I feel like I have been sugar coating my losses this year and not really realizing what has happened, so this blog is basically a way for me to get it all out there and be brutally honest with myself.
I recently opened an account in our business's name Rauch Acquisitions & Holdings. I supplied all the capital out of my own pocket. I started this year with $15,000.00.
The first trade,
1000 CORS @ 10.79
-10 zjx ab (10.00 JAN 09) @ 1.25
100 Cors @ 9.34
-1 zjx ab (10.00 JAN 09) @ 1.40
11 ZJX AB (10 JAN 09) @ 1.00
-11 QBA EB (10 May 08) @.05 <--seriously bad decision
200 CORS @ 7.47
-2 QBA EU (7.5 May 08) @ .55
11 QBA EB (10 May 08) @.05 <---see what I mean
-11 QBA EU (7.5 May 08) @.15
13 QBA EU expires
Sold 1300 CORS @ 5.46
Basically all this means is after the 7.50 calls I had a basis of 9.957/shr
9.957-5.46=4.497 * 1300 =5846.10-loss
The whole position was a big dividend play. CORS was paying 1.00/shr annually and I thought I was going to be able to combine the income from dividends and covered call writes to earn an incredible return. I was in love with CORS before I even bought it since I have a relationship with the company and felt that since they had no sub-prime loans they could navigate this mess safely. I thought I had a real contrarian position that was going to WAY outperform the market which is why it was the only major postition in my account and I had obviously decided that diversifying wasn't a good idea. Welp as you can see I got my ass handed to me.
The next position will haunt my dreams and will probably never forget this (hopefully I'll never forget any of the lessons here)
CORS (I know right)
Buy 13 ZJX AZ 2.5 Jan 09 calls @ 3.30
Sell 13 ZJX AZ 2.5 Jan 09 Calls @ 2.40
1300 * .9 = 1170.00 loss
I thought for sure it had bottomed and the mythical short squeeze was coming. I really need to learn to trust the fact that when over 70% of the float is short the stock is probably headed down.
lastly the ACAD mess that has had a couple of blogs written about it, you can check the TK all-star blogs for the details but basically if it looks to good to be true it probably is.
im down about 3400.00 on that
3400 + 1170 + 5846.10 = 10416.10 loss of my 15,000 in just a few short months
10416.10/15000 = 69.44 % loss, just think If I had shorted everything I liked :)
hopefully this is simply the cost of lessons learned and I will move on to acheive the goals I have for myself here.
* Take a second look at contrarian investments and how they relate to the market conditions, proceed with extreme caution and cut losses early.
*DO NOT OVERCOMMIT or neglect to diversify no matter what
*If it looks to good to be true it probably is.
*Pepare for the worst expect the best, in other words HEDGE HEDGE HEDGE
*Look at every position from as many perspectives as possible
I really do hope these lessons are worth 10k
Best wishes to everyone,
Cory Rauch
