Thursday, March 19, 2009


What I am about to say only makes sense to Mr. Left Brain and is a tad nerdy. I mentioned in a prior post that I was going to eliminate my holding of INZ (an ING preferred stock)  in a taxable account and then keep my position in a retirement account.    Buy 50 LXPPRD, Bought PG/ Lexington Realty/Outrage at AIG/   Instead of doing that, I decided to perform one of my risk reduction techniques on the position in the taxable account.  I just sold 50 of INZ at $8.90 in the taxable account and will keep the lower cost shares purchased in February in a risk reduction move, similar to what I did last quarter for the same security.  In the 4th quarter of last year, I first bought 50 at 10 and change and then bought the fifty on 10/08/08 that I just sold at 7.84.   Then, when INZ spiked to over 14, I sold my higher cost shares using FIFO accounting, and kept the lower cost shares bought in October at $7.84.   Now I have sold those shares bought at $7.84 and will keep the ones bought at $6.52.  I have also collected a few good quarterly dividends along the way at very good yields.  I will keep the shares of INZ and ISF in my retirement account for now. This is the history of this risk reduction technique for this one security in a taxable account in descending chronological order:
So, I have made a profit on my two sales on INZ, with the one last year being larger than the second transaction, collected a few dividends, and now own shares bought at $6.52.  Those shares produce a yield of close to 27% and I am already well into playing with the house's money on this security.  I was trading that security profitably before starting this blog in October of last year.   In the event INZ suffers another meltdown, and falls significantly below my last purchase, then I will consider buying back the shares just so sold.  That is how this one risk reduction technique works. (I also own 200 of IND)

I thought that this article was worth a read.   MarketWatch


  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. 

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