About time

I've been doing some more thinking about a concentrated approach. Essentially, I've been making 40-50% return for the last 2 or 3 years as the market has been chopping around and it seems to me that I could have done a lot better being more discriminating. Typically, if I'm particularly bullish, I might have 8 or 9 long positions and that ends up limiting any outperformance and making it difficult to get out if I'm wrong. It obviously smooths things; if I plump for 2 positions and neither of them perform then I might have been right on the general direction but wrong overall. However, over time I notice that I'm reasonably good at picking outperformers and I often ask myself which is the best of the x number of positions I hold. It usually turns out to be in the best 2 or 3 out of the 8 or 9 which implies that I should cut the chaff and increase the risk in the rest.

Right now I'm in two positions but they're yet to perform. However, they're the laggards I put on after I got squeezed out of FMG and LNC which have been excellent and I'm reasonably confident that they will soon have their day in the sun. Here's a weekly for IAU. It shows the possibility that the recent low of 108 in late December may well be a swing low. The last 2 weekly swings in the recent up move were 33 and 55 cents and the downtrend was also broken, so a decent move could be expected. The stock is up 4.5 to 123 and getting close to breaking out of a recent daily trading range.

 

I'm also planning to trade the XJO options contract. I usually have a view on the Asx 200 and this options market is cheap and liquid to trade. The contract is cash settled, there are no dividends to worry about and nor can it go bankrupt or be taken over.

4.10 IAU caught up in the afternoon and traded as high as 126.5 as it went through near term resistance at 124.5. It held most of the gains to close at 126.

The Asx 200 has shed early gains of 40 points to finish down by 3 points despite rises in Japan and China of around 1%.