Monday Morning

As has been the trend lately, we're up early Monday morning. So far lately between mergers and 'Mutual Fund Monday' for the last 2 months or so just about every Monday I can remember has been a pretty big up day. I haven't done a whole lot today, and I don't anticipate doing a whole lot today except I may trim a few positions into strength.

I did just close out my position in ARDI after it got a takeover bid this weekend. The stock shot up 8% and it was more of a speculative name in my portfolio too. Overally I closed it out with around a 20% gain which I'm quite pleased with. I'm sitting with a larger than usual cash position in my portfolio of about 20%. Normally I'd be looking to put that to work, but I don't anticipate doing anything today. If I do anything it will be later this week on a pullback, and I'm going to try and get a shopping list prepared today of some stocks that should they pull back I'll be ready to pull the trigger on.

I'm going to be very picky about what I go into right now though (not that I'm not always picky). I really think that we're going to see mostly churn for the rest of 2006 with overall very little up or down until then, although I think the ride will be very choppy up until then, so I may make some short term trades to take advantage of volatility.

I've been continuing to trim a lot of my video game, technology, and some retail exposure. I feel like video games and technology as sectors are starting to get a bit played out and have had huge gains worth protecting. We're at a point in the business cycle where the playbook says to buy retailers, but I have some big concerns over the retail sector due to the minimum wage increase I think we're very likely to see in early January. I also think the business cycle and the calendar cycle caused people to get into retail earlier than normal in anticipation of the holiday shopping season, as retailers had a pretty big run in the last few months, and I don't think the downside for the minimum wage increase is priced in at all yet.

I've considered looking at some higher end retail plays since I don't think minimum wage increases will impact them much, but 50% of a stock's move is usually tied to what sector it's in, and trying to pick good stocks in a bad sector is typically counter-productive. The playbook also says to get some financials, and I may very well look to do that after the FOMC meeting this week so we can get a handle on if and when we may see a rate cut, as the rate cut is really the upcoming catalyst for that sector. In addition I've been wanting to get some metals and oil stock exposure in my portfolio, as I'm pretty limited in those two areas. I've got a few names I'm keeping my eye on and I may pull the trigger on one or more of those later this week. Overall though I'd be perfectly fine sitting on my cash position through the end of the year and just getting the 5% return from my money market account if I don't see anything I really like. As always, I will also look to add to my some of my current positions if I can improve my cost basis or get a nice pullback in one of my favorite names.

-Rizen