A Good Beating

I'm going to start by saying that those of my regulars that couldn't care less about the sometimes bland world of economics need not even waste their time with my hackneyed interpretation of the stock market. Without further delay, anyone that's been working the stock market lately is likely to be thoroughly frustrated by what has transpired since the few days following the Christmas holiday. I'm not just talking about Series 7 holders either. I'm talking about general investors at home like me that keep track enough to monitor investments and stay on top of any possible decent returns. I gamble (yes, that's basically what it boils down to) a little with options because the possibility for a quick and substantial return on investment is greater than just buying stocks. You also don't need nearly as much liquid capital. Unfortunately, the threat for equal losses is also ever present and palpable. It's all about using news to your advantage.

News, in most cases with the big blue chips is very reliable and can be used reliably for following the other traders and riding the gains upward. That is, if the news is good. If the news is bad, you can short the stock or stay away, but it generally results in the stock taking a hit. The last two months have been very contradictory for a few companies. Cisco Systems, Inc. (CSCO) is the one blue chipper that has kicked my ass because it should be riding high and it is not. A mere whisper of economic problems in the credit sector, financials, or anything else for that matter, and this thing gets a beating worthy of a UFC matchup. My time value on these calls is going down faster than my pint of Boddington's on a good day. Luckily, it only lost 27 cents in yesterday's 317 point massacre which was the leap day loss for DJIA. The damn company is more solid than a brick shithouse and should rebound nicely. I just need it to do it NOW. I'm on this ride until the end and I'll drink another pint in hopes that it will be solidly in the black by the time I'm donning my Reefs.

There has been a bit of a saving grace lately, though, in a nice little company called Petro-Canada (PCZ). This little gem is a mid-size mover and shaker in the oil and gas sector. It does everything related to those two precious commodities. I've been riding the price roller coaster on this one for a few months now and have nothing but gains to show for it so far. As long as my ability to discern when it's about to take a dive and when it's going to shoot up like a roman candle is good, we're all happy. It's a volatile little company and it is common for it to rise and fall 3 or 4 dollars (stock price is fluctuating between 40 & 50 lately) in a few hours. This is awesome for straddles and strangles. Get in, get out at the right time and use your stop limit orders wisely.

The other frustrating company is EXM. Excel Maritime Carriers, Ltd. Dry bulk shipping overseas is the business. It's nice and volatile, just like I like 'em, but it doesn't seem to follow a pattern like other stocks or sectors. When China is looking to import more iron ore, EXM should rise, but it sometimes doesn't. The sector is somewhat boring and doesn't get the news coverage that the big chippers do, so that makes it harder to find information used for prognostication. China is the keystone in all of this, because like so many other people, I see it being a big player in our economic situation here across the mighty Pacific. I think one of big problems there is the fact that China got pounded by record blizzards this winter. I'll drink another pint in hopes we'll all see a springtime boom from the Chinese with fat contracts with dry bulk shippers. I'm right at even on this one, but I think I can get more from it with more time and study.

If I had just been heavy in puts when I was heavy in calls I would be loving life and reaping the rewards. Hindsight is always 20/20, though, as the popular cliche' reminds us incessantly. I'm close to even overall (on the plus side a smidge), and in this current market, I think it's far from a bad thing. The beating could have been much worse, and I think I'm in a decent position considering the conditions. I'm ready and waiting for a big move up. Where's that other pint I know is hiding in the back of the fridge?

CZ