Pulling in the Global Bull’s Horns… And Taking Profits on Atwood Oceanics (ATW) Options

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Negative headlines notwithstanding, you should be pleased about the performance of your Global Bull Market Alert portfolio. Six of your nine positions are profitable, and you’ve had some big 30%+ gains in Sociedad Quimica y Minera de Chile S.A. (SQM) and Potash (POT)

Here’s why. My strategy has been to focus your positions in the portfolio on a diverse range of countries, sectors and asset classes that have a high degree of relative strength. That doesn’t mean that every pick can fight the tide of the market. But it does mean that even if markets tumble, these picks tend to tumble less. For example, both the Market Vectors Russia ETF (RSX) and the Market Vectors Coal ETF (KOL) held up strongly in the face of falling markets. They dropped only about 1% last week, and by Friday were trading off of their lows. As a former manager of a global mutual fund, I can tell you that this portfolio has outperformed the market in ways that are impossible for a mutual fund to do. I doubt there is a mutual fund on the planet that has holdings as diverse as Potash (POT), the Market Vectors Russia ETF (RSX) and the Market Vectors Coal ETF (KOL) in a single portfolio.

A good example of high relative strength is oil driller Atwood Oceanics (ATW). The stock jumped from $105.42 to a record $120.04 on Friday after a Credit Suisse analyst upgraded the stock, noting that “Atwood’s growth rate will be the highest in the industry for the offshore drillers.” The stock is now up 7.14% and the options are up 28.41%. Because the options spent the bulk of the last two months under water, I’m going to recommend that you sell all of your options here to lock in your gains. If the stock’s momentum proves sustainable, we can always get back into the options at a later date. We’ve pursued this strategy profitably both with Potash (POT) and with NII Holdings (NIHD), where you’ve locked in triple-digit percentage gains during the past two months.

Exclusive  ETFs and the Music of the Markets, Part I

P.S. I invite you to join me at the 30th anniversary celebration at The Money Show San Francisco, August 7-10, 2008. Hear from 50+ world-class experts in more than 150 FREE workshops at the San Francisco Marriott, where you will be given every opportunity to refresh your perspective and prepare yourself for the uncertainty that may lie ahead. Meet face-to-face with 150+ investment companies and evaluate the products and software designed to help you improve your market performance. Call 800/970-4355 and mention priority code #009613 or visit  The Money Show San Francisco’s Web site to register FREE today!

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