August 23rd, 2009

I spent some time tonight taking a look at my portfolio and I examined a position (ING) that I have held, coupled with a collar strategy (involving the sale of a call and a purchase of a put). I have been holding this position for ~10 months and unfortunately my luck ran short and the call broke even and was exercised, which, forced me to lock in my profit and close out my position. I may jump back into the position within the next 30 days which would be considered a wash, but I am waiting to get an interpretation whether or not the 10 months would still count or not, and if the clock restarts - the goal being to try to cash out with a long-term capital gains rate vs. a short term rate.

The capital gains rate being my worst scenario, I am proud to say that including all commissions paid, pretax, I pulled out a sizable 27% gain on my position. I have been in the stock long enough to have seen the price per share drop to $3, and although that day I probably had a second thought or two, I stuck to the fundamentals that I learned from Buffett and I watched as every analyst dropped their 12 mo. prediction as the stock price crashed and then raise it as the stock's price soared. Just as a side note, I realized after this analysts are nothing more than a meteorologist for stocks.

The best thing I did was to dollar cost average on it's way down, and although most of my shares were quite a bit higher I did believe in this position enough to go as far as to purchase some down when the stock was at the low $4 mark - if that doesn't show confidence, I don't know what does.

Sticking to the fundamentals of value investing has truly paid off thus far, and while it means I am finding myself in positions that give most the chills, my portfolio is on fire.