PhilstockWorld May Portfolio Review (Members Only)

$1,800,221 – that's up 300% from our $600,000 start on our paired portfolios back on 11/26/13.

We haven't made too many changes in the past 30 days but we still gained a very nice $47,535 since the April Review ($1,752,686) on our paired Long and Short-Term portfollios.  While $47,535 is 8% of our original, it's "only" 2.7% of our April total so yes, we are playing a bit too conservatively for this market – despite putting up some very impressive numbers.  

The S&P 500 was at 2,360 on April 9th and now 2,433, so it's up 3.1%, which means we're now one of those funds that is underperforming the S&P 500, right?  But that's not the purpose of our portfolio strategy – clearly we outperform the S&P over the long haul and that's because our hedges keep us (mostly) from losing money in the downturns.  Being safe from downturns has a price though, when the market is gaining at an 18% annualized pace – we aim for a more conservative average than that.

Since April 9th, we've added new longs on ABX, DIN, EWZ, IMAX, SEE, SKT, TLRD and VZ and, if you are having trouble recognizing some of the symbols – well that's my point – we're running out of cheap stocks to buy at these days, so we either have to drink the Kool-Aid and buy high and hope to sell higher or we can wait PATIENTLY for a pullback that gives us better entries on better stocks.  

Going back to last July's review, when at S&P 2,120 I asked "Are We Too Bullish?", we were at $1,519,454 so we're up about 20% from that total but keep in mind we still trade the LTP like it's a $500,000 portfolio with 80% of our money in CASH!!! and gaining $300,000 on $500,000 is 60% – that's why our growth is slowing now, the way we're plaing it, 20% a year is just fine!  The key is to learn how to CONSISTENTLY get those 20% returns, so they can compound over time.  $500,000 compounded at 20% for 20 years is $19,168,799 – that should be enough to paper anyone's retirement, right?

The trick is to
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Friday Follies – Markets Still Look Toppy to Me

And we're done being bullish.  

It was a fun couple of days but I cannot, in good conscience, maintain a bullish stance into the weekend uncertainty.  In the past month, the Atlanta Fed has dropped their GDP forecast from 4.3% (which was silly) to 3.2%, which is down 25% yet the S&P has gained 45 point (1.8%) and the Dow is up 340 points (1.6%) and, as I noted in yesterday's PSW Report, the updated Fed Forecast from Wednesday's meeting indicates barely 2% growth this year and next – yet we are paying record-high multiples for stocks?  

I'm not advocating shorting stocks (other than TSLA, of course), that's how people got destroyed in 1999.  I'm just saying if we keep plenty of cash on hand and hedge our longs – we will have lots of money to go bargain-hunting when reality hits the fan – as it has been prone to eventually do, in every other instance of recorded history so far.  

Image result for hedgingMaybe this time will be different and that's why we have a Long-Term Portfolio that is filled with long-term trades (which are, in turn, hedged by our Short-Term Portfolio) and we went over our position in our Live Member Chat Room yesterday aftenoon and only had to make 6 adjustments to 37 positions despite gaining about $100,000 (7.6%) since our April Review.  That was offset by a $25,000 loss in our Short-Term Portfolio, which is what's supposed to happen to our hedges when our longs are doing well.  

And that's what I want to stress this morning – protecting your gains with hedges.  Hedges are not supposed to make money, they are insurance plays that help you lock in your unrealized gains when the market does correct on you.  It's very dangerous to be overly complacent about your profits, they can evaporate very quickly (just ask millions of trades who thought they were rich in 1999 and found out they weren't in 2000).  

Gains should be appropriate to what you have at risk.  When I was being interviewed at the Nasdaq on May 30th, we talked about hedging our Nasdaq-heavy portfolio (I run one
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Faltering Thursday – Fed Tightens, Trump Gets Probed

Image result for trump probe cartoonWheeee, this is fun!  

It's not an indictment, it's just a probe but now we know why Trump wanted to fire Special Investigator Mueller the other day – apparently he wasn't loyal to Trump either and he's now officially investigating the President for the obstruction of justice the President has already bragged about when he said to the visiting Russians:

“I just fired the head of the F.B.I. He was crazy, a real nut job.  I faced great pressure because of Russia.  That’s taken off.  I’m not under investigation.”

Master.  Oh sorry, that last word might not have been a direct quote – just stating the obvious.  Well, it's not even a month later and NOW the President is under investigation and Trump himself just said that the GOP health care proposal is "mean", so that's not going to pass – especially with "more money" because the Fed just took Trump's Budget off the table with updated forecasts that indicate we'll be LUCKY to see 2% GDP growth for the rest of this decade:

That's HALF of the Trump Budget Projections that STILL put us over $1 TRILLION in debt for each of the next 10 years AND, with the Fed on path to TRIPLE interest rates over the next 2 years, the $285Bn of interest payments we now pay will also triple to $855Bn, making interest on debt alone the most expensive line item in the budget and that's ONLY if we keep the debt down to "just" $20,000,000,000,000.00 – at Trump's projected $30Tn, our interest payments would be $1.3Tn but THAT is assuming 4% growth boosts revenues.  At 2% growth, we'd end up about $40Tn in debt paying $2.6Tn a year in interest and running a $2.5Tn annual deficit.  

So either the Trump budget is dead or you should quickly make arrangements to get out of the country while you still can because, even at "just" $20Tn, your share of the National Debt is $165,897 (each taxpayer).   Of course, if you are in the Top 0.1% and making more than $3M a year, that doesn't bother…
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Record High Wednesday – Does the Fed Even Matter?

Image result for throw in the towelieThat's it, the bears are dead.  

We'll still keep our hedges, just in case, but we're certainly not going to be looking for new shorts in this 1999-style market that goes up and up and up some more.  Every dip is a buying opportunity and you could already see this week how every dime that flowed out of the Nasdaq went right into other stocks, boosting the other indexes to all-time highs.  

That's OK though because, as noted yesterday, we have PLENTY of ways to profit from a continuing bull market and we do have lots of hedges so we will SLOWLY deploy some more cash and just see if we can ride this wave until it finally breaks.  

Meanwhile, the Futures trades continue to be very good to us with yesterday's morning report idea for the long on /NQ has also hit our $375 per contract at 5,775, just shy of our 5,780 goal – as predicted by our fabulous 5% Rule™.  

Rejection at 5,780 is technically bearish for the Nasdaq but the other indexes are off like rockets so it's not really a great morning to short though I do like playing the S&P (/ES) Futures short below the 2,440 line and Russell (/TF) below 1,430 as long as /NQ stays below 5,780 and the Nikkei (/NKD) stays below 20,000.  And no, it's not a contradiction to short the Futures after saying we can't short the market – this is just playing for intra-day fluctuations – fluctuations that netted over $20,000 worth of gains from last week's morning reports alone!  

We are fairly certain the Fed will be raising rates at 2pm and that should lead to Dollar strength, which will put pressure on the indexes so, although we went long on Oil (/CL) at $46 and Gasoline (/RB) at $1.48 in our Live Member Chat Room earlier this morning, we'll certainly be out by the afternoon.  Oil is down on strong builds indicated in last night's API Report but we think the 10:30 EIA report won't have a 5Mb product build
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Tepid Tuesday – Waiting on the Fed


Another day until the Fed's pronouncement but already we seem to be drifting aimlessly along with all of our indexes flatlining since yesterday's pumped-up close.  Bloomberg had a nice run-down of the status of the major Central Banks – unfortunately in the context of how totally screwed we all are after 8 years of ZIRP financing where all roads lead to inversion and, most likely, Recession.  

At the same time equities are boiling over at record highs, Team Trump is doing its best to take the shakles off the Banksters by rolling back Dodd-Frank which, as noted by Business Insider's Pedro da Costa, risks "another Lehman Brothers but on a larger scale."  That's right, the banks are even bigger now than they were then.  Simon Johnson, who was Chief Economist for the IMF agrees with what I said on Friday, stating that the latest proposal is "a dangerous plan for financial deregulation [where] the primary beneficiaries would be the big banks."

The current Vice-Chairman of the Federal Reserve, Stanlely Fischer warned the President that rolling back reforms poses a serious risk to the entire Financial System:

"We seem to have forgotten that we had a financial crisis which was caused by behavior in the banking and other parts of the financial system and it did enormous damage to this economy.  Millions of people lost their jobs, millions of people lost their houses."

"The strength of the financial system is absolutely essential to the ability of the economy to continue to grow at a reasonable rate, and taking actions which remove the changes that were made to strengthen the structure of the financial system is very dangerous."

When did this country decide to enter into a suicide pact?  We're tearing down the regulations that protect us from harm and destroying the environment while breaking off long-standing relations with our allies – and it's only Day 144 – not even a baseball season!  I'll be George Steinbrenner would have fired Trump by now.  As noted by Seth Meyers, Trump has yet to score a significant win, he is mainly focused on tearing down the accomplishments of others.  What baseball team would keep a guy like that?  





Monday Market Movement – Maybe Momentum Makes More Mayhem?


We love a good sell-off but we cashed in our index shorts with huge gains last Friday (you're welcome) and this morning, the Oil (/CL) Futures longs we kept (also picked for you in Friday Morning's PSW Report) are up $1,000 per contract at $46.50 and Gasoline (/RB) just hit $1.52, which is up $1,260 per contract and we are taking the money and running on both of those while waiting for the bounces to reload our index shorts.  

It's really all about the Nasdaq (/NQ) which, so far, has fallen from 5,900 to below 5,700 but we'll be looking for a weak bounce over the 5,700 line (40 points) to 5,740 so going long on /NQ is a no-brainer this morning with tight stops below the line.  If we make a strong bounce (5,780) today, then all of Friday's sell-off can be quickly forgotten but failing the weak bounce would be a bearish sign and we'd be looking for other indexes to short as well.

Mondays are, of course, meaningless days in the market, especially in the summer and we'll have to wait until tomorrow to see what's really going on but a huge correction like we had on Friday COULD lead people to contemplate that some of the overbought crap they have in their portfolios may not actually be worth 100 times earnings (yes you TSLA!).







Thank Trump It’s Friday – Dodd-Frank Rollback Dooms Us All

Image result for top 1% share of income post crisisSeriously?

The House voted yesterday to repeal much of the Dodd-Frank Act (the one that was meant to protect us from another Financial Crisis) by creating the Orwellian-named Financial Choice Act, which was unanimously opposed by Democrats because "it is bat-shit crazy."  Only one Republican, Walter Jones of North Carolina, was brave enough to stand up against this bill, which was crafted by a coalition of Goldman Sachs flunkies and Koch-funded think tanks.  

As you can see from the chart above, the financial crisis was very good to the top 1%, dropping a 15% larger share of the wealth into their laps (and out of your pockets if you are not one of us!) while the poor, of course, got 10% poorer.  It's a fair trade – in order for 1% of us to get 15% richer, you only have to get 10% poorer – so we both win, right?

So the incentive for Trump and his Top 1% buddies and their pet Congresspeople is to create another financial emergency, which will allow them to once again take on sweeping emergency powers and plunder the Treasury while plunging the Bottom 99% further into National Debt (now $20 TRILLION) to pay for it – just like we did last time.  Or maybe I'm wrong – how is that trickle down thing working for you so far?  

Related image

That's just the Top 1% minimum cut-off.  To get into the Top 0.01% (32,000 Americans), you need a minimum income (not wealth) of $36M per year.  THEN you will get the attention of a Congressman!  As it stands now, the banks are in for a good old time as they are once again allowed to engage in speculative trading (the kind that drove oil over $100/barrel and gold to $1,800/once) and, if you want to complain about it, you can't – because the bill also guts the Consumer Financial Protection Bureau because, if Wells Fargo creating millions of fake accounts to charge their customers extra fees has proven anything – it's that banks don't need regulating.

“It destroys nearly all of the important policies we put in place…to prevent another financial crisis and protect

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Failing Thursday – Comey Testifies, ECB Goes Neutral and Oil Collapses

Image result for trump godfatherWhat to talk about first?  

We already got the text of Comey's opening statement, which sounds like a meeting out of the Godfather – you're not going to nail Trump on what he said – he's had too much practice at that.  Trump even told Comey he wasn't stupid enough to get his hookers in Russia because he assumed he was being filmed at all times.  Trump has always been known for his skill at avoiding prosecution – he's not going to slip up now.  

What matters is actions and the question is, did the President's actions amount to obstruction of justice and did Jeff Sessions engage in a conspiracy to obstruct justice when he ignored the request by the FBI Director (Comey) to prevent any further contact between the President and Comey?  Comey literally said "please don't leave me a lone with that man"!  Since Comey was already concerned about being influenced and Sessions and Trump continued with the harassment (same rules as sexual), did they create a hostile work environment for Comey leading to his improper firing?  

This will obviously go on for a while and all this is a distraction from the real investigation as to how deeply Team Trump was tied to Team Putin during the elections.  "Not at all" is already off the table so now it's a matter of sorting through all the BS and finding out what the real connections were and all THAT is a distraction from the fact that yes, Russia did indeed mess around with a US election – that's getting a pass while we sort all the rest out.  

Speaking of passes, I'm not giving one to Sessions and neither is Samantha Bee, who came out strongly against his renewed war on drugs in last night's show and made many excellent points:

Part 3 (click here) is a great example of the difference between what happens to you when you are white/rich and arrested vs what happens to you when you are poor/black and arrested and THAT is why the War on Drugs is actually a War on the Poor.  Of course the entire Administration's agenda is essentially
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Waiting on Wednesday – Too Many Things Happening Tomorrow to Trade Today

This is a good day to take off.  

I can't take off because I'm doing a Live Trading Webinar at 1pm, EST (all are welcome), where we will be showing people NewsWare – the best way to get the FACTS in real time.  Other than that, though, we don't expect much action today at tomorrow we have Jame's Comey's testimony, the UK election and the ECB rate decision.  The Euro didn't wait and dropped half a point this morning as the UK is in electoral turmoil while Draghi has given every indication that "easy" is his only setting.  

That's punched the Dollar up (we're long), giving us a nice start to the morning.   The ECB is very focused on inflation and Draghi has repeatedly said that inflation must look like it's on a sustained path to 2% before he will remove monetary stimulus and inflation fell to 1.4% in May with core inflation way down at 0.9% – so there's really no drama tomorrow and that's what made our Dollar longs such an easy call.

It's a good thing the ECB doesn't have a jobs goal because PricewaterhouseCoopers (PwC) projects that 38% of jobs could be at risk of replacement by automation within the next 15 or so years.  That's odd since Treasury Secretary Steven Mnuchin thinks that we're so far away from seeing artificial intelligence take American jobs that "it's not even on my radar screen."  38% of the US workforce is 62M jobs – about 4M per year over 15 years and our Treasury Secretary doesn't think it's worth thinking about?  

In the shorter-term, the World Economic Forum projects a loss of 7.1M jobs in the World's top 15 countries by 2020 and, last I looked, we're halfway through 2017 so 2.5 years of carnage before the main event begins to devastate the workforce.  Just last night, Elon Musk was talking about rolling out electric, self-driving trucks that would eliminate the need for 3.5M truckers working in the US – Jimmy Hoffa must be spinning in his unmarked grave!  

Image result for death lack of health insuranceFortunately, Congress is on the case with the House having passed a bill to
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Tumbling Tuesday – Trump Troubles Mount While US Macros Hit 2016 Lows


Is there really any point to discussing the falling-off-a-cliff Macro Index which USUALLY leads the S&P up and down when we are in a market that reality forgot?  Last time the Macro Index was this low, the S&P was at 1,850 – down 24% from where we are now and we're 10% over the 200-day moving average and yet we're still scared to short the market because every dip gets bought – pretty much immediately.  

While we are timid about shorting individual stocks, we are happy to do some hit and run work on the Futures and the trade ideas we had for you in yesterday's PSW Report ($3/day to have them delivered to you, pre-market) made a quick $1,000 already on two short S&P (/ES) Futures shorts and the Russell (/TF) is down to 1,385 for another quick $1,000 per contract gain so 2 short /TF and 2 short /ES has been a $3,000 return on your $3 investment since yesterday morning – a very wise investing decision on your part!  

Oil (/CL) and Gasoline (/RB) were losers so far but we still have faith with /CL over the $47.25 line (tight stops below) and /RB over the $1.53 line.  Hopefully tight stops kept yesterday's losses in the hundreds and, of course, our Coffee (/KCU7) long more than made up for it with a huge $3 move per contract (to $131) at $375 per $1 is $1,125 per contract and you are very welcome!  

Making $4,000 is always a good way to start the week so no need to be greedy and we take the money and run on the winners and wait to see if your two losers pay off.  There's always new opportunities and we identified two long plays for our Members into yesterday's close as Craigs620 pointed out that Barrick Gold (ABX) hasn't been participating in the gold rally so we upped our Long-Term Portfolio position on that stock (one of our favorites) as they tested the $16 line.  Earlier this morning, Advill identified another LTP opportunity we'll be jumping on by selling $4,300 worth of…
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