I have looked closely at our performance since August and made some definite conclusions. Even as I am still in 1st place, the portfolio is down 5%. Looking to buy Yahoo! (YHOO) as well…

From my latest MSN Strategy Lab journal:

What a mess. Markets are in disarray, investors are anxious and nervous about their financial future and we seem to be playing a giant game of hot potato.

Remember that game, right? Five or six of your friends would stand around in a circle with you passing around a hot baked potato (or some other passable object) until the music stopped. It was a game similar to musical chairs that had people circling around a group of chairs waiting for the music to stop and then sit down. The last one with the slowest reaction time didn‘t get a chair and was out of the game.

Does it seem to you that Lehman Brothers was the slowest to grab the potato? Merrill Lynch and Washington Mutual didn‘t have the staying power or the best reaction time and therefore didn‘t get a chair. As an investor, I‘m constantly wondering when and if the music will stop or if I am going to get stuck with the potato. That is why I have been deliberately cautious when structuring each and every investment within the portfolio.

Yet, that same degree of caution has caused the portfolio to recently move down by over 3% as protective sell-stops were hit on the ProShares Ultra Oil and Gas Index (DIG) as well as my investment in the Proshares Ultra NASDAQ (QLD). The good news is that our “real” client portfolios still hold overweighted positions in (DIG), the Oil and Gas ETF and we actually were able to add positions and hold a 10% allocation when it hit an intraday low last Thursday.

Much of the rationale for the buy of a position in the Oil and Gas sector was once again the prompted by the ridiculous level of chatter that oil was going to $30 a barrel. These were the same well-dressed fellows and well-heeled gals that called for oil at $200 a barrel by the year‘s end. By researching and studying the overbought indications from a technical standpoint (See: Oversold Charts Lots of `em) we were able to comfortably add this position. The mistake we made was simple: Utilizing a sell-stop in this volatile environment took us out of the position, just as it was bottoming.

Read the entire article with all my stock additions and deletions HERE