As I've been thinking of some the recent moves I've made in the portfolio, some words from the Sinatra classic "My Way" came to mind, specifically, the phrase "...regrets,... I've had a few". My "regrets" involve an error of commission and two errors of omission.
The first error of omission involved a core portfolio holding, O, an operating REIT I've held for over 4 years. Back on July 10th, when the market had pulled back a bit, I more than doubled my position at a price of$20.03. Although substantially above its March low, it was still "cheap" by historical standards (having held it for a long time, I'm familiar with how it trades). The market resumed its climb, with O following along. Thinking the market was looking increasingly "frothy", on Aug. 6th, I sold my "excess" O at $25.76 for a gain of just over 28% in a bit under a month. I continued watching, and after creeping up a bit more over the next couple of days, O started to slip back down. By Aug. 19th, I watched as it slipped as low as $23.15ish during the morning. I'd been thinking in terms of a "lather, rinse, and repeat", although I wasn't really looking for O to revisit the $20 mark, but something around $22.50/$22.75 would have been tempting. There's an old saying, "He who hesitates, is lost", and as I watched, O reversed and started moving back upward.
The second error of omission could be called "the trade that wasn't". A recent addition to the core portfolio is GG. I'd noted that its been trading in a sideways channel between $35 and $39 over the last 6 weeks, or so. After looking at both daily and weekly charts, I decided that a buying at $34.80 with a target of $39.00 and a stop loss at $33.15 might make a decent short term trade. I was looking at something evolving over a few days, with a possible revision to the upside target, based on technicals. At this point, let me say that one of my "quirks" is that I NEVER buy or sell "at the market"; all of my orders are at limits. Given that GG is fairly volatile, and can be "gappy" at the open, I decided to hold off and see how it opened on Aug. 19th. Within moments, it opened gap down at $34.89, and slipped to $34.79, and took off upwards. I spent the bulk of the morning debating "chasing" it, but caution prevailed. The channel was fairly tight, and I didn't want to be in the position of over-paying, and relying/hoping for an upside breakout of the channel to regain the anticipated profit on the trade.
My error of commission involved my sale of the bulk of another core holding, PVX, a Canroy E/P that’s pretty evenly split between oil and gas production, with some midstream assets, as well. While I was, and still am, a long term bull on oil, I had felt that when oil ran up to $73/bbl, back in mid to late June, the price was not supported by the fundamentals, and was due to correct. Consequently, on June 23, I sold the bulk of my holdings in PVX at $4.84. Initially, it appeared that I’d made the right call, as oil (and PVX) sold off, with oil dropping down to the $61/$62 bbl range, and PVX sold down to $4.60ish. I was looking for a sharper pullback in oil….down to the mid/upper $50s, and something in the vicinity of $4/sh on PVW (it had traded as low as $2.50 during the March meltdown), at which point, I’d build the position back to its previous level, or perhaps, even slightly more. Needless to say, neither event occurred, and I watched as oil and the stock moved back up to, and then past my selling price, with PVX closing at $5.18 on Friday, Aug. 21, meaning the loss of a potential gain of 7% in not quite 2 month’s time. Additionally, as a Canroy, PVX yields roughly 13%, paying a monthly dividend of $.06/sh US, so there was an additional loss of yield.
Its pretty tough to formulate a correlation between the price of a commodity, and the share price of a given producer of the commodity, so my price target on PVX was based on a combination of technical factors and “gut feel”. Of the 3 errors, this one is the most problematic, in terms of rectifying. It seems that oil prices are based on 4 factors: domestic demand, global demand (which a lot of people, at least here, in the US, seem to ignore), the value of the dollar, and supply. At any given point in time, any, several, or all of the factors come into play, or at least are “over-weighted” by the market. My choices are to either try to ease back in on dips, or wait, and hope the traditional fall “pre-heating” season pullback is sufficient to make my original premise valid.
In the other 2 cases, GG is still in the lower part of the channel, and given its volatility, might well offer another chance for a bite of the apple, or barring that, I can wait and watch to see if it breaks out on the upside of the channel, and formulate a plan for that, or wait for it to drift back to the bottom again. It’s a somewhat similar situation with O. I don’t think its unrealistic for it too drop back to that low $23s/sh number, over the next 4-8 weeks.
Time will tell.