It has certainly been a volatile year in the stock markets and while our trades are not closed out yet, they will be closed out tomorrow morning and it seemed fitting to go over our trades, what went right, what went wrong and how things will change in 2011. To start things off, the year in numbers:
Number of trades: 25
Winning Trades: 13
Average return by trade: 3.03%
Annualized return: 16.21%
Frequency: I was much more regular this year in posting new trades on every Monday when we had less than 5 live ones
Overall return: The return over 15% is more than we had last year as is the return per trade 3.03% (vs 2.53%)
Trading on Apple (AAPL) was very successful: Despite its spectacular growth, I continue to be a long term believer in the stock and have had a lot of success going long on Apple.
(Click charts to expand)
Priceline (PCLN) was another huge success story as the stock gained nearly 100% this year. We went long 3 times on Priceline against other travel internet companies and they all turned out to be successful.
Once again, picks in the later part of the year turned out much worse than earlier picks: It’s difficult to pinpoint what is causing this honestly and I will keep looking into it. I am obviously hoping for another strong start in 2011.
Shorting Yahoo (YHOO) turned out to be difficult: I have been very critical of Yahoo, of its CEO Carol Bartz and of the overall strategy. The stock is also slightly lower than it was one year ago. Why did I do badly on all 3 trades shorting Yahoo? Because I did not short at the right time.
Trading prior to earnings: At least three times, I ended up trading a few days before an earnings release and while it did work out once, the other times it didn’t. More importantly, taking a position right before earnings feels more like playing roulette than investing in the market. I will try to avoid trading less than a week before earnings in 2011.
Inability to trade Chinese stocks: After having great success in 2009 with a few Chinese names, especially Baidu (NASDAQ:BIDU), I found it much more challenging to do well on the Chinese names because I am missing so much information. One good example is the volatility of CTrip (NASDAQ:CTRP) because of its negotiations with a Chinese airline. I will need to find more reliable sources of information for these Chinese names in 2011.
Google’s (NASDAQ:GOOG) drop: I publicly said how much I liked the stock, the company and even its management. Thus, you would not be surprised to hear that I was long Google for much of the year. I could have imagined others performing better but I never would have thought that Google dropping 25% was possible…yet it happened.
I would say 2010 was a very good year and while finishing with a gain of over 20% would have been ideal, I think the performance was still rock solid. It remained a bit volatile but hopefully my new resolutions will help me diminish the losers.