Portfolio results thru August

It has been a rough stretch for the model ports. Although they are still largely beating the overall market averages, they are in the red, and that is never good. The OOP and NoTouch portfolios have never had a losing year, but they are in real danger of that happening this time. Real life results are still good, as my selling disciplines took me out of everything but my small core positions that I hold through thick and thin, and have had long enough that my cost bases are low.
...For the most part, I use either a new 10 day low, or a violation of the second lower low on the stock chart as an exit point. For longer term positions, I use a violation of a major low point. XTO, my all-time favorite and most core holding, violated its long term low, but I held on to it anyway. Not good. I used to trade in and out of XTO, including core positions, as it has been my overall favorite performer for years. But it periodically can get slaughtered and I would sometimes miss the rebound. I made a decision years ago that I would always keep a core position in it no matter what, which is why I stayed in it this time, too. I did bail on my trading position in it long ago, though.
...I honored all other stops, though, and as a result, went mostly to cash, since I was so heavily overweight in commodities and resource stocks. So the balances for the year still are good.
...Anyway, here are the results year to date for the model portfolios vs the overall market averages:
NoTouch Portfolio: -4.3%.
OOP Portfolio: -3.9%.
Dividend Portfolio: -5.7%.
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Overall market averages:
Dow: - 13.0%.
S&P 500: -12.6%.
Nasdaq Composite: -10.7%.
Wilshire 5000: -11.4%.
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Commodities are the baby being thrown out with the bath water right now. There is economic warfare being waged between the biggest powers on earth. All weapons are being unleashed by the powers that be to preserve our markets and our way of life in this country.
...For some time, there has been a war going on between the nations that have the resources and the nations that consume them. Not coincidentally, many of the resource producing nations are not friendly to us, and they now see us as vulnerable. We have become the largest debtor nation in the history of civilization, and our military is overstretched as we try to police the world.
...If you recall a couple of months ago, our President went to our supposed allies in the Mideast asking for relief at the pumps. He was sent packing. He then issued a blunt warning to those people. Since then, commodities and oil have been dumping, even with the best efforts of the Russians, who have tried to stir the pot with their saber rattling.
...In the longer run, I still believe that the bulls cannot have it both ways. If commodities and oil are truly in trouble, then so is the economy. Demand destruction means that people don't need the commodities because they are not doing enough business to warrant their use. As it is, corrections tend to feed on themselves. There is no doubt that there was speculative money in the commodity and oil plays, but there always is. Now those areas will likely correct too far to the downside, setting up a terrific buying opportunity - unless we really are going into the dumper.
...Short term, I am looking at getting back into a fertilizer trade. POT, MOS, and AGU all show signs of having bottomed. POT is my favorite. If I do get back in, it will be a trading position with a stop below the latest low. Stops preserve capital, and keep one in the game.
...I have a book in my library, How I Trade For A Living, by Gary Smith (not the one on tv). He traded for 19 years with basically break even results. Money management made it possible for him to remain in the game that long, even though he was not successful. When he had his epiphany and finally found out what his game was, he then proceeded to lose on 23 trades in a row! I have always found that remarkable. I do not know how one could figure he was on the right track after 23 consecutive beats. That is confidence. It is also a lesson in using stops.
...For my part, I once went through a period of 12 consecutive losing trades in the midst of a 20 losses in 22 trades streak. That is my all time worst. But, as was the case with Mr. Smith, I have been a fanatic about using stops, and I was able to stay in the game and come back.