CollegeAnalysts.com: Portfolio Moves

James Cullen breaks down some trading moves he has done lately to save his portfolio and talks about his latest stock report on WallStNewsletters.com

I’ve been told several times that it’s the retail investors who are buying at the top of the market and throwing in the towel at the bottom. And I have a confession to make: I threw in the towel and sold the majority of my portfolio within a week of that happening.

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On July 15th, the S&P 500 tested the 1200 mark, closing down for the day slightly above there.
On July 16th, the S&P opened flat, lost a few points, and proceeded to rally into the close. The market has basically been up since that point.

On July 21st, I sold all the shares I owned of USG and American Eagle (AEO). The macro picture deteriorated beyond my expectations, and I took a not-fun loss on both positions. I’m also swearing off apparel retail for a very long time; I don’t get fashion and the moats in the business tend to be weak, particularly at younger age levels. Still, I anticipate that the several hundred dollars I lost on each will be more than worth the lessons I learned from being invested in my first very difficult market.

I was then faced with a dilemma of having about one-quarter of my account in the common stock of Primus (PRS), and a chunk of cash. What to do? The next day I limit ordered all that cash into the 7% senior notes (PRD), locking in a yield of 23%. Why the debt, and not the equity? This might seem counterintuitive because I’m obviously making a very large bet on Primus, but I liked the extra capital cushion provided by the seniority of the notes, and I think the total return offered by the debt is very competitive with the potential returns offered by the common – which I already have plenty of exposure to, thanks.

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SOURCE: http://collegeanalysts.com/2008/08/04/portfolio-moves-or-this-wednesday-could-be-an-interesting-week/