2011 so far . . .

I thought it might be time for me to talk a little about what has been going on in my personal portfolio. 2011 has been pretty average so far, I made some good picks and a bad one. I also got caught with a ill-placed stop loss on a stock that I should have sold in early January after they reported their numbers. But other than that, I'm pretty happy with my portfolio now and how things are progressing. I'm also well diversified in both sectors and in international stocks so hopefully that will help me to avoid all this inflation talk.

Here is what my portfolio looks like now. As you can see I have 4 stocks and some cash waiting for the right buy point. My big loss for the year came from my investment in MIPS. As Tim has discussed on this blog already there were signals there that we should have never gotten into MIPS but we both did and we both took a loss. Sometimes that happens, but I should have instituted some damage control and I should have never taken a 21.69% loss. I just kept hanging on hoping for it to turn around, but it never did. This was just an opportunity to learn from my mistakes. The other loss was from ATVI. I had originally gotten into this stock because I was expecting big 4th Quarter gains in 2010. But I never sold in early January and the stock lost all of it's gains after Blizzard announced that there was going to be no big releases in 2011 and the company announced that they were discontinuing their Guitar Hero series. I'm not sure how I could have seen that coming.

Finally I wanted to talk about diversification. I am finally pretty happy with how diversified my portfolio has become. Last year I spent way too much time heavily invested into technology, then foreign energy and finally consumer products fir the holidays. i lost focus on how a solid portfolio should be well diversified. In the image above you can see how my portfolio looks now. I won't hold onto the cash forever, but I will probably put that last investment into a commodity or into another international equity to ward off inflation as the US dollar drops. We will just have to wait and see. Thanks for reading!

CTSH

Last week was a good week for Duck Brother’s Investing. All our picks have been successful and our portfolio has hit an all time high. YTD we are up 3.81% and since inception up 11.42%. WLT did not hit a buy point, but is still developing.

CTSH is our stock pick of the week. Cognizant Technology Solutions Corporation is a provider of custom information technology consulting and technology services.

WLT

This last week I learned a lot about investing. I learned a fundamental mistake I have been making. It is a mistake that if I used I would not have bought into MIPS, or CCME. Both of these buys have been my worst mistakes. The fundamental rule I discovered is the buy point should not be more than 12% away from the 50-day moving average when the stock breaks out. Most cases the buy point ranges from 6% to 12% above the 50-day moving average.

Duck Brothers Investing bought GPOR, LULU and sold CCME. Both GPOR and LULU hit a buy point this week. GPOR reached its buy point on Monday at $23.02 and LULU on Friday with its buy point at $74.70. GPOR has raced up 9.25% and LULU is up 3.03%. We sold CCME with an 8% loss. Below is our Duck Brothers portfolio. We own PCLN, LULU, and GPOR.

Walter Energy, Inc is our stock pick of the week. It currently is forming a double bottom or a cup-with-handle base. WLT is a producer and exporter of metallurgical coal for the global steel industry. It also produces steam coal, coal bed methane gas, and metallurgical coke. WLT over next week will probably trend lower falling below the 50-day moving average. It will gain support under the moving average and create a W-pattern. The W-shape pattern is also called double bottom. Normally the second down trend will go lower than the first. The buy point will be above the 50-day moving average with volume 40% or higher above average. Also the buy point should be 12% or less away from the 50-day moving average on the day it gains support.

A friendly wager between brothers.

Welcome back to Duck Brothers. I hope the stock market has been treating you well. January was a little bit rough for me, but the beginning of the year usually is. Consumer spending is down and stocks that inflate for their year end numbers tend to deflate a bit as well. I think that this is a good time of year to ask yourself how you did last year, evaluate you investing strategy and refocus on what works for you. That's what I have been doing.

Tim and I have decided to test our market prowess against each other over the course of 2011. Being brothers competition has always been fierce between us. Basically we wanted to see who could do better with their personal portfolios in the next 12 months. And what better time to start this sort of thing than the beginning of a the year.

We have settled on who has the highest percentage gain on their portfolio in 2011. We are excluding the cost of trades as this may bring down our percentages a little and its not really fair since we pay different amounts for trades. Basically its portfolio vs portfolio to test our market acumen against one another.

To make it even more interesting we have decided to focus on quarterly results as well. The winner of each quarter will receive a point. The winner of the entire year will receive 2 points. Theoretically it is possible to win 3 quarters and loose the year to a very poor quarter and have the bet be a wash. Now I'm not going to tell you what each point is worth (because that would be illegal) but for now consider each point to be worth a nice steak dinner. Just as it is possible to wash, going 3-3, it is also possible to pull off a sweep and have the other brother owe you 6 steak dinners (or points). Clear as mud. Expect constant updates here at duckbrothers.blogspot.com.

GPOR

This week's stock pick is Gulf port Energy Corp. GPOR is an oil and natural gas exploration and production company. The company has been forming a 6-week base and could have a big week. Their buy point is $23.02. If Gulf Port Energy's daily volume increases 40% or higher it could break out.























The general market last week was hit hard. Worries about the US economy and troubles in Egypt sent the market lower. Because of the shaky market and failed rally attempt from ALTR we decided to cut our losses early. Below is a chart of ALTR's unusually high distribution days. On Thursday CCME hit our buy point. Below are pictures of our portfolio.

CCME

A lot has happened since the last article I have written. I will begin this blog by explaining what changes have been made to the Duck Brother’s account and brief updates on stocks in our watch list. Also I will explain a little on the strategy for our account.

Last week we sold MIPS, INFA and purchased ALTR (Refer to the article on ALTR for fundamentals and buy point). This transaction can best be explained by our strategy. In our account we will hold at most three stocks at a time and from different sectors. Our goal is to choose the best stocks on the move, also known as buying fundamentally sound growth stocks with sound chart patterns. We analyze the stocks using William J. O’Neil’s CANSLIM approach. Sources of this approach can be found in the Successful Investor and How to make Money in Stocks. MIPS and ALTR are securities from the same sector. We sold MIPS because ALTR is more fundamentally sound and hit a buy point with increasing daily volume. We sold INFA because it had a large distribution day over 100% above average. This sign tells me that institutions are selling the stock. For this reason we decided to take our profit and move on. Below shows our securities since inception of this blog.

The main stock in our watch list that I would like to address is FFIV. FFIV last week hit the buy point monatarily, but not by daily volume. Since the the volume did not indicate insitutions were buying FFIV we did not purchase the stock. If volume does not increase 40% or more the stock is more risky and as you can see FFIV took a big tumble sortly after the price move. Below is a graph of FFIV.

This week our stock pick of the week is CCME. CCME is a Chines company that operates a television advertising network. CCME is creating a cup-with-handle pattern. Watch this security, it should move down to the 50-day moving average. The downward trending is the handle. Once it gets close it should gain support indicating institustions are purchasing the stock. The stock will then run-up passing the buy point with increasing daily volume. If this happends the stock will be a good security to add to our Duck Brother’s account.

LULU and Other Thoughts

I have had a love/hate relationship with this stock from the beginning. I have bought in, and gotten out, and back in and then back out at least three times now. For some reason I cannot take a gain on this stock. I know that it has been a good stock for a lot of people over the last few months, but with LULU I seam to make all the wrong moves.

Today LULU is up 5.51 (8.19%) in the morning trading. Even after today's great gains I'm still down 4.60% lifetime. Last year I bought 76 shares at 48.03. If i had left that trade alone and not set my stop loss so close I would be up almost 48% on LULU. Instead, I fighting to get back to positive on a stock that has almost doubled in value over the last 6 months (since it hit its low in August 2010). This is just unacceptable.

The gains that I missed out on last year have got me thinking about my approach to investing. I used to subscribe to the "quick gains" approach. I would find a good stock, one that had just taken a dip, and bought in with hopes of making 8-12% and then getting out. Sometimes I would make more, sometimes I would take a small loss, but for the most part it balanced out. I ended the year about even in 2010, which is ridiculous because there were so many gains to be made. In fact I invested in many of those companies last year (NFLX, AMZN, GOOG, LULU, and BIDU) with hopes of making a quick buck. I could have just bought, walked away for 6 months, and came out almost 50% gain for the year. But I didn't, I got greedy and I keep selling off with small profits and not getting back in before the next big gain.

So I have been taking some time to consider my investment strategy and here is what I came up with. I'm still approaching the same companies I did before, focusing on technology and companies on the IBD100 list but I'm taking a different approach on buying in and getting out. Since I'm now focusing on holding a company for longer it is more important that I select a buy point that I'm comfortable holding onto for 3-6 months. I'm still trying to diversify in 5 different stocks or EFTs and never put more than 20% of my money on 1 stock. I'm also trying to loosen the reigns on my stop losses a bit to allow some of these investments to grow unrestrained. The bottom line is that I'm trying to buy smarter, hold on longer and wait for the steady gains over several months. Will this work better in 2011 than it did in 2010, only time will tell.