Going Off the Rails

By on March 23, 2020

MiseryToday I made wholesale changes to the SMA Portfolio; now being operated in a completely different manner than originally intended. I decided to trash the Tactical Timing System as the relentless rise of the market led to a dearth of timing signals and year-after-year of underperformance. This led me to lose patience and make some huge rookie mistakes and completely destroy the performance by investing in what appeared to be contrarian areas, but were industries in multi-year decline. I could blame the Fed for being too easy with money, but this would be a cop out. I own this since I should have known better with my college major in finance.

The SMA Portfolio is my IRA and I’m now using it as a trading vehicle; basically a play account. In essence, I blew the account to smithereens by investing too heavily in resources and commodities, a sector in an epic bear market seemingly without end.

I’m continuing to write here instead of give up, because maybe someone can learn from my experience and not hinder their financial future through timing moves. I now believe all individual investors should use low cost index funds, whether traditional mutual funds or ETFs. The Bogleheads site is a great resource for investors who want to reinforce their knowledge and belief in indexing.

In fact, many of my investments are indexed, but this account, which I will still refer to as the SMA Portfolio, will be a freewheeling affair. Whatever whim comes to my mind will likely be acted on come hell or high water. I want to warn investors that I’m frequently wrong and have lost vast sums on several of my investments, but I’m way ahead over the long-term. I’d be a lot further ahead if I had begun index fund investing as a young man. I implore anyone who asks me what to invest in to just buy low-cost index funds and hang onto them. This message has been in my disclaimer and I believe in it more than ever today.

I’ve been through a number of bear markets. This is one of the five worst in my investing lifetime (1980-1982, 1987, 2000-2002, 2007-2009, and now). What I’ve learned is that you don’t know where the bottom is, but you can make a hell of a lot of money if you buy stock in companies that have been hit the worst when it’s over. Today I see bargains galore in housing, broadcasting, energy (ugh!), autos, travel and leisure, and finance. I’m sure there are more sectors, but these come to mind immediately. There is going to be a gangbuster rally at some point and easy doubles will be made. But this is an especially scary time with forecasts being made of unemployment of 20-30% in the coming quarters. We are sailing into the unknown and the ripples could easily morph into a tidal wave of defaults and misery.

I’ll continue to post the makeup of my portfolio and the results every quarter. If anyone wants to see what I’ve held in the past, just go to the internet archive Wayback Machine, where you can pull up the homepage captured on various dates in the past. You can see some of the junk I put my money in.

Today I sold ENLC, UPLC, PFE, RYN, GSM, MRO, CMRE, SUBCY, AM, XES, OXY, PAGP, NLS, EPR, VAL, RYAM, WMB, and PEP. I purchased EURN, DHT, LPG, NAT, FRO and added to my STNG position. I’m not going to go into the prices and allocations because I’m too burned out. The allocations will be posted on the homepage (to the right) when I get to it. As info, this guy Kuppy is giving me some ideas since he seems to make sense and he has a great recent post here -> Adventures in Capitalism.

Good luck to you all in these trying times.

Disclaimer: It is very challenging to outperform a buy and hold strategy. Historically, investors have found themselves well-served over the long-term by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Past performance has no relation to future performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

One Comment

  1. Barron Maestro

    March 30, 2020 at 11:59 pm

    Good interview with Chris Macintosh. Starting at the 38 minute point he talks about the bullish thesis on oil tankers for the next couple of years.


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