In 2008, I picked Buffalo Wild Wings (BWLD) in a stock picking contest. YTD, it’s up around 30%. But I ate there for the first time the other week (after picking up $75 of chicken wings for other occasions). I’m not so bullish now. Why?

The atmosphere. Okay, I’ll admit I was kind of overwhelmed the first time I went there. Boneless wings costing between 75 cents and a buck each? Yeah, good stuff, but not the kind of thing that I’d do once a quarter.

Eating there was disorienting. Dozens of screens. Noise through the roof. Lousy acoustics. Air temp designed to drive you out of the place. Sensory overload. Cheap burgers, pithy amount of fries. Great wings. Even the kids were overwhelmed. Everything oriented towards turning you over quickly.

It reminded me of the time we took a Caribbean cruise, almost a kind of tourist trap, complete with smiling kitchen staff peering out through their porthole sizing up the next round of suckers they were reeling in. Perfunctory service. We won’t be back anytime soon.

So I’m down on BWLD. Yes, they’ll do well simply because they are in that stage where they aren’t mainstream yet, and there are plenty of folks who have yet to experience the store, dropping a load of cash there in the process. But it has no legs. Watch for this thing to jump the shark sometime in the next 24 months. This isn’t even analysis, it’s just a channel check. No one there appeared to be enjoying themselves. They all looked like anxious monkeys waiting to flee.

Last night I watched the schlocky film 10,000 B.C. as part of my research for life skills in the time of Dow 1000. Consequently, this week I’m going long mammoth pelts and have began careful study of the art of curing meat on a clothes line, Andy Swan’s optimism be damned.

I call this “investing in myself”. While I’m not accurate with a spear honed from a wooly mammoth femur, I did take some money off my wife and kids on a bet Saturday by draining a wicked three-pointer, so there’s hope that those skills may transfer to hunting.

On the off chance that we aren’t headed for doom, I did begin to start taking short money off the table, and established a couple of new base long positions.

What’s different for me this time was that in the past, when I’d close a winning position, I’d close it out completely; lately I’ve been staging my exits in chunks, trying to take profits off and keep the positions in balance overall. So far, it seems to be working out well. As I looked back over my monthly performances for the last six months, things seem to be going slightly better—less variance, and fewer huge mistakes. (For what it’s worth, here are the monthly numbers. Sep 2008: +27.4%; Oct 2008: +107.6%; Nov 2008: -7.1%; Dec 2008: +15.96% Jan 2009: -5.81%; Feb 2009: +10.71%; March to date: +19.8%. The great returns in September and October were due to flat out gambling and taking positions that were about 60-70% of my total trading account at the time. Better to be lucky than good.)

Started covering SRS

Monday I wrote some March 100 call premium on SRS on half my position. By Friday, this looked like a bad trade, with SRS at $111, but it feels like it’s time to get out, and I sold 1/4th of my SRS position at $104 on Friday for a 21% gain. I get the sense that its run is over (as @thehawaiitrader says: “$SRS takes the stairs up, the elevator down.“) Consequently I make be looking for an exit on the other quarter of it, and then see if the rest gets called away.

SRS is a trade that I did just about everything wrong on—too big of a position, held an ultra ETF for too long, averaged down. If I can unwind it entirely at these levels, though, it’ll end up being a fairly profitable mistake.

Closed out the Mastercard Put Failure

Finally got out from underneath this put position as Mastercard tanked this week. The right trade might have been to assume my timing was poor and let it fade some more, but from what I’ve learned, this was just trying to turn what might have been a 60% loss into a 36% loss, so I can use the money for better trades.

BBY Starts to Flame Out, and Pay Off

I’ve had a long running short position on Best Buy with a cost basis of around 26.40, but rather than adding to it as it showed strength on the way to $30, I bought puts. Going into this week I was sitting on a pretty good pile of profitable June 25 puts; on Monday I closed 40% of them for a 29% gain, then eased out of 30% of the overall position for a 45% gain on that lot, and took down 1/4th of the short position.

BBY is still my second biggest short position (SRS is first by dollar volume, and SPY puts are third.) I went to Best Buy this weekend and while it didn’t seem as empty as some of the home improvement stores I’d been to, the kind of stuff I saw people walking out the door with were fairly small ticket items. Keyboards and $200 video cameras. The DVD area is wasted space, the TV and appliance areas are empty, no one buying phones. The only area with anything going on was the video game section, which they’ve smartly moved to the back of the store.

Closed out NDAQ Puts

The other big short I had working, and perhaps the first trade where I showed discipline and awareness of the charts, closed out Friday for a 60% gain. I had a small position of NDAQ puts with a cost basis of $2.50 that went off for $4 as the stock dropped from the $24 range to $18.50 over the course of a couple of weeks.

Bought More SPY Puts

On the strength Wednesday morning, an order for Sep 56 SPY puts filled, giving me two separate SPY put positions (the other is Sep 64s) that are up 15% and 40% respectively. Beanieville had a great post on simplification this week, and in retrospect, getting rid of the exotics like SRS and limiting exposure to specific stock shorts might be a good idea, so these SPY puts are perhaps a better way to go with the flow as the market trends down.

Started Longs with AAPL and AMZN

Before Apple imploded late in the week, I bought some July 85 calls. Sentiment would seem to tell me I’m flat out wrong on this one, and that AAPL might not be a leader, but Andy Swan’s optimism gives me a moment of pause, and I want to be in some leaders if things turn around.

I’d been trying to get into AMZN for awhile, and finally entered a small position at 60. Although this morning, reflecting on things, as much as I love Amazon, how can anyone think we’ve hit a bottom in either the market or the overall economy if Amazon is still at 60? Won’t it have to be punished in a sustained way for some time? I went in thinking this was an investment, but now I’m wondering if it is a short term trade.

Other Positions

Still hold some of the initial INTC calls I started taking down last week. I’m less enamored with these, but it’s part of my Bear Rally Early Warning System (BREWS) and a buy on the dip kind of move. It’s weakening though, so my patience is getting thinner.

Keep Your Spears Sharp

If there’s one thing I learned from “10,000 B.C.”, it’s to keep your spear sharp. Both ends. The volatility is back, both sides are trying to punish the other, and in the course of a single week, both sides can claim victory. Stay agile.

And the PETS shall lead them

A long time since the last update—very busy with work and the vacation days and weekends have been spent trying to salvage some alpha by putting cash to work in very aggressive daytrading behaviors which have netted around 110% return on a very small amount of cash, mainly through a combination of swing trading AAPL and hedging the rest of my shredded long portfolio with SPY puts.  More details on my foray into trading in a future post.

But the family stock picking contest is in need of an update, just to humble all idiot retail investors like me who think that individual stock picking combined with a buy and hold strategy makes sense in the long run.  Of the 40 stocks selected by the 5 participants, only one is in the black: PetsMed Express (PETS +48.18%).

I happen to be in a close second in the contest now, with my eight picks (BRK.B, MR, PHO, BWLD, MWA, CEDC, CTSH, GRP) down only 37.88%; the worst participant, identified only as “The Nephew” is down a miserable 69.06% on the heels of his -5% performance last year.

The quick rundown from top to bottom:

In the lead

The Nephew’s Bride (pets fxi vlo nvs pep wfmi fpl ba) -37.79%.  PETS is up an amazing 48.18%, but this can’t offset FXI (China) being down 84.4%, and Whole Foods (WFMI)  down 74.07%.

Me: (stocks—see above) -37.88%.  I’m basically getting killed due to a combination of Buffet’s financial exposure and my global exposure (what I thought was a lesson learned last year).  Best stock: Buffalo Wild Wings (BWLD: -1.12%).  Grant Prideco was acquired for a combination of cash (yeehaw) and Valero stock (booooo!) in April; that didn’t help.

Berkshire Hatha Class B Ord Shs	-26.12%
Mindray Medical International Ltd	-57.92%
PowerShares Water Resource Portfolio	-36.54%
Buffalo Wild Wings Inc	-1.12%
Mueller Water Products Series A Ord Shs	-35.29%
Central European Distribution Corp	-59.30%
Cognizant Technology Solutions Corp	-43.43%
Grant Prideco Inc	-43.34%

Middle of the Pack

Mrs Firebones (down 40.15% with AET DE ARG CVS NTDOY AAPL COST GMCR) got creamed due to Aetna and Deere (each down around 62%).  Retail exposure hurt as well, although some of the quality stocks held up okay relative to the market.

Firebones Jr (down 51.48% with CERN ADDYY VIA.B PEP SNS TWX SCHL PIE) has one down 67% (PIE—picked solely because the ticker symbol was PIE).  I like his chances to improve before the end of the year through strength in Scholastic.

Bringing Up the Rear

The Nephew (down 69.06% on bidu isrg fwlt vip cmg stp nov rimm).  Suntech is down 89%; when your best stock (ISRG) is down 58.97%, it’s hard to dig yourself out of the hole.  Quick analysis is that this is overexposed to energy at the height of that market; looking at it another way, the double whammy of oil falling from $140/barrel and the falling dollar crushed him.

Overall

Overall the combined portfolios are down 47.17%, compared to a positive return of 15.82% last year.  There is not a single major index that the combined portfolio is beating.  My picks happen to be beating the S&P, the NYSE Composite and most of the international indices, but trailing the three Dow Jones averages (Industrial, Transportation and Utilities).

After yet another wild week, I’m pulling ahead in the family stock contest. Translation: I suck less than my family members.

Me	$87,694.07	-12.31%
Niece-in-law-to-be	$85,331.46	-14.67%
Little Firebones	$84,163.55	-15.84%
Mrs Firebones	$82,892.81	-17.11%
Nephew	$70,340.52	-29.66%

Of the stocks selected, the only winners are my pick of Buffalo Wild Wings (BWLD: up 5.6%) and my wife’s pick of CVS Caremark (CVS: up 0.25%).

In terms of indices, I’m beating the following indices:

• NASDAQ Composite
• NASDAQ 100 Stock
• Russell 2000
• CAC 40 (France)
• DAX (XETRA) (Germany)
• Nikkei 225 (Japan)
• ASX All Ordinaries (Australia)
• Korea Composite

The “wisdom of the crowd” theory is not holding up well; the combined portfolio is down 17.92%, which ends up being closest in YTD performance to the NASDAQ 100 Stock index (which is down 17.71% YTD).

Here were my 2008 stock picks for this year’s family stock contest. We take the closing price on 12/31/2007, so the current streak of eight straight losing days for the NASDAQ put us all in a big hole.

Stock	Starting Price	YTD
Berkshire Hatha Class B Ord Shs	4736.00	-6.78%
Mindray Medical International Ltd	42.97	-8.03%
PowerShares Water Resource Portfolio	21.40	-6.45%
Buffalo Wild Wings Inc	23.22	-7.97%
Mueller Water Products Series A Ord Shs	9.52	-10.82%
Central European Distribution Corp	58.08	-5.35%
Cognizant Technology Solutions Corp	33.94	-9.81%
Grant Prideco Inc	55.51	-1.44%

YTD: down 7.08%, and the family pickers are down 6.18%.

I picked these with a little less analysis than I normally do before making a trade, and perhaps relied a little too much on the Motley Fool community recommendations as a screening tool to find eight I liked. I had briefly considered ISRG, but passed on it as too pricey (turns out it is in fact down almost 16% YTD). I picked PHO based on Paul Kedrosky’s love of water (and predictions that “blue is the new green” for 2008, meaning that environmental talk will turn from global warming to the implications for water.

BRK.B appears to be a safe port in down years. The rest are just small to midcap stocks that I think have the potential to appreciate significantly if the market does turn around.