Just as a rising tide can lift all boats, a falling tide can
also sink them.
As I've been writing for the past few months, investors should be
thinking about opportunities for profit-taking after the
made a virtually uninterrupted upward move since October, 2011. I
was poorly-positioned for that rally in my
$100,000 Real-Money Portfolio
, focusing on stocks that were built for the long haul. Instead,
the market has rewarded investors that aimed for the riskiest
corners of the market.
Since hitting a peak of 1,416 back on March 26, the S&P 500 has
slipped by about 4%, though many individual stocks are off 20% or
more in recent weeks. Some of these
were only recently added to my portfolio, and as I think they are
poised for much better days ahead, I'm not looking to sell them
when the markets get rough.
But I do want to have cash to play with, now that many more
bargains are emerging. And I'm making a pair of moves that should
free up more than $15,000.
For starters, I am selling my 600 share position in the
Direxion Small Cap
unlocking more than $12,000. This
exchange-traded fund (
is rallying as the market slumps, and I run the risk of getting out
too soon if the market tumbles from here. It's the price I'll pay
to build a cash
[block:block=16]I'm also taking a very modest
in my small 100 share position in toy-maker
. The company just announced tepid first-quarter results, and I
expect more of the same in the second-quarter. This is really a
stock to own for the upcoming holiday season and 2013, and I
mistakenly assumed the company would get credit long before that.
Hasbro is making many investments now that will pay off down the
road. Still, the stock is up modestly, and its lack of
makes me want to focus my ammo elsewhere.
Make no mistake, I think Hasbro is still a great long-term core
holding. It has powerful brands, robust
, and a smart multi-year game plan. But it now looks like the wrong
stock for this market. If the market punishes Hasbro, perhaps below
the $30 mark, you'll be hearing from me again on this stock.
A final thought...
Though I don't intend to add to any of my current positions right
now, I'd note the recent sell-off in
-- after a stellar
report -- makes that stock even more compelling for investors that
don't yet own this financial services powerhouse. The macro
headwinds are impeding shares right now, but the bottom-up analysis
of this company hasn't looked this good in half a decade. Shares
now trade for less than 70% of tangible
. Were it not for the fact that it is already one of my largest
holdings, I'd be a fresh buyer right now.
Action to Take -->
Taken together, these sales position me to opportunistically pursue
fresh bargains that the current market turmoil is uncovering. I
will complete both transactions I mentioned above (selling TZA and
Hasbro) 48 hours after you read this -- but with a caveat. If the
market rebounds sharply between now and Wednesday, and TZA sells
back down below $19.50, I will be inclined to cancel this move --
and I'll let you know if that happens.
-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of HAS, TZA, C in one or more if its "real money"