Editor’s note: This article was first published in October 2014; the trading positions, General Motors’ price near $30, the volatility affecting the IBEX 35 warrants, the economic outlook for the EU and Spain, and the views on Spanish stocks and Fannie Mae reflect that month. These October 2014 trades, including leveraged warrants, were the author’s own and are kept as a historical record. They are not investment advice.
After the short on General Motors that I opened on 23 June at $36.72, we are closing the position to take profits. And while we are at it, we can draw a conclusion about market noise, because I decided to open the short after seeing a report that recommended buying the stock based on rather surreal, or overly optimistic, expectations for the company.
What’s more, the stock seems to be having a hard time breaking below $30.00.
As for the IBEX 35, I am closing the position because I invested through warrants, and they are starting to lose value now that volatility has dried up. Even so, given the economic outlook for the European Union in general and Spain in particular, we will probably keep seeing the index fall.
I still have a lot of doubts about building a portfolio of Spanish stocks at these levels, and I think the smartest move would be to wait for further falls, when we might once again see some investment opportunities more clearly.
The profits from these trades will go 40% to Fannie Mae (which is recovering from its “monstrous fall”) and 60% to a new averaging-down purchase in Navidea, while we hold on to some cash and wait for something interesting.
See also: Tips for making money in a bear market
Featured image: Chris Woodrich, CC BY-SA 4.0, via Wikimedia Commons.
