Stopped out of PIC

By Travis Johnson, Stock Gumshoe, October 6, 2008

I don’t use stop loss orders for most individual stocks I hold, since they often get triggered by volatility regardless of what the company’s future looks like.  But I often use them with ETF investments or trades, and my position in the PowerShares Dynamic Insurance ETF triggered a stop loss order this morning.

I still think Insurance is a reasonable “hiding spot” from the current craziness, particularly the more conservative insurance companies — but I am overexposed to the sector with holdings in Berkshire Hathaway, Loews, and Markel, so I won’t shed any tears for the absence of PIC.  I’ll keep my eye on it for the future, though — if things turn around, this is an unusually strong portfolio of really well run companies that are more profitable than the average insurance company, including some brokers and some niche companies like Markel, Chubb and others.

This is as underinvested in the market as I’ve been in a long time — I typically carry some margin on my brokerage accounts and am therefore effectively more than 100% invested in equities, but not now, I do have a nice little cash cushion that I can invest as opportunities arise.  And since there’s no margin, I can be a stubborn investment bank and hold my “toxic assets” for as long as I like and not accept the market’s price until it looks more attractive.

The only positive thing is that I certainly won’t owe as much in taxes next year 🙂

I will probably end up doing a bit of selling to realize some taxable losses in the next few months, depending on how things look — it will be an awfully interesting Winter, who would have thought that the presidential campaigns would be pushed off the front page in October?

Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you ...

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