Poor Senator

Quick, name a poor senator!
Strategies for investing on an uneven playing field

Hits and Misses

 

Past examples, hits and misses

Missed: 

 

Halliburton:  (HAL) The stock that got us thinking about how to exploit the corruption at the heart of our government.  One we watched but wished we had bought.  We first thought about investing in Halliburton right after the Supreme Court gifted the 2000 election to W.  Instead we chose to study Halliburton to see if our theory would play out.  Of course it did and we lost out on a chance to triple our investment.  (See graph below)

Halliburton as we all know is a giant logistical services provider for the oil industry and the U.S. military and government.  Vice President Dick Cheney is the former CEO of Halliburton, a job he was given while taking a nap on a fishing trip with his Halliburton cronies.  Cheney’s political connections garnered through his service to Nixon, Reagan and Bush I proved to be an asset that the Halliburton gang thought could come in handy.  Boy did it ever.

 

When George W. Bush was running for president his father suggested that W. have Dick Cheney lead the search for a Vice Presidential running mate.  It came as only somewhat of a surprise when Dick Cheney chose himself as the perfect candidate.  The only problem was his CEO role with Halliburton.  Mr. Cheney promptly stepped down from Halliburton but retained his millions of share options.  The press of course had a field day with this for all of five minutes before Dick told them in no uncertain terms to collectively fuck off and so they did.

 

Had you invested in Halliburton right after Bush 43 was sworn in and held it until the market crashed at the end of his 2nd term, you could have tripled your investment.  It is possible that having a connection to the Vice President helped.

EWJ: I-Shares MSCI Japan Index: A Hit and a Miss. 


Purchased shares in the aftermath of the March 11 earthquake that devastated the northeast of Japan.  The entry price was $7.80/share.  The next day as the market opened lower; intended to purchase more.  However, as I have a day job I had to get permission from compliance first.  As I waited for compliance approval I was preparing for a morning meeting.  Minutes before the meeting was to begin, I received compliance approval to trade.  I quickly entered my trade and left for the meeting.  When I returned from the meeting I saw that EWJ was gaining.  But there was a problem, my position was now flat.  What happened?  I hit sell instead of buy!  So I quickly entered a new trade to bring the position in line with intentions.  Filled at $9.80.  That is a big potential gain left on the table because of careless trade entry.  Still up so a hit but not by nearly as much as I should be, so a miss as well.  Lessons learned.


Put Options in S&P: Late 2011 - As congress and the President dithered on reform and agreement on extension of payroll tax breaks, I purchased out of the money put options with a March 2012 expiry.  The market subsequently rallied.  The options expired worthless, capping my gains from my shareholdings.  Memo to self: buy longer dated options, closer to the money.