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Roger Knights
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I'm a Seattle-ite, retired from computer programming. I'm a mere dilettante of the market.
  • Laugh at My "Picks" Now / Later / Both / Neither 20 comments
    Nov 14, 2009 4:14 PM

    I’m posting here a record of my paper trades, with the intention of crowing about them later. (Or eating crow, as the case may be.) The outcome should instruct or amuse readers, depending on whether I’m right or wrong, so it’s a win/win situation for them. I've given myself 1000 "chips" and allocated them across 16 picks, plus cash.

    My selections aren’t very non-correlated—the only non-bearish selections are Rambus and the agricultural commodities ETF. I’ve reduced my risk by setting tight stops. I’ve been bearish for a long time and I figure, like a stopped clock, that I’m due to be right—and that therefore THIS is the top--and so there’s not much chance of getting stopped out. (Anyway, with today’s commissions as low as they are, getting whipsawed out and in again isn’t costly.) 

    All my initial positions were entered at the closing price on Friday, Nov. 13, 2009. (I put this table together the next day, so it was convenient for me to use those prices.) Whenever I make a new “trade,” I’ll append an update to this post in the form of a comment. After I’ve made several trades, or anyway after about four months, I’ll post a new thread containing an updated table showing accumulated profit/loss, etc.

    Symbol
    (- means short)
    Name
    Entry @
    Date
    (YR-MO-DA)
    Stop loss @
    Sold @
    Chips-bet (of 1000)
    Prof-it / Loss %
     
    Long Stocks & Commods. (450):
     
     
     
     
     
     
    +RMBS
    Rambus (memory chip designer)
    18.50
    09-11-13
    15.50
     
    200
     
    +GDXJ
    Junior Gold Miners ETF
    25.43
    09-11-13
    23.00
     
    200
     
    +RJA
    Replication of Jim Rogers Agricultural Index ETN
    7.66
    09-11-13
    6.50
     
    50
     
     
    Short US Stocks (150):
     
     
     
     
     
     
    -GE
    General Electric
    15.66
    09-11-13
    17.00
     
    30
     
    -WFC
    Wells Fargo
    27.68
    09-11-13
    30.00
     
    30
     
    -NILE
    Blue Nile (online diamonds)
    58.43
    09-11-13
    60.00
     
    30
     
    -CRM
    Salesforce.com
    66.13
    09-11-13
    70.00
     
    30
     
    -PSS
    Collective Brands
    20.26
    09-11-13
    21.50
     
    30
     
     
    Short Real Estate (75):
     
     
     
     
     
     
    -O
    Realty Income Corp.
    24.58
    09-11-13
    25.50
     
    25
     
    -IYR
    Dow Jones Real Estate Index ETF
    43.19
    09-11-13
    45.00
     
    25
     
    -ITB
    DJ Home Construction Index ETF
    12.06
    09-11-13
    13.25
     
    25
     
     
    Short Emerging Markets (75):
     
     
     
     
     
     
    -RWX
    DJ International Real Estate ETF
    36.57
    09-11-13
    38.00
     
    25
     
    -EEM
    Emerging Markets ETF
    41.04
    09-11-13
    43.00
     
    50
     
     
    Short Commodities (75):
     
     
     
     
     
     
    -JJC
    Copper Sub-Index ETN
    41.04
    09-11-13
    43.00
     
    75
     
     
    Short Bonds (100):
     
     
     
     
     
     
    -MFL
    MuniHoldings Fund ETF
    12.48
    09-11-13
    13.50
     
    50
     
    -JNK
    High Yield Bond ETF            
    38.05
    09-11-13
    40.00
     
    50
     
     
    Cash for “dry powder” and for SPY-hedging with options (75):
     
     
     
     
     
     
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  • Roger Knights
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    Author’s reply » Changes after 1st week:
    Add 71.58 to “chips” from short-covering of JJC
    (stopped out at 43.00 for a loss of 4.56%)
    -RWX Triple my short position 35.50 09-11-20 37.00 50
    Chips now: 75 + 71.58 - 50 = 96.58

     

    Because the market was down a bit and I was mostly short, most of my picks above gained a bit. My notable gainers this week were Junior Gold Miners (GDXJ) & my short on Salesforce.com (CRM). My notable loss was on JJC (stopped out, as noted).
    21 Nov 2009, 03:55 AM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » PS: A third notable winner for the week was RWX (DJ International Real Estate ETF), the equity on which I tripled my short position.
    21 Nov 2009, 02:00 PM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » PPS: I was tempted to re-enter my stopped-out short on JJC, but I remembered Jesse Livermore’s advice not to add to losing positions, but to winning ones. So that’s what I did.
    21 Nov 2009, 02:05 PM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Another first-weekend transaction:
    -BRK.B Short Berkshire Hathaway B @ 3447, stop loss @ 3500, amount 50 chips.

     

    My chip pile is now down to 46.58
    21 Nov 2009, 06:48 PM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » Results after 2nd week (ended 11/237):
    Market was down a small bit. More gainers than losers among my picks.
    Only notable loser was Rambus (just normal jitter, IMO).
    Notable gainers were my shorts on WFC, IYR, and RWX (again).
    27 Nov 2009, 05:51 PM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » Oops--there was a fourth notable gainer among my shorts, BRK.B, which went from 3447 to 3370.
    27 Nov 2009, 05:58 PM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » 3rd week Saturday, Dec. 5:
    The market was up the prior week, hurting my shorts.
    Notable gainer = Rambus (over 10%).
    Notable losers = CRM, RWX, NILE, PSS, O, and IYR.
    Stopped out of my four shorts on NILE, PSS, O, and IYR.
    Chips lost = 4.33. New free chips = 105.67 from those sales.
    Total free chips = 105.67 + 46.58 = 152.25
    I’m increasing my holdings of my winners this week (RMBS, GLDX, and short BRK.B) by 50 chips each.
    This is what Livermore recommended – drop your losers and add to your winners.
    I’m glad I’m using a mechanical (tight stop) system to force me to reallocate my chips.
    Free chips remaining = 2.25
    RMBS Rambus (memory chip designer) 21.32 09-12-05 17.50 50
    GLDX Junior Gold Miners ETF 27.14 09-12-05 25.00 50
    -BRK.B Berkshire Hathaway B 3320 09-12-05 3500 50
    5 Dec 2009, 07:18 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Oops--change GLDX to GDXJ.
    5 Dec 2009, 07:19 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » 4th week:
    Market was up a bit. Nevertheless, 8 up, 4 down.
    Notable gainers: WFC, CRM, and RWX.
    Notable losers: GDXJ (ouch!)
    14 Dec 2009, 11:02 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » 5th week:
    Market down a bit
    7 up, 5 down
    Big gainers: RMBS, -RWX, -EEM
    Big losers: -WFC, -CRM
    20 Dec 2009, 01:29 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Market up: 4 up, 6 down.
    Big gains: RMBS, GDXJ
    Big loss: -CRM (stopped out at a loss of 6.45% or 3.23 chips)
    Free Chips: 26.77 + 2.25 = 29.02
    25 Dec 2009, 06:41 PM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Use most (25) of my free chips to buy more Rambus (RMBS) @ 24.75 stop loss at 20.
    4.02 free chips left.
    28 Dec 2009, 06:48 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » I've neglected to update this list because I got involved in a hot topic elsewhere on the Internet. I assume most of my positions have been stopped out. I'll work out the damage eventually. However, for the record, at this point I'll put all the proceeds into GDXJ (junior gold miners ETF). It closed yesterday at 27.61, which I'll use as my entry point.
    6 May 2010, 08:49 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » In my previous comment, dated May 6, 2010, I observed that the market had gone against me (risen), that I was reinvesting the proceeds from my stopped-out positions since my previous comment in GLDX at the then-current price of 27.61, and that I would work out the details later. They follow, but the bottom line, for those who want to skip them, is that I’m up 24% since November 2009, 14 months ago.

     

    My proceeds from stopped-out positions as of May amounted to 425 chips. I had originally invested 460 chips in these positions, making my loss 35 chips, or 7.6%. My tight stops—except on my 2nd position in Rambus—saved me from a larger loss.

     

    (My loss on my six previous-to-May stopped-out positions that I had reinvested elsewhere before May was 11.96 chips, or 5.56% of my investment of 215 chips. Most of these (i.e., except RWX) were stopped out again before May.)

     

    Adding those 425 chips to my 4.02 existing free chips gave me 429 chips, the number that was invested in GDXJ. Added to my original 200-chip buy, that gave me 629 chips. (My 2nd buy of 50 GDXJ was stopped out in the interim, before May, because I’d set a higher stop-loss on it than on my original buy.)

     

    In late December there was a distribution of $2.929 per share by the GDXJ ETF. In percentage terms that was 7.2% of the price just before the distribution, which gave me about 44 free chips.

     

    In addition, my position in RWX was stopped out after May, giving me about 71 free chips. (I’d originally invested 75 chips, in two purchases of 50 & 25.) 44 + 71 = 115 total free chips.

     

    My three winning positions, the only ones I have left, are:

     

    RMBS (my original position, not my 2ndary one, which was stopped out before May)—up 10%, from 18.50 to 20.34
    RJA—up 27% from 7.66 to 10.46
    GDXJ, first buy—up 42%, from 25.43 to 36.18
    GDXJ, third (May) buy—up 31%, from 27.61 to 36.18
    (My 2nd buy of GDXJ had a higher stop than my first & was stopped out before May.)

     

    Only three of my 17 picks were winners, but I did well overall because I was overweighted in those three choices, both initially (45%) and in May (92%); because my stops cut my loses; and because I let my profits run.

     

    My bottom line (total chip gain) is that I’m up 240 chips, and now would have about 1240 chips if I cashed in my positions. (I got two slightly different figures when I made this calculation, and I don’t want to spend an hour tracking down my error, so I’ve guesstimated it. It doesn’t matter in the big picture if I’m off by 1%. I now realize I should have used a spreadsheet to handle this or, better, some packaged play-trading software.)

     

    I now commit my free 115 chips to the Gold Explorers ETF, GLDX, at its Friday close of 17.26. So I’m “all in” three sectors: gold, chips (Rambus), and soft commodities.

     

    I don’t like the other PMs because of their downside potential in the event of a depression. I recognize that gold has a downside too, and might drop 15% or so if there were another crisis like that of 2008, when it was dumped to raise cash. Euro sovereigns might be forced to do the same. But there’ll be buyers on dips. I don’t have that confidence about anything else. And I’d do think a “dip” is coming. Gold is volatile; all else is risky.

     

    I also raise my stop-loss on RMBS from 15.50 to 18.50 (my entry point.)
    10 Jan 2011, 05:32 AM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » Sell all RMBS at current (1:46 PM ET) price, 20.47, yielding 220 chips, and use them all to short JJC, Copper Sub-Index ETN, at 56.78. Set stop loss at 60.

     

    My rationale is explained in a post on Zero Hedge, “Founder Of Brook Hunt Sees Copper Peaking In Near-Term, Plunging To "Forgotten Levels" Of $1,500 By 2016,” at www.zerohedge.com/arti...

     

    I was short (JJC) 14 months ago and got stopped out at 43. I figure I was just early.
    10 Jan 2011, 01:55 PM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Whoops. Feb. 1: I’m stopped out of JJC, which hit 60.60. I am reinvesting those chips in a short on Netflix at its close yesterday of 212.90. Stop loss at 220.
    2 Feb 2011, 09:33 AM Reply Like
  • Roger Knights
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    Comments (4830) | Send Message
     
    Author’s reply » Feb. 4. Whoops again. Stopped out of Netflix at 220. OK, put those chips into a short of Salesforce (CRM) at 138.23, the current price. Stop loss at 150.
    4 Feb 2011, 01:50 PM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » I'm bailing out of RJA here at Friday's (Feb 4) closing price and taking my profits. (I can't find a price quote online at the moment.)

     

    I notice that I got stopped out of CRM, which just breached 150 a while back.

     

    I notice that Netflix is now back down to 212. (I shorted it in the real world at 232.)
    5 Mar 2011, 01:09 AM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » =========================
    4/27/2013: This is my first comment in two years. The trades above didn't work out well. I haven't computed the bottom line, though. I think maybe I've learned something from the experience and from the reading I've done. So I'm going to start a new set of paper trades with a blank slate. I'm giving myself 200 "chips" to start.

     

    Last weekend (about midnight Saturday) I tried to post my first paper trades in a new Instablog, but SA didn't post it. It now moderates the posting of them, which it hadn't done before, so I was unprepared for it. Mine didn't qualify, apparently. The first trades I made were at Friday's closing price:

     

    1. (AAPL) Buy 10 chips @ 390.53.
    2. (SAND) Sandstorm Gold. Buy 10 chips @ 7.08.
    3. (IBM) Short 10 chips if it hits 198. (Hasn't happened yet.)

     

    This weekend (Friday night) I'm making these paper trades at Friday's close:
    4. (TSLA) Tesla Motors. Short 10 chips @ 51.20.
    5. (NFLX) Netflix. Short 10 chips @ 215.55.
    6. (BBY) Best Buy. Short 10 chips @ 23.50.
    7. (NYT) NY Times. Short 10 chips @ 8.92.
    8. (PTNT) Internet Patents Corp. Buy 30 chips @ 3.62.

     

    So that's 100 chips committed, assuming IBM hits my selling point at 198.

     

    Possible future trades: Short YELP (25.45 at the close Friday) and CRM - Salesforce (40.71). Buy RMBS - Rambus (6.50).
    27 Apr 2013, 03:59 AM Reply Like
  • Roger Knights
    , contributor
    Comments (4830) | Send Message
     
    Author’s reply » One more trade at Friday's close:
    9. (WFM) - Whole Food Markets. Short 10 chips @ 88.61.
    27 Apr 2013, 05:13 AM Reply Like
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