I apologize for the delay this week with my portfolio progress. Work’s been a strain. If only I could blog and invest full time. Now there’s a thought!
Market volatility is in full swing (get it?). Last week had the largest point gain and the largest point loss of the year. Last week also brought on some liquidity issues.
- Monday (8/6): The day after Jim Cramer’s rant rallied the market 280+ points. Looked like the market was figuring the Fed would come to the rescue…
- Tuesday (8/7) The FOMC released a statement regarding the inflation situation in the US. They also stated that they’ll be watching the housing/financial sectors in case of spillover into the rest of the US economy.
- Wednesday (8/8): Market was up about 100 points for the day in a fairly volatile session. I couldn’t see any signs of what was about to come at the end of the week.
- Thursday(8/9): Down almost 400 points. During the day, the Fed “injected” $12 billion to the system. The short explanation from how I understand it is that when the Fed begins to purchase bonds from the market that no one wishes to buy, the Fed is effectively “injecting” money or liquidity into the system. The bonds the Fed purchases are usually high grade bonds (AAA). I’m not completely familiar with bonds though so I’ll have to give a nice explanation on how they work in the future. I do know that when you take a mortgage out, not only is your bank making money on the interest from your mortgage, but they turn around and sell your mortgage on the open market as bonds. To me, it appears that banks make money twice off your mortgage. Must be nice, eh?
- Friday (8/10): The Fed injects money, or liquidity, into the market three times. This hasn’t been seen since 9/11. Some people feel the Fed is doing the right thing. Others feel it’s a band aid on a gaping wound. I think they were caught with their pants down to be completely honest.
- Total Deposits: $1,353.38
- Current Portfolio Value: $1301.44
- Profit (Loss) as of August 15, 2007: -$51.96
- Profit (Loss) as of August 8, 2007: -$ 103.88
- Profit (Loss) as of July 30, 2007: -$35.79
As you can tell, even my own portfolio has been pretty volatile. I have three holdings in my portfolio, XTO Energy (XTO), Level 3 Comm. (LVLT), and Titanium Metals (TIE). Normally to be dversified you need 5 different companies from 5 different sectors. The problem comes from the fact that the market has been in such flux it’s been rough to judge when to jump in. I have a couple of plays I’ve been watching for some time. Let’s see if I can sneak in on a down day (and if I have the patience to wait).
DJIA futures are down this morning. Safe trading!