Too much trading?

I should probably burn my password/codesheets to my brokers and get new ones after summer as I have the urge to do too much trading. I am definitely not a day trader and as a big believer of buy and hold strategy I really should minimize selling and short term investments. But somehow I managed yet again do something else than buy and hold.

Here is some changes I have done on friday and today:

• Closed leverage long positions for gold - not a very smart move as now gold price is shooting up again. However, volatility is not good for leveraged ETFs so maybe I keep my hands off them given that so far my short term trading has yielded pretty much zero profits, maybe even a small loss.
• Sold Sampo shares even though not long ago I said it's definitely a long term investment. I kind of realized that even though it is a great company, it really did not fit into all the other moves that I have made (selling Berkshire Hathaway). Also, I realized for some articles that I read yesterday that I may be sitting on a time bomb there. You see, Berkshire has most of it's holdings in stocks and I sold it because I believe we are now in a fairly long bear market. Sampo on the other hand is heavily exposed to bonds. Here is why bonds (or atleast bond funds) are not so good idea: http://menafn.com/qn_news_story.asp?storyid=%7B88E69BCA-9396-4AA0-9DC0-C6696D6AA709%7D. So I figured that if I sold BRK for time being, why I am still holding this one. I probably can get back into both cheaper later IF I am right about bear market.
• Moved money away from ETFS Physical gold (Frankfurt: VZLD) as I don't like the rumours about HSBC which holds the gold in London for ETFS and it seems also for SPDR Gold Trust (NYSE: GLD) which seems to get a lot of flak from some of the gold bulls:
• http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=10825:the-bogus-bullion-etfs&catid=42:rokstories
• http://seekingalpha.com/article/206320-seriously-the-spdr-gold-trust-isn-t-a-scam-but-phys-might-be (Article in defence of GLD, but you should also see the comments!)
• I have seen a lot of this type of commentary and it kind of seems like yet another conspiracy theory. Although I have to admit that if all this is just that then these guys are the best conspiracy theory writers I have ever seen. Don't fully believe it, but sold anyway as I also needed the profits to cover some of my losses (tax planning :).
• Put some more money into Xetra Gold (Frankfurt: 4GLD) as I find it somehow more credible than other alternatives. But in the end of the day, it's only bits in cyberspace as well, but I can live with it for now.

Increased gold position

I pretty much moved all cash that was sitting in euros to gold bearer notes (Frankfurt: 4GLD) and took yet again a leveraged position via an 2x ETF (Frankfurt: 4RT8). Although this time the position is pretty small.

Portfolio check

Closed the 2x leveraged gold positions (approx. 10% portfolio size) and pocketed some nice gains there.

My portfolio looks now as follows:

Cash 48,8% (in US dollars, Swedish Krona and Euros)
Gold 16,5%
Sampo 8,2%
Fortum 8%
Teliasonera 6,6%
Gold mining companies 6,4%
Pharma/healthcare companies 5,5%

All of these positions except cash are long term buy and hold. I will not offload these even in case of bear market which I am expecting. Instead I will be increasing my positions when anything goes down significantly given that fundamentals why I own these won't change.

Gold price soaring

ECB seems to follow FED on kind of operations not really supporting the currency like buying "toxic" assets. It may be just a matter of time when the "printing presses" will be turned on. You can roll over the debt from one "credit card" to the next quite long, but not indefinitely.


I guess this is one reason why gold price is soaring:

Auch

Closed my STOXX 600 banks short position and took some pretty severe damage there. Kept leveraged gold position and actually increased it from the dip. Let's see what happens.

Pretty big rescue package from EU. I'm just wondering where does all this money come from. Everybody is running a deficit while they should run surplus to offset raising healthcare and pension costs in the future. In some point of time they may have to turn on the printing presses and that will be good for gold.

My non-leveraged gold positions are long term investments. The leveraged ones are short term as volatility will do severe damage to leveraged ETFs long term. Besides their costs are also higher.

Ultralong Gold, Short Banks

I took two speculative short term positions. One is 2x leveraged bet on gold price and the other is 1x short on STOXX 600 Bank index. I have entertained these positions for quite some time and have missed probably the best gains. Let's see.

I have now also fairly large cash position is US dollars and Swedish Krona.

Sell Sell Sell

Yesterday and today, I offloaded most of my holdings except for the ones I have selected as key long term positions. The reason for the sell-off is that I believe major correction is imminent. The rationale for this can be found from my earlier posts like "Financial Crisis 2.0" or my recent posts in Twitter. Simply put: the Greek crisis is just the first domino in a long series. Even that has not been solved yet - far from it!

A paper from Bank of International Settlements titled "The future of public debt: prospects and implications" sum up the upcoming problems quite bluntly:

"Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability."

It's not just the PIIGS. There is UK, Japan, US and many others which are in a very bad trajectory.

Any one of these countries default or start monetizing debt in serious way (i.e. printing money to pay back debt), there will be serious consequences. Actually, nothing really needs to happen. It is enough if markets as whole loose faith.

I will be going step by step my remaining portfolio in forthcoming blog posts. Also, I will be looking at some short positions and other speculative bets as well.

Bear in the room

Past week I tried hard to look at things from bull's point of view, but it is not really working for me. I'm still bearish and increasingly so.

I'm torn between hold and sell for a number of my stocks which I know will take severe beating in case of 2.0 version of the financial crisis. So I decided to sell the most obvious ones: The ETFs with dividend strategy. These funds had a significant exposure on banking sector and companies in cyclical business.

As the result my cash (euro) position is now at 15% of portfolio. Not a happy position knowing that inflation eats that away all the time and euro is in decline. I now have to find a suitable parking space for that cash as I'm pretty sure I won't be increasing my stock positions for a while.

Last week I also increased my gold position which is now my largest single position.