Bumpy ride, lunch money trades, Grade C

SPY +6.7% ytd, QQQ +15.2%

My trading account +4.6%. Not good, but not a disaster. Several of my significant positions such as AMZN, BRKB, have underperformed. MSFT, META, aren’t doing well. I maintain a healthy cash reserve, so the less than market return might be as expected. Lower risk often translates to lower returns.

My options trading has mostly been selling delta adjusted calls. During the massive rally off the 2026 lows, I rolled up and out, taking a modest loss each time. I made some lunch money trading MU and SPCX options, one lots for tiny gains as compared to the portfolio, but there are no real trading highlights for 2026.

Some commentators are saying that AI is the biggest invention in our lifetimes. Bigger than the Internet, bigger than moon rockets. Some say bigger than the steam engine or electricity. On the other side Chicken Little is always with us. There was a recent best selling book about the coming stock market crash. The SPCX IPO is pointed to as a sign of a clear top. Certain stocks such as MU have already had impressive gains.

As always predictions are for entertainment. Ride is likely to be bumpy. General purpose robotics, and AI are going to revolutionize many industries. Old line companies such as CAT and GM are touting new efficiencies. I no longer believe that buy the dip is a safe strategy. If a person is already wealthy, it makes a lot of sense to take some off the table. Timing an ultimate top is a low percentage game. A few will be correct, but most that try will fail. I have never been a nimble trader so that game has little appeal to me. 

As an aside America is about to celebrate its 250th birthday. While the country has its flaws, we are extremely blessed to be Americans. This year, I’ve spent less time on the stock market and more with the Bible. Let me leave you with 

from Numbers 6:24-26

May the LORD bless you and protect you.
May the LORD smile on you and be gracious to you.
May the LORD show you his favor and give you his peace.

Market correction, bad news is bad news

SPY -7.0% ytd, QQQ -8.4 ytd, my account -5.0% ytd

Most major market averages are ten percent off their highs, making the market correction official. I haven’t done as much trading. AMZN, BRKB, META, MSFT are all losers for 2026. -10% from the highs is not enough for me to deploy cash reserves to buy. In my January update, I wrote that market is slightly over valued. It is more in line now, but there feels like more uncertainty now.

It is remarkable how much AI can already do, especially consumer level AI. It might be scary what high level super expensive AI is capable of, or maybe it isn’t much better. It does seem like China and Japan are ahead of the U.S. in robotics. Their societies, especially Japan, are more likely to turn over certain tasks to smart robots. Europe may become an economic backwater because they are less likely to embrace robots and AI. One historical comparison might be countries that built lots of railroads, and those that didn’t do much with that invention.

With every big invention there will be winners and losers. People might think it is easy to pick winners. Keep in mind the 1960s era movie The Graduate. The secret word is Plastics, the keystone to the future. Indeed, plastics became much more popular in the next 30 years. However, the big stock winners, mostly had little to do with making or selling plastic.

Already several of the big mega cap companies AMZN, BRKB, META, MSFT have seen their stocks under perform. It may be the beginning of a long period of that.

I am holding my own at -5% for the year. Large cash reserves and being cautious limits the downside (and upside). Sure, we would like all like to make money every month, but limiting downside during difficult markets is a big piece of the long term puzzle.

I still believe a crash is highly unlikely in 2026. Odds seem higher for late 2027.

Hiatus and Kyle Tucker, Sam Darnold and new priorities

 I have decided to take a break from blogging about my options trading. It has been way more than 10 years. Publicly posting my thoughts made me more accountable, less likely to do stupid things. During recent years my updates have been less detailed, perhaps less interesting. 

Anyway, Kyle Tucker is a baseball player recently signed by the Los Angeles Dodgers. His four year $240 million dollar contract is a metaphor for the current stock market. Tucker is a good player but that much money is not a good value. 

The stock market is slightly over valued. There are pockets of exuberance but overall I would estimate 10 percent over valued. I am long past the stage of all in, all cash, or all short. Almost no one can function that way for the long term. 

Sam Darnold is any case study. Darnold was a high draft pick that was considered a bust. He has rejuvenated his career with two solid seasons with two different teams  I remember selling Palantir at $9.  PLTR has gone up more than ten fold  Captain Obvious will say it is difficult to be right on every investment or trade, but it is one that got away.

Big big news in my personal life is I have joined a local Baptist church and am getting baptized. It is a good time to reset priorities. Active trading is less of a priority. I plan to post quarterly updates. Plans may change. Good luck and God speed to all. 

Grade C+/B- for 2025

I didn’t do much these last few weeks. The year end numbers are in:

SLV silver 144.7%
GLD gold 63.7%
EEM emerging mkt 30.8%

QQQ Nasdaq 100 20.2%
SPY SP500 16.4%
IWM Russell 2000 11.4%

TLT US20 yr -0.2%

My trading acount +14.6%, so slightly behind SPY. The sky rockets are in precious metals. Many overseas markets also did well. I have signficant positions in NVDA which out performed, AMZN and BRKB which lagged the overall market. I didn’t have any of the really hot stocks in any meaningful way. 

My biggest losers for 2025 include AMD and MSFT. Both ran to the upside while I was short calls. Minor dollar amounts, but staggering percentage losses. One of the few things I did correctly was to stay in NVDA. 

We’ve had three decent up years in a row. Average for a fourth year bull is +12%, so that would be my near random prediction. Markets are slightly overvalued. There certainly are some signs of froth. 

My over riding theme for 2026 is back to basics. When I think about option trading, selling covered calls at 20 delta, selling puts at 20 delta are a well worn path aka as the Wheel strategy. That’s the plan at the moment. Add shares on any dips of 10% or more. It would be great to see the future, but experience tells me that I rarely get that even partially right. So vanilla is the flavor at the moment. Back to basics.

There is chatter about bubbles and crashes. The popularity of that kind of talk, often means at least 20% more upside before the rug gets pulled. That said, external events can and will influence the markets. 

I rarely mention politics here. Trump has a few more months to do things. He is already positioning for the mid-term elections. Most likely result is grid lock after that, with a lame duck president.