A funny thing happened on the way to managing my portfolio.  I made the classic mistake of watching CNBC and acting on their “reporting”.  I should have known better, after watching investors loose trillions in the market while CNBC continued to hype the market all the way, way down.

Generally, I do not trade securities often, but due to a really dumb stock purchase, I was compelled to trade my way back to respectability.  For a good laugh: I was watching CNBC one mid-July day (the kiss of death), when at 3 pm, Maria Bartoromo  announces that her “sources” told her that the company, CIT, would have a resolution “within the hour” to it’s cash flow problems.  It should be noted that throughout the day, CNBC had reported that the President was kept updated on the situation, and the Treasury Secretary was in day long meetings with CIT to, in theory, provide the company with financial assistance.  Let’s see…banks getting bailouts have moved significantly higher since the march lows, so why not take a shot at this one?  I mean…CNBC would not intentionally mislead an investor, would they?  So, at 3pm I buy a bunch of CIT at 1.64 per share.  My idiotic idea was to hold this security for 45 minutes, so what was I really risking?  Well, at 3:10, the stock was halted.  Couldn’t sell if my life depended on it.  Bartoromo and CNBC had sucked me in (as well as 7 million other shares that traded hands in ten minutes).

Needless to say, CIT did not open for trading until the next day, while overnight it was reported that CIT failed to get government assistance.  CIT opened the next day at…31 cents!!!  To the rescue came David Faber, the dogged “investigative reporter”, who gave report after report of the imminent demise of CIT.  Faber repeatedly reported the company was filing bankruptcy the next day.  The stock closed at 38 cents, where I sold half of the pennies I had left just in case CNBC actually said something truthful.  Well, Friday comes and no bankruptcy.  The stock rises as high as 90 cents, whereby our dogged investigative reporter Faber gets on the tube to assure the audience that the company will file bankruptcy over the weekend.  Each time Faber reported, the price of CIT tanked.  Like clockwork.  CIT closed that friday at 77 cents.

The weekend comes and goes, and of course, no bankruptcy.  Instead, CIT worked out a deal over the weekend with it’s largest bondholders, who provided the company with 3 billion dollars worth of financing.  CIT opened on the following monday at 1.31…Not to be deterred, the CNBC tag team (first it was Bartoromo, then Faber) had Stevie “I got my economics degree from the bubble gum machine” Liesman, to jump on the bandwagon to let the whole world know that the recently obtained financing was only an overpriced bandage that would not stop the cash bleed at CIT.  Every time Stevie spoke, again and again, CIT tanked.  Thanks, Steve.  Wrong-o again.  Not once did any of the Three Stooges opine that they had gotten it wrong, notwithstanding the millions of dollars that were lost by investors who actually looked to CNBC for the story.  The trifecta of baffoons at CNBC  had  whipsawed me out of most of my investment…

The story has a happy ending.  After studying some charts, it looked like CIT could trade down to 77 cents, so I sold my position at 1.30.  I put in a buy for the same number of shares at 80 cents.  The next day, sure enough, CIT traded down to 77 cents.  I sold at a buck, then bought some CIT preferred.  After some zig zagging, I sold out of the preferred with a profit.  I still hold a little preferred, just in case CIT makes it out of it’s cash flow problems.  I then had to trade securities repeatedly to make up the difference I had lost in CIT.  I bought some fannie mae at 1.23, sold at 1.90 for another positive step back.  It felt like I was pulling myself up by my bootstraps trying to recover from listening to CNBC,  It should be noted that CNBC paraded expert after expert in front of the camera to tell you fannie mae was worth zero.

After a month and a half of trading, I’ve recovered almost the entire loss from CIT.  I am long Tenet Health Care, Rite Aid, Citibank, Huntington Bank, Etrade and UNG, the natural gas ETF.  Nat Gas is a risky play, but I bought at 9.50 and think it’s upside is 14 in the short term.  I just can’t reconcile the difference between the large run up in oil while nat gas has tanked.  I’ve read all about the oversupply issues in nat gas, and the problems that ETF’s are having with the CFTC, but It still makes no sense, and my judgment is that the recent rip down in the price of the ETF was a final shake out for retail investors.  The key here is that nothing is certain.  I will be ready to get out of nat gas should the ETF resume it’s down turn.  I do not engage in short selling, as I believe short selling is immoral in that it (short selling) artificially increases the supply of a security on the open market by borrowing securities from unsuspecting investors who never knew their securities were being lent out for the purpose of bringing down the price.  A full 100% of the clients I have surveyed over the past 5 years do not know what short selling actually is, and how the securities that they own are being lent out to traders for the purpose of flooding the market with an artificially high supply that must lead to lower prices (see supply and demand/economics).  When the client is advised of how short selling actually works, each and every client is shocked that such trading is legal.  Such is the nature of markets…

The major markets have shown relative strength, but I would not get giddy just yet.  The long term downtrend of the market is still intact, so I’d hang in there but be ready to pull out completely.  The next level in the DJIA, 10400, is the time when I plan on exiting altogether.  This level is where the long term downtrend intersects with the short term uptrend of the market.  From a time frame standpoint, we have another month to go before the possible resumption of the bear market is upon us.  If the DJIA breaks through this barrier, I will stay in until the charts say otherwise.

Predicting market direction is tricky business.  I have spent much time reading and researching, applying technical analysis to investing, and am always looking for competent opinions. The hands down, most diverse source of market advice can be found at http://www.marketoracle.co.uk.  The market oracle provides a myriad of perspectives, from currencies to securities to commodities, from contributors residing in all parts of the world.  A fascinating array of opinions will give you a wealth of perspectives that can prove profitable to your portfolio.

The moral of the story is:  If you want to lose all of your money, follow the advice of CNBC.  If you want to make money in the markets, do exactly the opposite of what CNBC, Bartoromo, Faber, and Liesman tell you to do.  You will also help yourself immeasurably by stopping by the market oracle for real market analysis.