• BAC – I recently picked up some more BAC because I think it is undervalued.  If I had more “spare” money, I would purchase more.  Over the next several years, I think BAC will recover spectacularly.  That being said, it’s even more of a long term play than most stocks.  I don’t expect BAC to recover any time soon.
• BRT – Down 65% since my purchase, with no signs of recovery any time soon.  I’ll hold this issue just because I don’t want to lock in a 65% loss.  There’s no telling if or when it will recover…. but it will surely be a long time.
• COP – ConocoPhillips is down 36% since my purchase.  I’d love to add more COP to my llamafolio, because I think oil is a sure bet going forward.  I’ll wait it out for another drop though.
• KO – Down “just” 26%.  In these days, that’s not too horrible.  There’s a reason KO is a blue chip – it’s a huge, solid company.  Long term I have no doubts KO will be solid.
• GE – I purchased a small GE position recently, when I added more BAC.  The yield is currently at 9% – that’s ridiculous for a blue chip.  I’ll be looking to pick up some more GE soon too.
• PRFT – If this stock comes back up to my purchase price, I’ll probably unload.  I’m in no rush though.
• SLV – The silver ETF is down, since the price of silver tanked last year.  This should head north this year – and I’ll unload when it does.  I’ll either purchase another beaten stock, or some more physical silver.  I’m not going to pursue paper silver and gold, anymore.
• TELOZ – TELOZ suffered some hurricane damage last year, and took a beating.  I did purchase some more after the price drop, to lower my cost average.  It hasn’t recovered in price yet, but I have no worries.  This will be a solid performer soon enough, and keep those dividends flying in.
• VDSI – A bank security software company when confidence in banks is at an all-time low? Yes please.  I’ll hang tight, and I expect to be rewarded.  Eventually.

That’s about it.  Mostly long term plays at this point, with some reaaaaaaaaaaaaaly long term plays ( think BAC ).  Overal my portfolio has taken a 43% beating…. that’s horrific.  But I feel pretty Ok with my choices, and their futures.  What stocks are you holding right now? 

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BAC is another story indeed.  When BAC dropped to $10.25 per share, I just *had* to buy.  After all, I liked the stock in the 30′s – how could I not like it at $10.25?   Sure, it’s taken a beating like all the big financials… but a solid long-term play nonetheless.  So, I bought 30 shares.

The next day, I couldn’t resist another purchase, this time 37 shares at $7.54 per share.   BAC at under $8?  Unreal.  Of course since then, it has nearly dipped below $5 ( and slightly rebounded to under $7 ).  After receiving a big check from Uncle Sam, BAC was forced to cut their dividend to a penny – ouch!  I knew a divided cut was forthcoming, but I had no idea it would be so severe.  That really puts a damper on my purchases.  I don’t regret them – I think 2 or 3 years from now, BAC will be flying high again. 

So, what about you – have you gone out on a limb and made any “risky” stock purchases?  I’d love to hear about them in the comments.

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After a stellar performance like that, I’d be Gold will give up a bit of its gains tomorrow.  If that pans out, this move will look smart.  However, if Gold duplicates today’s performance, it will look awfully crummy.  No worries though, I didn’t lose a dime on the trade. 

What to do with the cash?

Invest, of course!  I used the proceeds from the DGP sale to purchase 16 more shares of TELOZ – an oil trust – at $16.07 per share.  I think oil is greatly underpriced right now ( drastically, even ), and is TELOZ poised for some killer earnings.  Trading gold for oil – who would’ve thought?

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I did receive two dividend payments, though.  $3.29 from COP, and a healthy $6.40 from PFE.  Finally, something good from PFE!  That stock has been a skunk since I purchased it.  A little over nine bucks in dividends doesn’t make up for those big losses across the board, but they help a bit at least.  Plus, losses are only paper, until I sell.  Looking over my portfolio, there’s nothing that I’m willing to sell at a loss.  A few more months and I’ll be able to unload a couple stocks, and streamline my holdings.  But, as Warren Buffet so eloquently put it, the first rule of investing is don’t lose money.  I don’t intend to.

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• 15 shares of DGP @ 19.12 per share
• 14 shares of SLV @ 15.30 per share

A little background is in order, no doubt.  SLV is the Silver ETF – electronically traded fund.  Barclays supposedly holds an ounce of silver for every share of SLV on the market.  So, the share price of SLV is usually very close to the spot price for an ounce of silver.  Since I believe Silver to be undervalued, I am comfortable paying $15.30 per share for this ETF.  I don’t intend to hold a long position here, but rather a short-medium term position for a short capital gain.  With any proceeds, I’ll likely buy some Silver Eagles or US Junk silver.  I won’t make a fortune here by any means, but it looks to be a solid investment.

DGP works a little differently

DGP is another beast entirely.  There is a gold ETF -GLD, that acts in much the same way as the silver ETF.  The only difference is that each GLD share is 1/10 ounce of gold.  DGP doesn’t work quite the same way.  Rather, it’s a derivative investment.  That’s something I’ve never dabbled in before, and wouldn’t commit any large sum of money to.  Here’s why:

For every percentage move that Gold makes, DGP doubles that move.  I.E. if gold rises by 3% one day, DGP goes up 6%.  By the same token, if Gold drops by 5%, DGP falls by 10%.  This ETF magnifies gold’s moves by a factor of 2.  That means twice the risk, with the potential for twice the reward.  Since I feel gold will make a march toward $1000 again very soon, I feel this is also a smart choice.  Riskier than GLD for sure, but I don’t have any reservations about making that bet.  Like my SLV purchase, I don’t intend to hold DGP long-term.  A few months at most is my timeframe here. 

Trading is new to me

I haven’t before ventured into the world of trading stocks / ETF’s / ETN’s.  This is a first for me, and an experiment.  I did commit $500 to this experiment, which isn’t a pittance, but it also won’t take me to the poorhouse if it fails.  Keep your eyes peeled for my results.

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Unlucky number 9.  That’s what we’ll call my latest and greatest electric bill.  Well, latest and highest, at least.  It’s actually 12% higher than June’s bill, which was my previous highest.  What was the damage?  A whopping $221.36.  Unreal.

Natural Gas – down, down, down

I used 37% less natural gas, which amounted to a 25% drop in my bill.  That funny accounting again.  With the summer being here, my only gas usage is for heating water and cooking.  I have made an effort to keep my showers a bit shorter, which I guess has helped.  Next months’ bill will be worse though – we have two houseguests staying with us.  More people = more showers = more gas usage.

Electricity – Unstoppable.

My bill is, at least.  My usage jumped by 11%, which by the electric company’s creative math, increased my electricity cost by 21%.  The disparity is mainly due to a “peak capacity charge” and a huge “fuel adjustment” mystery fee.  $60 for a mystery fee is a bit excessive.

What does the future hold?

These constant bill increases are hard to swallow.  I’m using more energy to be sure, but my bill is increasing faster than my usage.  This month will be tough, because of the aforementioned house guests.  My two sisters-in-law are with us for the month, which means increased energy usage.  On an upside, we did finally get around to installing 3 ceiling fans on my lower level.  With the air circulating, hopefully we can manage to keep the A/C a few degrees higher, and still remain comfortable.  Besides that, hey it’s summer in Texas.  It’s going to be hot, and the electric bill is going to be high.  All I can do is try to keep it (relatively) manageable.

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How to turn $3000 into $2946.22

I have invested a total of $3000 into the Llamafolio via Zecco.  My initial $2800, and an additional $200 added later on.  The current total value of the account is : $2946.22.  That’s nearly $54 less than I put into it.  Money that’s *POOF* gone – on paper at least.

How did this happen?  Let’s take a quick look at the performance of each stock I own:

Bank of American – BAC

I purchased BAC twice, with an average cost of $37.5307 per share.  The current price is $24.81 per share.  Multiplied over my 15 shares, that’s a $190 loss on this single stock – ouch!  Fortunately I have full confidence that BAC will rebound and end up well in the $40′s before another year passes at the latest.  It’s painful to watch the stock continue to slide day after day, though.

BRT Realty Trust – BRT

I purchased BRT recently, and it’s pretty much flat.  I’m up a buck fifty, and that’s a positive. 

ConocoPhillips – COP

I was lucky enough to get in on COP at just $78.28 per share.  The current price of $92.72 has me smiling – that’s a $101 gain on my measly 7 shares.  I hate paying more for gas, but owning strong oil stocks sure helps ease the pain a tad.

Coca Cola – KO

What a stinker.  I bought KO at $59.25, and it sits at $54.10 today.  I haven’t lost a ton, but it’s just not doing what I expected.  KO is a very strong company, and dividends over time will help ease the pain.

Pfizer Inc – PFE

I’m down $83 on Pfizer, and seriously considering pulling the plug.  I haven’t yet sold a stock at a loss, so I don’t want to start.  However, PFE sinks daily, and doesn’t really show any signs of a turnaround.  I’ll likely just end up holding this to see where it goes.  My initial investment wasn’t huge so it’s not the end of the world if it doesn’t pan out.

Perficient Inc – PFE

PFE has been a shining star in my portfolio.  Time and again I’ve considered selling to lock in my profits, but held back.  PFE did tumble a bit, but I’m still up $161 since the purchase – that’s 44%.  I have high hopes for an even stronger increase here.

VASCO Data Security – VDSI

Though I’m currently down almost 5% on VDSI, I’m not considering a sale.  If VDSI doesn’t double within the next year, count me surprised.  Earnings are strong, and I think investors have unfairly beaten this stock down.  I’m holding long-term on this one.

Conclusion

Sure, I’m down on paper.  Big deal.  I’m not really uncomfortable with any of my holdings, with the possible exception of PFE.  Every other security I expect to see solid gains in over time.  I’ll hold and watch the dividends roll in, and the share prices rise.

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A huge overreaction

On April 24th, before the markets opened, VASCO Data Security International, Inc reported their first quarter results.  How did it look?  Well, not as bad as the market took it, if you ask me.  Net income dropped from $4.96 million last year to $4.90 million this year ( in the first quarter ).  Sure, a drop is never good – but this is a tough economy, and that’s a tiny drop.  About 1.2% to be exact.  Revenue increased 10% from $26.41 million to $28.93 million.  A 10% increase is bad, but only when Wall Street is expecting a 23% jump.

The future looks pretty good

Despite the small setback, I think VDSI is going to move forward quite nicely.  Once Wall Street gets over themselves and stops overreacting, VDSI should move back up nicely.  They launched several new products in Q1 2008, so their sales team will be working hard. 

I won’t sell anytime soon

I bought VDSI at $11.44 per share.  That means I’m down quite a bit right now – and no one likes losing money more than I do.  However, I think the fundamentals of the company are strong.  The huge drop in share price is simply an overreaction that should blow over.  I’m expecting it to head back up into the $13-$14 range before too long.  If I can find some extra cash, I may even pick up a couple more shares to bring my average cost down. 

Remember, investing takes nerves of steel.  I have them – do you?

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I use Zecco as my brokerage, so I get 10 free stock trades per month – buying or selling.  I still have several free trades left this month, so I wouldn’t owe anything in commissions.  If I sell both positions, I’ll net $154.80 in less than a month.  That’s cold, hard cash – and it’s hard to pass it up.  Especially with Bank of America, because I can see some up and down swings in that stocks’ future.  On the other hand, I think I bought it right, at a good price.  Over time I believe that I’ll come out ahead – even if I weather some ups and downs.

There has to come a point though, when it’s obviously time to sell.  If I had any reason to believe that BAC or VDSI would take a large hit in the near future, you can be darn sure I’d sell them in a heartbeat.  My intention would be to sell now, and re-buy once the lower prices settles in.  That way I would end up owning more shares for the same amount of money.  I don’t see a clear decline in their future though.  Selling now with the intent to repurchase later is risky.  In effect I would be trying to time the market – and no one can do that with any consistency.

In the end, I’ll be sitting on these two stocks awhile longer.  I don’t want to get into the habit of over-trading.  Many lose theirs shirts this way, and a big chunk of cash too.  I’d just as soon relax and see what happens.  I’m confident in my purchases, and believe that they will pay off for me.

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If you want to see my stock portfolio and performance, simply click on the Llamafolio link in the header navigation bar.

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