My trades on May 30, 2008

On Friday I didn’t trade much.

I took a partial profit on the last builder I have in my portfolio – PHM ( I had short positions in TOL, KBH, PHM & DHI, but covered all of them except for PHM two days earlier). Overall, I think a number of builders will declare bankruptcy sooner rather than later; but even if they don’t, there are not much business for them in the next couple of years anyway. The only reason I got out of my short positions – it was attractive to take a quick profit of 17.3 % (DHI); 8.9% (TOL) & 3.8% (KBH). I’ll sell them short again if they bounce up.

I also bought an ETF – GLD @ $87.45.

I was looking at gold for quite a while, but didn’t act on it. Meanwhile, it looks to me that FED is stuck in between mortgage / credit crisis and inflation. So far, Bernanke is doing everything possible to avert fast and complete financial collapse. The price for it, however, is horrendous. The US dollar is getting killed and the record oil and food prices are going to bite everyone painfully in the very near future. If this is the case, gold is the best hedge against inflation. From the technical viewpoint, it is also a good time to jump in.

DHI – D R Horton Inc.

KBH – KB Home.

TOL – Toll Brothers Inc.

PHM – Pulte Homes Inc.

GLD – SPDR Gold Shares (ETF).