As you know the rally from the March lows has sent us into a selling frenzy and allowed us to take advantage of the cheap shares we bought as the markets fell apart.

This past decade has been the worst decade in history from a buy and hold perspective with all the major indices down for the ten year period starting in January 2000.

The model portfolio that we are working with right now was started in August 2008 and the markets are still down from the initial buy in for our holdings.

However, our portfolio is showing some decent profit considering that we had a great opportunity to buy into the market weakness and have since been able to unload those cheap shares as this market rally has continued to push higher.

Here are the most recent sell orders given by the software.

Sell 22 SPY at 112.66 for a total of 2,478.52

Initially we bought into SPY at 12.00 per share and have since had 26 buy orders and 8 sell orders. The net effect is our cost per share is now down to 106.50 and the holding is showing a profit. This is the value of the PCA system.

Sell 32 QQQQ at 46.05 for a total of 1,473.60

Our cost per share is now down to 38.85 and we are 67% in stock and 33% in cash on this holding.

Sell 13 IWM at 63.26 for a total of 822.38

Our IWM cost per share is down to 57.69 and we are holding 906 shares. We are currently 75% equity and 25% cash on this holding.

Sell 17  DIA at 105.47 for a total of 1,792.99

Our DIA holding is now 71% stock and 29% cash with a cost per share of 99.53. We are holding 804 shares.

In our sector portfolio we have GDX with a starting price of 34.95 and a current quote of 46.57. We are getting a hold signal right now with a buy price of 38.80 and a next sell price of 50.24. We have had 10 buys and 8 sells and our cost per share of 16.85. A few more round trips and these shares could be free! Once again, the power of PCA!

Sell 20 SMH at 27.62 for a total of 552.40

We started SMH at 30.41 and now our cost per share is 25.05 after 15 buys and 6 sells. We are 75% stock and 25% cash in this holding.

Our XLE holding started at 70.90 and now we are at 57.50. We have 370 shares after starting with 200 and our cost per share is 59.54. This position is 77% stock and 22% cash. 14 sells and 6 buy orders have been placed and we are holding for the next buy price of 48.12 or the next sell price of 60.62.

XLF is also in a hold pattern waiting on a buy price of 12.39 and a sell price of 16.20. This holding has had 11 buy orders and just one sell order and we are 85% stock and 15% cash.

Our GLD position is in a hold as well. With a next buy price of 85.08 and a next sell price of 111.75. This holding has issued 2 buys and 3 sells and we are 70% stock and 30% cash.

SLV is also a hold right now with a next buy price of 12.88 and a next sell price of 18.07. So far we are 3 buys and 3 sells and we have 478 of our initial 500 shares. Currently 51% stock and 49% cash.

In total our portfolio is showing a profit of 27,597 and all but one holding is still down from where we bought it.

The power of PCA is that it forces you to buy low and sell high and I have managed this portfolio in a very haphazard manner. Given more attention the results could have been even better!

The Indices portfolio is up 20,464 or 5.7%

The sectors portfolio is up 5,586 or 7.6%

The Gold & Silver Portfolio is up 5,657 or 24.3%

Finally our leveraged ETF portfolio is down 4,111 or 25.1% and was a bad idea to begin with.

I strongly recommend against using leveraged ETFs in the PCA system as the churn will kill your profit over time.

All in all I have to say… not bad! Total portfolio profit of 27,597 or 5.8% is a pretty good [performance given the fact that all holdings but one are lower than the entry price.

The PCA system of buying low and selling high automatically since August 2008 has been great. No one would have guessed back then how much damage could have been done to the stock market. Even more stunning has been the bounce of the March 2009 lows and now here we are.

From 2000 to now it has been the worst calendar decade in the history of the S&P500.

As we look forward to 2010 it was nice to get another chance to lighten up the holdings a bit more with these final sell orders. I look forward to another interesting year and we’ll be there to buy low and sell high every chance we get.

Happy New Year!

Sincerely,

Doug & Bill
Investing Systems Inc.

Once again the market pushed higher and once again we are getting more sell orders.

Selling 13 SPY  for  a total of 1,371.63

Selling 21 QQQQ for a total of 880.74

Selling 18 IWM for a total of 1,082.52

Selling 12 DIA for a total of 1,167.48

Selling 16 GDX for a total of 761.60

Selling 13 SMH for a total of 328.25

Selling 10 XLE for a total of 543.80

Selling 5 GLD for a total of 511.40

Selling 40 SLV for a total of 683.20

The Total Portfolio Value of all holdings and cash reserves is now positive by 1.2% and we are holding a lot more shares than we started with. None the less our $5,670 gain is a great relief since the market has actually gone down about 20% on us.

PCA is a wonderful risk management style.

I updated the model portfolio recently and got a barrage of selling. As I expect the market to roll over a bit here and possibly for a while, I am updating the portfolio more often these days.

Today I opened it up and ran the quotes to discover another round of selling.

I will take this round of sell orders as well because I will want the cash on hand to buy back in at lower prices.

Here are the orders for the model portfolio.

In the Indices portfolio I am getting sell orders on SPY, 14 shares for 1,456.28

The QQQQ holding is saying hold and I will.

The IWM says sell 17 shares for 1,003.68.

The DIA is selling 10 shares for a total of 959.70

The Sector Portfolio is selling off a bit as well… here are the orders.

GDX is selling 15 shares for a total of 668.40.

SMH is selling 14 shares for a total of 345.66.

XLE is selling 9 shares for 478.08.

The commodities are all holding and we sold the entire QLD position as it was a bad idea to begin with.

Total portfolio picture is this…

We started with a portfolio value of 472,613 and now we have a portfolio value of 471,728 so we are down a mere 885 bucks or 0.2%.

That is not bad at all when you consider the prices of our initial purchases way back in August of 2008. The market had not really fallen apart yet and the collapse provided the buying opportunities to load up the portfolio.

We’ll see what happens going forward and since we have about a 25% cash reserve available we may get a chance to deploy more cash should we get considerable weakness from here.

With 75% of the portfolio invested, we could also get a chance to lock in more gains if the market pushes higher.

The beauty of the PCA strategy is having a plan in place no matter what.

Until next time…

Buy from the scared… sell to the greedy with PCA.

Here is a sell on SLV.

61 shares for 965.02.

Now we have 53.7% shares and 46.3% cash.

3 buys and 2 sells have us up 19.2%

We started the model portfolio back in August and the markets have completely fallen apart since then.

Overall the model portfolio is only down about 24.9% because we had the cash cushion to help absorb the losses.

We have had a bunch of buy orders as the markets collapsed and I am very glad we are using ETFs instead of stocks.

3 of our positions are "out of cash" and I may decide to add some more if I could be convinced that we have actually seen the bottom.

We still have some buying power, and It may be a while before I deploy any more cash into the positions.

Only time will tell.

We would love to scoop up some real bargains and so I will try and keep some powder dry.

To get our weekly commentary for all things market related… tune into www.MarketToolbox.TV every Sunday Night!

AIM High!

It has been a long time since I updated the model portfolio.. good thing too as the moves have continued upwards in Gold, Silver and Mining.

Today I got sell orders on all three. Bought 103 shares of SLV at 14.23 now we hold 579 shares at an average cost of 11.56.

In GLD we sold 10 shares and now are holding 96 at an average cost of 79.20.

In GDX we sold 60 shares at 36.90 and now hold 320 shares at an average cost of 23.92.

We are also getting a lot of buy orders as markets and indices continue to fall, new post about that coming soon.

I finally had a chance to update my PCA again today and what do you know… more buying to be done. The purchasing department has been working overtime and building quite an inventory of low priced shares.

We started this model portfolio in August and so far this will be the 20th buy order into a falling SPY.

There have been 22 buy orders in the recent market turmoil and that is just since august and only in SPY. We still have about 20% of our portfolio value in cash and we have lowed our average cost per share considerably. We can still buy into more weakness and get even more bargain shares.

Here are the orders from today for QQQQ

The QQQQ holding has had 13 buy orders and we still have 21.7% of our holding in cash. So far so good. Cost per share is down about 5 bucks and we are holding 464 more shares than we started with.

Here is the buy orders on IWM

Three trades today in IWM and so far that makes 15 buy orders. We still have 23.8% cash and we are holding 432 more shares than we started with.

Here are the buy orders on DIA

Two buy orders today in DIA and that makes 15 so far. We are holding 432 more shares and our cost per share is down about 9 dollars.

Here are the buy orders on SMH

Two buy orders on SMH as well and now the cost per share is down over 5 bucks from the original purchase. We are also holding 386 more shares after 15 buy orders.

Here are the trades from XLF

Two trades today in XLF, now we are holding 326 more shares with an average cost down over 4 dollars each. The 10 buy orders so far leave us with 16.6% cash left to go.

Even a buy order on GLD, I have been waiting for this one.

Finally one trade in GLD today and its the first one since August, Interesting that we started this holding with a 30% cash reserve to begin with because Gold was so beaten down at the time. Since then it has held up well in the market chaos.

That’s all for today.

I updated the model portfolio after the close today and got a buy order on SLV. Here it is…

When congress voted down the "bail out bill" we are now getting a fist full of buy orders.

We are getting buy orders on SPY and QQQQ and SMH and XLE and QLD all on the same day.

PCA is allowing us to strategically deploy this cash into a weak market and will also signal us to sell these shares when the markets come back in line.

This is not anything more than pure risk management.

By being most exposed to the market at the bottoms you stand to gain the most when a rebound occurs.

Conversely, by being fully exposed at the top of a market cycle you are assuming the most risk. Now we are going to put a little more capital on the table.

Here are the buy orders we got today…

Here is a good learning opportunity for those new to PCA…We got 3 buy orders on SPY today. The lesson here is that by using the occasional update method I am able to take better advantage of bigger moves in the stock in this case SPY.

Here are the 3 trades…

Notice how the size of the orders decreases

And decreases again.

Of course you would have "bundled" these orders into one transaction at your actual brokerage but for the purposes of running this model portfolio and blog I am including them separately and will account for them that way as well.

As a side note… I have NEVER seen three trades in a row before… and today it happened twice… Read on.

Here are the trades for the QQQQ and once again we are getting a multiple order. only two on the QQQQ so here they are.

Now we are moving on to the sector ETFs and we are getting one buy order on the SMH

We are also getting a buy order on XLE

And finally we are getting another triple buy order… this time on the QQQ.

WOW, I have never seen anything like it.

Thursday Night we are doing the third seminar with our special guest Jeff Webber on how to build a diversified portfolio and we’ll talk about using PCA and LEAPs for the most conservative use of leverage I have ever seen… DO NOT MISS IT!

Today I got a sell order on the GDX, that’s the Gold Miners.

There is where we are now…

Here is the next trade advice.