Author: Bob Gay, GEARS
Covestor model: Speedboat
Disclosure: Long CYBX, SUPX, COHU, MCRL
The Speedboat model showed its volatile characteristics in August when the portfolio declined during the big market correction, then rebounded with the market recovery in the last two weeks of the month.
As of 9/1, the model is fully invested and leveraged. That means that there are few options to deal with a market decline except to increase leverage.
I trimmed some of the larger positions to avoid over-exposure and the event risk associated with that. The positions in Cyberonics Inc (CYBX) and Supertex Inc (SUPX) were reduced in August. Positions in Cohu Inc (COHU) and Micrel Inc (MCRL) were sold in August due to deteriorated fundamentals.
August was a month of new numbers, as American companies reported their financial statements for the fiscal quarters ended June and July. Generally, the numbers looked good and the population of improving companies remains high. Here is a brief recording of mine (http://www.the-gears.com/wmv_files/igetwmv.aspx?wmv=review2011-2) with a review of the second quarter numbers.
To create a successful stock portfolio requires attention, consistency and discipline. Most of all, it requires an information edge. Years of research have shown that shares of companies that are profitable with rising shareholder wealth perform better.
