Covestor models: Alpha Trapper and Beta Blocker
As far as price movement, September was uneventful for my models. They had little volatility, but both under-performed as QE 3 turned out to be “QE infinity,” giving the market a bit larger of a bump than I expected.
Moving forward, I expect like there will be a struggle where mostly poor news in global economics and politics is pitted against extreme efforts of global central banks to prop up the markets. While I don’t know which force will prevail, I think the effect is likely to be more bullish for commodities than I previously had thought. For this reason I recently increased my short positions in Proshares UltraShort Silver (ZSL) and Proshares UltraShort Crude Oil (SCO).
Elsewhere in the portfolio, I have reduced my holdings of Asta Funding (ASFI). I do expect further gains and may have sold a little too soon, but because the most-certain gains have already been achieved, and due to some negative technical effects associated with having too much of an illiquid low-volume stock in the portfolio, I decided to start focusing more elsewhere.
One new focus is Best Buy (BBY). While I doubt the long-term future of the company is likely to be great, I think the current balance sheet and near-term earnings, combined with the near-term possibility of a buyout at much higher than today’s price, make it worth a shot at recent prices.
I have also tiptoed back into a short position in natural gas via UNG. With natural gas prices on the rise lately despite continued high supply, and fairly strong contango still in effect, I envision UNG’s price to once again erode over time, as it has so often in the past.
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The investments discussed are held in client accounts as of September 30, 2012. These investments may or may not be currently held in client accounts.The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.
Certain of the information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Covestor believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.