Saturday, March 16, 2024

Live by the Sword, Grade C+

The cliché is Live by the Sword, Die by the Sword. Being overweight tech is great on the way up, turbulent on the way down. Grade C+. I did okay, but feel like I mis-managed my NVDA position. One lucky thing I did was close longs in Adobe before it fell on earnings.

Here are some ETFs, 2024 calendar performance:

SPY SP500 7.3%
QQQ Nasdaq 100 6.0%

SLV silver 5.7%
GLD gold 4.5%

EEM emerging mkt 1.4%
IWM Russell 2000 0.8%

TLT US20 yr -6.0%

My trading account +7.7, so I am staying ahead. Still doesn’t feel good during those down days towards the end of the option cycle. The most likely scenario for QQQ and some other leading stocks is choppy horizontal trade. I reduced long positions in AAPL and TSLA, got out of ADBE entirely because they are two of my worst holdings for 2024. I initiated tiny long positions in Ferrari RACE, and Toyota TM. These two auto stocks are doing well, while EV oriented auto stocks have been falling.

I remain overall bullish, overall tech heavy, lots of cash in reserve, looking to add longs on signficant dips.

Saturday, February 17, 2024

One stupid mistake, Grade B-

Stocks rally then dip, then recover. Bulls are still mostly in control, though there are pockets of weakness. My trading account is up 5.8% for calendar 2024. My one stupid mistake was selling calls on ARM. It is too volatile a stock for that. My position was complex, but I covered the long calls for a huge percentage loss.

Here are some ETFs 2024 calendar performance so far:

SPY SP500 5.1%
QQQ Nasdaq 100 5.1%
IWM Russell 2000 0.5%

EEM emerging mkt -0.3%
SLV silver -1.9%

GLD gold -2.5%
TLT US20 yr -6.2%

My trading account up 5.8%. So despite the ARM loss, I am ahead of the major indices. I continue with the thesis that AI is a big deal. It will have a positive impact on the earnings of many companies.

I was tempted to use the title Tale of Two Cities, best of times, worst of times. McDonalds and Starbuck report that customers are starting to balk at the higher prices. Chipotle reports their customers have not flinched. SuperBowl tickets started at $8000 per ticket. Huge demand from San Francisco, and their many wealthy fans. Not many regular folks can afford $20k for a weekend in Vegas and the SuperBowl.

The wealth gap is an issue. At some point it becomes politically unstable, and revolution becomes much more likely. There is so much anger out there. I will spare you the soap box speech.

The big picture strategy remains, buy QQQ on major dips. Be on the watch for a 5% or 10% correction at any time. Enjoy the bull ride, but keep a healthy cash reserve to add more on dips. I am not a fan of protective puts. It is so hard to decide when to cash in the puts and go without protection. For retail traders, much easier to keep cash in reserve and buy the dip.

Saturday, January 20, 2024

NVDA pulls the bull train, grade B+

Stocks start the year with a minor dip. Then the bulls take the wheel, with record highs in many major US indexes. Other investments such as bonds, gold lag. I make decent gains, self-grade B+. About half my gains are from Nvida. I have a small position in shares, and lean long with options. Tesla is a laggard. I maintain large cash reserves, waiting and watching for clearer opportunities.

Here a few ETFs 2024 year-to-date:

QQQ Nasdaq 100 2.8%
SPY SP500 1.5%

GLD gold -1.7%
IWM Russell 2000 -4.1%

TLT US20 yr -4.8%
EEM emerging mkt -4.5%
SLV silver -5.1%

My trading account +2.5%, so better than SPY. I remain over weight big tech. I believe the AI revolution is only in the second inning. There will be any number of small or new companies that become large companies, that aren’t even on my radar yet. With this in mind, the strategy of buying QQQ on dips. SPY might be good too. American companies are more likely to embrace the new changes. 

European governments may try in vain to save human jobs, with the unintended result of their big companies lagging those that embrace AI. It isn’t all puppies and rainbows. There have already been and will continue to be significant disruptions. People on the short end of the stick will need to adapt or suffer. 

There is a dark side. Dictatorships will have no qualms about weaponizing AI. This is down the road, but will almost inevitably come. Hopefully, the ethical side will prevail, but there are no guarantees. Think about big inventions such as the steam engine, or electricity, and how much those changed the world. AI is on the same scale. Unlike industrial inventions, AI is mostly about ideas and processes. Any changes are potentially much quicker.

It is always prudent to have some emergency supplies, food, water, meds, barter goods on hand. I’m not talking about massive stock piles, but two weeks worth, cost near nothing and will get a person through average disruptions.


Monday, January 01, 2024

Year in Review, grade B+

A very good year for the bulls. SPY +24%, QQQ up over 53%. My trading account a little bit better than SPY. I feel like I’m taking less risk than buy and hold SPY, so coming out ahead is a good result. My self grade is B+. Almost everything worked. Winning tickers were everywhere, led by NVDA, BRKB, AMZN, META, AAPL. 

As I often write, I am older than most, and my account is not some small throw away account. I have to be deliberate, because I can’t earn enough from wages to make up for big losses. After the margin call during the Covid year, I am especially careful. In my retirement account, I picked several value stocks using a fundamental screener. Those did poorly. 

In my trading account, I leaned heavy towards mega cap tech, and BRKB. That worked well, so my limited equity exposure turned into a good return. 

I remember telling some others to buy on dips, that a 20% percent dip would be a golden buying opportunity. QQQ touched 11 percent then went up. Hard to be so precise.

Going forward, I lean bullish, but will keep huge reserves until more is revealed. A five percent correction can happen at any time for little apparent reason. Last year’s strategy of buying the laggards for the year probably won’t work so well. For now, I lean cautiously bullish. I am grateful for the good year. I know a lot of people are hurting financially. Some of that is choices made. Some of that is disposition. Some are the cards you are dealt.

Some new year questions: Highlights, lowlights of 2023. What did you learn? What do you want more of, less of? What new activities would you like to start or perhaps resume? These are more life questions, than trading oriented, but still can be useful.

Highlights, a good solid year, low drawdowns. Low lights? Missed opportunity because huge gains were out there for those willing to take on the risk. What did I learn? I am an old dog trader, so not much new material to learn. Perhaps, learning to be happy with the half a loaf that I get. I'm never going to be an all in, all out, or all short kind of trader, not at my age and life situation.

Whatever your situation, I wish everyone of you, peace in the new year. 

Sunday, December 17, 2023

Grade Incomplete

This is my month of limited trading activity. I’ll ramp up slowly into the holidays and new year. The market has been incredibly strong. Even the Russell 2000 is participating in the rally. I’ll make another post for year end.

Here a few ETFs year-to-date:

QQQ Nasdaq 100 52.2%
SPY SP500 22.7%
IWM Russell 2000 13.0%

GLD gold 10.2%
EEM Emerging markets 5.2%

TLT US20 yr -0.4%
SLV silver -0.9%

My trading account +24.2%. I am holding my own despite having huge cash reserves most of the year. The Nasdaq is up an incredible 52% for the year. The chart formations for SPY and QQQ are bullish. However, as many readers will tell me, charts don’t mean that much.

My overall thesis of AI being a big deal remains. Companies are rushing to invest in AI, perhaps in folly, but right now the people selling the shovels in the gold rush, the big chip makers are benefiting. One perhaps unforeseen effect is the rich, getting even more of an advantage, because it takes a huge capital, and educational investment to understand and use AI well.

Luxury house builder TOL saw 26% of its new house customers paying cash for $1 million dollar homes. This compares to about 10% cash buyers for the past 20 years. Of course 7 and 8 percent mortgage rates are way different from 3 or 4 percent.

Merry Christmas. I’ll have a year end round up around 12/30. Cheers!

Saturday, November 18, 2023

Rally days then weeks, Grade B

Stocks and bonds move higher on tame inflation indications. The QQQ again leads the way. I do alright, adding a bit to longs, but mostly still on the sidelines. Grade B okay, not great, but way better than being short equities.

Here are some Etfs year-to-date:

QQQ Nasdaq 100 45.0%
SPY SP500 17.9%

GLD gold 8.3%
EEM emerging mkt 3.9%
IWM Russell 2000 2.3%

SLV silver -2.8%
TLT US20 yr -9.6%

Megacap tech is having an incredible year. I tilt that way with my modest equity allocation. My trading account up 21.2% for the year. Better than SPY and all the other ETFs, but looks meager compared to the gains in QQQ.

My trading activity will be next to nothing for the next month. I have other priorities this time of year. I made add a few shares, take a few tax losses. Everyone is different. For me, taking a few weeks off from the market gives me a fresh perspective.

Friday, October 20, 2023

War and the long bond, Grade C+

War erupts in Gaza. Initial reaction is minor, but as the war deepens and gets more complex, US stocks move lower. Long duration US treasury yields are a tremendous headwind for equities.

QQQ Nasdaq 100 33.2%
SPY SP500 10.1%
GLD gold 8.2%

SLV silver -2.8%
EEM emerging mkt -2.9%
IWM Russell 2000 -4.5%
TLT US20 yr -16.4%

My trading account +14.9 for calendar 2023, down a modest 0.3% since the last report. For 2023, I am doing better than SPY, not as good as QQQ. Despite the recent decline QQQ is still having a banner bull year +33%. It is notable that a lot of investments are now down for the year, with TLT having terrible year so far.

I started buying shares of TLT at much higher levels. Thankfully, the position remains small. For now, I’m not adding to longs. I might add to longs in QQQ and SPY if the decline accelerates. I mentioned SPY 370, QQQ 310 as possible levels, so there is still more room before I add signficantly more.

Earlier in the year, a wise old market observer said that when the long bond yield crosses 5%, that would be significant competition for stocks. Looks spot on as of today.

What next? Long time readers know that I get busier with other activities and have less time for trading towards the end of the year. I am already tapering down, the number of trades, and will likely again take several weeks off from trading options. I might still look at the markets and perhaps buy or sell etfs, but very little for options. This month off seems to help me. So for me, a very few trades are in my near future. I won’t swear off options until mid-November, that that is not far away.