Today I’ve been taking a look at the risk I’ve been running in the portfolio, versus the general market situation and a variety of factors has tipped me towards reducing and selling some positions to build a cash buffer and taking out a short on the FTSE 100.

The general market has been on an amazing run since last July, up 20%, and with this move has come some complacency and increasing bullishness which to me raises the odds of a sharp downwards move at some point in the next couple of months. Undoubtedly the general economic situation is improving and good growth around the world looks set for 2011 however the market has a tendancy to get ahead of itself and I think we are approaching that point.

So with that view I’ve decided to reduce overall exposure, raise some cash and open a small short on the FTSE 100. Trades below:

Dart Group (DTG), £50 per pt sold @ 93p to take a 4% profit. Retain £100 per pt. Still unsure how winter trading will have gone and longer term increasing oil prices will crimp profits.
Kryso Resources (KYS), £200 per pt sold @ 17.5p for breakeven. Retain £300 per pt. Getting bored out of this one, plus gold has been weakening recently.
Quintain (QED) sold £100 per pt @ 43p to take a 17% profit and sold £100 per pt @ 42.75p for a 15% profit. Reducing position size after recent rally from mid 30’s. Still long over 60,000 shares.
CSR (CSR) sold £17.5 per pt @ 412p to take a small 2%. This was a trade so was closed as taking risk off the table and have higher conviction on positions elsewhere.
Cookson (CKSN) sold £10 per pt @ 635p for a loss of -5.5%. Another trade, not working so closed.
Debenhams (DEB) sold £50 per pt @ 67.8 for a loss of -2.15%. Only opened yesterday but with taking some risk off it didn’t beat the cut given smaller upside.
Aminex (AEX) sold 100,000 shares @ 8.77p for a small 2% profit. AEX has failed to join in on the small cap O&G sector rally and if the market does head south I can see that sector being hit hard. As a speculative position I am happy to exit and watch from the sidelines. Not sure there is any significant news expected in the near term that could propell the share price south anyway.

FTSE 100, sold £7 per pt @ 5940 on March contract (hence a fair way lower than current FTSE level). This gives me a good couple of months to see where the index will head. Stop loss at 6100 as I don’t want to let a large loss build up in the even the market continues heading higher.

Thats it. The portfolio is now about 18% in cash and with a small hedge too.