact, I pretty much looked at the entire restaurant industry and thought I'd gotten into a position with one of the best risk:reward ratios and strong fundamentals. It turns out there was one minor detail that I missed and it's usually the minor details that get you, isn't it?

Apparently, BNHNA shareholders have been enmeshed in a merger battle where the issuance of 12.5 million shares of Class A stock is at stake whilst Wachovia had cut BNHNA's credit facilities from $60 million to $40.5 million. This is set to continue decreasing throughout the year. Moreover, BNHNA's full outstanding debt balance is due on 15 March 2011.

If the issuance of 12.5 million shares goes through, book value will decrease from $9.941 per share to $5.487 per share. It seems some of my calculations have been off lately for various reasons, so do your own homework...

The big question is whether they will be able to pay back their outstanding debt in March 2011. Their EBITDA was $27.5 million, which just about covers their outstanding debt obligations, but if the share issue doesn't go through, this position will literally be a double edged sword.

Gosh! It's a good thing I didn't order a lot, but this is enough to make investors lose their appetites.

I'll wait and see if it tests its 52 WL again.

I Wonder If DJIA Will Test 10700 Again Soon?

It's so close, really...

Today's results:

+1.47% on standard brokerage account
+0.39% on the Roth IRA

Nothing to really write home about, but interestingly, I have more positions that are now in profit in the Roth IRA.

BX and IPG will take centre stage over the next few days as people anticipate earnings announcements from both. I expect at least IPG to be positive. The good news about BX is that it is in the bidding for Kettle Foods, the maker of Kettle Chips. I love Kettle Chips!

Hoping Is Not A Strategy...

So, I rebalanced my portfolio again. I sold a partial position of BAC and exchanged the moola for some BNHNA (Benihana) shares as well as another issue of Lehman bonds.

Price/Sales and Price/Book are both attractive enough for me with BNHNA. It's one of the Fair Weather Friends stocks I was talking about. The cash vs. debt situation is not great, but I think over the long term, this should change. I think I slightly overpaid, but that's OK. I got more shares out of this capital than I had with BAC.

The great thing about BNHNA is that it operates 9 Haru restaurants located in upscale areas. I noticed they used these modern chandeliers that I know are expensive because I was window shopping them once. The Haru restaurants don't seem to have a consistent interior design theme, but the online reviews are pretty positive. I'd have to do a Diva Taste Test next time I'm travelling. Based on its balance sheet, customer reviews, and the overall economic recovery, I think BNHNA should test the $20s again one day. I plan to add more of BNHNA and my other top secret Fair Weather Friends stock over the next few months.

With the issue of Lehman bonds I bought today, I potentially stand to at least recover my full investment in Lehman bonds if the rest of the bonds turn out to be worthless. Recall I was worried about my investment not paying off a few posts back. Finally, I decided to do something about it and bought this additional bond issue, which was a lot more than what I paid for my other ones. I plan to cash out on some of the bonds if they start trading substantially above my entry price. This most recent purchase is somehow up +7.33% already. I'm looking to potentially add more to my position if I can get in at a good price.

I am now waiting for all those investors who invested in bonds to get out of that market and jump into the equities pool. The most attractive yield in the bond market averages about 8.01% now on Municipals A bonds.

I think when the Lehman bankruptcy estate starts making distributions, we'll see another wave up in the markets.

So, yes, I have my rose-coloured glasses back on and whilst hoping is not a strategy, we cannot allow ourselves to lose hope!

BAC Deserves A Two-Hour Toe-Curling Massage...

BAC led my portfolio today, gaining +5.19% and lifting my overall portfolio together with some other porfolio-boosting heroes.

Overall results at the market close:

+2.70% on the standard brokerage account
+3.29% on the Roth IRA (yay! It closed above 3%!)

It was one of the most exciting trading days of the year as I watched position after position heat up - four smokin' hot ones in my Roth IRA and one Harry Winston in my standard brokerage account.

I sold my remaining NYX and am now waiting for the cash to settle so that I can get into some Fair Weather Friends sectors. Think anything fun, really. I recently bought one already, but since I'm still building up the position, I think I should be slightly mysterious for once. Just look for Price/Sales and Price/Book to be below 1 with very little debt if possible. I wouldn't touch anything with very high debt relative to cash - not even with an 18 foot pole. Gosh, that would include me, wouldn't it? Temporary condition that'll improve in just 103 days.

Follow me at your own peril though. LOL. There are some days when my portfolio won't get the Clairol Herbal Essences treatment.

Harry Winston looks like he wouldn't mind if we continue to be the equestrian.

But to think... had I just kept my trading legs closed for one or two days, my gains now would be even higher. Hopefully, this will mark the start of another long rally where it wouldn't really matter since the tide's headed up again. Hopefully!

I'm Wondering Whether They Wrote This With A Straight Face?

Bigger Not Better When It Comes To Satisfying Bank Customers

I am totally blushing - chastity-related!

I Want It & I Want It Now!

Guys with French accents... British accents... Profits... Especially guys with glasses... Add this to the list of things I find irresistible: The Tiffany Metro Flower Bracelet. I kind of wish the adjustable cord would be long enough to make it suitable for use as a choker necklace too.

I can't wait! In just 103 days, I'll be financially free and this will probably be one of my first new splurges...

Even If I'm Starting To Sound Like A Clairol Herbal Essences Commercial...

I don't mind... oh... oh... oh!

My portfolio's sexier than his shirt today. And my analogies are getting older than me. LOL.

+2.27% on the standard brokerage account
+2.98% on the Roth IRA

The market's not closed yet, but I'm hoping at least one of my accounts will be +3% when it does close. I hope so!

I'm also in the midst of some more portfolio rebalancing action. I sold NYX at about a 30% loss in favour of a new sector I've been researching. Think Fair Weather Friends. I'm fairly confident that the economy is picking up and therefore, there are so many sectors that have been sold before that will now start looking attractive once the recovery gathers even more momentum. That is, if the OBG Team don't say anything. If two of the three speak on the same day, I don't know what'll happen to the markets.

On the Clairol Herbal Essences Shampoo: Diva endorsement not implied. We don't do mass-market shampoo. No we don't!

The Same Joke Twice?

It's just not as smokin' hot as it was, is it? HWD led my standard brokerage account back up +1.48% with a much-desired break above $10. I'm waiting for C to get above $4, but it isn't doing much really.

I fear it's going to be the same joke twice with MS. Volume remained below the 10 day average, but I see blocks of selling on MS, which makes me fear this will be one that plays me like BAC. AA and IPG both closed strongly.

I've been brainstorming on ways I could potentially avoid this same joke twice scenario. My positions aren't big enough for me to be half in half out anymore. So, I think I'm going to have to pair stocks with similar betas and trade them as if they were one position. I'd have to pay attention to both and keep one in my portfolio whilst taking profit on the second one. Then, I'd look for a buy opportunity again. It could work! At the least, I wouldn't be always wondering if a really quick retracement is imminent.

The Roth IRA lagged the market again - only a 0.51% gain! No one's going to be affected by any second hand smoke from that!

These Are Adorable...

For the guys who never want to ask for directions... Functional Working Compass Silver Cufflinks!

Do not ask what I was actually searching for on Amazon.co.uk...

What's Happened to ABK?

I suppose I sold it at the right time...

If I did the calculations correctly, it has lost more than 30% of its value since I sold it.

That's what they would call good riddance! Today, it declined -11.11% on a 74% volume increase...

I'm really starting to like my portfolio rebalancing...

In case anyone was wondering, the AA I keep talking about is Alcoa - not American Airlines.

Muted Volume?

Is it me or did someone turn the volume way down in the financial sector? Trading volume is much, much lower with several key stocks I'm following, including C, BAC, and MS. I see the same thing with HWD. How much lower? Let's say about 40% less volume than the 10 day average. Does this mean more explosive action is on its way?

Both portfolios were up today, but not quite the smokin' action I was expecting. Advance retail sales is due out tomorrow and being the perennial shopaholic, I'm feeling very upbeat that we'll have better than expected results here. The real beneficiaries will be luxury retailers. TIF and SKS both increased today, but JWN got sold.

Overall, today saw:

+0.65% for the standard brokerage account
+0.52% for the Roth IRA


MS is really kind of charming, so I'll dedicate that French song Moi Je Joue to MS.

Beautiful - that song makes me so happy!

I Love You, I Love You Not!

So which is it? I couldn't decide from reading these two stories on Arcelor Mittal.

ArcelorMittal damps hopes of rapid recovery

ArcelorMittal Tops Expectations

This totally makes me think: there are two sides to every story and one cannot judge the truth by its cover...

S&P = Stupid & Poor

Sorry to say, but I find it pretty much ridiculous that Standard & Poor's decided to warn investors about C and BAC at this point of the economic timeline. Weren't these the same people who pleaded the First Amendment?

Whilst its comments about BAC may be true since BAC is one of the few larger commercial banks with more debt than cash, its comments about C are a bit unfounded.

Even with a very conservative estimate, I think C could go up by at least another $1 over the short term. It has a lot more cash than debt and based on this alone, its market cap is way undervalued. Its ROE isn't that bad and its 200 day moving average is at about $3.9967.

However, I do have to sigh that sometimes, even if a trade is based on logic, it might still not work out. I've been waiting for C to go up forever and keep getting in at the wrong levels. How frustrating is that?

Very!

Why Isn't It Hotter?

I'm not going to say that my portfolio was smokin' hot today! All throughout the session, I was wondering to myself why MS didn't rise even more. My Roth IRA consequently lagged behind the overall market.

+2.04% on the standard brokerage account...
+0.95% on the Roth IRA...

Harry contributed to the amazing results, but it was really NYX with a +5.11% move that saved today. I got an inferiority complex looking at some other companies with double digit gains for the day, though.

On the JBQ front, I'm still worrying about whether the Lehman bond issues I bought are the right ones. There hasn't been much progress really with my JBQ strategy. Out of all my junk bonds, I expect Finlay to be the first company to emerge from Chapter 11 and begin to distribute money from its estate - possibly as early as August 2010, but it could be February 2011 or later as well. Still, I think Finlay will be faster than Lehman.

Tomorrow will hopefully be smokin' hotter!

Aujourd'hui Cava Mal...

My portfolio ended the day on the saddest tune-up-the-cello note - much more out-of-tune than my French...



-1.10% on the standard brokerage account

-1.89% on the Roth IRA



Even AA retraced after hitting a daily high of $13.53.



I still believe that all the big fish in the sea are looking to gobble up little mermaids and my bimbo assessment is as follows. The BLS figures came in indicating that the 2009 labour picture was much worse than originally thought, which means to achieve this level of GDP and this level of retail sales at labour conditions that turned out to be much worse than economists were basing their estimates on throws everything off for the better. Supporting this theory is the minor run-up in prices of various retailers and FMCG companies, from JWN to TIF to HWD.



Based on this same theory, we should see a run-up in the financial sector as well. More so because consumer credit card delinquincies eased in December 2009 for CapitalOne, indicating that the tide is starting to turn. And to put the Greece sovereign debt issue into perspective, if all the PIIGS defaulted, which would be the worst case scenario, the impact would be about $4.2 trillion. If we only get a Greece default, the impact would be $401.98 billion - which is much less than Lehman. Not that I'm on the side of the PIIGS, but the US budget deficit is 86.1% of GDP and the Eurozone sovereign debt is 'just' 78.2% of GDP. Half my salary is in EUR so I have to defend the Euro here a little, but that's a personal bias based on logical truth (see table below lovingly calculated by ForexDiva in Microsoft Excel based on interesting article from The Economist).











Anyway, I totally digress. Getting back to stocks... the valuations in the financial sector appear much higher than the retail sector. Price/Sales ratios are well above 1.5 for most of the banks I'm looking at, whereas some stocks in the retail sector have Price/Sales ratios of below 1. Price/Book in the retails sector is much worse, whereas there are several big banks trading at well below book value with lots of cash holdings as well.



Moreover, the volume that I see on C and MS favours upwards price movement, so I'm going to try to hide behind a coral reef. I'm putting myself out on a limb with the Big Bank Theory of ForexDiva Portfolio Recovery, brought to you by the OTT ForexDiva Institute of Premeditated Profit Taking.



Interestingly, the E*Trade babies gave E*Trade a good lift after the Super Bowl commercials, increasing ETFC by +2.05% today.

Oh, Come On!

I reckon the only people loving my trading are the E*Trade babies. How did I miss the top in MS? It was such a good move up to $27.54 and now I've been hit with a button-popping retracement. It got so close to the $28 level I was looking at and I was hoping for some more upwards push up to $29+.

I was feeling kind of good this weekend, having had a very quick 3.53% gain in one day with MS. Moreover, I was on the verge of making some very nice seven figure sales at work. I was really kind of excited. I was ready to put my Miss Equities 2010 crown back on.

And now, it's all hot air! From premium to helium... from dinero to zero... from oh to no...

I'm pretty much in love with the fundamentals of MS. The more I study their balance sheet, the more I am convinced that they are way undervalued. And surprisingly, so is C.

But I am now equally convinced that the market is more emotional than logical. I'm not the only one! I mean, come on! There are companies drowning in debt and they are being bought up in today's sell-off, whilst the cash-rich MS is being sold. But fear is a powerful emotion. It keeps us from realising our full profit potential during intermediate tops and allows us to buy into market tops for fear of not profiting enough. I'll admit I belong in the confessional booth for committing both trading sins.

I have a bottom line with MS and I'm going to try to keep it, but that's sort of hard when you know there has to be a lot more potential with MS over the longer term. It has about 85% the cash that GS is holding, with a price that's currently only 17% of GS. Once it starts posting positive EPS, MS only has one direction to go. Yes, up! So, it hurts that it isn't going up.

Now that I've started looking at the market from this perspective, I am going to put MS on my ForexDiva's Absolute Favourites list. And it's possible even Harry Winston will take second place on this list.

In the meantime, I may have to avert my gaze during this semi-wardrobe malfunction. This will be a long wait, though. Next earnings announcement for MS: 22 April 2010.

Do I want to wait that long?

Hopefully, the NYX earnings announcement on 9 February, the BX earnings announcement on 22 February and the IPG earnings announcement on 26 February will bring some good news for my portfolio and divert my attention from AA, BAC, C, and MS, which will all announce their earnings in April.

Oh, Yes! That Was Pretty Amazing...

Yes... Yes... Yes!! Profits are like better than oysters... figs...

I pretty much redeemed myself with this MS trade - at least for the time being. As my perma-bear colleague would say, there's always a chance of a retracement.

But MS closed the week with a strong comeback. It broke new daily highs into the market close. There are lots of put options at $28 now that are probably going to start getting their Inner Fraidy Cats on when Monday arrives.

It hurt when they were pushing prices down... now it's revenge time! We saw good volumes pushing from the daily low of $26.15 all the way up to close the market at $27.24. Ooohhh...

I was not quite happy about having to work this weekend, but I'm going to go into the weekend feeling much, much better.

I got played with BAC, but what do I care? I still have a small position in it and my portfolio benefitted when BAC pushed back too.

I was even ready to dump Harry Winston because the profit level on my overall position was about to become obsolete, but I kept Harry Winston, my beloved Angel Made In Heaven / Prince Smokin' Hot Charming / Portfolio Carrying Hero of the Highest Calibre.

Oh, it was hot - smokin' hot!

+1.22% on the standard brokerage account
+1.32% on the Roth IRA

Apparently, a new position makes a big difference.

Have a nice weekend, Happy Shiny Forex Traders! Not that I traded forex this week, but still...

Deflated, But Not Defeated...

I was going to name this post "Futile Trading Attempts: The Daze of ForexDiva's Life... My Inside Story on Wake the Neighbours Smokin' Hot Trading Turned Freezin' Cold." I could now write a book on how to successfully lose money in the stock market... Yes, my hot air balloon of a portfolio experienced a shocking wardrobe malfunction just in time for the Super Bowl, getting its fair share of button-popping deflation.

But I have a new plan of action. I sold another partial lot of BAC and decided to nurse another position - jumping into MS. I bought MS at $26.20. I had fears that BAC might become another Enron in the making and decided to decrease risk by taking partial profit on this position. It wasn't the best time for me to do so, but I think MS is in a much stronger position than BAC at the very moment.

There's plenty of profit potential in the sea! I might be a bit of a little mermaid swimming in a sea of sharks, but I've got to turn my financial vulnerability into profit opportunity. I traded myself into this mess; I've got to trade myself out of it. And the worst thing I did was stand still these past few weeks.

If we're not getting our profits with one position, we have to try a new one - and that one could be smokin' hot. My reasons for getting into MS again are similar to the previous time I was in this trade - lots of cash per share, more cash than debt, trading below book value, etc. - only, this time, I also see that the put options on MS are more or less exhausted. So, this is a good time for me to be in the trade, especially since selling pressure is decidedly much intense than before.

My second bit of insight was I am not focusing enough on recovery. Before we can run, we need to be able to walk. Yes, I just quoted the very famous Cantonese proverb. I'm going to spend the next two months on recovery - doing everything I can to recover my disastrous portfolio.

I'm going to use mainly $5 and under plays, cramming as many shares into this Five Car Parking Lot of mine and hopefully allowing logic to rule my trading rather than being emotional and impulsive (my fortes, I must say).

Am I emotional by nature? Yes. So maybe there'll still be some Wake the Neighbours type trading going on. I hope so!

I love Wake the Neighbours type trading...

10,000 Maniacs...

It's very interesting how Nikkei 225 is also at about the 10,000 level - as is DJIA.

In fact, all equities markets are at key psychological levels...

I have a new action plan, which I'll try to blog about later.

Stay tuned for some more bimboism.

Lord, Have Mercy!

Today was a big Ooops for my portfolio...

-5.05% on the standard brokerage account...
-4.40% on the Roth IRA...

Where was my Inner Fraidy Cat?

Out to lunch, apparently.

Volume on HWD today was about 15% lower than the past 10 days. Volume on C was similarly lower - as with AA.

Shall we put on the rose-coloured glasses once more or am I jumping to conclusions?

Volume was higher on IPG and BX...

Oh, Prince Smokin' Hot Charming! Take Off My Rose-Coloured Glasses & Kiss Me...

And then, he became a frog!


Some time back, my colleague and I were discussing market timing and he indicated how we can be really right about the market and yet be wrong for a long time, citing people who called the global financial crisis two years too early.

Here I am, dealing with several prince turned frogs again. And I'm really at fault here for being greedy at the wrong time. BAC was a huge hit for me for a while and I was really loud about that too. It was definitely my most impressive Wake the Neighbours trade - aside from Harry Winston - an especially loud position.

Now, if the market doesn't turn around with tomorrow's employment data, I think I might be wrong for a long time. People will be hearing me cry instead of sigh. I have to watch this data announcement very carefully. How will prices react? Will prices be able to climb back up and hold at a good support level? Or does it appear that people are selling the news? It'll take time for the accumulation at certain price levels to occur. For now, I still consider my positions being well supported, with the exception of NYX. NYX keeps breaking lower and lower.

I do trust my intuition. I saw first hand that the US economy was getting back on track during my visit in December and it made me very bullish. People want the recession to be over already. And there are signs that growth might be around the corner. I also know that there are sectors that are still very much undervalued.

What is my definition of a sector being undervalued? It is not as rose-coloured as it would seem. I define an undervalued sector like this. It has a lot of market cap growth potential, either because it is trading below book value or because its Price/Sales ratio is below 1 - or both. Moreover, it would have to have healthy cash levels. If it has a positive ROE, that's even better. It would also have been one of the most beat up sectors. Basically, its share price would have no place to go but up - in theory.

The big question now is: are we getting into another Buyer's Market and should I temporarily close my trading legs for an even better opportunity?

It's very true that when you can buy with discipline, the profits naturally follow.

Il Pleut...

It's raining... and a combination of factors has led to the biggest wardrobe malfunction with my portfolio in the longest time. So my portfolio recovery was really all hot air?

I'm not so sure even if the standard brokerage account is -4.07% so far and the Roth IRA is -3.42%.

I am still here being stubborn and not letting go of some positions because I've suddenly developed some semblance of trading conviction. I've fallen in love with AA, BAC, BULIF, BX, C, HWD, IPG, and NYX - or more specifically, I've fallen in love with the six figure profit potential they collectively promised my portfolio. I was mesmerised and tantalised...

I'm ready to sing along with the E*Trade babies: take these broken wings...

Good thing I can still keep a sense of humour about my portfolio, though. As crazy as it seems, I'm looking into some more undervalued stocks to buy while the sale's still on!

Il Fait Froid...

Sadly, my portfolio turned out to be a hot air balloon that's running out of energy.

-1.84% on the standard brokerage account
-0.62% on the Roth IRA

Harry Winston had some deflationary pressure with a -3.65% move.

The three smokin' hot positions in my Roth IRA are AA, BAC, and surprisingly, C - all slightly profitable. BAC's the most exciting by far.

I got the grand idea of possibly holding a short term position in HWD in my Roth IRA. If I can catch a +8% move or more on HWD consistently, the profits would make me a very happy woman. This is the only stock I know that moves like this. The volatility is definitely something I want to take advantage of.

DJIA: Getting Back to Business Again...

I usually don't look at line graphs, but I decided to look at a DJIA 15 minute line graph. I'm kind of glad I did because I didn't realise DJIA was at such a critical moment. It looks like it is poised to break the 10280 level, which was previously support throughout November and December, but then became resistance during this recent sell-off. If it breaks past this resistance and stays above it, we might be in for another run higher. And this time, I hope it'll break above the 10720 area.


It all depends on the employment outlook on Friday though. That's what I think at least...


Yes, I'm all rose-coloured glasses again...

This Feels So Good!!

Another wow day for my portfolio...

+2.27% on the standard brokerage account...
+0.47% on the Roth IRA...

Do it again, please! Just a little bit higher... oh, a few hundred % will be just fine.

AA is already in positive territory for me. BX was +3.33% and Harry was +3.05%. Even IPG advanced with +1.82%... 26 February 2010 is the date to watch for IPG's Q4 earnings.

I'm not sure I know what to think about this market... I'm just glad it's going up. And once the employment outlook comes out on Friday, we won't feel so clueless anymore.

In the meantime, don't mind my Wake the Neighbours type trading. Hopefully, my forex trading will be even more satisfying!

My Lipstick Brings All the Boys to the Yard!

My portfolio wasn't the only thing that got an overhaul recently. After years of wearing the same lipstick every day, I recently upgraded myself to the Rouge G de Guerlain range.

It contains ruby powder, feels luxurious, and is the perfect lovable, hug-able, kissable, delectable shade. And since Sephora was nice enough recently to accept a shocking amount of returns from me (shocking as in it really made me think my shopaholism had to be suppressed), I'll give them a round of applause here on my lovely blog.

The Swiss Model of Excellence

This morning, I opened up FT.com and received a major shock after seeing the headline: "Obama looks to target overseas tax breaks." I immediately thought I was going to be affected, but thankfully, it's not the case. I'm under enough financial stress already and I really don't like what Obama's doing to the tax system - especially not the part about tax cuts expiring for the top income brackets. I'm far from being affected, but here's why we should all care.

Higher income should be what everyone aspires to. And if we allow the government to increase taxes and penalise people for aspiring to a better lifestyle today, what are they going to do next? Are people living in poverty because others are living in luxury? No! Moreover, if we cut the inefficiencies in the US government today, taxes wouldn't even have to be so high. Recall the article I posted here some while back citing the massive salary boosts US government employees received throughout the financial crisis. If Dubbaya did anything good for the US, it was lowering taxes. And that's possibly the only good thing he's done. Lower taxes are why I'm semi-Republican. Everyone should be Republican when it comes to taxes! In a socialist regime, the only direction taxes could head is higher.

But look at what the Swiss are doing. Apparently, the Swiss healthcare system is amongst the best in the world and their federal corporate tax rates are only 8.5%. I have to say the Swiss should be lauded as models of excellence - at least when it comes to taxes. But that's almost a given since their watches are so fantastic.

Oui, Oui! Her Royal Smokin' Hotness Is Back!

OK, that might have been a bit OTT, but today was OMG Day for my portfolio...

+2.69% on the standard brokerage account...
+2.2% on the Roth IRA...

Harry Winston led my portfolio with a +7.31% gain and BX was a close second with +6.35% whilst AA was +4.95%. I wish this would happen every day!! If it did, I'd have a yacht in no time...

I'm not sure I'm so concerned about USD/CHF breaking down anymore. If it breaks below 1.045, then we really have something to be worried about. This is practically the slowest pair on earth, so if it starts moving fast, then we have even more to be worried about.

I'm not going to do much portfolio rebalancing until the unemployment rate and NFP announcements on Friday. Now that we see the market moving higher, people who are short would probably have to take profit before the employment outlook and people who want to be long will probably use this opportunity to make some quick gains.

The tables are turned now - hopefully. I am happy I didn't let the market bully me, but at the same time, I'll have to ensure that the moves are real.