Wednesday, August 10, 2011

Cash and Cojones, Part II

Back in May I wrote a post titled "Cash and Cojones," ( which I said the following:

Recently I've read a handful of articles that basically say the same thing in different ways: proceed with caution.  Or, to put it more colorfully, in early 2009 you only needed two things to make a killing: cash and the cojones to commit it.  Ironically, if you had those two things in 2005-2007 you probably got killed.  So what does the market feel like today?  Well, while we may not be quite at the excesses of 2005-07, we're definitely nowhere near the palpable fear of early 2009.

So the real question is what’s an investor to do?  Obviously I have no idea what the right answer is (remember, I'm just some guy with a blog), but I’ve been focused more and more on mitigating risk and less and less on reaching for returns. 

So, out of a general sense of concern and nervousness I managed to keep a large % of my portfolio in cash.  In fact, at the end of Q2 my cash position was 37% (  However, over the recent days/weeks the fear in the market has grown steadily and, while it might not be 2009 all over again, I'm wondering if maybe now is the time to start using some of that dry powder... 

With that in mind I decided to dip my toe in the water by adding to my SHLD LEAPS.  Specifically, I bought Jan 2013 $95 call options (10 contracts at $3.00) for a total outlay of $3,010.76. 

On a side note there are a ton of stocks I've added to my watch list, some of them are new (MS, JEF, AMD) and some are old friends (SD, USG, NRG).  As always, if I buy or sell anything I'll do a quick write up that day.  Good luck everyone, and for those of you worried about the market decline just remember - this too shall pass.

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