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Over 10 years of investing experience, I use dividend reinvestment to accumulate stocks. I view myself as a Long-Long investor, very rarely (if ever) making short term trades. My three model portfolios--Widows and Orphans, Climbers and Dogs, and Pretty Girls and Railroads, are basically each 1/3... More
  • Why I Sold American Capital Agency Corp. (AGNC) 0 comments
    Jul 7, 2013 6:32 PM | about stocks: AGNC

    I had intended for this weekend to be when I would focus on a mid-year review on the performances of all three of the model portfolio's (Widows and Orphans, Pretty Girls and Railroads and Climbers and Dogs). I am still working on this. I prefer to do a broad survey during the weekend so as all the parts can be "still" but other matters took precedence this weekend. Perhaps I will finish this work in the evening, at which point it may appear in the next 24 hours or so.

    On Friday I completely eliminated all of my holdings of American Capital Agency Corp. ($AGNC). This began as a planned sale of about half of my position (capital was needed elsewhere), and on seeing the day's tape I dumped all of it. For about a week I had been sort of putting off the sale as I had hoped to sell on a particularly strong day, and with Friday being my last day to make this transaction, I got squeezed by the Jobs Report. I should have planned this better. In fact, I should have protected myself with a very narrow limit stop on this holding.

    In the book "Winning on Wall Street" Martin Zweig advises for the use of Limit Stops on all holdings--the tightness depending on your risk profile and current market conditions. Unfortunately I have not been following this rule (even though I keep it in the back of my head). I will be rectifying this over the course of the next week by installing appropriate limits on all my holdings. This will take time as I will be doing it on a case by case basis. Overall, I will be trying to protect the profits on the big winners, and prevent any more leaking loss with the big losers. This second point will be done in consideration with consensus forecasts as well as the other components of my trading signals system in general. Unlike what I expect to find with other holdings with similar size losses since January 1, 2013, I did not see a redeeming set of factors that gave me any reassurance that AGNC may regain it's lost principal value. Thus why I did not keep the half I at first intended to.

    AGNC will no longer be held in the Widows and Orphans Portfolio (for the foreseeable future in any case), and if it reappears it may begin, as all of my holdings, in the Pretty Girls and Railroads portfolio as I accumulate.

    Year To Date:

    Climbers and Dogs: +9.27%

    Widows and Orphans: +11.76%

    Pretty Girls and Railroads: +11.87%

    S&P 500: +11.59%

    DOW: +12.86%

    Russell 2000: +15.11%

    As can be seen, aside from just barely beating out the lowest of the 3 Benchmarks I track with 2 out of 3 portfolios, I am significantly trailing the Year-to-Date winner Russell 2000 by almost four percentage points. This after the first five months saw consistent 1-2 percentage point leads by all three portfolios. June was a strange month, and the rumblings of Fed Tapering will likely bring July showers as well. Prepare for a bumpy ride.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: AGNC
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