Review of 2008-09 Investment Performance & Strategies NET

Fellow Traders and Friends,

Time flies when we’re happy and healthy. I hope this note finds you well and looking forward to a Happy Holiday and a prosperous 2010!

First of all, I'd like to take this time to thank you for your business and continued relationship. Many of you have been with me over these last 10-15 years. Without you, Rhythm, Option Magic and New Era Trader would never have become what they are today.

You have challenged and pushed me to levels I could never have achieved alone and it's all there in writing. Just when I thought I was out of the market I was sucked right back in, and it was definitely the right move. I now plan to die happily in front of the computer hitting a trade button.

I truly hoped the aggregate of New Era Trader materials, indicators, videos, intraday charts, email/newsletters, my blog, and alert emails have proved rewarding. We keep improving.  For Chart subscribers, you now receive the Intraday Charts real-time via email. With our newly updated email lists, I will start the Alert (trade) Emails again. I expect you will receive more than 25 this coming year and plan to expand these alerts as time permits.

As I look forward to the New Year, I believe 2010 will be one of the best stock-picking years that we’ve seen in some time. I see limited upside – maybe 1200. Although in June of 2009 we experienced a single 9% correction after the March bottom, I predict that this year may have several 10-15% corrections.

2007-2009 New Era Trader Trading Recap

A lot has happened in the last 28 months since our Intraday Charts advised you to get out of the market back in August '07. At the time I thought we would have had 3+% up and 25-30% down. Was I ever wrong. We went down over 60% and covered most of our financial shorts way too early.

Between September and November '08, during and after the Lehman Brothers (LEH) bankruptcy, I suggested a number of great buy ideas; most focused on the master limited partnerships or MLPs. Lehman had a $3 billion hedge fund of only MLPs. The fund was liquidated along with LEH, and within 2-4 weeks all these stocks were cut in half. Their yields increased from 10% to 20-25%.

Perhaps you’ll remember a few of my recommendations:

(HTS) – At my time of recommendation, Hatteras Fin (HTS) was trading $16-$18 with a $4.00 dividend that I thought would pay $5.00 sometime this year. I thought HTS would trade north of $27-$30. HTS hit a Sept high of $33.59 and declared a 4^th quarter $1.20 dividend. I was close. HTS was my 2008 favorite before HUN.

(NLY) – Annaly Mortgage (NLY) was trading at $10-$11 with a $2.50 dividend and then hit nearly $20 with a $2.76 dividend.  Recently NLY has been around $19.00.

(LINE) – Linn Energy (LINE), my 2nd favorite, was selling around $11 with a locked-in, fully hedged $2.62 dividend for the next 3 years. Today, LINE sells near $26.

Even with a market headed still lower, none of my MLP ideas were ever at risk. We even collected over 6 high-yield dividend payments before exiting these positions.

I also recommended a number of put writes with Jan '10 expiry with enormous premiums - puts on FRE, CAT, CME and CKE and other energy stocks. As foretold, all these puts will expire worthless next month.  I even wrote that the major oils would take over the gas players in the next few years removing additional investment risk. In early ‘09, Burlington was acquired by Conoco and XTO is going to be merged into XOM next year.

(HUN) - Huntsman Corp (HUN) was recommended in December 2008 at $3.00 and we averaged down into $2.00, with a $0.40 dividend for added yield protection. A good number of NET students cashed out most of their HUN position at $7.00+. Some are still holding positions awaiting a possible take-over out in 2011. Currently, HUN is trading around $11.00 – don’t forget the 17% annual yield.

There were additional put write and long call suggestions in Feb of '09 when I wrote that the decline would end 600-700 in the S&P. The market then bottomed in March '09 at 666.

A few months ago I wrote that NET traders should sell all stocks and concentrate on E-minis and Expo week option trades. We may have left a few dollars on the table as the market is up 50 points or so.  Just look at those unbelievable option trades these last few months in the weekly blog. I plan to make these shorter-term option trades the focus of the Alert Emails in the future.

If you followed my advice these last few years you obviously did very well.  My own self-managed IRA, which I opened in Feb ’09, hit a high in November ’09 - a 10X return in 9 months. I expect substantial returns into 2010 as well.

Even though none of us have ever experienced anything like these last 2 years you will realize the game is still the same, only the players are different.

As can be seen above and below [Charlie’s Interaction] my trading and mentoring style is quite unique among professional traders, very profitable and risk adverse. I also employ sophisticated money and trade management learned from my many years of experience. For 2010, I plan to continue recommending “normal” and the more advanced trades such as hedging and parlaying trades, partial position trades, pair trades and seasonal trades. Of course my more advanced trading techniques maximize returns, limit risk or achieve both. As most of you know, while I primarily trade E-minis, cheap expiring options and a selected handful of stocks, I also dabble with ETFs, currencies and other securities as market opportunities arise. 

So, by staying connected, you can either trade along with me or just learn from my trades and recommendations!

Jan 2010 - It’s Remuneration Time

It's the time of the year to ask for your continued financial support. Above I've provided a brief reminder of what many of you received over the last 2-3 years. Just one of these ideas pays for many years of my services. For example, one student doubled his trading account with HUN alone.  Another told me he earned over $250,000 buying HUN.

For those that want to trade options NET style on Thursdays and Fridays, I’m offering a special Chat Room price of $175.00. Here’s the purchase link.

Charlie Comerford is one of the main reasons I came back into the student-teaching business after a shortened retirement. Charlie is now my newest full-time trader who moved from the chills of New Hampshire to Arizona, showing that you can live anywhere. He loves the hours.  See our email correspondences and samples of our phone calls.

I will always be available to you at anytime. I stand ready to answer any questions about trading, a specific trade, economics, etc. Just call me if you have any questions or want anything special.

Over the holiday season, I will be away from December 25^th to January 4^th.

May your family be happy and prosper in the New Year and Happy Holidays! I can't thank all of you enough for all your support.