Weekly Positions Update - 12/23/07

Date	Position	Qty	Month/Yr	Contract	Strike	Call/Put	Entry Price	Last Price	Profit/Loss
12/07/07	Long	1	MAR 08	Corn			415	443 1/2	$1,425.00
12/14/07	Long	1	MAR 08	Corn			439	443 1/2	$225.00
12/20/07	Long	1	MAR 08	Cotton			66.45	66.58	$65.00
11/09/07	Long	1	MAR 08	Coffee 'C'			126.05	133.85	$2,925.00
12/21/07	Long	1	APR 08	Platinum			1531.0	1522.5	($425.00)
12/21/07	Long	1	MAR 08	Rough Rice			13.840	13.875	$70.00
12/21/07	Long	1	MAR 08	Rough Rice			13.855	13.875	$40.00
11/28/07	Long	1	MAR 08	Soybeans			1108	1196	$4,400.00
12/20/07	Long	1	MAR 08	Sugar #11			11.10	11.12	$22.40
06/04/07	Long	2	JUL 08	Sugar #11			10.05	11.45	$3,136.00
08/01/07	Long	1	JUL 08	Sugar #11			10.48	11.45	$1,086.40
12/20/07	Long	1	JUL 08	Sugar #11			11.37	11.45	$89.60
10/18/06	Long	1	JUL 08	Sugar #11			12.08	11.45	($705.60)
12/21/07	Long	1	MAR 08	Mini Soybeans			1192 1/2	1196	$35.00
Net Profit/Loss On Open Positions:									$12,388.80

Current Cash Balance	$59,490.07
Open Trade Equity	$12,388.80
Total Equity	$71,878.87
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$71,878.87

Cashed out: $5,000.00
Total value: $76,878.87

Weekly return: 7.20%

Beer crisis: This is serious

From The Economist:

"The decrease in hop production, put at some 50% over the past decade, has sent prices through the roof."
Full article

Book Review: Winner Take All by William Gallacher

Winner Take All: A Top Commodity Trader Tells It Like It Is by William R. Gallacher is a great read. Gallacher is a pure fundamentals guy who dismisses technical analysis by itself, but recognizes its importance in the context of an overall system.

Here's the jist of Gallacher's discussion:
* Fundamentals rule the day - technical analysis by itself is worthless.
* That being said, you need some technical entry and exit system to support your trading system.
* All technical only systems are pure crap - Fibonacci, Gann, etc are great only when applied to historical data.
* Risk management is very important so that you don't go bust - he lists suggested position sizes for various situations.
* Your entry/exit system does not matter, as long as it's consistent. Gallacher employs a 10-day breakout entry and exit in his text.

It makes a lot of sense to me that Gallacher says fundamentals should determine which side of the market you are on. Would anyone want to be short grains and oil today, even if the technicals were bearish? That's too scary for me. In a bull market like this, I want to be long only.

The book is a bit over 200 pages and an extremely enjoyable read. I cranked it out on a recent overseas plane ride. I normally prefer to read stuff like this, with heavy content, much slower so that I have a chance to digest. However Gallacher writes with such clarity and humor that I was able to plow through. I will need to re-read at least once in the near future.

Kevin Kerr's Hot Commodities for '08

Over at Agora, commodities guru Kevin Kerr listed his hot commodities for '08.

In short, he likes the soft commodities - especially cocoa, coffee, and sugar. Both coffee and sugar have been pushing higher over the past couple of weeks.

I picked up another sugar contract this morning in an attempt to pyramid this rise. Hopefully it will continue!

Weekly Positions Update - 12/16/07

Yesterday I pounded through a great read, Winner Take All: A Top Commodity Trader Tells It Like It Is, by William R. Gallacher. I'll gather my thoughts and post what I took away shortly.

Overall on the portfolio side, I'm sure you notice some major changes from about a month ago (when things were running quite reckless and out of control). I am doing my best to reform my old ways - here's how I'm currently approaching things:

1. Since we're in a flat out bull market for commodities, I'm buying anything that hits a 20-day high. Anything. Could be crude oil, feeder cattle, or sugar - doesn't matter. Everything goes higher in a bull market, so I'm letting the market sift these out rather than me buying and holding something - which I have been doing.
2. If a current position hits a 20-day low, I sell. Again, no questions asked. I'll re-enter the position on a new 20-day high. Easy - automates the exiting process.
3. Not have more than 25-30% of the portfolio "at-risk" at any given moment. In other words, if the world went to hell in a handbasket in 0.001 seconds flat, here's what I would lose.
1. I'm working on a spreadsheet to calculate this, which I am still tinkering with. I'll share when finished. Basically the idea is that I have trailing stops at the 20-day low of each position. The difference between the current price and the stop (times the amount of leverage) equals how much I can lose on that position.
4. The new return goal is 2% per week. If I break this, great. The idea is to try not to lose money in a given week. I figure if I can hit this # approximately, the returns will be great. Helps me to focus on the weekly # rather than trying to triple my portfolio in a year (which is what 2% will do over 52 weeks)
   

This week in the market, we've seen a big rally in the softs and the grains. My entry method put me into corn and soybeans a couple of weeks ago, and I am thankful for it this week. How about that to instill some confidence! Sugar is also showing some life - nice to have you back, sugar!

Date	Position	Qty	Month/Yr	Contract	Strike	Call/Put	Entry Price	Last Price	Profit/Loss
12/07/07	Long	1	MAR 08	Corn			415	438 1/4	$1,162.50
12/14/07	Long	1	MAR 08	Corn			439	438 1/4	($37.50)
11/09/07	Long	1	MAR 08	Coffee 'C'			126.05	133.80	$2,906.25
11/28/07	Long	1	JAN 08	Rough Rice			13.080	13.125	$90.00
11/28/07	Long	1	MAR 08	Soybeans			1108	1175	$3,350.00
06/04/07	Long	2	JUL 08	Sugar #11			10.05	10.84	$1,769.60
08/01/07	Long	1	JUL 08	Sugar #11			10.48	10.84	$403.20
10/18/06	Long	1	JUL 08	Sugar #11			12.08	10.84	($1,388.80)
Net Profit/Loss On Open Positions:									$8,255.25

Current Cash Balance	$58,796.45
Open Trade Equity	$8,255.25
Total Equity	$67,051.70
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$67,051.70

Cashed out: $5,000.00
Total value: $72,051.70

Weekly return: 12.75%