It was another tough day in the market as oil climbed back above $135 per barrel. The culprit today was news of a drop in oil inventories. I would really like to know who all these people are that are buying more gas at these prices. Anyway, the DOW finished down 205 points and we are now only about 300 points above the March lows of around 11,700. The market is very worried that $4 per gallon gas is going to sink our economy. I am pleased to say that my own portfolio performed better than the major averages today, but I am still unhappy whenever I lose money. On days like today, I like to review every stock in the portfolio and make sure I know why I own the stock and whether or not the story has changed. So, in today's review, I have found a couple of names that I'm thinking I may need to sell. The first is BE Aerospace (BEAV). Let me say that I have totally messed up when it comes to this stock. The short story is that I made money with this stock last year, but this year has been a different story. A couple of weeks ago when the stock started dropping, I wondered if I should buy some puts or buy more stock. Technically the stock did not act well and I ignored the fact that the airlines still don't have pricing power even though some have already gone out of business. This stock may rebound, but I think it's not going to go too much higher until the airlines gt pricing power again. The second stock is Microsoft (MSFT). This is another one that I just misplayed. It started out as a trade on the potential buyout of Yahoo, when I actually bought Yahoo stock. I later traded out of that to buy MSFT because I felt the risk/reward scenario was much better for MSFT. I don't typically make such trades and I should have stayed away from this one.
Specific portfolio news:
Several of my stocks were down significantly today. Burlington Northern was the most notable as it was down about 7%. A UBS Analyst downgraded the entire railroad sector which hit all of the rail stocks. I have to disagree with this analyst on the call. About 50% of what BNI hauls is corn and coal and the prices for those two commodities have been strong and only look to get stronger. Also, I believe the high fuel costs will force more companies to look at the railroads as a way to ship their products because it's much cheaper than shipping by truck.
I made one move today as I sold out of my small Foster Wheeler (FWLT) position to buy more BNI.
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