Portfolio Update

You may have noticed, over the last few of days that Gold fell back into Our Man's stop loss range. Now given that Our Man is a fairly simple kind of chap and is unable to short-term trade his positions (given the investing constraints imposed upon him, not to mention the commission involved!), he's a big fan of having a Stop Loss range rather than a specific Stop Loss point. After all, how do you pick that specific point, without it being somewhat arbitrary?

A range also makes more sense to Our Man as it can help balance the two conflicting emotions; a desire to be patient with positions and to give them an opportunity to work, and the ex-post need* to be disciplined in managing risk. Thus by having a range Our Man is able to encapsulate a number of things into his decision such as key support levels (be they moving average related or just psychological round numbers like $1,100) and normal intra-day volatility.

Anyways, in this instance…Gold fell through $1,100 (a psychological round number) and the moving averages (support levels, in the $1,080-$1,090 range), touching and intraday an intra-day low of $1,074. Thus discipline trumps patience and Our Man exited just over half the Gold position at the equivalent of $1,085. The Gold position now represents 8.8% NAV, with the Cash position increasing to 29.5% NAV.

*Note that by "ex-post..." Our Man means the need to be disciplined in managing risk, after the decision to invest has been made. The ex-ante discipline in managing risk should (obviously) be done before making the investment and Our Man's consideration of risk is an important factor in both making the investment AND how the investment is sized.