Mad Money Machine

Patience pays off

See! Being patient pays off (or so we hope.) I’m talking about the previous post where I said we would wait to buy Southern Copper Corp. (PCU) for $81.81. And today, with the commodities down, we did get filled. I’ll update the portfolio page tonight with the details.

Two of three filled so far…

I’ve made the trades to the portfolio as promised. We sold 814 Votorantim Celulose VCP at $15.21 for $12,380.94. That’s a gain of $2376.88 on our $10,004.06 investment or 23.8% in two months. Fantastic!

Next we sold 347 Bancolombia CIB (or as Jim Cramer likes to say, “Banko-Columbia”) for $12,002.73. That’s a gain of $1,998.72 on our 10,004.01 investment or 20% in two months. Fantastic!

Finally, we sold 500 Seagate Technologies STX at $27.86 for 13,930. That’s a gain of $3,935 on our $9,995 investment or a whopping 39.4% in two months. FANTASTIC!

We took our proceeds of $38,346.20 and divided it by three to buy our replacement stocks. First up, OptionsXpress OXPS which we bought at market at 10:00 for $31.11 and 410 shares. Then we did get filled on iRobot IRBT at our bid $28.42 as it did dip down to that level at 10:14 for us.

Now what are we going to do about Southern Copper PCU? Are we going to be patient and wait for a pullback to our $81.81 bid. Or do we chase and get in at any price ’cause we gotta have it!

We wait! And if we don’t get it in a week or so, we re-evaluate.

Before I leave you, lemme point out a little problemo now…

These short-term capital gains have resulted in a pretty large extra-tax hit of $1,684 to the portfolio. You’ll see it on the Portfolios page. So while the top-line gain of the Cramer Portfolio is 8.8%, the after-extra-tax portfolio net gain is only 7.1%!!! (The ETF portfolio, by comparison, is at 6.6%. We can’t let it get this close now can we?)

We may have to re-think our holding onto the losers in order to help wash out some of the short-term gains. That is, we may sell Sara Lee SLE and Crocs CROX and swap into some other retailer and speculative plays. Even then, though, we’re only talking about $1,270 in losses. And that would only bump up the net gain to 7.3%.

Wow, I HATE taxes! Let’s make a push for friction-free capitalism, huh?

Time for some listener feedback

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We Will Not Be Slaughtered!

OK, we watched Citi Trends (CTRN) go down, then up, then back down. Let’s not do the same with our other winners: Votorantim Celulose (VCP) up 24%, Bancolombia (CIB) up 18%, and Seagate Technology (STX) up 38%. We’re going to sell all of them tomorrow at 10:00 AM. Then we will have to hunt for replacements in each of their categories: 1: A company you know, 4: A Financial, 8: Technology.

For the all-encompassing category 1, I think we gotta go with Southern Copper Corporation (PCU). It was our triple-buy stock (although it is no longer on IBD 100 or MagicForumlaInvesting.com but it is still in the MagicFormulaInvesting.com) and Jim said buy it this week. We’ll look for weakness and then jump in. Hey, let’s set a buy price of $81.81 and see if we can get filled in the next week.

As to the Financial: Jim’s most recent featured financial is from February 7th: OptionsXpress Holdings (OXPS). It is up 4% from the day before Jim mentioned it. It is also the IBD 100’s #3 stock this week. So let’s do a market order on it tomorrow (Friday 3 March) at 10:00 AM.

For the Technology category, we might go with iRobot (IRBT) if it comes back down from it’s Cramer Crackle. (Jim took a call from CEO COlin Angle on his March 1st show.) No hurry, we will rest in cash until the right ones are identified. Let’s set a bid at 28.42.

As for the losers: CROX, SLE, and now CTRN… Let’s hang in there and let them come back up a little. Remember, Jim has a price target of $35 for CROX and CTRN put up some good growth numbers recently. And SLE’s gotta be done going down, don’t ya think?

I’ll open up the comments on this blog so you can have your say. Hit the Comment link.

MMM-011: FORE!

Golf and risk in investing. Our Guru knows his way around the GREEN. The Tool in the Crib helps you evaluate the risk in your portfolio. The Mad Money Machine Match Play Classic pits two very different competitors against each other.

Play show #11 Right Here, Right Now!
[audio:MMM-011.mp3]

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• Our Guru knows his way around the GREEN
• New Money discusses What is Risk?
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Here’s the deal: Capture Capital Loss

With Nabors Industries (NBR) down so much, I think for our Portfolio Smackdown we’re going to sell and take that short-term capital loss to help offset some of our previously realized short term capital gains. We’ll sell NBR tomorrow at 10:00 and swap it into National Oilwell Varco (NOV). We bought 168 shares of NBR for $13,235 and will sell them all for about $11,511, resulting in a loss of about $1700. This will reduce our short term capital gain to about $2200 from $3900 and thus reduce the extra tax bite from $626 down to $352, a savings of $274. NBR would have to go up 2.4% MORE THAN NOV in order for this to be a bad move. Follow? Thoughts?

MMM-010: Five Things Jim Cramer DOES NOT TELL YOU

Five things Jim Cramer does not tell you. New Money asks What is a Sector? The Tool is like a GPS for your investments. You get a twofer for your Gurus this time. Portfolio Smackdown. Mad Money Review.

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• Stocks below their recommended prices.
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It’ll be CROX

Our new speculative play to replace the laser company Palomar PMTI will be one that Jim featured on the 15th: Crocs Inc CROX the maker of lightweight footwear. I personally bought some (the stock) and I will buy some shares for the Portfolio Smackdown. He says it could go to $35, so that is our target price and we’ll look to sell it if it gets there.
Click to see ’em at Amazon.

SELL PMTI

Jim said on the 14th that we should back away from all laser stocks. This includes Palomar Medical Technologies, which happens to be the worst performer in our Portfolio Smackdown, down over 17%. PMTI was in our Speculative category. What should we replace it with? Send your suggestions to (feedback AT MadMoneyMachine.com). I will sell PMTI tomorrow at 10:00 and will rest in cash until I get a good Cramer recommended speculative suggestion.

MMM-009: Sunday Jazz Brunch

A day in the life of Mad Money: 28 November 2005. Play pick the Jim Cramer BEAR stock. Our Guru winner this time says DO NOT diversify. The Tool will keep you up at nights (reading). New Money reviews the P/E ratio. A special Sunday Jazz Brunch edition of the Mad Money Machine.

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Winners and losers since mid-December:

Swapping CMI for PCAR

On Monday’s show, Jim said swap out of Cummins Inc and into Paccar. So after waiting a few days, I’ll make the trade in the Portfolio tomorrow at the 10:00 prices.

We’ll keep Seagate Technology (STX) as he says it should go to $31 or so.
No other changes at this time.