Investment Activity Review-February 2015

Maybe it was the bitter cold, but I didn’t make too many moves in February other than a couple of opportunities to build on some existing positions.

ADDED to short position in S&P 500 via (HSD)

Despite all the political uncertainty in Europe, terrorism fears and falling oil prices, stocks continued to trend up in February and on a few occasions reach record highs. I continue to remain convinced that there is a ever increasing disconnect between stock prices and economic reality. As long as the Federal Reserve continues to keep interest rates at next to nothing, the incentive is still there for stock prices to rise in the short term.  It continues to be a very hard decision to live by right now as the ETF I’m using continues to fall but I’m determined to ride this long term. The indications are becoming more heightened that Club Fed will raise rates at some point this year and I feel at some point stock prices will need to be discounted to reflect the reality. It seem like there is critical mass of people in the Federal Reserve that see rates need to go up sooner rather than later, but it appears the Chairwomen does not share the same view at least in the short term. As long as this paradigm is in effect, I am continuing to add to my short position every few months to average down my cost position.

ADDED to position in Gilead Sciences (GILD)

Gilead was recovering nicely this year after falling off a cliff as a result of the Express Scripts licencing agreement to sell a competitor Hepatitis drug. The company responded to the agreement by locking in a few prominent supplier contracts that the market appeared to like. It was all good until the latest earnings came out which were amazing, however they announced that they would in the future be cutting some prices for their drugs. The market did not like it at all and again the stock spiked down. I thought the reaction of overblown and I used the opportunity to add a little more to my position at the $96 level. Sure enough the stock recovered again and went back as high as $105. I’m up so far about 6 percent on the position. The fundamentals still price the stock as high as $140 so there is room for the stock to move, however I have to be ready to embrace violent price shocks like we’ve seen the past few months.