Tuesday, November 25, 2008

The benefit of a concentrated portfolio

Today is my portfolio's biggest one day change: 16.33%. The S&P 500 barely moved up 0.66%, so my gain came from the stocks I happen to hold. First Marblehead shot up 64.71% because, I suppose, of news that Leslie Alexander (the company's largest investor) bought more shares. Random fluctuation sent Select Comfort up 28.57%. (When a company costs a quarter a share, a few pennies change in price makes a big relative difference.) Berkshire Hathaway is up 8.95% as investors figured out the company is not going to fail after all. So just a few big moves in companies I happen to own make a huge difference.

Of course, there's a cost as well. On the year, my IRA has lost more than half it's value due almost entirely to awful results from First Marblehead (down 91%) and Select Comfort (down 96%). Digging out of a hole like that will be very tough even with days like today. Both these stocks represent value traps that should have been sold long ago. I'd sell Select Comfort today except it will cost too much in commission. (I am shopping some December call options, but my limit price won't be filled any time soon, I think.)

Friday, November 21, 2008

Best one-day return ever

My IRA shot up 10.93% today. Of course, it's still down 62% this year compared to 45% for the S&P 500. So no celebrating yet. My 401(k) is only down 40%.