We begin with some advice given me in the very first week I began trading stocks from an older wiser gentleman who had been doing it for several decades. The gentleman was the CEO of a small community bank and I was hitting him with a series of questions and one asked by me was " I understand the concepts of trading and know experience is needed, how does a trader deal with the political angles. His response has stayed with me all these years, " when democrats are in charge money is easy to make since they throw it out in the street for everyone to pick it up, when republicans are in charge making money is much harder because they make you earn it." So be it now as we end a third year of a democrat in charge and making money with trading has become easy and it is reflected in our third straight excellent month. Since I expect this trend to continue we will likely dump additional carryfoward loss positions in December to open up what looks to be excellent easy money opportunities in 2012. Those opportunities could make 2012 possibly one of our best years ever. Of course the grim reaper of a republican president looms on the horizon and working harder could be the option in 2013.
Despite having only about 40% of our positions open for trading this month we still had an excellent month producing a 21.59% annualized gain. As has been the case recently dividend coverage was very positive to interest expense and also covered trading fees. Large trading gains came from tobacco stocks including another very large one from LO, which continues to reward us from being our largest held position. Real estate stocks continued to perform well as well. We did take a position on a financial stock that assumes the European deal unravels and that trade might hit us with a year end loss if that does not happen. Year to date through October annualized gain is 17.51%.
Significant help again came from market volatility and our continued careful stock selection. We also are pleased that our cash flow model is performing and allowing us to make decisions when we desire to exit positions that are in the money as opposed to being forced to do so due to margin calls or excessive debt and leverage.
As we head into November we have add back several trading positions that increase our trading positions to 75% open and could allow us to make additional profit this month. That could be balanced by the normal year end decisions to exit unprofitable and no longer desired stock selections, which could dampen overall profit. December as usual will be the month we make final decisions on stock exits.
We continue to beat other hedge funds and hedge fund models for profit and maintain above average annualized gains in invested capital. Year end as noted earlier should finish around 15% with expected sales and carryover in the money positions where we see additional profit opportunities. We might consider one or two additional sales that might bring the year end down to 13%, but still market beating results and certainly much better than bonds of any type.
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