This morning I purchased one June 2011 TBT $35/$47 CALL spread for $4.65 (x100 shares = $465) to supplement the (38) shares of TBT that I am currently holding in the portfolio. My cash position in the portfolio is now $781.42, down from $1,246.42 after the purchase.
I have been saying for quite some time that I believe interest rates will continue to rise, especially with Mr. Bernanke's QE2 which is scheduled to purchase near-dated bonds through June of next year (notice the date I picked on the options). While TBT has made an impressive move upward since the announcement of QE2, I believe it has a long way to go. I purchased the (38) shares of TBT currently sitting in my portfolio on 1/3/2010, the date I started this blog. Back then, the yield on the 10-year was 3.85%, and the TBT was trading at $43.66. Today, the 10-year closed at 3.35%, down .132%, and the TBT closed at $37.81, down 3.30% today. Obviously, I took a bit of a hit on the aforementioned trade today.
To put this all into a bit of historical perspective, the average 10-year rate from 1962 to the present (a pretty big sample size) is 6.81%. Furthermore, the average rate from 2000-2009 was 4.46%. You can download and analyze all of this data for yourself here.
Just to tie a pretty little bow on this whole conversation, not only are the historical rates still low, but the U.S. Government itself has already told us it is going to prop up rates through QE2, and we there are also other forces at work which may drive rates up (see my post from yesterday here, more specifically, China and oil). As inflation begins to creep into the economy, and I am not saying it will, so too will the interest rates increase. Actually, just the fear of inflation is all that's needed.
Wednesday, December 29, 2010
Tuesday, December 28, 2010
What Will Cause The Coming Market Correction?
In the past few weeks I have said that I believe the market is overbought, and we are headed toward an early 2011 correction. Well, it is my opinion that such corrections are usually brought about in the media through the proliferation of "bad news", and then traders use that as an excuse to take the market lower. Here is my list of the top ten news stories (in no particular order) that I believe will spur our move lower:
1) The conflict between North and South Korea
Today, South Korea declared North Korea it's enemy. Big shock there. Quite frankly, that tiny man with the crazy here in North Korea is crazy. Tension has been boiling over between them and the rest of the world for quite some time. I believe that any sort of military action in that region would weigh on the markets if it came to pass.
2) Rising interest rates - both in China and here in The United States
While the media will tell you that rising rates here in America are a problem, truth be told, the rate on the 10-year could rise 15% from a 3.50% yield to 4.00% and still be at historically low levels. The problem is, as rates go up, so does the cost to service and obtain debt. Credit cards, adjustable mortgages, new mortgages, you name it. All of those reasons could be tough on American consumers.
On the other hand, China has a similar issue. Anything seen as a negative in China is seen as a negative for the rest of the world. I don't so much buy into this theory, but it's true. Rising Chinese rates will have the same effect on their economy as the reasons I just stated above for the U.S. economy.
3) The Euro Zone's debt problems
We've already had Greece and Ireland. I promise you, they are not the only ones on the other side of the pond with trouble. Portugal and Spain are also going to be an issue, and Spain is a much larger economy than the others.
4) Slowing or no perceived job growth
To quote Adrian Van Eck's most recent publication, "weekly jobless claims remain much improved from their levels of six to twelve months ago. They have been running in the area near 420,000 to 430,000 for a while now. A year or two ago, many economists were saying that weekly jobless claims would have to break below 425,000 before any kind of meaningful improvement in the monthly employment picture could take place." Now that we are at that level, the media and economists are going to want lower numbers. All in due time. Jobs are the last things to come back during an economic recovery.
5) Rising oil prices
Oil is currently around $91 a barrel, and many analysts are saying it's going to $100 or maybe even higher. Such things are sometimes a self-fulfilling prophecy. Higher oil will be seen as an added "tax" on the American consumer, and will drive up the prices of everything from goods to travel.
6) Rising inflation in China
The Chinese economy has been on a tear the last few years, fueled by gobs and gobs of money pumped into the economy by the government. With that came increased real estate and food prices, among other things. As inflation on basic items rises, demand will decrease and I ultimately feel that the huge labor force in China will demand higher wages. As wages increase, so does the cost to produce things, and so does the cost to buy Chinese made goods. The world, especially the U.S. consumes a lot of Chinese goods. See where I am going with this one?
7) Profit-taking
Honestly, the link says it all. The market has made a huge run, and most everybody is bullish as you can tell from the sentiment data I publish in my portfolio updates. Traders will want to lock-in profits at some point...
8) Municipal and State debt problems
A couple days ago, Meredith Whitney went on television and forecasted a major state and municipal debt problem here in the U.S. Meredith Whitney is famous for her call of the Financial Crisis of 2008. While she was right on her predictions then, I think she is borderline fear mongering. While I believe there will be some debt problems, in my opinion, they won't be as soon nor as deep as Meredith is forecasting.
I do not mean to downplay Ms. Whitney's work. I read this story on an obscure news site a few days back, and was astounded that this did not get more national play. Surely, this small Alabama town is not going to be the only one...
9) Iran
See: Korea, North. These folks have a crazy leader with nuclear capabilities too. 'Nough said.
10) Home price instability
October home price data came out this morning, and it wasn't good. Foreclosures are going to weigh on the market for quite some time. However, I can tell you that a realtor friend of mine told me she had her best November ever this year. While the real estate market is quite soft, as I have observed personally, I don't think it's as bad as it is made out to be in the media.
To conclude, while I do not think that all these things are going to happen, and while I think that many of these things have little to no actual economic bearing or consequence to our economy or our markets, I do think that at least one of these stories is going to be played up in the media, and I also believe it will coincide with the market correction I am forecasting.
1) The conflict between North and South Korea
Today, South Korea declared North Korea it's enemy. Big shock there. Quite frankly, that tiny man with the crazy here in North Korea is crazy. Tension has been boiling over between them and the rest of the world for quite some time. I believe that any sort of military action in that region would weigh on the markets if it came to pass.
2) Rising interest rates - both in China and here in The United States
While the media will tell you that rising rates here in America are a problem, truth be told, the rate on the 10-year could rise 15% from a 3.50% yield to 4.00% and still be at historically low levels. The problem is, as rates go up, so does the cost to service and obtain debt. Credit cards, adjustable mortgages, new mortgages, you name it. All of those reasons could be tough on American consumers.
On the other hand, China has a similar issue. Anything seen as a negative in China is seen as a negative for the rest of the world. I don't so much buy into this theory, but it's true. Rising Chinese rates will have the same effect on their economy as the reasons I just stated above for the U.S. economy.
3) The Euro Zone's debt problems
We've already had Greece and Ireland. I promise you, they are not the only ones on the other side of the pond with trouble. Portugal and Spain are also going to be an issue, and Spain is a much larger economy than the others.
4) Slowing or no perceived job growth
To quote Adrian Van Eck's most recent publication, "weekly jobless claims remain much improved from their levels of six to twelve months ago. They have been running in the area near 420,000 to 430,000 for a while now. A year or two ago, many economists were saying that weekly jobless claims would have to break below 425,000 before any kind of meaningful improvement in the monthly employment picture could take place." Now that we are at that level, the media and economists are going to want lower numbers. All in due time. Jobs are the last things to come back during an economic recovery.
5) Rising oil prices
Oil is currently around $91 a barrel, and many analysts are saying it's going to $100 or maybe even higher. Such things are sometimes a self-fulfilling prophecy. Higher oil will be seen as an added "tax" on the American consumer, and will drive up the prices of everything from goods to travel.
6) Rising inflation in China
The Chinese economy has been on a tear the last few years, fueled by gobs and gobs of money pumped into the economy by the government. With that came increased real estate and food prices, among other things. As inflation on basic items rises, demand will decrease and I ultimately feel that the huge labor force in China will demand higher wages. As wages increase, so does the cost to produce things, and so does the cost to buy Chinese made goods. The world, especially the U.S. consumes a lot of Chinese goods. See where I am going with this one?
7) Profit-taking
Honestly, the link says it all. The market has made a huge run, and most everybody is bullish as you can tell from the sentiment data I publish in my portfolio updates. Traders will want to lock-in profits at some point...
8) Municipal and State debt problems
A couple days ago, Meredith Whitney went on television and forecasted a major state and municipal debt problem here in the U.S. Meredith Whitney is famous for her call of the Financial Crisis of 2008. While she was right on her predictions then, I think she is borderline fear mongering. While I believe there will be some debt problems, in my opinion, they won't be as soon nor as deep as Meredith is forecasting.
I do not mean to downplay Ms. Whitney's work. I read this story on an obscure news site a few days back, and was astounded that this did not get more national play. Surely, this small Alabama town is not going to be the only one...
9) Iran
See: Korea, North. These folks have a crazy leader with nuclear capabilities too. 'Nough said.
10) Home price instability
October home price data came out this morning, and it wasn't good. Foreclosures are going to weigh on the market for quite some time. However, I can tell you that a realtor friend of mine told me she had her best November ever this year. While the real estate market is quite soft, as I have observed personally, I don't think it's as bad as it is made out to be in the media.
To conclude, while I do not think that all these things are going to happen, and while I think that many of these things have little to no actual economic bearing or consequence to our economy or our markets, I do think that at least one of these stories is going to be played up in the media, and I also believe it will coincide with the market correction I am forecasting.
Sunday, December 19, 2010
I Have Joined The Yakezie Challenge!!!
Dear Readers,
As of today, I am joining the Yakezie Challenge. The Yakezie Challenge is the process you have to go through to get your financial blog listed on Yakezie. For those of you who don't know, as I didn't five minutes ago, Yakezie is one of the top financial blogs on the interwebs. In order to get your blog listed with them, you must complete a simple process, listed here.
Basically, in order to get my blog listed, I have to 1) install the badge (see at right, a little ways down the page), 2) write consistently 2-4 times per week for six months (I should be doing this anyway, and have failed over the last two months. This will be good motivation to maintain my pace.), and 3) get my Alexa rank above 200,000 (I am currently at an abysmal 12,506,744).
How you can you help?
Read my blog. Please. If you like it, keep reading, tell your friends and write comments. If you hate it, do the same. I would love to hear what readers think either way. If you comment, please leave your name and website/blog address so we can get it some exposure and engage in constructive dialogue.
As of today, I am joining the Yakezie Challenge. The Yakezie Challenge is the process you have to go through to get your financial blog listed on Yakezie. For those of you who don't know, as I didn't five minutes ago, Yakezie is one of the top financial blogs on the interwebs. In order to get your blog listed with them, you must complete a simple process, listed here.
Basically, in order to get my blog listed, I have to 1) install the badge (see at right, a little ways down the page), 2) write consistently 2-4 times per week for six months (I should be doing this anyway, and have failed over the last two months. This will be good motivation to maintain my pace.), and 3) get my Alexa rank above 200,000 (I am currently at an abysmal 12,506,744).
How you can you help?
Read my blog. Please. If you like it, keep reading, tell your friends and write comments. If you hate it, do the same. I would love to hear what readers think either way. If you comment, please leave your name and website/blog address so we can get it some exposure and engage in constructive dialogue.
Portfolio Update - 12/19/10
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The Wilshire 5000 closed the week at 13,203.03, up from 13,175.94, or .21%, this past week. The Wilshire 5000's 200-day moving average currently sits at 11,878.70, or 11.15% below Friday's close.
This week's reading of the Investor's Intelligence Survey was 56.8% BULLS, and 20.5% BEARS, for a spread of 36.3%. This is in comparison to a reading of 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9% back on December 7th.
The Volatility Index ($VIX) closed Friday at 16.11, down from 17.61 last Friday.
Now for the portfolio...
1) Verizon ($VZ) at $34.64, up 13.03% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.25/share, worth $64.75 to this portfolio currently.
2) AT&T ($T) closed at $29.21, up 4.50% for the year, inclusive of dividends.
3) GE ($GE) closed at $17.70, up by 16.84% for the year, inclusive of dividends.
4) TBT, ($TBT) the doubleshort U.S. Treasury ETF closed at $38.13, down 12.66% since my buy.
5) January 2012 Dupont ($DD) $45/$55 CALL spreads purchased a few months back closed at $4.85, up 32.88% since my buy.
6) Apple ($AAPL) closed at $320.61 up by 65.48% since my buy.
7) January '12 Citigroup ($C) CALLs closed at $.12, down by 72.73% since my buy.
8) Citigroup ($C) closed at $4.70, up by 18.09% since my buy.
9) Goldman Sachs ($GS) closed at $164.04, up by 20.53% since my buy.
10) January '11 S&P 500 ETF ($SPY) $127/$120 PUT Spread that I purchased on Wednesday at $2.92 closed at $2.58, or down 11.64%.
As you see above, sentiment data has gotten way overdone on the upside. To put things into perspective, the BULL/BEAR spread of 36.3% is the highest it's been since 5/4/10, right at the beginning of the 15+% correction that we saw over the summer. While the upcoming correction will not be as deep or as long, it has to be coming at some point. The VIX is currently at 16.11, with the 25-day moving averageis at 19.27, historically pretty low. In addition, every moving average of the Put/Call ratio is more than 1 standard deviation below the historical average. All of this is pointing to the market being overbought.
As I said last week, I believe the market will continue to melt up into year-end. I am going to continue to raise cash into year-end, but don't see any reason to do it right this second. As you see, my SPY PUT Spread is down 11% since I bought it. I am not worried. If the market looks like it refuses to break in another three weeks or so, I may have to liquidate that position at a loss. Until then, I will remain patient.
Overall, the portfolio is up by 19.72% (13.56% for the DOW Dogs), versus 14.83% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.
The Wilshire 5000 closed the week at 13,203.03, up from 13,175.94, or .21%, this past week. The Wilshire 5000's 200-day moving average currently sits at 11,878.70, or 11.15% below Friday's close.
This week's reading of the Investor's Intelligence Survey was 56.8% BULLS, and 20.5% BEARS, for a spread of 36.3%. This is in comparison to a reading of 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9% back on December 7th.
The Volatility Index ($VIX) closed Friday at 16.11, down from 17.61 last Friday.
Now for the portfolio...
1) Verizon ($VZ) at $34.64, up 13.03% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.25/share, worth $64.75 to this portfolio currently.
2) AT&T ($T) closed at $29.21, up 4.50% for the year, inclusive of dividends.
3) GE ($GE) closed at $17.70, up by 16.84% for the year, inclusive of dividends.
4) TBT, ($TBT) the doubleshort U.S. Treasury ETF closed at $38.13, down 12.66% since my buy.
5) January 2012 Dupont ($DD) $45/$55 CALL spreads purchased a few months back closed at $4.85, up 32.88% since my buy.
6) Apple ($AAPL) closed at $320.61 up by 65.48% since my buy.
7) January '12 Citigroup ($C) CALLs closed at $.12, down by 72.73% since my buy.
8) Citigroup ($C) closed at $4.70, up by 18.09% since my buy.
9) Goldman Sachs ($GS) closed at $164.04, up by 20.53% since my buy.
10) January '11 S&P 500 ETF ($SPY) $127/$120 PUT Spread that I purchased on Wednesday at $2.92 closed at $2.58, or down 11.64%.
As you see above, sentiment data has gotten way overdone on the upside. To put things into perspective, the BULL/BEAR spread of 36.3% is the highest it's been since 5/4/10, right at the beginning of the 15+% correction that we saw over the summer. While the upcoming correction will not be as deep or as long, it has to be coming at some point. The VIX is currently at 16.11, with the 25-day moving averageis at 19.27, historically pretty low. In addition, every moving average of the Put/Call ratio is more than 1 standard deviation below the historical average. All of this is pointing to the market being overbought.
As I said last week, I believe the market will continue to melt up into year-end. I am going to continue to raise cash into year-end, but don't see any reason to do it right this second. As you see, my SPY PUT Spread is down 11% since I bought it. I am not worried. If the market looks like it refuses to break in another three weeks or so, I may have to liquidate that position at a loss. Until then, I will remain patient.
Overall, the portfolio is up by 19.72% (13.56% for the DOW Dogs), versus 14.83% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.
Wednesday, December 15, 2010
Time To Get Short!
I have been writing for a few weeks now that I am beginning to get bearish on the market in the short term. That doesn't mean I am bearish on the economy on the market, it just means that I foresee a correction coming, and I want to profit from it. As such, here is what I am going to do...
I have an order in to purchase a January 2011 SPY (Ticker - $SPY) $127/$120 PUT spread at $2.86. As you know, the SPY is the ETF that tracks the performance of the S&P 500. If the order fills today, I am going to add four positions to the portfolio, using about $1,144 of my available cash.
You can follow me on Twitter to get the status on this trade. I will be updating this space in the next few days to fill you in on the portfolio's progress. Happy trading!
I have an order in to purchase a January 2011 SPY (Ticker - $SPY) $127/$120 PUT spread at $2.86. As you know, the SPY is the ETF that tracks the performance of the S&P 500. If the order fills today, I am going to add four positions to the portfolio, using about $1,144 of my available cash.
You can follow me on Twitter to get the status on this trade. I will be updating this space in the next few days to fill you in on the portfolio's progress. Happy trading!
Sunday, December 12, 2010
Second Update In A Week! Portfolio Up 20.95%!!!
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I'm feeling rather productive lately, and I thought it would be a good idea to update you on the status of my portfolio. As I've stated in the last few posts, I have begun to raise cash into year end. While I think we are going to continue to melt up into the new year, I am beginning to believe that the data is pointing to the fact that we may see lower prices in the not-so-distant future. Make no mistake, I am very bullish on the market going forward. Very, very bullish. However, what goes up must come down...at least momentarily on occasion.
The Wilshire 5000 closed at 13,175.94, up from 13,009.05, or 1.28%, since Tuesday. The Wilshire 5000's 200-day moving average currently sits at 11,830.03, or 11.38% below Friday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9%. This is in comparison to a reading of 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6% back on November 30th.
The Volatility Index closed Friday at 17.61, down from 17.99 on Tuesday.
Now for the portfolio...
1) Verizon at $34.04, up 11.07% for the year (please note, this is inconsistent with the percentage in my last post. Forgive me, but I had a formula error in my spreadsheet that incorrectly understated Verizon's performance to date), inclusive of dividends. FTR, the recent spinoff, recently closed at $9.37/share, worth $65.59 to this portfolio currently.
2) AT&T closed at $28.89, up 3.35% for the year, inclusive of dividends.
3) GE closed at $17.72, up by 16.97% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $38.28, down 12.31% since my buy.
5) January 2012 DD $45/$55 CALL spreads purchased a few months back closed at $4.54, up 24.38% since my buy.
6) AAPL closed at $320.56 up by 65.45% since my buy.
7) January '12 Citigroup CALLs closed at $.15, down by 65.91% since my buy.
8) C closed at $4.78, up by 20.10% since my buy.
9) GS closed at $168.47, up by 23.78% since my buy.
Overall, the portfolio is up by 20.95% (12.62% for the DOW Dogs), versus 13.94% for the Wilshire 5000. The current basket of nine stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.
In the week or two ahead I am most likely going to start raising a bit more cash. As is now, I have roughly $2,400 in the portfolio in cash. With the upcoming pullback/correction I am forecasting, I believe I will most likely sell AAPL, VZ, T, and GE. I will most likely be buying some SPY PUTs with part of the cash, and leaving the remaining for a better entry point into some names, including new DOW Dogs. But, as I said before, I believe we will continue to melt higher into year end. How high we go and how quickly we go in the next two to four weeks will determine how hard and how far we fall after that.
I'm feeling rather productive lately, and I thought it would be a good idea to update you on the status of my portfolio. As I've stated in the last few posts, I have begun to raise cash into year end. While I think we are going to continue to melt up into the new year, I am beginning to believe that the data is pointing to the fact that we may see lower prices in the not-so-distant future. Make no mistake, I am very bullish on the market going forward. Very, very bullish. However, what goes up must come down...at least momentarily on occasion.
The Wilshire 5000 closed at 13,175.94, up from 13,009.05, or 1.28%, since Tuesday. The Wilshire 5000's 200-day moving average currently sits at 11,830.03, or 11.38% below Friday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 56.2% BULLS, and 21.3% BEARS, for a spread of 34.9%. This is in comparison to a reading of 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6% back on November 30th.
The Volatility Index closed Friday at 17.61, down from 17.99 on Tuesday.
Now for the portfolio...
1) Verizon at $34.04, up 11.07% for the year (please note, this is inconsistent with the percentage in my last post. Forgive me, but I had a formula error in my spreadsheet that incorrectly understated Verizon's performance to date), inclusive of dividends. FTR, the recent spinoff, recently closed at $9.37/share, worth $65.59 to this portfolio currently.
2) AT&T closed at $28.89, up 3.35% for the year, inclusive of dividends.
3) GE closed at $17.72, up by 16.97% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $38.28, down 12.31% since my buy.
5) January 2012 DD $45/$55 CALL spreads purchased a few months back closed at $4.54, up 24.38% since my buy.
6) AAPL closed at $320.56 up by 65.45% since my buy.
7) January '12 Citigroup CALLs closed at $.15, down by 65.91% since my buy.
8) C closed at $4.78, up by 20.10% since my buy.
9) GS closed at $168.47, up by 23.78% since my buy.
Overall, the portfolio is up by 20.95% (12.62% for the DOW Dogs), versus 13.94% for the Wilshire 5000. The current basket of nine stocks and options that I am currently invested in, including dividends, is up 8.11% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 7.01% outperform.
In the week or two ahead I am most likely going to start raising a bit more cash. As is now, I have roughly $2,400 in the portfolio in cash. With the upcoming pullback/correction I am forecasting, I believe I will most likely sell AAPL, VZ, T, and GE. I will most likely be buying some SPY PUTs with part of the cash, and leaving the remaining for a better entry point into some names, including new DOW Dogs. But, as I said before, I believe we will continue to melt higher into year end. How high we go and how quickly we go in the next two to four weeks will determine how hard and how far we fall after that.
Tuesday, December 7, 2010
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I'm back! I have not posted on this blog in a month and four days (by my count), and it was about time for an update!
The Wilshire 5000 closed at 13,009.05, up from 12,323.47, or 5.56%, since October 12th. The Wilshire 5000's 200-day moving average currently sits at 11,813.05, or 10.12% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6%. This is in comparison to a reading of 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3% back in October. Bullish sentiment is now in what I would consider to be a dangerous range, as it's been well over 50 for three straight weeks, and the 4-week moving average has been over 50 for the second straight week.
The Volatility Index closed Friday at 17.99, down from 18.93 back on October 12th. It is also worth noting that the 25-day moving average has closed below 20 for the third straight trading day, what I consider to be dangerous territory.
Now for the portfolio...
1) Verizon at $32.95, up 7.60% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.11/share, worth $63.77 to this portfolio currently.
2) AT&T closed at $28.54, up 2.10% for the year, inclusive of dividends.
3) GE closed at $17.03, up by 12.41% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $37.49, down an abysmal 14.12% since my buy. However, it is worth noting TBT has gained significant ground since my last portfolio update, and I think it will continue to do so for the foreseeable future. Remember, the 10-year is still only down near 3%, historically still very low.
5) January 2011 WHR $75/$85 Call spread purchased a few months back I sold at $6.50, up 39.78% since my buy.
6) January 2012 DD $45/$55 Call spreads purchased a few months back closed at $4.70, up 28.77% since my buy.
7) AAPL closed at $318.21 up by 64.24% since my buy.
8) January '12 Citigroup Calls closed at $.13, down by 70.45% since my buy.
9) C closed at $4.62, up by 16.08% since my buy.
10) GS closed at $161.59, up by 18.73% since my buy.
Overall, the portfolio is up by 19.03% (9.47% for the DOW Dogs), versus 13.15% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is up 7.62% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 5.88% outperform.
Overall, my portfolio has done quite well this year. As I have detailed a bit above, I am getting a bit worried about where the market is. I think we are due for some sort of a dip or correction in the near future. As you can see from this post, and my prior post, I have raised quite a bit of cash, and I may be putting that to work on the short side in the near future, maybe as soon as tomorrow. As I make trades, I will update this blog going forward.
I'm back! I have not posted on this blog in a month and four days (by my count), and it was about time for an update!
The Wilshire 5000 closed at 13,009.05, up from 12,323.47, or 5.56%, since October 12th. The Wilshire 5000's 200-day moving average currently sits at 11,813.05, or 10.12% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 55.4% BULLS, and 21.8% BEARS, for a spread of 33.6%. This is in comparison to a reading of 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3% back in October. Bullish sentiment is now in what I would consider to be a dangerous range, as it's been well over 50 for three straight weeks, and the 4-week moving average has been over 50 for the second straight week.
The Volatility Index closed Friday at 17.99, down from 18.93 back on October 12th. It is also worth noting that the 25-day moving average has closed below 20 for the third straight trading day, what I consider to be dangerous territory.
Now for the portfolio...
1) Verizon at $32.95, up 7.60% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $9.11/share, worth $63.77 to this portfolio currently.
2) AT&T closed at $28.54, up 2.10% for the year, inclusive of dividends.
3) GE closed at $17.03, up by 12.41% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $37.49, down an abysmal 14.12% since my buy. However, it is worth noting TBT has gained significant ground since my last portfolio update, and I think it will continue to do so for the foreseeable future. Remember, the 10-year is still only down near 3%, historically still very low.
5) January 2011 WHR $75/$85 Call spread purchased a few months back I sold at $6.50, up 39.78% since my buy.
6) January 2012 DD $45/$55 Call spreads purchased a few months back closed at $4.70, up 28.77% since my buy.
7) AAPL closed at $318.21 up by 64.24% since my buy.
8) January '12 Citigroup Calls closed at $.13, down by 70.45% since my buy.
9) C closed at $4.62, up by 16.08% since my buy.
10) GS closed at $161.59, up by 18.73% since my buy.
Overall, the portfolio is up by 19.03% (9.47% for the DOW Dogs), versus 13.15% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is up 7.62% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 5.88% outperform.
Overall, my portfolio has done quite well this year. As I have detailed a bit above, I am getting a bit worried about where the market is. I think we are due for some sort of a dip or correction in the near future. As you can see from this post, and my prior post, I have raised quite a bit of cash, and I may be putting that to work on the short side in the near future, maybe as soon as tomorrow. As I make trades, I will update this blog going forward.
Wednesday, November 3, 2010
Trades For This Week
Greetings all! I am sorry this space has not been updated in quite some time. Unfortunately, life has gotten in the way. However, I did want to update you on the trade I am making:
I am trading out of my December SPY $102 CALLS. I am exiting this trade at $17.31 for a gain of 34.19%. I think we are set for a pullback post-election/FOMC meeting, and will look to add some longer-dated in-the-money calls in SPY if and when the conditions present themselves. I may even buy some out-of-the-money PUTS in the next day or so. We'll see. I will update this space more thoroughly this week, as time presents itself.
I am trading out of my December SPY $102 CALLS. I am exiting this trade at $17.31 for a gain of 34.19%. I think we are set for a pullback post-election/FOMC meeting, and will look to add some longer-dated in-the-money calls in SPY if and when the conditions present themselves. I may even buy some out-of-the-money PUTS in the next day or so. We'll see. I will update this space more thoroughly this week, as time presents itself.
Wednesday, October 13, 2010
CSX Options Gain 108%, C Options Still Up BIG
Last night I wrote that I had purchased some CSX October $57.50 CALLS for $1.20. As I had suspected, and wrote about last night, the market moved appreciably higher today on the backs of earnings from CSX, Intel, and JP Morgan (the latter two stocks did struggle today). Going higher with the broad market was CSX. I traded out of my position in CSX CALLS at roughly 11:30am EST this morning for $2.50. This represented a gain of roughly 108.33% in 22.5 hours (roughly), a new record for me.
I am still holding on to my C $4 October CALLS which are well in the money. Earlier today the options, traded up to $.30, along with the stock that traded for a while in the $4.29/$4.30 range. However, the stock got killed in the last hour, and traded back down to $4.25. In the after hours, the stock is currently at $4.24. The intrinsic value of the options is currently $.25, representing a gain of 317%. I suspect C will continue to trade up through Friday's close with the general market. If C gets around $4.30 tomorrow or during the day Friday, I may strongly consider trading out of that position. We'll see.
I am still holding on to my C $4 October CALLS which are well in the money. Earlier today the options, traded up to $.30, along with the stock that traded for a while in the $4.29/$4.30 range. However, the stock got killed in the last hour, and traded back down to $4.25. In the after hours, the stock is currently at $4.24. The intrinsic value of the options is currently $.25, representing a gain of 317%. I suspect C will continue to trade up through Friday's close with the general market. If C gets around $4.30 tomorrow or during the day Friday, I may strongly consider trading out of that position. We'll see.
Tuesday, October 12, 2010
My Portfolio Beating Market, Up 8.80% This Year
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The Wilshire 5000 closed at 12,323.47, up from 12,072.58, or 2 .08%, since October 2nd. The Wilshire 5000's 200-day moving average currently sits at 11,659.37, or 5.70% below Tuesday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3%. This is in comparison to a reading of 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5% on September 28th. Bullish sentiment has now turned higher in five consecutive weeks.
The Volatility Index closed Friday at 18.93, down from 22.50 back on October 1st.
Now for the portfolio...
1) Verizon at $32.54, up 6.50% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.63/share, worth $60.41 to this portfolio currently.
2) AT&T closed at $28.03, up 1.62% for the year, inclusive of dividends.
3) GE closed at $17.19, up by 14.28% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.32, down an abysmal 25.97% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $5.05, up 8.60% since my buy.
6) December 2010 SPY $102 Calls closed at $14.92, up 7.98% since my buy. It is worth noting here that the bid/ask prices for these options is well above the "last" price of $14.92. This is due to the fact that these options are well into the money right now, and as such their volume is exceptionally light.
7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.76, up 3.01% since my buy.
8) AAPL closed at $298.54 up by 54.09% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.
10) C closed at $4.24, up by 6.53% since my buy.
11) GS closed at $155.21, up by 14.04% since my buy.
Overall, the portfolio is up by 8.80% (8.41% for the DOW Dogs), versus 7.18% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 1.56% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.62% outperform. It is also worth noting that this portfolio is up 4.70% since my last post, versus 2.18% for the Wilshire 5000 in the same time period.
The Wilshire 5000 closed at 12,323.47, up from 12,072.58, or 2 .08%, since October 2nd. The Wilshire 5000's 200-day moving average currently sits at 11,659.37, or 5.70% below Tuesday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 45.6% BULLS, and 28.3% BEARS, for a spread of 17.3%. This is in comparison to a reading of 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5% on September 28th. Bullish sentiment has now turned higher in five consecutive weeks.
The Volatility Index closed Friday at 18.93, down from 22.50 back on October 1st.
Now for the portfolio...
1) Verizon at $32.54, up 6.50% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.63/share, worth $60.41 to this portfolio currently.
2) AT&T closed at $28.03, up 1.62% for the year, inclusive of dividends.
3) GE closed at $17.19, up by 14.28% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.32, down an abysmal 25.97% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $5.05, up 8.60% since my buy.
6) December 2010 SPY $102 Calls closed at $14.92, up 7.98% since my buy. It is worth noting here that the bid/ask prices for these options is well above the "last" price of $14.92. This is due to the fact that these options are well into the money right now, and as such their volume is exceptionally light.
7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.76, up 3.01% since my buy.
8) AAPL closed at $298.54 up by 54.09% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.
10) C closed at $4.24, up by 6.53% since my buy.
11) GS closed at $155.21, up by 14.04% since my buy.
Overall, the portfolio is up by 8.80% (8.41% for the DOW Dogs), versus 7.18% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is up 1.56% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.62% outperform. It is also worth noting that this portfolio is up 4.70% since my last post, versus 2.18% for the Wilshire 5000 in the same time period.
What I Traded Today
Today I bought some $57.50 October 16th CALLS of CSX (Ticker: CSX) at around noon for $1.20. Unfortunately, I did my analysis of the stock late yesterday evening, and did not get the time to post on the blog about it. Given the state of the economy, and what I deemed to be "softish" earnings expectations by analysts, I thought this stock would be a good earnings play. As of now, 7pm EST, CX is trading at $58.52 in the after hours after posting earnings of $1.08, beating the Street's estimates of $1.04.
I suspect tomorrow we will see decent earnings from JP Morgan (JPM) before the bell, and we will also be buoyed by earnings beats by Intel and CSX, as well as the Fed's QE2 guidance this afternoon. I am expecting to see a high volume day in CSX tomorrow, and potentially a move up and through $59 in the stock. So far my thesis on a pop from earnings is correct, we will see how my options play pans out in the days ahead.
I suspect tomorrow we will see decent earnings from JP Morgan (JPM) before the bell, and we will also be buoyed by earnings beats by Intel and CSX, as well as the Fed's QE2 guidance this afternoon. I am expecting to see a high volume day in CSX tomorrow, and potentially a move up and through $59 in the stock. So far my thesis on a pop from earnings is correct, we will see how my options play pans out in the days ahead.
Sunday, October 10, 2010
233% Gain!? I Hope You Jumped On Citi $4 Options
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Unfortunately, I have been exceptionally busy lately, and have not had time to update you on some of the stock and options picks I have made in the past month or so. I will try to do so this coming week, however, I wanted to update you on the Citi position I am currently in.
As you recall in this post I stated that I would be buying C $4 October 16th CALLS. I did so at $.06 the following day. If you're following the stock, you know that it closed at $.19 this past Friday, and moved to $.20 in the after hours. The options I purchased closed at $.20 on Friday. As is now, I believe we are going to see a continuation of the broad market rally this week. I also believe the lack of government selling will continue to buoy C into earnings next Monday. As such, I am going to leave this trade on. Currently, the C options I am in have an intrinsic value of $.20 (using the after hours close), and a time value of $.00. I suspect the options will open somewhere in the $.21-.22 range tomorrow, and continue to move higher throughout the week. So far my gain is 233.33%. I'll update you as the week progresses.
Unfortunately, I have been exceptionally busy lately, and have not had time to update you on some of the stock and options picks I have made in the past month or so. I will try to do so this coming week, however, I wanted to update you on the Citi position I am currently in.
As you recall in this post I stated that I would be buying C $4 October 16th CALLS. I did so at $.06 the following day. If you're following the stock, you know that it closed at $.19 this past Friday, and moved to $.20 in the after hours. The options I purchased closed at $.20 on Friday. As is now, I believe we are going to see a continuation of the broad market rally this week. I also believe the lack of government selling will continue to buoy C into earnings next Monday. As such, I am going to leave this trade on. Currently, the C options I am in have an intrinsic value of $.20 (using the after hours close), and a time value of $.00. I suspect the options will open somewhere in the $.21-.22 range tomorrow, and continue to move higher throughout the week. So far my gain is 233.33%. I'll update you as the week progresses.
Saturday, October 2, 2010
Market, Portfolio Still In The Black - Finish Week Flat
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The Wilshire 5000 closed at 12072.58, up from 12,062.80, or .08%, since September 24th. The Wilshire 5000's 200-day moving average currently sits at 11,636.13, or 3.75% below Friday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5%. This is in comparison to a reading of 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1% on September 21st. Bullish sentiment has now turned higher in four consecutive weeks.
The Volatility Index closed Friday at 22.50, up from 21.71 back on September 24th.
Now for the portfolio...
1) Verizon at $32.89, up 7.64% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.18/share, worth $57.26 to this portfolio currently.
2) AT&T closed at $28.81, up 3.13% for the year, inclusive of dividends. (Note: apparently in a few of the most recent portfolio updates I had given some inaccurate prices. I use two "portfolios" in two different websites to quickly access prices for this blog, and in one location I had ATT, and the other I had T for this equity. As it turns out, T is the stock, and ATT is the debt. My apologies for any confusion.)
3) GE closed at $16.36, up by 8.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.54, down an abysmal 27.75% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $4.84, up 4.09% since my buy.
6) December 2010 SPY $102 Calls closed at $13.93, up 7.98% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.28, down 10.14% since my buy.
8) AAPL closed at $282.52 up by 45.82% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.
10) C closed at $4.09, up by 2.76% since my buy.
11) GS closed at $147.70, up by 8.52% since my buy.
Overall, the portfolio is up by 4.10% (8.41% for the DOW Dogs), versus 5.00% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is down 2.84% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .90% underperform.
The Wilshire 5000 closed at 12072.58, up from 12,062.80, or .08%, since September 24th. The Wilshire 5000's 200-day moving average currently sits at 11,636.13, or 3.75% below Friday's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 43.3% BULLS, and 27.8% BEARS, for a spread of 15.5%. This is in comparison to a reading of 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1% on September 21st. Bullish sentiment has now turned higher in four consecutive weeks.
The Volatility Index closed Friday at 22.50, up from 21.71 back on September 24th.
Now for the portfolio...
1) Verizon at $32.89, up 7.64% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.18/share, worth $57.26 to this portfolio currently.
2) AT&T closed at $28.81, up 3.13% for the year, inclusive of dividends. (Note: apparently in a few of the most recent portfolio updates I had given some inaccurate prices. I use two "portfolios" in two different websites to quickly access prices for this blog, and in one location I had ATT, and the other I had T for this equity. As it turns out, T is the stock, and ATT is the debt. My apologies for any confusion.)
3) GE closed at $16.36, up by 8.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.54, down an abysmal 27.75% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased a few weeks back closed at $4.84, up 4.09% since my buy.
6) December 2010 SPY $102 Calls closed at $13.93, up 7.98% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased a few weeks back closed at $3.28, down 10.14% since my buy.
8) AAPL closed at $282.52 up by 45.82% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy.
10) C closed at $4.09, up by 2.76% since my buy.
11) GS closed at $147.70, up by 8.52% since my buy.
Overall, the portfolio is up by 4.10% (8.41% for the DOW Dogs), versus 5.00% for the Wilshire 5000. The current basket of eleven stocks and options that I am currently invested in, including dividends, is down 2.84% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .90% underperform.
Wednesday, September 29, 2010
Is Citi About To Make A Move?
On Sunday evening I wrote this post about a trade I was venturing into in Citigroup (C). In that post, I stated that I was going to be buying October $4 CALLS, for $.05 - $.06. Well, I entered into the trade on Monday at $.06, the high end of my range, but I'm ok with it nonetheless.
Today, the beautiful office of the U.S. Treasury came out and said they are selling $2.2b bailout Trups in Citigroup, thereby making an uninteresting morning awesome as I watched Citi trade all the way up to $3.99, and my CALLs trade up to $.09. The article on the Treasury sale can be found here.
All of this is fine and dandy, but my thesis for why I think Citi will eclipse $4.15 by the middle of October has not even begun to take effect yet. As I stated in my prior blog post, the Treasury is going to suspend their sale of Citi common stock due to their blackout period before earnings after tomorrow's trading. From there, through the next two weeks I am suspecting that C will make a nice move upward. Even more validating, Bryan Kelly said today on CNBC's Fast Money that he entered into the stock today for the same reason that I bought my CALLs on Monday. While there is barely a mention of it on the Fast Money recap page here, you can watch the episode later this evening, or on your TiVo (if you're sick and obsessive and DVR this show like I do) and check out his recommendation.
I will keep ya'll posted on this trade in the next two weeks, with any luck, it will be very profitable.
Today, the beautiful office of the U.S. Treasury came out and said they are selling $2.2b bailout Trups in Citigroup, thereby making an uninteresting morning awesome as I watched Citi trade all the way up to $3.99, and my CALLs trade up to $.09. The article on the Treasury sale can be found here.
All of this is fine and dandy, but my thesis for why I think Citi will eclipse $4.15 by the middle of October has not even begun to take effect yet. As I stated in my prior blog post, the Treasury is going to suspend their sale of Citi common stock due to their blackout period before earnings after tomorrow's trading. From there, through the next two weeks I am suspecting that C will make a nice move upward. Even more validating, Bryan Kelly said today on CNBC's Fast Money that he entered into the stock today for the same reason that I bought my CALLs on Monday. While there is barely a mention of it on the Fast Money recap page here, you can watch the episode later this evening, or on your TiVo (if you're sick and obsessive and DVR this show like I do) and check out his recommendation.
I will keep ya'll posted on this trade in the next two weeks, with any luck, it will be very profitable.
Sunday, September 26, 2010
U.S. Government To Exit AIG Stake
First Citi, now this. This makes AIG an interesting stock again, potentially. I still think it may be wise to look at how Citi's stock acts as we come to the conclusion of that government sale, and take that into consideration when analyzing AIG. Here's the link:
http://www.bloomberg.com/news/2010-09-26/treasury-said-to-ready-plan-to-sell-aig-stake-recoup-taxpayer-investment.html
http://www.bloomberg.com/news/2010-09-26/treasury-said-to-ready-plan-to-sell-aig-stake-recoup-taxpayer-investment.html
What I'm Trading Tomorrow (Monday)
Tomorrow I will be buying October 15th $4 Citi CALLS. Citi is currently sitting at $3.90, and the Calls are trading at $.05. I am going to put an order in at $.05, but am willing to adjust up to $.06 if need be. I am going to see what the market futures look like later on this evening and in the pre-market tomorrow, and make a decision from there.
As you know, the S&P 500 crossed above important resistance ~1,131 this week. The S&P 500 currently sits at 1,148, and I believe is poised to test the April highs around 1,200 in the near term.
Citi will be reporting earnings on October 18th, and as such the government's blackout period for selling shares of Citi begins on October 1st, and lasts through options expiration. Looking back to July when the government had their blackout period, Citi ran from $3.80 all the way up to $4.30. I am not going to bore you with all the math, but my analysis suggests that Citi can make a run to $4.15 and maybe higher before expiration based on the market move I am expecting, and the past history of what happens during the government blackout period.
As you know, the S&P 500 crossed above important resistance ~1,131 this week. The S&P 500 currently sits at 1,148, and I believe is poised to test the April highs around 1,200 in the near term.
Citi will be reporting earnings on October 18th, and as such the government's blackout period for selling shares of Citi begins on October 1st, and lasts through options expiration. Looking back to July when the government had their blackout period, Citi ran from $3.80 all the way up to $4.30. I am not going to bore you with all the math, but my analysis suggests that Citi can make a run to $4.15 and maybe higher before expiration based on the market move I am expecting, and the past history of what happens during the government blackout period.
Portfolio up 1.94% This Week, Wilshire 5000 Up 2.13%
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The Wilshire 5000 closed at 12,062.80, up from 11,811.39, or 2.13%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,619.35, or 3.82% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1%. This is in comparison to a reading of 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1% on September 14th. Bullish sentiment has now turned higher in three consecutive weeks.
The Volatility Index closed Friday at 21.71, down from 22.01 back on September 17th.
Now for the portfolio...
1) Verizon at $32.64, up 6.82% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.07/share, worth $56.49 to this portfolio currently.
2) AT&T closed at $27.03, up 3.01% for the year, inclusive of dividends.
3) GE closed at $16.66, up by 10.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.50, down by 25.55% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased on Monday closed at $4.85, up 4.30% since my buy.
6) December 2010 SPY $102 Calls closed at $14.02, up 8.68% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased Monday closed at $3.58, down 1.92% since my buy.
8) AAPL closed at $292.32 up by 50.87% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012. See a post that I am going to do later on in regards to Citi.
10) C closed at $3.90, down by 2.01% since my buy on Monday.
11) GS closed at $147.28, up by 10.93% since my buy.
Overall, the portfolio is up by 5.74% (8.74% for the DOW Dogs), versus 4.92% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 1.37% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .82% outperform.
The Wilshire 5000 closed at 12,062.80, up from 11,811.39, or 2.13%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,619.35, or 3.82% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.4% BULLS, and 29.3% BEARS, for a spread of 12.1%. This is in comparison to a reading of 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1% on September 14th. Bullish sentiment has now turned higher in three consecutive weeks.
The Volatility Index closed Friday at 21.71, down from 22.01 back on September 17th.
Now for the portfolio...
1) Verizon at $32.64, up 6.82% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $8.07/share, worth $56.49 to this portfolio currently.
2) AT&T closed at $27.03, up 3.01% for the year, inclusive of dividends.
3) GE closed at $16.66, up by 10.76% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $32.50, down by 25.55% since my buy.
5) January 2011 WHR $75/$85 Call spread purchased on Monday closed at $4.85, up 4.30% since my buy.
6) December 2010 SPY $102 Calls closed at $14.02, up 8.68% since my buy.
7) January 2012 DD $45/$55 Call spreads purchased Monday closed at $3.58, down 1.92% since my buy.
8) AAPL closed at $292.32 up by 50.87% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012. See a post that I am going to do later on in regards to Citi.
10) C closed at $3.90, down by 2.01% since my buy on Monday.
11) GS closed at $147.28, up by 10.93% since my buy.
Overall, the portfolio is up by 5.74% (8.74% for the DOW Dogs), versus 4.92% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 1.37% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .82% outperform.
Monday, September 20, 2010
Trading Update - 9/20/10
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After a weekend of analysis I posted here last night that I was going to take up positions in DuPont (DD), and Whirlpool (WHR). I also noted that I would be trading out of NLY and FXP. Well, the market helped in some regards, and hurt in others. While it was nice to be seemingly right in my research of both these names, I wish the market would have held off another day so I could get in at better prices.
If you noticed, the market was up big today, and DD and WHR were no exceptions, especially WHR which was up 7.24% vs. 1.52% for the S&P 500. As such, I didn't get into or out of any of the positions at the prices I wanted. I was able to trade out of FXP at $33.26, as well as NLY at $18.02.
With the proceeds, I purchased three (3) DD $45/$55 January 2012 CALL spreads for $3.65/each, or $1,095. I was also able to buy one (1) WHR $75/$85 January 2011 CALL spread for $4.65, or $465 total.
Due to the jump in DD options today, I was unable to buy the second WHR call spread. Therefore, I have ~$300 left in cash. I do not want to leave that money on the sidelines, so I am going to by seventy-five (75) shares of Citigroup at $3.98. As you recall, I owned this stock earlier in the year, and did quite well with it. I suspect that this name is going to make a huge move after the government sells all of it's shares. We'll see.
After a weekend of analysis I posted here last night that I was going to take up positions in DuPont (DD), and Whirlpool (WHR). I also noted that I would be trading out of NLY and FXP. Well, the market helped in some regards, and hurt in others. While it was nice to be seemingly right in my research of both these names, I wish the market would have held off another day so I could get in at better prices.
If you noticed, the market was up big today, and DD and WHR were no exceptions, especially WHR which was up 7.24% vs. 1.52% for the S&P 500. As such, I didn't get into or out of any of the positions at the prices I wanted. I was able to trade out of FXP at $33.26, as well as NLY at $18.02.
With the proceeds, I purchased three (3) DD $45/$55 January 2012 CALL spreads for $3.65/each, or $1,095. I was also able to buy one (1) WHR $75/$85 January 2011 CALL spread for $4.65, or $465 total.
Due to the jump in DD options today, I was unable to buy the second WHR call spread. Therefore, I have ~$300 left in cash. I do not want to leave that money on the sidelines, so I am going to by seventy-five (75) shares of Citigroup at $3.98. As you recall, I owned this stock earlier in the year, and did quite well with it. I suspect that this name is going to make a huge move after the government sells all of it's shares. We'll see.
Sunday, September 19, 2010
What I'm Trading Monday September 20th, 2010
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I think it is time to take some action with my portfolio. Tomorrow, I will be selling all of my shares in FXP, as well as NLY. FXP is down 22.12% year-to-date, and I suspect the shorts are going to have some fun with this one as the market trends up. NLY is up 4.04% year-to-date, and I believe it is time to invest in something a bit more aggressive. I am putting in orders to sell at $33.85 and $17.92, respectively.
In their place I am going to buy three $45/$55 January 2012 CALL spreads in DuPont (DD). I am putting in an order for $3.13 for this trade.
The second trade I am going to make is to buy two $75/$85 January 2011 CALL spreads in Whirlpool (WHR). I am putting in an order for $4.78 for this trade.
We'll see how I do in the time ahead. In the meantime, I will be writing more this week about some of the names I have recently mentioned in this blog. Stay tuned, and don't forget to subscribe! Go Colts!
I think it is time to take some action with my portfolio. Tomorrow, I will be selling all of my shares in FXP, as well as NLY. FXP is down 22.12% year-to-date, and I suspect the shorts are going to have some fun with this one as the market trends up. NLY is up 4.04% year-to-date, and I believe it is time to invest in something a bit more aggressive. I am putting in orders to sell at $33.85 and $17.92, respectively.
In their place I am going to buy three $45/$55 January 2012 CALL spreads in DuPont (DD). I am putting in an order for $3.13 for this trade.
The second trade I am going to make is to buy two $75/$85 January 2011 CALL spreads in Whirlpool (WHR). I am putting in an order for $4.78 for this trade.
We'll see how I do in the time ahead. In the meantime, I will be writing more this week about some of the names I have recently mentioned in this blog. Stay tuned, and don't forget to subscribe! Go Colts!
Saturday, September 18, 2010
Good Week For My Portfolio, Overall Market
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The Wilshire 5000 closed at 11,811.39, up from 11,698.90, or .96%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,602.84, or 1.80% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1%. This is in comparison to a reading of 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1% on September 7th. Sentiment continues to turn higher since our low of 29.4% BULLS back on August 31st. The 4-week moving average of BULLISH sentiment still sits at a low for the year of 33.2%. I see these as bullish signs.
The Volatility Index closed Friday at 22.01, up from 21.21 back on September 14th.
Now for the portfolio...
1) Verizon at $31.68, up 3.68% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.96/share, worth $55.72 to this portfolio currently.
2) AT&T closed at $27.57, up 5.07% for the year, inclusive of dividends.
3) GE closed at $16.29, up by 8.30% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.80, down by 22.58% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.86, down by 22.12% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.45, down 3.49% since I purchased them a few weeks back.
7) NLY closed at $17.92, up by 4.04% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $275.37 up by 42.13% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $150.98, up by 10.93% since my buy.
Overall, the portfolio is up by 3.80% (7.57% for the DOW Dogs), versus 2.73% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 4.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.07% outperform.
More later.
The Wilshire 5000 closed at 11,811.39, up from 11,698.90, or .96%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,602.84, or 1.80% below today's close.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 36.7% BULLS, and 31.1% BEARS, for a spread of 1.1%. This is in comparison to a reading of 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1% on September 7th. Sentiment continues to turn higher since our low of 29.4% BULLS back on August 31st. The 4-week moving average of BULLISH sentiment still sits at a low for the year of 33.2%. I see these as bullish signs.
The Volatility Index closed Friday at 22.01, up from 21.21 back on September 14th.
Now for the portfolio...
1) Verizon at $31.68, up 3.68% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.96/share, worth $55.72 to this portfolio currently.
2) AT&T closed at $27.57, up 5.07% for the year, inclusive of dividends.
3) GE closed at $16.29, up by 8.30% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.80, down by 22.58% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.86, down by 22.12% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.45, down 3.49% since I purchased them a few weeks back.
7) NLY closed at $17.92, up by 4.04% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $275.37 up by 42.13% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $150.98, up by 10.93% since my buy.
Overall, the portfolio is up by 3.80% (7.57% for the DOW Dogs), versus 2.73% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 4.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 1.07% outperform.
More later.
Thursday, September 16, 2010
Short Squeeze Screen Produces Good Results!
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Cabela's Incorporated (CAB), Retail (Specialty)
9/10/10 Close - $16.72
9/16/10 Close - $17.29
Four Day Return - 3.41%
Children's Place Retail Stores, Inc. (PLCE), Retail (Apparel)
9/10/10 Close - $47.71
9/16/10 Close - $48.21
Four Day Return - 1.05%
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
9/10/10 Close - $19.07
9/16/10 Close - $19.63
Four Day Return - 2.94%
The average return for these three stocks is 2.47%. Compare that to a return of 1.36% for the same time period for the S&P 500. After Monday's close I posted here that the three picks were up 3.84%, and had I been trading them I probably would have taken profits using short dated options.
Well, today I decided to see if I could find any more of such opportunities. I have modified my stock screen criteria to be as follows:
1) Asset Class > Small Cap. This includes all asset classes larger than small cap, it just excludes the micro caps.
2) Price Performance vs. S&P 500 Last 4 Weeks = -20% to 0%. The market has been going up the last few weeks, and I want laggards.
3) Component of NYSE. This ensures these are legitimately traded companies, and should provide some liquidity assurance.
4) Beta > S&P 500 volatility. Detailed in my post from Monday morning.
5) Price/Cash Flow Ratio < 10x. Also detailed in my post from Monday morning.
6) Short Interest as Percent of Float > 20%. Also detailed in my post from Monday morning.
The results:
1) Barnes & Noble (BKS), $15.90, Retail/Specialty
2) Boyd Gaming Corporation (BYD), $7.19, Casinos & Gaming
3) GameStop (GME), $18.59, Retail/Technology
4) Genco Shipping & Trading Limited (GNK), $16.15, Water Transportation
5) Life Time Fitness (LTM), $37.51, Recreational Activities
Over the next few days I am going to watch these names and see how they do. If they perform well, that is, better than the market, this might be a strategy that I begin to employ. We'll see.
Why Do You Blog?
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This is a paid post.
I am writing this post to tell you why I blog. I needed a creative outlet where I could share my investing thoughts and experiences. While my long-term goal is to open my own hedge fund, and run money, that is not happening anytime soon. This is the next best thing.
Ironically, shortly after beginning this blog, it came to my attention that you can get paid to blog. This was a new revelation for me. There are many ways to make money blogging, some of them I use, some of them I don’t. Among them are Google AdSense, Adwords, private advertisers, or blog advertising. While my blog covers popular topics, I have found it a chore to get the word out about this page, and to use specific keywords so my blog would get noticed. (Called SEO. If you don’t know what that is, check here)
So far, the best means to make money blogging that I have found is the Blog Advertising Store. It’s easy to sign up (it took me less than a day), and they feed you opportunities for paid posts (like this one) regularly. When you’re done, you post the link to their website, and they send funds to your PayPal. It’s pretty easy. They also have a blog, check it out here.
I write this blog because I love finance, and the world of investing. The fact that blogs can make money is a bonus. If you are reading this blog, and you currently write one of your own, I encourage you to post your experiences in the “comments” section of this page for all to share.
Everybody Should Have Their Investing Rules
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I found an interesting article titled “The Golden Rules Of Investing” while I was perusing the interweb today. The basic premise of the article is that this gentleman is a mess when it comes to the market, and from the recent financial crisis he has gleaned ten (10) steadfast principles on investing. They are:
1) Thou cannot predict thy market
2) Take a long-term view
3) Keep adding to your investments – dollar cost averaging
4) Your age should not dictate how you invest
5) Rebalance your investments periodically
6) Buy and sell gradually
7) Use all-in-one funds to improve returns
8) Avoid traps in employer sponsored retirement accounts
9) Consider annuities for income, and
10) Use ETFs
While I certainly agree with most of this list, some of it, I think, is a bit misguided. For one, I think most investors should take a long-term view. However, a long-term view is not what it used to be. To me, long-term is one year, and not much more. Furthermore, sometimes a short-term opportunity presents itself, and it is too good to pass up.
Finally, I do believe it is possible to time the market within a reasonable realm. It’s difficult, but often the data will tell you it’s a bottom, or close to it. When everybody is running for the exits, that’s when I want to walk into the theatre and catch a movie. The same is true at market tops. You don’t need to catch the absolute top or bottom, but you should try to be close. Sometimes you just have to hold your nose, and go against the consensus.
On another interesting note, here is another article title “What Kind Of Investor Are You?”. I think it goes well with this article. Take a look at both, and let me know what you think.
Wednesday, September 15, 2010
New! Email Subscription Option!
Hello all. As you will notice on the right side of the page under the "Follow Me On Twitter" box, there is a new option to follow me via email. If you're visiting this page for the 1st time or the 100th time, please take the time to enter your email address and subscribe. It takes two seconds, and will give you convenient alerts on when I have posted. Thanks!
Why Invest In Treasuries? 14 DJIA Stocks Have Higher Yields!
Here is an updated list from a post I did on August 6th. Currently, the 10-year U.S. Treasury is yielding 2.74%, down from 2.86% when I last did one of these lists. Why invest in Treasuries when you can get a higher yield and the potential for price appreciation from equities? Here's a list of 14 DOW stocks that currently are yielding more than the 10-year:
1) Verizon (VZ), 6.25%
2) AT&T (T), 6.00%
3) Pfizer (PFE), 4.17%
4) Merck (MRK), 4.16%
5) DuPont (DD), 3.82%
6) Kraft (KFT), 3.67%
7) Chevron (CVX), 3.64%
8) Johnson & Johnson (JNJ), 3.54%
9) Home Depot (HD), 3.16%
10) Proctor & Gamble (PG), 3.15%
11) Coca-Cola (KO), 3.07%
12) McDonald's (MCD), 2.94%
13) General Electric (GE), 2.94%
14) Exxon-Mobil (XOM), 2.89%
1) Verizon (VZ), 6.25%
2) AT&T (T), 6.00%
3) Pfizer (PFE), 4.17%
4) Merck (MRK), 4.16%
5) DuPont (DD), 3.82%
6) Kraft (KFT), 3.67%
7) Chevron (CVX), 3.64%
8) Johnson & Johnson (JNJ), 3.54%
9) Home Depot (HD), 3.16%
10) Proctor & Gamble (PG), 3.15%
11) Coca-Cola (KO), 3.07%
12) McDonald's (MCD), 2.94%
13) General Electric (GE), 2.94%
14) Exxon-Mobil (XOM), 2.89%
DOW Dogs Beating Market By 147%; S&P Dogs?
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As you all know, I am a big fan of the use of stock screens, and specifically my DOW Dogs strategy. After yesterday's trading, the three DOW Dog stocks currently held in my portfolio are up 5.70%. You can see which stocks those are here. To date, the total market index, the Wilshire 5000, is up 2.31% year-to-date. If you do the math, the DOW Dogs are beating the market by 147%. Not too bad.
As of this morning, one new name has appeared in my stock screen: Wal-Mart (WMT). WMT is currently trading at $52.66, 8.48x price/cash flow, .46x price/sales, and 13.46x price/earnings. Wal-Mart is also carrying a yield of 2.30%. Overall, I think this is a very attractive name currently selling at a discount. If you believe the economy is NOT falling off a cliff, as I do, then this is also an interesting play on consumer spending and confidence.
"Why limit this strategy to just DJIA stocks? Can we expand this?" you say. Well, yes, yes we can. This morning I ran the same screen, but instead input S&P 500 stocks instead of DJIA stocks. The only change I made was to make the price/cash flow ratio criteria more stringent, so as to not return too many names. Here is what the screen looks like:
Criteria -
1) Component of S&P 500
2) Price/Cash Flow of 0-5x
3) Insider Activity over the last month - net accumulation
The Names -
1) Dean Foods Company (DF), $10.31, 0.00% yield, 4.26x price/cash
2) Supervalu, Inc. (SVU), $11.09, 3.16% yield, 2.03x price/cash
3) Tenet Healthcare Corporation (THC), $4.33, 0.00% yield, 3.85x price/cash
4) The AES Corporation (AES), $11.19, 0.00% yield, 3.90x price/cash
5) Time Warner Cable, Inc. (TWC), $55.17, 2.90% yield, 4.24x price/cash
6) Verizon Communications (VZ), $30.91, 6.31% yield, 3.81x price/cash
7) Whirlpool Corporation (WHR), $72.32, 2.38% yield, 3.87x price/cash
Admittedly, I am not all that interested in the names that pay no dividend. Three names on this list do not pay one: DF, THC, and AES. However, I am going to keep track of all these names, and see how they perform relative to the market. As of yesterday's close the Wilshire 5000 was at 11,762.80. I suspect the broad market, and all of these names, will be higher by the end of the year.
As you all know, I am a big fan of the use of stock screens, and specifically my DOW Dogs strategy. After yesterday's trading, the three DOW Dog stocks currently held in my portfolio are up 5.70%. You can see which stocks those are here. To date, the total market index, the Wilshire 5000, is up 2.31% year-to-date. If you do the math, the DOW Dogs are beating the market by 147%. Not too bad.
As of this morning, one new name has appeared in my stock screen: Wal-Mart (WMT). WMT is currently trading at $52.66, 8.48x price/cash flow, .46x price/sales, and 13.46x price/earnings. Wal-Mart is also carrying a yield of 2.30%. Overall, I think this is a very attractive name currently selling at a discount. If you believe the economy is NOT falling off a cliff, as I do, then this is also an interesting play on consumer spending and confidence.
"Why limit this strategy to just DJIA stocks? Can we expand this?" you say. Well, yes, yes we can. This morning I ran the same screen, but instead input S&P 500 stocks instead of DJIA stocks. The only change I made was to make the price/cash flow ratio criteria more stringent, so as to not return too many names. Here is what the screen looks like:
Criteria -
1) Component of S&P 500
2) Price/Cash Flow of 0-5x
3) Insider Activity over the last month - net accumulation
The Names -
1) Dean Foods Company (DF), $10.31, 0.00% yield, 4.26x price/cash
2) Supervalu, Inc. (SVU), $11.09, 3.16% yield, 2.03x price/cash
3) Tenet Healthcare Corporation (THC), $4.33, 0.00% yield, 3.85x price/cash
4) The AES Corporation (AES), $11.19, 0.00% yield, 3.90x price/cash
5) Time Warner Cable, Inc. (TWC), $55.17, 2.90% yield, 4.24x price/cash
6) Verizon Communications (VZ), $30.91, 6.31% yield, 3.81x price/cash
7) Whirlpool Corporation (WHR), $72.32, 2.38% yield, 3.87x price/cash
Admittedly, I am not all that interested in the names that pay no dividend. Three names on this list do not pay one: DF, THC, and AES. However, I am going to keep track of all these names, and see how they perform relative to the market. As of yesterday's close the Wilshire 5000 was at 11,762.80. I suspect the broad market, and all of these names, will be higher by the end of the year.
Tuesday, September 14, 2010
My Portfolio, Dow Dogs Beating The Market
The Wilshire 5000 closed at 11,698.90, up from 11,453.30, or 2.14%, since my last post. The Wilshire 5000's 200-day moving average currently sits at 11,592.67, or .92% below today's close. The Wilshire 5000 closed above it's 200-day for the first time since August 11th.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1%. This is in comparison to a reading of 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3% on August 31st. Sentiment has turned a bit higher since we saw the lowest reading of March 2009 in the prior week. Given how the market has been trading the last few days, I would say that we will see a higher BULL reading this week, as well as an increased spread. We'll find out Thursday night.
The Volatility Index closed Monday at 21.21, down from 23.25 back on September 8th.
Now for the portfolio...
1) Verizon at $30.90, up 1.13% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.68/share, worth $53.76 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $16.25, up by 8.03% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.14, down by 24.09% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.93, down by 21.95% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.03, down 6.74% since I purchased them a few weeks back.
7) NLY closed at $17.87, up by 3.74% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $267.04 up by 37.83% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $154.37, up by 13.42% since my buy.
Overall, the portfolio is up by 2.61% (5.72% for the DOW Dogs), versus 1.75% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 5.89% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .86% outderperform. A substantial portion of my performance is due to my Dow Dogs strategy. This strategy has consistently outperformed the market for me over the past 5 years, and I have no reason to suspect it won't do so for the next 40. In a future post I will detail the performance of the three additional Dow Dogs I recommended back on July 26th.
I stated in my last portfolio update that the market was due for a bounce. Since that post, the market is up over 2%. The market has been volatile, no doubt. Some people believe we are range bound. While that may be true short term, eventually we are going to break out of this range to the upside. Watch and see if we can get a few days close above the 1,140 level on the S&P, that will be the telling sign. For now, I think sentiment is negative enough, and there is enough money floating around to believe that we are poised for a move higher.
According to my post on June 20th, I believed then that the time to buy was on or around June 1st. On June 1st, the Wilshire 5000 closed at 11,184.70. As I stated before, the market is now at 11,698.90, up 4.59%. The market is only up 1.75% for the entire year. The talking heads would have you believe that the world fell off the edge during that period of time though. It's always important to keep things in perspective, watch the data, and pay attention to history.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 33.3% BULLS, and 32.2% BEARS, for a spread of 1.1%. This is in comparison to a reading of 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3% on August 31st. Sentiment has turned a bit higher since we saw the lowest reading of March 2009 in the prior week. Given how the market has been trading the last few days, I would say that we will see a higher BULL reading this week, as well as an increased spread. We'll find out Thursday night.
The Volatility Index closed Monday at 21.21, down from 23.25 back on September 8th.
Now for the portfolio...
1) Verizon at $30.90, up 1.13% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.68/share, worth $53.76 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $16.25, up by 8.03% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $33.14, down by 24.09% since my buy.
5) FXP, the doubleshort China ETF, closed at $33.93, down by 21.95% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $12.03, down 6.74% since I purchased them a few weeks back.
7) NLY closed at $17.87, up by 3.74% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $267.04 up by 37.83% since my buy.
9) January '12 Citigroup Calls closed at $.15, down by 65.91% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $154.37, up by 13.42% since my buy.
Overall, the portfolio is up by 2.61% (5.72% for the DOW Dogs), versus 1.75% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 5.89% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .86% outderperform. A substantial portion of my performance is due to my Dow Dogs strategy. This strategy has consistently outperformed the market for me over the past 5 years, and I have no reason to suspect it won't do so for the next 40. In a future post I will detail the performance of the three additional Dow Dogs I recommended back on July 26th.
I stated in my last portfolio update that the market was due for a bounce. Since that post, the market is up over 2%. The market has been volatile, no doubt. Some people believe we are range bound. While that may be true short term, eventually we are going to break out of this range to the upside. Watch and see if we can get a few days close above the 1,140 level on the S&P, that will be the telling sign. For now, I think sentiment is negative enough, and there is enough money floating around to believe that we are poised for a move higher.
According to my post on June 20th, I believed then that the time to buy was on or around June 1st. On June 1st, the Wilshire 5000 closed at 11,184.70. As I stated before, the market is now at 11,698.90, up 4.59%. The market is only up 1.75% for the entire year. The talking heads would have you believe that the world fell off the edge during that period of time though. It's always important to keep things in perspective, watch the data, and pay attention to history.
Monday, September 13, 2010
Were You Up 3.84% Today?
I hope this posts finds all of you well. I also hope that this post finds you a little bit richer. This weekend I wrote a blog post which posted this morning before market open. In it, I detailed a new screen I was trying, and the results that it produced when I ran it. Here's what happened today...
S&P 500 - +12.35, up 1.11%
Cabela's Incorporated (CAB) - +$.58, up 3.47%
Children's Place Retail Stores, Inc. (PLCE) - +$1.49, up 3.12%
True Religion Apparel, Inc. (TRLG) - +$.94, up 4.93%
Overall, if you invested in all three in equal increments, you would have seen a total return of 3.84% today, more than triple the return of the S&P 500 which returned 1.11%. I must say, I am very intrigued by the possibilities of this type of screen. As you can see, the screen identified stocks that will move higher much harder than the overall market. In an up market, this is a great thing, in a down market, it's just as bad.
If one is able to identify short periods of time where the market is likely to trend higher, this can be a very profitable strategy. I am going to keep an eye on these stocks for a while, and will look for opportunities in the future to test this stock screen further. While I myself did not buy any of these names this morning, as this was an experiment, in the future if I were to do so I would take part with near dated options. With near dated options I will have a defined risk, and the potential for a higher percentage gain will be much greater. Had I been trading such options today, odds are I would have covered those options in the same day with a substantial profit.
S&P 500 - +12.35, up 1.11%
Cabela's Incorporated (CAB) - +$.58, up 3.47%
Children's Place Retail Stores, Inc. (PLCE) - +$1.49, up 3.12%
True Religion Apparel, Inc. (TRLG) - +$.94, up 4.93%
Overall, if you invested in all three in equal increments, you would have seen a total return of 3.84% today, more than triple the return of the S&P 500 which returned 1.11%. I must say, I am very intrigued by the possibilities of this type of screen. As you can see, the screen identified stocks that will move higher much harder than the overall market. In an up market, this is a great thing, in a down market, it's just as bad.
If one is able to identify short periods of time where the market is likely to trend higher, this can be a very profitable strategy. I am going to keep an eye on these stocks for a while, and will look for opportunities in the future to test this stock screen further. While I myself did not buy any of these names this morning, as this was an experiment, in the future if I were to do so I would take part with near dated options. With near dated options I will have a defined risk, and the potential for a higher percentage gain will be much greater. Had I been trading such options today, odds are I would have covered those options in the same day with a substantial profit.
Are These Stocks Poised For A Short Squeeze?
Over the weekend, I used the trusty E-Trade stock screener to attempt to identify some names that are poised for a short squeeze. When a stock is shorted, the investor "borrows" the stock at a high price, with the intent of "buying" it back at a lower price. When a stock with a high short percentage of the float begins to move higher, the shorts begin to lose money and thus get "squeezed" into buying the stock back to cover their losses. As a stock begins to move higher, the move is exacerbated by such unnatural buying.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Saturday, September 11, 2010
Wal-Mart (WMT) On My Radar
This morning, I checked my E-Trade stock screener, looking to see if anything new popped up. Well, it did. My stock screener returned Wal-Mart (WMT) and Verizon (VZ). While I have talked endlessly on this blog about Verizon, and that pick is up .87% year-to-date, I am far more intrigued by Wal-Mart.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
Wednesday, September 8, 2010
The Market Is Suggesting A Bounce Is Coming
Hello again. I am just recently back from vacation, and studying for a CPA Exam before that. I have been eager to collect all of my data, and see what the market is doing. Let's get into it...
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
Wall Street Journal Subscription Discount
Much of the information that you read on this blog is news found in "The Journal". I thought you guys might like this post by a paid sponsor about discounts on the publication that everybody in the world of finance reads. I have been a subscriber for a few years and love it. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Sep 29, 2009 03:51 ET
Prime Rate Website Offers Wall Street Journal Subscription Discounts
"We've added lots of new content, including new blogs and charts," said content manager Steve Brown. "We're excited to offer website visitors the best possible pricing for the Wall Street Journal®. It's very widely accepted as America's premier business and finance newspaper. As a source of first-class journalism covering the world of business and the global economy, the Journal is a vital staple in the information diet of knowledge-hungry individuals all over the world, and from all walks of life. It's an indispensable resource."
New subscribers can get access to the online version of the Wall Street Journal for $1.99 per week. Those who are interested in receiving the print version alone can get the Journal delivered six days per week at $2.29 per week. A third discount subscription option is to get both the print and online versions of the Journal at $2.99 per week.
The FedPrimeRate.com website also features discounts for subscriptions to the online and/or print editions of Barron's Magazine and Investor's Business Daily (IBD).
Recently, a graph which compares the target fed funds rate to the U.S. Prime Rate, the one-month LIBOR rate and the three-month LIBOR rate was added to the site. It's a fascinating and telling chart which essentially chronicles the history of the global credit crisis. As numerous banks in the industrialized world were failing as a result of exposure to toxic debt, the Federal Reserve aggressively cut short-term rates to record-low levels. Commercial banks, on the other hand, responded to the same financial havoc by raising rates on unsecured, short-term interbank loans, because the risk associated with such loans increased dramatically. The resultant and precipitous decline in interbank lending produced a domino effect which led to a chocking off of lending to businesses and consumers in the U.S. and other developed nations.
About FedPrimeRate.com
The website at www.FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and personal finance.
No Exam Life Insurance
Here is an interesting article by a paid sponsor on no exam life insurance. As somebody who had to buy such coverage for both of his parents because it was too late for them to pass an exam, I can tell you that it really is a great (and useful) product. Life insurance, unfortunately, is often one of those necessary evils. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Jun 20, 2010 19:48 ET
No Medical Exam Life Insurance Page Added to FedPrimeRate.com Website
"The addition of a life insurance information page is a natural step forward for us as we pursue our goal of being the most useful and unique finance site on the Internet," said content manager Steve Brown. "Our new life insurance page is very unique. It's not just a bunch of dry content about life insurance. We've included highly instructive, real-world stories related to life insurance, stories that anyone can relate to. There's also a rich and carefully crafted life insurance frequently asked questions section which will be expanded indefinitely."
FedPrimeRate.com is already the Internet authority on the United States Prime Rate, LIBOR and other key market rates like the benchmark fed funds target rate. Establish in 2005, FedPrimeRate.com has expanded considerably over the last five years to include blogs about car insurance, consumer and business credit cards, and interest rates. The site also has in-depth information about controversial loan products like online payday loans. Other popular features on the site include an impressive number of detailed and regularly updated charts, a U.S. Prime Rate frequently asked questions page and an entire section dedicated to housing and foreclosures.
Consumers with dependents know how important it is to have life insurance. However, many aren't comfortable with the idea of dealing with pushy insurance salesmen or having a paramedical visit their home to draw blood. No medical exam term life insurance is very popular due to the simplicity of the application process, and, of course, because the premiums are very affordable when compared to other life products like whole, variable, universal, permanent and hybrid plans.
"We like and respect other finance-related websites like BankRate. Our mission, however, is to provide web surfers with the most unique and useful finance-related info that they simply won't be able to find anywhere else. We're very proud of what we've accomplished over the last five years, and we have no plans on slowing down," added Brown.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and personal finance.
Small Business Credit Cards Are Back
Hello again, folks. I have returned to the blogosphere after a few week sabbatical to study for the CPA exam, as well as a long Labor Day Weekend vacation.
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Jul 15, 2010 22:13 ET
FedPrimeRate.com Now Recommending Small Business Credit Cards
"We're really glad to see business credit cards coming back," said Steve Brown, content manager at FedPrimeRate.com. "Small business owners all across America have been struggling to get access to loans as banks continue to hoard cash. Though the American economy is growing again, the banking sector is still hurting, with many banks still facing closure by the FDIC."
To date, the Federal Deposit Insurance Corporation (FDIC) has closed 90 banks in 2010, which, so far, is a faster pace of bank closures when compared to 2009. Between the beginning of 2009 and July 17, 2009, the FDIC closed 57 banks. The FDIC closed a total of 139 banks during all of 2009. Another troubling fact: unnumbered banks across the country are defaulting on their TARP payments.
"We like the new Ink line of business credit cards from Chase because they offer great rates, reasonable terms and conditions, and they have a very strong bank behind them," continued Brown. "Chase is on an extremely short list of banks that emerged from the banking crisis virtually unscathed. We believe that a bank as strong and responsible as Chase has the financial strength and corporate culture necessary to provide some of the most consumer and business-owner friendly credit products around."
Many factors have contributed to banks scaling back on lending to small businesses. Since the subprime mortgage-inspired financial crisis unfolded two years ago, banks have had to operate within a powerfully negative economic environment: a severe banking crisis, a devastating recession, rising unemployment and defaults, disinflation and the very real threat of deflation. As a result, the credit card industry contracted sharply. Another major factor: the market for credit-card receivables completely dried up. During the credit boom years, banks would bundle up all kinds of credit-card debt, including business-credit card debt, and sell this debt to investors on Wall Street -- very similar to the way mortgages were packaged and sold to investors. Credit-card securitization contributed much to the ready flow of credit to all types of consumers and businesses, as banks were more than happy to pass the risk associated with unsecured debt onto Wall Street. However, the fate of this market was to become another domino felled by one of the many financial shockwaves created by the subprime-mortgage crisis. Business credit cards became so risky and unprofitable for banks that many business card accounts were either closed or had their credit lines severely limited.
Advanta, a company that specialized in small business credit cards, closed all of its card accounts on May 30, 2009. Advanta Corporation filed for bankruptcy relief in November, 2009. The FDIC closed Advanta Bank Corporation in March of 2010.
Chase emerged from the global banking crisis and subsequent Great Recession as one of America's strongest and most resilient banks.
"Have you seen how complicated it is to get a Small Business Administration loan?" quipped Brown. "Business credit cards are not just a great way to get quick and easy access to short-term financing. Small businesses owners can benefit from the rewards programs that come with many business cards, and they can also stay more organized with monthly and yearly expense reports that many business credit card issuers provide. A business credit card also helps a business build its credit rating, making it more likely to get approved for a traditional bank loan in the future."
The typical small business owner who uses a business credit card for short-term financing is a responsible borrower. According to the Federal Reserve, less than 20% of small business credit card holders carry a balance.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and finance.
Friday, August 20, 2010
WSJ: Treasury Yields Fall In Trading Friday
For awhile now I have been saying I am bearish on Treasuries. I have even gone so far as to put out a list of DOW stocks that are trading with higher yields than Treasuries. Perhaps it is time to update my list. Today during intra-day trading, the yield on the 10-year fell as low as 2.531%. Here is an interesting article from The Wall Street Journal. Apparently, I am not the only one totally miffed by this phenomenon. Make no bones about it, I am on the side of the trade that thinks this is a massive bubble forming in Treasuries.
Wednesday, August 18, 2010
What Warren Buffett Is Buying
Recently, I came across a blog post by a fellow blogger here about what Uncle Warren is currently buying. Warren recently added to his position in Johnson & Johnson (JNJ), among other names. However, JNJ really caught my eye.
If you will remember in a post back on July 26th, I recommended JNJ, as well as MRO, and KMB. At that time, JNJ was trading at $57.74, and is now trading at $59.35, up 2.79%. In the same time period the Wilshire 5000 is down by 2.29%.
It is worth mentioning that KMB is also up 1.79%, and MRO is down 2.49%. I still like all three names, and Buffett buying JNJ is just a bonus.
For now, I see the market in a long-term uptrend. Sometime this week, I hope to put together an in-depth post on Treasury Bonds and interest rates that I think you will find interesting. I have been gathering data and formulating this piece on the upcoming Treasury bubble. I think you'll find it interesting. Stay tuned.
If you will remember in a post back on July 26th, I recommended JNJ, as well as MRO, and KMB. At that time, JNJ was trading at $57.74, and is now trading at $59.35, up 2.79%. In the same time period the Wilshire 5000 is down by 2.29%.
It is worth mentioning that KMB is also up 1.79%, and MRO is down 2.49%. I still like all three names, and Buffett buying JNJ is just a bonus.
For now, I see the market in a long-term uptrend. Sometime this week, I hope to put together an in-depth post on Treasury Bonds and interest rates that I think you will find interesting. I have been gathering data and formulating this piece on the upcoming Treasury bubble. I think you'll find it interesting. Stay tuned.
Sunday, August 15, 2010
I'm Still Beating The Market By Over 3.0%
The Wilshire 5000 closed at 11,203.50, down from 11,680.30, or 4.08%, since my post on 8/7/10. The Wilshire 5000's 200-day moving average currently sits at 11,579.62, or 3.25% below Friday's close. The Wilshire 5000 has now closed below it's 200-day moving average for the 3rd day in a row.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2%. This is in comparison to a reading of 38.9% BULLS, and 33.3% BEARS, for a spread of 5.6% on August 3rd.
The Volatility Index closed Friday at 26.24, up from 21.74 back on August 7th.
Now for the portfolio...
1) Verizon at $30.03, down 1.72% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.60/share, worth $53.20 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $15.38, up by 2.25% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $34.19, down by 21.68% since my buy.
5) FXP, the doubleshort China ETF, closed at $37.72, down by 13.24% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.53, down from 18.37% since I purchased them this past week
7) NLY closed at $17.39, up by .96% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $249.10 up by 28.57% since my buy.
9) January '12 Citigroup Calls closed at $.18, down by 59.09% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $148.08, up by 8.80% since my buy.
Overall, the portfolio is up by .52% (2.84% for the DOW Dogs), versus -2.56% for the Wilshire 5000. The current basket of ten stocks that I am currently invested in, including dividends, is down 7.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 3.08% outperform.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2%. This is in comparison to a reading of 38.9% BULLS, and 33.3% BEARS, for a spread of 5.6% on August 3rd.
The Volatility Index closed Friday at 26.24, up from 21.74 back on August 7th.
Now for the portfolio...
1) Verizon at $30.03, down 1.72% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.60/share, worth $53.20 to this portfolio currently.
2) AT&T closed at $26.90, up 2.52% for the year, inclusive of dividends.
3) GE closed at $15.38, up by 2.25% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $34.19, down by 21.68% since my buy.
5) FXP, the doubleshort China ETF, closed at $37.72, down by 13.24% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.53, down from 18.37% since I purchased them this past week
7) NLY closed at $17.39, up by .96% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $249.10 up by 28.57% since my buy.
9) January '12 Citigroup Calls closed at $.18, down by 59.09% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $148.08, up by 8.80% since my buy.
Overall, the portfolio is up by .52% (2.84% for the DOW Dogs), versus -2.56% for the Wilshire 5000. The current basket of ten stocks that I am currently invested in, including dividends, is down 7.79% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 3.08% outperform.
Wednesday, August 11, 2010
Real Estate Bottom Coming Soon? Nope. You Already Missed It.
This article was posted today on the Bloomberg website, stating that housing prices rose in many markets last quarter. The Van Eck Tillman Real Estate Hotline that I read weekly stated last summer that we had seen a bottom in real estate. I have been reading Adrian Van Eck's stuff for well over a decade, and my father (a very successful investor in his own right) read him for years before that. So, it's safe to say, whatever he writes I am listening to. This article on Bloomberg is just further confirmation that many of the talking heads on the TV either don't do their research, don't know what they are talking about, or both.
http://www.bloomberg.com/news/2010-08-11/home-prices-increase-in-100-u-s-cities-as-tax-credit-helps-boost-demand.html
http://www.bloomberg.com/news/2010-08-11/home-prices-increase-in-100-u-s-cities-as-tax-credit-helps-boost-demand.html
Tuesday, August 10, 2010
My Latest Trade
As I detailed in my post a few days ago, I was looking to move out of Gladstone Commercial (GOOD), and into SPY calls. As I said a few days ago, I wanted to sell GOOD at $17/share on Monday, which I was able to do, and move into SPY calls around $12.75. I was not able to move into the calls after liquidating GOOD due to the fact that there was no volume in the December 2010 $102 SPY calls on Monday. However, today was the day! I was able to get into the SPY calls at $12.90. If you're paying attention, those options closed today at $13.08. More later on this week.
Sunday, August 8, 2010
What Am I Buying and Selling Tomorrow?
If you keep up with this blog, you know that I have owned Gladstone Commercial Group (GOOD) since I began my portfolio back in January. Tomorrow, I am going to look to sell my entire position (77.607161 shares, including reinvestment over 7 months). I am going to look to sell out of that position at $17.00, giving me a nice gain of 26.27%, over an average cost basis of $13.46.
In it's place, I will be purchasing deep in-the-money calls of the S&P 500 ETF, the SPY. I have stated here quite a few times that I believe we are going to see a nice run in the market through the end of the year. At a minimum, I am looking for the S&P to hit 1,250 or higher by year's end. Currently, the index is at 1,121.64, which corresponds to a price of $112.392 in the SPY. A year-end close in the S&P 500 of 1,250 would correspond, roughly, with a price of $125 in the SPY, up 11.22% (roughly).
Now, to the trade:
With the proceeds from the sale of all my GOOD stock, $1,319.32 (exclusive of taxes and commissions), I am going to purchase one of the December 18th $102 Calls for ~$12.75 ($1,275 total = 100 shares per contract x $12.75). A share price in the SPY of $102 correlates loosely to an S&P 500 level of 1,020, down by 9.96%. Anything above that level and we will still retain some capital, and the breakeven is at $114.75 ($102+$12.75) in the SPY, which equates roughly to an S&P 500 level of 1,148, up 2.35% from here. Should the market go to 1,250, and we see the SPY go to $125, this trade will pull in a tidy gain of $1,025 ($125-$114.75), or 80.39%.
This is a good example of a) a stock replacement strategy using options, and b) leveraging your money, both of which I am going to do more with in this blog, as I have done in my personal portfolio. Had I purchased 100 shares of the SPY at $112.392, it would cost me $11,239.20. If the SPY goes to $125, as I am predicting by the end of the year, I would see a gain of $1,260.80, or 11.22%. Not bad, but not nearly the rate of return I can get with options for a minimum capital outlay.
In it's place, I will be purchasing deep in-the-money calls of the S&P 500 ETF, the SPY. I have stated here quite a few times that I believe we are going to see a nice run in the market through the end of the year. At a minimum, I am looking for the S&P to hit 1,250 or higher by year's end. Currently, the index is at 1,121.64, which corresponds to a price of $112.392 in the SPY. A year-end close in the S&P 500 of 1,250 would correspond, roughly, with a price of $125 in the SPY, up 11.22% (roughly).
Now, to the trade:
With the proceeds from the sale of all my GOOD stock, $1,319.32 (exclusive of taxes and commissions), I am going to purchase one of the December 18th $102 Calls for ~$12.75 ($1,275 total = 100 shares per contract x $12.75). A share price in the SPY of $102 correlates loosely to an S&P 500 level of 1,020, down by 9.96%. Anything above that level and we will still retain some capital, and the breakeven is at $114.75 ($102+$12.75) in the SPY, which equates roughly to an S&P 500 level of 1,148, up 2.35% from here. Should the market go to 1,250, and we see the SPY go to $125, this trade will pull in a tidy gain of $1,025 ($125-$114.75), or 80.39%.
This is a good example of a) a stock replacement strategy using options, and b) leveraging your money, both of which I am going to do more with in this blog, as I have done in my personal portfolio. Had I purchased 100 shares of the SPY at $112.392, it would cost me $11,239.20. If the SPY goes to $125, as I am predicting by the end of the year, I would see a gain of $1,260.80, or 11.22%. Not bad, but not nearly the rate of return I can get with options for a minimum capital outlay.
Saturday, August 7, 2010
"How Hedge Funds Beat The Market"
Here is a link to a free download of a scholarly paper written by Craig W. French & Damian B. Ko. The paper is highly technical, but still an interesting read.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=927235
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=927235
My Stock Picks Up 4.94%, Market Up 1.59%
Thanks for visiting my new and improved blog! Now, let's make some money together...
The Wilshire 5000 closed at 11,680.30, down from 11,735.70, or .47%, since my post on 8/2/10. The Wilshire 5000's 200-day moving average currently sits at 11,567.13, or .98% below Friday's close. The Wilshire 5000 has now closed above it's 200-day moving average for the 5th day in a row. In addition, the 10-day, 20-day, 50-day, and 200-day moving averages are all in an uptrend, which is bullish.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 38.9% BULLS, and 33.3% BEARS, for a spread of 5.6%. This is in comparison to a reading of 38.2% BULLS, and 34.9% BEARS, for a spread of 3.3% on July 27th. In recent weeks we have seen the reading of BULLS increase, and BEARS decrease, this is a bullish sign.
The Volatility Index closed Friday at 21.74, down from 22.01 back on August 2nd. All of the important moving averages for the VIX are currently in a downtrend, also bullish.
Now for the portfolio...
1) Verizon at $29.55, down 3.29% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.65/share, worth $53.55 to this portfolio currently.
2) AT&T closed at $26.54, up 1.14% for the year, inclusive of dividends.
3) GE closed at $16.45, up by 9.36% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $35.78, down by 18.04% since my buy.
5) FXP, the doubleshort China ETF, closed at $34.54, down by 20.55% since my buy, and after a 1:5 reverse split.
6) GOOD closed at $16.97, up by 26.05% since my buy, including the reinvestment of dividends.
7) NLY closed at $17.50, up by 1.60% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $260.08 up by 34.23% since my buy.
9) January '12 Citigroup Calls closed at $.21, down by 52.27% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $155.18, up by 14.02% since my buy.
Overall, the portfolio is up by 4.94% (4.27% for the DOW Dogs), versus 1.59% for the Wilshire 5000. The current basket of ten stocks that I am currently invested in, including dividends, is down 1.22% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 3.35% outperform.
The Wilshire 5000 closed at 11,680.30, down from 11,735.70, or .47%, since my post on 8/2/10. The Wilshire 5000's 200-day moving average currently sits at 11,567.13, or .98% below Friday's close. The Wilshire 5000 has now closed above it's 200-day moving average for the 5th day in a row. In addition, the 10-day, 20-day, 50-day, and 200-day moving averages are all in an uptrend, which is bullish.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 38.9% BULLS, and 33.3% BEARS, for a spread of 5.6%. This is in comparison to a reading of 38.2% BULLS, and 34.9% BEARS, for a spread of 3.3% on July 27th. In recent weeks we have seen the reading of BULLS increase, and BEARS decrease, this is a bullish sign.
The Volatility Index closed Friday at 21.74, down from 22.01 back on August 2nd. All of the important moving averages for the VIX are currently in a downtrend, also bullish.
Now for the portfolio...
1) Verizon at $29.55, down 3.29% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.65/share, worth $53.55 to this portfolio currently.
2) AT&T closed at $26.54, up 1.14% for the year, inclusive of dividends.
3) GE closed at $16.45, up by 9.36% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $35.78, down by 18.04% since my buy.
5) FXP, the doubleshort China ETF, closed at $34.54, down by 20.55% since my buy, and after a 1:5 reverse split.
6) GOOD closed at $16.97, up by 26.05% since my buy, including the reinvestment of dividends.
7) NLY closed at $17.50, up by 1.60% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $260.08 up by 34.23% since my buy.
9) January '12 Citigroup Calls closed at $.21, down by 52.27% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $155.18, up by 14.02% since my buy.
Overall, the portfolio is up by 4.94% (4.27% for the DOW Dogs), versus 1.59% for the Wilshire 5000. The current basket of ten stocks that I am currently invested in, including dividends, is down 1.22% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at 3.35% outperform.
Friday, August 6, 2010
Want Income? Buy Stocks, Not Bonds!
Did you know that as of today's close, fourteen (14) of the 30 Dow stocks have a higher yield than the benchmark 10-year US Treasury? It's true! Today, the 10-year closed with a paltry yield of 2.86%, down from a close of 2.99% on Monday. As the anti-risk crowd piles up on one side, you should be taking a look at equities that not only afford a higher yield, but have much more room to run on the upside. Here is the list of the Dow stocks currently sporting a higher yield than Treasuries:
1) Verizon (VZ) 6.43%
2) AT&T (T) 6.28%
3) Pfizer (PFE) 4.45%
4) Merck (MRK) 4.33%
5) Kraft Foods (KFT) 3.91%
6) DuPont (DD) 3.86%
7) Chevron (CVX) 3.64%
8) Johnson & Johnson (JNJ) 3.61%
9) Home Depot (HD) 3.29%
10) Procter & Gamble (PG) 3.22%
11) Coca-Cola (KO) 3.12%
12) McDonald's (MCD) 3.12%
13) Intel (INTC) 3.05%
14) General Electric (GE) 2.91%
Honorable Mention:
1) Travelers (TRV) 2.84%
2) Exxon-Mobil (XOM) 2.81%
1) Verizon (VZ) 6.43%
2) AT&T (T) 6.28%
3) Pfizer (PFE) 4.45%
4) Merck (MRK) 4.33%
5) Kraft Foods (KFT) 3.91%
6) DuPont (DD) 3.86%
7) Chevron (CVX) 3.64%
8) Johnson & Johnson (JNJ) 3.61%
9) Home Depot (HD) 3.29%
10) Procter & Gamble (PG) 3.22%
11) Coca-Cola (KO) 3.12%
12) McDonald's (MCD) 3.12%
13) Intel (INTC) 3.05%
14) General Electric (GE) 2.91%
Honorable Mention:
1) Travelers (TRV) 2.84%
2) Exxon-Mobil (XOM) 2.81%
Wednesday, August 4, 2010
S&P 500 ETF (SPY) Up 1.85% Year-To-Date
The S&P 500 is what many consider to be the broad stock market, as it encompasses more names than the Dow, which only includes 30 stocks. IF you follow this blog, you know that I use the Wilshire 5000 to track the broad market, as it includes even more names than the S&P, and I believe provides a better picture of the market as a whole.
The ETF that tracks the S&P 500, ticker SPY, closed today at $112.97. The index closed on December 31, 2009 at a price of $111.44, for a price appreciation of 1.37%. However, if you follow this blog, you know that I believe in the reinvestment of dividends. The SPY paid a dividend of $.531 on June 18th of this year, and usually pays a dividend four times a year. Therefore, with the inclusion of the reinvestment of said dividend, you would have picked up a fractional share on June 18th at a price of $111.73. All told, with the reinvestment of the dividend, the broad market has returned about 1.85% thus far this year.
The ETF that tracks the S&P 500, ticker SPY, closed today at $112.97. The index closed on December 31, 2009 at a price of $111.44, for a price appreciation of 1.37%. However, if you follow this blog, you know that I believe in the reinvestment of dividends. The SPY paid a dividend of $.531 on June 18th of this year, and usually pays a dividend four times a year. Therefore, with the inclusion of the reinvestment of said dividend, you would have picked up a fractional share on June 18th at a price of $111.73. All told, with the reinvestment of the dividend, the broad market has returned about 1.85% thus far this year.
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