5,000 Dollar Portfolio

A lot of my friends have been asking me what would I do with 5,000 dollars in this volatile stock market. The answer is complex I suppose, but only because they expect 30-100% gains and want them fast. One thing I have learned is that the market never owes you anything and that you are NEVER above the market.

With that being said, if I were to invest 5,000 dollars here is what I would do for a low risk, high reward portfolio.

4 stocks(1 grand each), 2 options(around 500 a piece).

Stocks:

1. WCI: "In Ichan we Trust" one might say. Ichan bought into this stock at 5.34 and with the subprime mess the stock has fallen to 1.51(as low of 1.35). WCI Communities, Inc., together with its subsidiaries, operates as an integrated homebuilding and real estate services company. The company's activities primarily include single- and multi-family (traditional) homebuilding, and mid- and high-rise (tower) homebuilding, as well as the provision of real estate services primarily in Florida. It designs, constructs, and operates leisure-oriented and master-planned communities; and designs, builds, and sells traditional homes serving primary, second, and retirement home buyers. WCI Communities also designs, builds, and sells luxury residential towers and condominium hotels targeted to primary and affluent, leisure-oriented home purchasers. Its real estate services include realty brokerage, title insurance and closing services, and mortgage banking services. In addition, the company develops and operates amenity facilities, sells selected land parcels, and enters into real estate joint ventures. WCI Communities also has operations in New York, New Jersey, Connecticut, Massachusetts, Virginia, and Maryland. As of December 31, 2006, it had 79 locations where it builds single-family and multi-family homes or mid-rise and high-rise residential units, or operating amenity facilities. Ihcan has strongly been advocating the restructuring of loans for WCI, and I hope to see progress in the next week. I think this is a strong short side and alongside stock.

1000/1.51 = 622.25 shares.

2. ABK: Ambac Financial Group, Inc., through its subsidiaries, provides financial guarantee products and other financial services to clients in the public and private sectors worldwide. It operates in two segments: Financial Guarantee and Financial Services. The Financial Guarantee segment offers financial guarantee insurance and other credit enhancement products, such as credit derivatives for public finance and structured finance obligations. It also provides financial guarantees for bond issues and other forms of debt financing. This segment sells its products in the U.S. public finance market, the U.S. structured finance and asset-backed market, and the international finance market. The Financial Services segment provides financial and investment products comprising investment agreements, funding conduits, interest rate, currency, and total return swaps, principally to clients of the financial guarantee business, which includes municipalities and other public entities, health care organizations, investor-owned utilities, and asset-backed issuers. Two things we are looking for here, A huge rate cut(75 basis points at least), and a possible takeover from either (A) the gov, or (B) a wealthy individual investor. Both could happen by end of month.

1000/5.11 = 195.7 shares

3. OCNW: I would usually pick a google/apple/ or Rim as my tech play but all our very costly compared to 1,000 dollars so lets go with Occam Networks, Inc. who develops, markets, and supports broadband access products that enable telecom service providers to offer bundled voice, video, and data, or triple play services over copper and fiber optic networks in the United States. Its broadband loop carrier (BLC) is an integrated hardware and software platform that uses Internet protocol and Ethernet technologies enabling its customers to deliver advanced services, including voice-over-IP, Websurfing, and other high speed data communications services, IP-based television, and high-definition television. The company primarily offers BLC 6000 System product line, which allows telecom service providers to deliver triple play services to their subscribers. BLC 6000 System includes blades, which transmit traffic upstream and downstream, interconnect various networks, and convert circuit-switched voice traffic to VoIP; chassis that houses blades, and performs cooling, power, and cable distribution; OccamView, which manages triple play services from any secure Web-browser; optical network terminals that terminate active gigabit Ethernet FTTP services delivered by the BLC platform; and a series of remote terminal cabinets that house BLC platform and protect the system. Occam Networks markets its products through direct sales force, strategic relationships with third parties, and value added resellers. It has strategic reseller relationship with Tellabs, Inc. This company has short term and long term potential becuase they have recently upgraded their "New Hope Network" in hopes of being picked up by someone else. I expect this to happen relatively soon.

1000/3.02 = 331. 125 shares

ICE: ntercontinentalExchange, Inc., through its subsidiaries, owns and operates an Internet-based global electronic marketplace for trading in futures and over-the-counter (OTC) commodities, and derivative financial products in the United States and internationally. Its products include contracts based on crude and refined oil products, natural gas and power, and emissions, as well as sugar, cotton, coffee, cocoa, and orange juice along with foreign exchange and index products. The company operates in four segments: Energy Futures and Options Markets, Global OTC Markets, Market Data, and Soft Commodity Futures and Options Markets. Energy Futures and Options Markets segment consist of trade execution in futures contracts and options on futures contracts. Global OTC Markets segment comprise trade execution in OTC energy contracts and provision of trading-related services, including OTC electronic trade confirmation and OTC risk management functionality services. Its products include derivative contracts and contracts that provide for physical delivery of the underlying commodity principally relating to natural gas, power, and oil. Market Data segment distributes electronically generated energy market data primarily derived from actual trades executed in its marketplace, as well as provides information services, which publication of daily indices, access to historical pricing data, view only access to the platform, end of day settlements, and pricing data sets, as well as a service that involves the validation of participants' own mark valuations. Soft Commodity Futures and Options Markets segment offers financial products in the currency markets, equity index, and commodity index markets.ICE has taken a recent nosedive but I value the company anywhere from 165-210 dollars per share.


1000/130.02 = 7.7 shares


Options:

WCI: 10 cent per share Call option for Feb 15th 2008 at strike price of 2.50, 100 options make that 10 bucks a contract. So 500/10 equals 50 contracts of WCI at 10 cents per share for Feb 08.

EJ: Volatile stock I have long been a fan of. The stock has been hit hard this past week and I think it comes back to the upper 20's. Feb 15th 08 Call option at 40 cents a pop with a strike price of 30 dollars. 40 cents per share means 40 dollars per options. 500/40= 12 options and leaves us with 20 dollars.

The cost of the four stock trades are free(using account on zecco), but the option costs for these two would be 12 dollars total which leaves us with a surplus of 8 dollars at this time.

I will not be conducting inter day trading on this portfolio unless under extreme circumstances, while this surely will lower the overall gain of this portfolio I realize most people with 5,000 dollars are more in a "buy and hold" methodolgy than they are a interday trading one.