Just A Small Drop

Watch Out Below!

My portfolio tumbled 2.6% today.  That means in the past year (back to April 2013) three of my six worst trading days have been in the past 6 days.  In the grand scheme, it really isn't a surprise, but it is still a shock.

• SYNA down 7.8%
• GTAT down 6.7%
• LMNS down 4.7%
• CYOU down 4.4%
• CF and SNDK down 3.8%

I did have a few stocks in the green, GA, NTC, TWOU and TGONF.  

Dropping Ballast

I did have a couple transactions this morning, thankfully before all h*ll broke lose.  I sold the KANG and my CALL.  I did buy GSOL as a special situation play (Make 25% In 2 Months With This Special Situation).  That is a relatively small position.  I also traded TZA today in a pure momentum trade. I made 2.5%, but that did little to stem the tide.  Look at the waterfall above and imagine you put up a tiny wall in the middle. It does change the water falling a little bit, but it is still Niagara Falls!  That being said, I am in (on a dollar basis) one of my largest cash positions ever, so I am ready for either a correction or a rebound.

Tomorrow

I am curious to see what tomorrow will bring.  My rule of thumb, wrong as often as right, is that you can often have two or three bad days in a row.

In some sense, there needed to be some sort of rotation.  I have mentioned several times that stocks with nothing but a faint promise of a future have been bid to the moon.  It feels a lot like 1999-2000 for some of the biotech, 3 D printers, cloud space and social media names.  Frankly, many of them still have a lot further to fall.  

The interesting thing (to me) is that we now have a lot of people investing in these spaces through ETFs. And while I understand the allure of an ETF and the diversification, when people sell the ETFs, all the underlying stocks move in lock step.  So I believe a lot of good names are dropping in a classic baby with the bath water situation.  I do not invest much in the bio tech space, but there is a big difference between GILD, CELG and AMGN and the phase 2 or phase 3 companies out there. But they are being painted with a similar brush.

Performance of GARIX

One other interesting thing.  We have had some discussion here about some of Gotham's institutional funds.  My wife actually has some GARIX in her IRA as I put her into FSNAX, and when it stopped operations, she was rolled into the large institutional fund, despite being many thousands short of the $250,000 minimum.  GARIX is 170% long and 70% short fund, so it is actively shorting many of these high flier stocks.  As you might expect, it has held up well during the recent sell-off.  IWV has gone from $113.60 to 109.79, call it a 4% drop.  GARIX has gone from $13.37 to $13.29.  Not even one percent!  My wife is happy!