Friday, February 6, 2009

The reflation trade in full swing

My portfolio got a nice boost today, along with the broader markets. Sectors tied to a reflationary thesis did especially well; in my portfolio these include Companhia Vale (calls 10.7% of portfolio), Potash (9.2% of portfolio), and Joy Global (common 7.3% of portfolio, calls 1.2%). I have no idea if this trade will fade, but even if so, I'll use weakness to build bigger positions to hold into the 2009-2011 time frame. Yesterday's purchases are doing especially well, with my out-of-the-money calls in Companhia Vale up about 50% in just two trading sessions.