Background / My Investment Style ~ market folly

Wednesday, June 11, 2008

Background / My Investment Style

I started this blog a few months back and completely forgot to even introduce myself or give a brief overview of my investing background as well as my investment and trading styles. So, figured I should prooooobably do that.

Call me J, I'm the brains/stupidity behind "Market Folly." I've been investing for a little over 5 years now and have been intrigued with the markets in some form or another pretty much all my life. I have degrees in both Economics and Communications, hence the blog. It serves as a place for me to communicate with others as well as a place to throw down my analysis on paper (er, online). I've outperformed the markets 4 out of the 5 years I've been in "the game," and the only year I didn't beat the S&P was in my first year, when I was struggling to figure out my investment style. But, just recently, I've really stopped focusing on outperforming/underperforming the S&P. Instead, I'm shifting slightly and focusing on absolute return, straight up.

This goal suits my style because I also short sell, use options, and occasionally use leverage. As mentioned above, I both invest and trade, in 2 different portfolios which I combine in 1 account. I technically keep investments in one portfolio and trades in another portfolio so that way I can still short-term trade some of the positions I hold in my investment portfolio, without having to mess with my cost basis etc. Both accounts are at the same brokerage so I just tab back and forth and then lump the performances together to come up with my annualized return. Currently, I'm up 13.8% for the year. My investment style is a very top down approach. Its a macro thesis based style in which I like to seek out emerging trends and secular growth. I throw a little bit of value investing every once in a while when I see some overlap with my theses. I'm big on emerging markets, but they by no means make up my entire portfolio. After arriving at a macro investment thesis, I take a look at all the companies within that theme and hand pick the top 1-3 (depending on how many names are in the sector). I'll use fundamental research to back up my picks, and then I use technical analysis/chartology to determine entry/exit/stops/price targets. I'll be doing another post here soon detailing what exactly I look for in terms of fundamentals. Additionally, I'm big on monitoring a select bunch of hedge funds who have solid track records and very smart managers, to help generate ideas. My timeframe for these investments is anywhere from 6 months to 2 years typically. However, there are definitely some names in my portfolio that I'll be holding for 5 years and beyond.

My short term trading style is based pretty much on market catalysts or technical analysis. However, I'm not someone who will just pick any chart whatsoever and then trade that stock if the chart looks ok. I have to know the company and know why it's moving. My short term trades last anywhere from 1 day to 3 weeks typically. Very rarely do I actually day-trade. I'm more of a swing trader/momentum/short-term trader (a hybrid, basically). As of late, I've been more focused on momentum trades, given how things have worked out in commodities. Hopefully I'll be able to give examples as the blog goes on, so people can get a feel for how I 'roll.'

So, I think thats the gist of things. Feel free to drop me some questions/comments below. Be happy to clarify anything if people are curious or confused.

- J.


CelticCross said...

I feel like I am reading a mirror. I have been playing around with a Zecco account for about a year now. I am up about 20% this year as I picked up AGU and MON about 30% ago, and picked up AAPL at $125. You and a few others are teaching me the importance of considering the macro economy and what is/isn't working.

I hate that I started getting interested in the market too late. But with the time I have left, using information from people like you, I hope to exceed my goals which is to get 20%/year no matter the climate.

Theres always a bull market somewhere....i just need you guys to help me find it sometimes :-)
Thank you.

j. / marketfolly said...

celtic, cool congrats! its all a learning process after all, glad i could help.

you a soccer/football fan by chance?

CelticCross said...

MF...I watch soccer matches every now and then but in no way could I be considered a soccer fan. Although I love to watch the guys go down in a heap, like their leg broke in 3 places, only to get right back up. Floppers....

I am a spiritual person and love the celtic cross image, nothing more than that.

j. / marketfolly said...

ah ok good deal. obviously 'celtic' references a lot of different things but the football fan in me thought of the club team right away haha