Even if you're abuy-and-hold investor by nature, you have to be nimble enough toprofit from any short-term gifts themarket may hand you. In late May, with the market swooning, I took advantage of that opening by acquiring even more shares of Citigroup (NYSE: C ) for my $100,000 Real-Money Portfolio .
That move has paid off nicely. Citigroup has been surging in recent weeks, thanks to market-boosting comments from Federal Reserve Chairman Ben Bernanke.
Make no mistake, I still think this stock is headed into the $40s -- and beyond -- as theeconomy firms. But I also know the recent $30 billion increase in Citigroup'smarket value could vanish the next time we have a scary economic crisis.
My colleague Jim Woods recently laid out the case why you should bebearish on banks in the near-term. I'm actually quitebullish for this sector in the long haul, but I share his short-term view.
The portfolio rebound
Citigroup, along with some other strong gainers, has finally rescued my $100,000 Real-Money Portfolio , which had gotten off to a poor start. By the middle of June, this portfolio was 13.5% in the red. But only three months later, it's now up 5%. That works out to a 22% three-month gain, compared to a 9% gain for the S&P 500.
The portfolio rebound may not be simply based on oversold stocks getting fresh support. I think it's due to more recent picks performing quite well. Four of my five picks from this summer are up at least 10%, led by a 35% gain in Maxwell Technologies (Nasdaq: MXWL ) . Tivo (Nasdaq: TIVO ) , the most recent pick, is flat thus far. Notably, I still see solid upside for each of these picks.
A shift in portfolio focus
You may have noticed a subtle shift in this portfolio. Recent picks have tended to be of smaller companies that are not as likely to be household names. At the same time, I've sold bigger stocks such as Hasbro (NYSE: HAS ) , Alcoa (NYSE: AA ) and Freeport-McMoRan (NYSE: FCX ) .
I still only focus on stocks with clear downside support, but I am returning to my roots as a seeker of underappreciated, off-the-radar stocks. This allows me to not just track market returns (with some hoped-for upside) but pursue major returns as well. A number of picks in this portfolio are capable of 50% to 100% upside when their stars finally align. (Note that Ford (NYSE: F ) , my favorite investment idea of anyasset class , is staying put for the long haul.)
But this market makes me nervous right now. I don't want to sell these stocks, which have such solid upside, but I also need to preserve capital in case we get into profit-taking mode.
Action to Take -- > As such, here are my moves. I will sell 400 shares of Citigroup (freeing up roughly $14,000 in funds) two trading days after you read this. At the same time, I will be once again taking a position in the Direxion Daily Small Cap Bear 3X Shares (NYSE: TZA ) . I intend to buy 800 shares, or around $10,700 worth.
I will have roughly $10,000 in firepower after these two moves, so stay tuned for another fresh pick in coming weeks.
-- David Sterman
David Sterman does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.
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