My favorite form of performance review is also my most painful. Every year I complete my income taxes–by hand. That means that I write out every single trade that I placed during the year in chronological order, along with its profit/loss (P/L). This past year, that meant reviewing approximately 240 trades, roughly one a day.

Yes, there are ways of capturing this information electronically to avoid the hand-numbing task of writing each transaction, but I choose the old-fashioned method. Writing the trades out makes me reflect on them: “What the hell happened here?” and “What was going on in the market then?” Writing the trades makes me sensitive, not only to their P/L, but to their sequencing: How many runs of winners and losers did I have? How far did I draw down during the year? How well did I trade after I had a losing period? What happened following winning periods?

It’s easy to get caught up in the hustle and bustle of Black Friday, but let’s go to the scoreboard and see what really happened.

Chain-store sales slipped 0.4% in the week ending Saturday from the prior week, the International Council of Shopping Centers reported Tuesday. Not too impressive given all the reports of jam-packed malls over the holiday weekend. However, when you compare last week’s performance with the same week a year earlier, chain-store sales increased 2.6%.

Redbook puts out a similar survey but got slightly different results. Chain-store sales rose 0.1% in the first four weeks of November from October, and 3.2% from November 2005, according to Redbook’s gauge.

“Ironically, hedge funds trading oil are not doing anything very different than the large investment banks such as Goldman Sachs, Bank of America, or Morgan Stanley already do.  The proprietary trading desks of these and other large investment banks are actually ‘hedge funds in drag,’ just as Enron was.” –Peter C. Fusaro and Gary M. Vasey, Hedge Funds Change Energy Trading

bill cara did a write-up of the senate subcommittee report THE ROLE OF MARKET SPECULATION IN RISING OIL AND GAS PRICES: A NEED TO PUT THE COP BACK ON THE BEAT (PDF). phil davis did an analysis as well.  for an alternative view, read the EIA report on why oil prices are so high. you should read the report and those analyses if you are interested in what may prove to be the next enron-style scandal, only much bigger. player of note: t boone pickens, who among other things donated $3MIL to the swift boat veterans for truth, and who has been pulling down billions in the last several years while pounding the table on peak oil.

i sold penn west (NYSE: PWE)  this morning, not on the basis of this alone (EIA weekly inventory was up this morning, and GDP surprised downwards, adding more data to the argument for a slowdown).  weighing in favor of holding was the iran deadline tomorrow, but the risk of the bottom falling out of oil has been bothering me more lately.

demand is going up, supply is going up. if the economy keeps slowing down,  and i consider that the more likely case, then demand acceleration is going to slow as well. more to think about.

there are a couple of compelling reasons behind publishing my trades and talking about stocks. for one thing, it makes me a bit more accountable to my own behavior. whenever i write about something critically, i force myself to look more carefully, to more thoroughly run through arguments in favor or against. or at least that’s the way it’s supposed to happen. writing here forces me to be more honest with myself usually.

and in all honesty, i am still very much learning about markets. i believe i will always have that feeling, because it’s an observational knowledge and the behavior of the markets is perpetually changing. this is another compelling reason to share. i get a deeper understanding, more rapidly,  when i attempt to explain things i have learned, especially in the context of blogging and other intarweb knowledge sharing  activities. i believe there is a large amount of disinformation or lack of critical thinking in mainstream financial press, and reading and becoming part of the dialog on a large number of blogs has helped me get a clearer sense of these systemic biases.

i can see some potential dangers. i tend to favor contrarian strategies, and occasionally spend a lot of time in conversation defending my positions or economic opinions. in a way this a good thing, in that i have to do more research and strive for a better understanding than i might have if i were always siding with conventional wisdom. the pitfall is investing so much time in defending my own reasoning that i fail to recognize when a situation has changed. flexibility of thinking is the best way to make money in markets, not winning arguments.

another danger i addressed in the disclaimer. writing about a stock i buy doesn’t mean that i think everyone else should run out and buy it as well (ok that’s not true, because i DO want everyone to buy them and push the prices up ). a good example is that i manage an account for my mom, and there are things i do with my own money i would not do with hers. she has done really well, but i stress out a bit more about her account than my own, even though it’s a lot smaller and less volatile. things i do, i cannot necessarily recommend for anyone else.

i am trying to think of the best way to keep my trading info updated here. for now, i think i will point anyone who cares to my stocktickr page. i just updated the list, with correct buy prices, and will attempt to keep it current. perhaps a project for the future is a plugin to keep the information in the sidebar here on the blog. there is also an rss feed for that page. (i just noticed that if you don’t have a registered account, the information on the page is TWO days old. that’s not very useful. ok back to the drawing board. the rss feed is up to date though).

the pressure to rack up the big returns at those hedge funds must be intense these days! thanks, whoever you are, for giving me a list of stocks to steer clear of. here’s someone who created a tracking portfolio out of stock spam he received.

if you are getting hit by stock spam, you can forward them to the SEC.

i bought back into PHO today, the powershares water resources ETF. i had bought it earlier in the year for a runup, and then when it turned around on may 10 with everything else i got out at a fractional loss. i’m probably early getting back into it, but i am still confident that water is one of the bigger stories out there. i also think that the utility constituents of the palisades water index should start getting a lift at some point as the tightening cycle pauses or ends and the economy shows more signs of slowing. the risk there is oil prices, because most utilities are energy intensive. i suppose i am “hedged” against that by penn west (PWE). i received those shares in a buyout of the petrofund canada i had.

my gut tells me i should think about buying puts on the QQQQ on days like this. i’m not complaining, mind you. everything is green on my screen right now. sandisk announces at 3PM�� the close, and i sure hope they have some happy things to say about the next two quarters.

UPDATE: sandisk had good things to say.

i have been messing around with stocktickr lately as well. i’m seacaptain on there. i just threw some random stocks in there when i first signed up and haven’t edited my portfolio there, so don’t wail me about my performance. it’s a bit more of a TA and momentum crowd, but the germ of an idea is there for using social and trusted network tools for stock selection and personal finance. i have a pretty good idea of the app i would like to build, or would like to see built so that i could use it. but i think i’m going to keep that one in stealth mode for now.

By the fall of 2007, the administration expects that about 27,500 immigrants will be in detention each night, an increase of 6,700 over the current number in custody. At the average cost these days of $95 a night, that adds up to an estimated total annual cost of nearly $1 billion.

[...]

Wall Street has taken notice of the potential growth in the industry. The stock of Corrections Corp. has climbed to $53.77 from $42.50, an increase of about 27 percent, since February when President Bush proposed adding to spending on immigrant detention.

Geo���s stock rose about 68 percent in the period, to $39.24 a share from $23.36.

the bread and butter are still regular old prisoners, but the margin on illegal immigrants is pretty sweet. in the following excerpt from the article i have bolded a sentence that i feel indicates the possibility for exponential growth in the event of some sudden “market event”:

While the companies would not comment on profit margins from their
immigration business, Wall Street analysts said that detention centers
produce profit margins of more than 20 percent.

That compares with margins in the mid-teens for traditional prison management, they
said, because prisoners are provided with more costly services like
high school degree programs and recreational activities.

Even with the expected growth in the number of immigrant detainees, the main
source of income for the private prison companies will continue to be
revenue from state and federal governments for housing regular inmates.

The state and local prison population totaled more than 1.5
million last year, with about 100,000 of those held in privately
managed prisons. But the number of state and federal inmates rose by
just 1.4 percent from June 2004 to June 2005, slower growth than the
average 4.3 percent annual increases from 1995 to 2000.

By contrast, the number of immigrants in detention is expected to increase
by about 20 percent over the next three months alone.

Federal immigration contracts generated about $95.2 million, or 8 percent, of
Correction Corp.���s $1.19 billion in revenue last year, and about $30.6
million, or 5 percent, of Geo���s $612 million total income.

In the first quarter of 2006, Corrections Corp.���s detention revenue rose
to $25.5 million. The federal immigration agency is now the company���s
third-largest customer, after the federal Bureau of Prisons and the
United States Marshals Service.

The detention market is projected to increase by $200 million to $250 million over the next 12
to 18 months, according to Patrick Swindle, a managing director at
Avondale L.L.C., an investment banking firm that has done business with
both Geo and Corrections Corp. He said that a company���s capacity would
play an important role in how much of the market it would be able to
capture.

The company ���currently has 4,000 empty beds in their system,��� Mr. Swindle said. ���They are bringing on an additional 1,500 beds within the border region.�����

���Reasonably, about 3,000 to 4,000 beds could be made available��� for immigrant detention, he said.

Having empty cell space that can be made available quickly is
considered an advantage in the industry since the government���s need for
prison space is often immediate and unpredictable. Decisions about
where to detain an immigrant are based on what is nearby and available.
Immigration officials consider the logistics and cost of transportation
to the detention center and out of the country.

i started dabbling in t-bills a couple weeks ago. i haven’t bought treasuries before (i might be wrong about that, i am remembering some kind of bank product i had as a teenager), but they have made it painless with treasury direct. i set up the account in january but left it alone until now. bond prices have moved steadily up since i ordered on the 7th. (you place an order and it gets filled at the next auction). i don’t anticipate buying many treasuries, it is more like an experiment, and i really don’t see myself trading in and out of bond positions.

i guess in a way i really do get a rush from consumerism, it’s just that i get way more of a rush out of buying things i believe are going to appreciate in value. with exceptions made for computers, consumer electronics, and boats of course.