On September 11th in a post called My life as a Non Trader, I shared with my blog readers that I hadn´t bought stocks in many years but that I felt that the markets were not valuing assets correctly and that I had chosen to buy shares in Citigroup and Bank of America. I then explained that this purchase was around 5% of my net worth and that it was a long term bet that America would not let it´s largest banks go under. That the financial system was sick but some of the best bank shares were trading as if the financial system as already dead.
Two days ago, when Lehman imploded, I wrote that the US government had to come up with a Brady Plan type solution to the crisis. That instead of going bank after bank and playing God as to who lives and who dies, the US Treasury had to rescue the poor quality mortgages and make everyone proportionately better off. This is what Paulson announced today. But, as the WSJ says, Paulson´s decisions until now have been pretty bad.
So this is how I feel today. Even though I am very happy that my thinking was correct, I still feel it was a mistake to share my investment strategy with the general public. When C and BAC were down over 20% I felt enormous guilt, thinking of a reader out there who may have followed my decision, thinking that I would be infallible, when I knew very well that I could have been wrong. So what I want to accomplish with this post is get rid of my guilt. If you followed my advise and believed like me that the US banking system would survive, enjoy it and take a nice profit now!!!
Most investors who trade stocks and other securities trade frequently. I don´t. I am your average broker´s nightmare. I probably do around 1 trade per month. This year I decided to share my portfolio in my blog. And it has not been a bad year.
In a post I wrote on May 4th I told my readers what I thought was going to happen with the dollar. I said that Europe was in worse conditions then what it looked like at the time, and that the US were in better conditions then what it looked like at the time. That while the dollar was in a seeming freefall that it was going to turn around. For my own portfolio I reversed a 7 year trend and started moving away from the euro into the dollar. And while I haven’t done any oil related transaction, last July I wrote in my Spanish blog that oil prices were absurdly high and they had to fall.
I started sharing what I was doing with my portfolio in early 08 with a post in which I recommended buying Apple stock (on January 23rd). Apple stock had fallen from $202 to $134 per share in less then 60 days and I loved the company, I bought shares and I told my readers I had done so.
So my two trades of the year until now were shifting my liquidity into dollars and buying Apple shares. Other than that my money was mostly in hedge funds that are down around 8% on the average this year. Bad but not as bad as the markets. And here´s another 3 trades I did. I bought TEO (Telecom of Argentina) mainly because I am Argentine and don´t think Argentina is going to hell again. I bought Citigroup and Bank of America because I lived in the States for 18 years and I can´t imagine the two leading US banks going to hell. But if you look at the stock performance of C and BAC you would think that everyone else seems to think they are going to hell. So I bought those shares. I also have bought shares of Cresud (CRESY) a very large landowner in Argentina for the same reasons. They trade as if fertileland will be worthless something that in this world of still very high food prices I don´t think will be the case.
I should also note that my investments are very long term. In 2001 when I switched to the euro I kept with it until 2008. The Apple, Citigroup, Bank of America, Cresud and Telecom of Argentina stock I’ve bought I also plan to keep for quite some time. And overall I don´t own in all these equities combined more than 5% of my net worth so until this year I had no stock exposure and now I have very little.