The volatile nature of January can be exemplified by these last few trading days. We have seen several bad days that may have forced us to close some positions; however, when the stock rebounds upwards the following day, it is natural to find yourself in a position of uncertainty. Should I buy the stock back at a higher price or just let it go and move on? In this type of environment, it is very easy for one mistake to lead to another. Mistakes can add up quickly.

 

Our shop’s extensive experience in the month of January has led us to operate by dialing down the amount of risk and exposure within our portfolio as discussed in a previous MarketSmith blog post, “Preparing for January,” on 12/23/2010. Sometimes we will buy some of the positions back, but we are very careful and methodical if we do, so that we don’t make additional mistakes.

 

Our goal is to make and hold onto small percentage gains in January that can be built upon going forward into the rest of the year.