Philstockworld July Portfolio Review – Members Only

Image result for one million dollars animated gifRather than writing about news the market is ignoring, I thought I'd get started on our Portfolio Review.

I tried this last month and never finished it (finished in chat) but, seriously, I am trying not to be doom and gloomy so I'm going to ignore the news and focus on our nice Member Portfolios and this should be quick because we did the Long-Term Portfolio (LTP) Review on Wednesday morning (only 2 changes) and the Short-Term Portfolio (STP) Review on Tuesday (no changes) and the reason there is nothing to change is because we are super well-balanced, as we should be in a time of uncerainty.  

How well-balanced.  Well the STP was at $405,464 on Tuesday and the LTP was $901,428 on Wednesday for a combined $1,307,074 in our primary paired portfolios and, as of yesterday's close, we're at $928,128 and $381,501 for a combined $1,309,629 – that's pretty well-balanced!

There are two ways to play uncerainty and one is to go to CASH!!! and we topped out at right about $1.4M (up 133% for the year) in the LTP/STP and I said at the time that we should put a stop at $1.2M to preserve a double but then we had some craziness with TSLA so we rode that out and hopefully it will calm down and start making some money.  In any case, we didn't cash out, we decided to hold our positions and being well-hedged is like cashing out as we're not likely to make a lot but, if we're quick, we have a better chance of catching a nice move than if we were just sitting on sidelined cash. 

If we were not locked in our homes with nothing to do – I would have cashed out and been on a nice 3-week cruise at the moment – that is the more sensible thing to do.  The advantage of either CASH!!! or balance in an uncertain market is that, if the market goes lower and you hold your value – then you have a lot of money to buy stocks when they are actually cheap – just like we did in March – which is why we are up so much now.  We'd hate to miss another…
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Mask On Thursday – Surging Virus Numbers Push Many States to Lock Back Down

Remember the virus?

The stock market sure doesn't but the US, on the whole, just reported it's second-highest jump in infections and governors and mayors were scrambling to issue new mask orders and limit the size of gatherings.  Several large school districts also said they would open the academic year with online classes, bucking pressure from President Trump and his administration to get students back into classrooms as quickly as possible.

The new restrictions reflect a painful reality that America’s outbreak, which has increased in 41 states over the past two weeks, may worsen in the coming weeks and months.  Wednesday’s tally of more than 67,300 new infections was about 1,000 cases shy of the record set late last week, according to a New York Times database, as the country’s total number of cases passed 3.5 Million.  Meanwhile, 963 more of Trump's "Virus Soldiers" died yesterday in their brave struggle to keep the economy open for the President's Re-Election – no matter how many lives it costs.  

As you can see from the S&P Chart, we were rebounding just fine in May, while we were still locked down as life was ajdusting to the "new normal" – as it did in the rest of the World.   2 months ago, on May 16th, we had less than 1.5M viral infections in the US and we had drastically slowed the spread – even with many states not following the lockdown protocols.  BUT, then we had this rush to "re-open" into the Holiday Weekend and, in just two months since then, we have added 2M more cases and the chart is RAPIDLY accellerating as we hit two new records in the past 5 days. 

DESPITE pouring $2.7Tn of direct stimulus into the economy and another $4Tn of aid from the Fed – we are STILL not back at our February highs – excpet the Nasdaq, which is way off in fantasy land at 10,550, after testing 11,000 on Monday.  The Nasdaq was at 9,500 in February so it's up 11% during the pandemic while the S&P is less than 200 (5.8%) points off it's high.


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Wonderful Wednesday – More Stimulus and a Vaccine?

Goldman Sachs made money!  

Yes, I know, that's not really a surprise but the markets are acting like it is this morning and the Dow is up almost 500 points, pre-market with Goldman Sachs (GS) contributing 50 points with their $9 (4%) jump on better than expected earnings.  Mainly we're up because last night Moderna's Covid Vaccine showed positive immunity responses in all 45 people tested and now they are heading into a much bigger phase two study (30,000 subjects) at the end of the month.

The new “Cove” study, scheduled to start July 27, will aim to enroll about 30,000 adults at nearly 90 different U.S. locations. Many of the study sites will be in states where the virus is surging, such as Texas, Florida, California and Arizona, according to information posted Tuesday on a federal database of medical studies.

Among the people researchers plan to enroll are those at appreciable risk of infection because of where they live. Testing the vaccine in coronavirus hot spots could help generate answers about the vaccine’s efficacy sooner, because people there are more likely to be exposed to the virus in everyday living compared with people in places where new cases have declined.

Researchers, however, still don’t know what level of a neutralizing immune response would be needed to guard against either infection or severe disease, and for how long a vaccine could provide such protection.

More than half of the study participants had side effects including fatigue, chills, headache and injection-site pain. Three participants who received the highest dose level tested had one or more severe adverse events, the researchers said. That highest dose level isn’t being tested in the large phase 3 study.

We're still a good 6 months away from a proper vaccine roll-out, even if everything goes perfectly and the Global Economy is still severely damaged so of course this is a massive over-reaction but it's better than no vaccine, right?

This should give everything a nice boost but hopefully not Tesla (TSLA), which is killing our Short-Term Portfolio (see yesterday's review) but, fortunately, great for the Long-Term Portfolio,
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Testy Tuesday – S&P 500 at 3,135 (10% line), As Usual

Wheee, what fun!

Although the Dow fell 500 points into the close yesterday we still finished the day in the green as we had quite the low-volume rally in the morning (before the market opened).  That brought in what they call the "bag holders" to buy the "rally" before they got whipsawed in the selling frenzy that over took the market in the afternoon as California announced it was going back to lockdown as the virus rages out of control (again). 

WHO Says Pandemic to Linger; Cases Pass 13 Million: Virus Update.

See, that's what I'm talking about!  What a coincidence that news item popped up there…  That's right, not all the news is GREAT and we're still very concerned about what's going on in the World and, without new stimulus officially being announced, the market is looking just a little bit tired of rallying on rumors of virus cures, etc. and now we are getting REAL earnings reports that are not, on the whole, very pretty.

I'm sure everything will be "FINE" eventually but, for now, I'd say a little caution would be recommended – just in case it isn't.  We keep our hedges in the Short-Term Portfolio (STP) but those are getting killed recently because of Tesla's (TSLA) wild ride though we did take advantage of yesterday's spike up to sell more short calls, we're still way behind on that position though it is an excellent hedge against a market crash as I very much doubt TSLA will be immune:

There's not much we're looking
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Portfolio Protection Workshop Part 7 – 20 Crisis Trades Revisited

Amazon.com: 4 Month Anniversary Cup for Boyfriend - Four Month ...Has it been four months?

That's right, it was four months ago when we first plunged below our 2,850 "Must Hold" line on the S&P 500 and, as I said back on March 12th, "When the going gets tough, the tough go shopping" and it's not just the lower stock prices we take advantage of when our fellow investors are panicking out of positions but the higher levels of volatility raise the Volatility Index (VIX) and allow us to "Be the House" and sell options for fantastic premiums.  

Initially, we sell puts to establish good entries in positions when we think there may be more downside.  We'll see how those are doing and decide whether we want to expand on our plays.  The first round was taken on March 12th, and these were the trade ideas followed by the current price and profit in caps:

  • Boeing (BA) – It's hard to call a bottom on BA but they will be close to $160 this morning and that means we can sell 5 of the 2022 $110 puts for $27.50 ($13,750) in the LTP for just $3,707 in margin. This one could be a rough ride.  NOW $20.00 ($10,000) UP $3,750 (27.3%)


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Friday Follies – Marching Headlong into Earnings Season

Buckle up, it's going to be a bumpy ride!

We're 10 days into the third quarter and look how well things are going with almost every state having the virus under control except for a few idiot red states that think they are immune but, either way, the daily briefings and general public awareness have certainly turned the tide and….  what?  That's the chart from May?  Oh gosh, I'm sorry – let's take a look at the same chart as it is today thanks to our completely inept leadership:

Oh my God – get me out of this country!!!  What?  We aren't allowed to leave because we're too likely to be infected?  Inept is not the right word for our leadership then, is it?  "Contrary to the continued existence of American life" is a more accurate description for these morons, really.  You would think this is all some kind of plot to destroy America that was set into motion by a foreign Government, setting up a puppet leader who would send America spiraling down a path of division and destruction.   Nah….

The only good news here is the same good news I predicted back when Trump was first elected – this may be the end of the Republican Party – just like Herbert Hoover in 1929-1933 led to over 20 years of Democratic rule.  When Hoover was elected, the Senate had 56 Republicans and just 39 Democrats and the House had a 267-163 Republican majority and, just like they did 100 years later, they raped and looted the land and destroyed the economy and, just 4 years later, there were 59 Democratic Senators and just 36 Republicans and, in the House, there were 313 Democrats and just 117 Republicans and, by 1937, Republicans almost qualified for endangered species protection with only 17 remaining GOP Senators and just 89 House Members.

While it's still too early for the Democrats to throw Putin a thank you party for installing the Puppet of Doom for the GOP in the White Hosue, it's certainly looking like more of a Blue Tsunami than a "Blue Wave" is shaping up for the upcoming elections
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59,000 Thursday – Another Record High for Viral Infections

You're gonna be tired of so much winning! - Donald Trump CODE(KEEM ...Winning!  

As Trump predicted in 2016 we are so tired of winning at this point, aren't we?  The US is clearly winning the virus race with a record 59,400 infections on Wednesday – our 5th National Record in the past 9 days – WINNING!  On Tuesday we celebrated our 3,000,000 infection in the US and we're officially at 1% of the total population infected so that's 1/100 people carrying the virus (that we know of without adequate testing - which the President says causes more cases) and it remains airborne so see how well you do today avoiding coming in contact with 100 people or things that have been touched by 100 people….

There is a certain logic to "getting it over with" – they probably can't stop it from spreading, there is no miracle cure and we're all going to get it eventually so why prolong the agony?  Well, one reason is that hospitals are out of room for new patients and also out of supplies which means the virus can spread out of control when we try to treat infected people and more infected people means less room and less supplies and that will cause more people to die and not just from the virus but hospital staff is pulled away from other duties as well – endangering non-Covid patients.  

That is why we need to "flatten the curve".  The US already has one of the worst-performing Health Care systems in the World and this is a stress test we are clearly failing.  “It’s been chaos for us,” said Randy Bury, President of the Good Samaritan Society, which has struggled to keep its 200 nursing homes supplied with hand sanitizer, masks and gowns. “The supply chain in the United States is not healthy, and we’ve learned we cannot depend on the Government.”  

Trump has resisted using federal powers to address the problem, saying in March that individual governors should find their own gear because “We’re not a shipping clerk.” With the National Strategic Stockpile depleted, states have been left to fend for themselves, though the Federal Emergency Management Agency has been distributing modest shipments of gear to nursing
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Which Way Wednesday – What Happened to Top Trade Alerts?

It's been a while since we had a Top Trade Alert.

Top Trade Alerts are the trade ideas we like the most in any given week, the ones we feel as very likely to do well and usually we are running with around an 80% success rate, which is amazing.  I often tell our Members that the reason we are so successful with our trade ideas and futures plays is not because we are so good at picking winners but because we are so good at NOT picking losers.  

When you decide to be a trader, professionally or as a hobby, you tend to sit down at your desk looking for things to trade but, like a good baseball hitter, the thing you have to learn is PATIENCE – if you don't wait for a good pitch, you are going to swing and miss a lot.  In baseball, it's just a strike but in trading, it's a loss!  

Home run hitters tend to strike out a lot because they swing for the fences and, while it's spectacular when they connect, many great home run hitters are terrible batters because that's all they do well while almost any player with an 0.300 batting average is going into the Hall of Fame.  An 0.300 trading average is not great, but, if you learn how to manage your money correctly, it can work but traders who can bat 0.500 (50%) and manages their losses will always get into the hall of fame.

Cardinals Strikeout GIF - Find & Share on GIPHYThe highest batting average in baseball history was Ty Cobb, who battet 0.367 but, because he didn't swing at pitches he didn't like, he also walked a lot and his "On Base Percentage" (times he got to first base) was an amazing 0.433 – almost half the time he got up, he got on base!  Being selective in your trades will also get you to first base (profits!) much more often but that, unfortunately, means there are certain times – or UNcertain times like these – when you are better off not swinging at all.  

While we were happy to buy stocks when they were cheap earlier in the year, there simply aren't too many bargains left and, so, not a lot…
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Testy Tuesday – S&P 3,135 Tested from Above for a Change

If it's Tuesday we must be testing the 10% line.

Mostly we've been coming at it from the bottom but, this week, we're trying something different and diving back to it from the top.  We did this back on June 11th (Thursday, actually) when the S&P fell from 3,123 all the way back to 2,965 on Thursday and that Tuesday (9th) was when we began the fall from 3,222, down 8% from the top in two days.  It's only 3 weeks later and no one even seems to remember it happened.  

Certainly not Tesla (TSLA) investors, who have driven that stock up to about $1,400 per share as of this morning, giving the company an implied market cap of $254Bn.

 

 

IN PROGRESS

 

 

 

 

Monday Market Movement – Up and Up and UP!

Another day another 1.5% gain.

This is why we can't cash out our long portfolios, as much as we'd like to.  The problem is we are going to have a very hard time protecting our ill-gotten gains from the correction – if and when it ever does come but, so far, the flow of money from the Fed and the endless stimulus by the Government is the rising tide that is floating all boats – no matter how rough the waters.  

Investors are "exhberant" but is it really irrational when so much money is being thrown at the stock market?  This is historically unprecedented.  Here we are at the start of Q3 and we already heard on Friday that Q2 was a disaster for the Auto Industry and Earnings Reports kick off next week with PEP, C, JPM, WFC, UAL, BK, GS, PNC, PGR, USB and UNH reporting by Wednesday.  This week we have just a few but nothing terribly exciting so we'll have to wait until next week to see if the markets can skip over Q2's almost certain disaster:

The top earnings releases scheduled for the week are Paychex, Aspen Group, Simply Good Foods, Walgreens Boots Alliance, Bed Bath & Beyond, and Levi Strauss.

The Atlanta Fed has increased their GDP Now Forecast to -35% from -54% for Q2 so I guess that's great news.  I'm not sure if -35% deserves new record highs in the stock market but it is certainly better than -54% thanks to that very clever re-opening thing we've been doing for the past month under the guidance of Supreme Leader Donald Trump.

According to our President, a few people "caught the sniffles" this weekend – a record amount, in fact – but it's nothing to worry about and no reason to chicken out and go back to our cowardly lockdowns that were damaging his economy.  I know I'm inspired.

"Experts say the president appears to have seized only on a death rate estimate of 1 percent or less that does not capture the entire impact of the disease, and excludes


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