Year in review Grade B, and the Buffett indicator

 Time for a year end wrap up. It was a bull year for sure, despite a little weakness here near the end.

Here are a few ETFs for 2024, not factoring in dividends:

26.7% GLD gold
24.8% QQQ Nasdaq 100

23.3% SPY S&P500
20.9% SLV silver

10.1% IWM Russell 2000
4.0% EEM emerging mkt

-11.7% TLT US20 yr

My trading account +25.2%. A solid B grade. I have significant positions in NVDA, BRK.B, AMZN, SPY and QQQ. A do have a few scattered shares in quite a few other stocks. Only losing ticker symbols for the year are TM Toyota, and TLT 20 year treasuries. Big winners in the stocks listed up front, NVDA, BRK.B, AMZN, SPY, QQQ.

I had a couple of big percentage winners on vertical call debit spreads on NVDA. Mostly, it was small potato, selling of puts and calls way out of the money. A couple of rallies were strong enough for me to roll the calls up and out.

Didn’t do anything brilliant. Last year I sold my few shares of PLTR Palintir, never bought back in. I sold my few shares in TSLA near the 52 week lows, but did buy back in.

Predictions are for entertainment, my prediction is +6% for SPY in 2025. There will be trading swings, but I don’t expect anything overly dramatic. If we get 10% off the highs, I will add longs, and add more if we touch -20% (which I don’t think we will see). On the up side, if we get to +20% for the year at any point, I may reduce positions and/or sell higher delta calls than I usually might.

Worth mentioning is the the US GDP vs total market cap indicator, sometimes called the Buffett indicator. What this doesn’t factor in, is how global many companies are now in terms of sales and profits. Anyway, the Buffett indicator is on a sell signal, with stock market valuations way out pacing GDP growth.

It’s been a good year for bulls. I hope it’s been good for you. If not, like the NY Mets baseball team, wait until next year. Cheers.

Election party, then hangover, grade B-

Stocks boom higher on election news, then give half of that back during the next week. I haven’t been doing much trading.

Here are some ETFs year-to date:

SLV silver 40.7%
GLD gold 23.8%

SPY SP500 23.2%
QQQ Nasdaq 100 21.3%
IWM Russell 2000 13.8%

EEM emerging mkt 6.8%
TLT US20 yr -8.9%

My trading account up around 25% for calendar 2024. I’ll take it. I am busier until Christmas, so will have less time for trading. Overall plan remains, add to longs on significant dips, keep a healthy cash reserve.

This is the month of Thanksgiving. I am grateful for all my blessings, especially my friends and family, and our Lord and Savior Jesus Christ.

Off topic: One new thing for me is learning guitar, I’ll post my first Christian song on YouTube. Link

https://www.youtube.com/watch?v=pJZ29LAC1ms

Bulling ahead, Grade B-

The bull continues to plow ahead. I only make minor moves, and give myself a B- grade for the trading month. Sometimes doing nothing or very little is a productive way to proceed. I continue to be overweight large cap tech, along with a large cash reserve.

Here are some ETFs year-to-date:

SLV silver 40.7%
GLD gold 31.4%

SPY SP500         23.0%
QQQ Nasdaq 100         20.7%
EEM emerging mkt 14.2%
IWM Russell 2000 12.4%

TLT US20 yr -5.1%

My trading account +23.8%, so about even with SPY. I see this is a good result because I keep a large cash reserve.

Without too much fanfare, Silver is now leading the way in calendar 2024. Back in day, I established a modest emergency reserve in precious metals. Even the not so smart purchases at prior highs of around $35 an ounce are now profitable. Captain Obvious will tell the metals people that SPY and QQQ have done much better over the last 10 years.

For people with significant wealth a modest position in physical gold and silver is a prudent move. Even 2% can provide a significant buffer against some unthinkable scenarios. A week’s worth or water, food, meds is another common sense precaution that costs near nothing. With widespread flooding from recent storms, it is hard to evacuate with much more than that.

I will have less time for trading between now and Christmas. I like to have a month of almost no activity, so I can come back to the market with fresh eyes. I keep my core stocks and etfs. Overall strategy remains the same, overweight big cap tech, add on signficant dips.

The Impossible Dream. grade B-

Back in the day, the song Impossible Dream from Man of LaMancha, was popular. This comes to mind with the gyrations of the market. Some imagine how much money they could make if they could time, those highs and lows, even in one stock, much less the market. For almost all of us, this is an impossible dream. Any way to phrase it:

Perfection is a hope a dream, an illusion.

Those that buy lows tend not to be those that sell highs. Investing legend Warren Buffett, says he never met a successful long term market timer. Of course some make great short term calls, and may get it right over a short time period. Over the long term, the market is always evolving. Indicators that work during one period, may fail spectacularly as the market shifts. 

Those with big money that try to time the stock market tend to also trade bonds, currencies, commodities and make the bulk of their money outside of the stock market. 

Here are some ETFs year-to-date:

SLV silver 30.4%
GLD gold 26.7

QQQ Nasdaq 100 17.8%
SPY SP500 16.6%

IWM Russell 2000 10.5%
EEM emerging mkt 8.7%
TLT US20 yr 0.0%

My trading account +19.4, so ahead of SPY. Grade for the month is B-. I remain over weight big cap tech with medium sized positions in AMZN and NVDA. Another significant holding is shares of BRKB.

The NFL football season has started. Over reaction to one good or bad game is common, early in the season. Hard to discern whether some teams have real strengths or weaknesses, that become apparent over the course of the year. The analogy to the stock market is the desire to over react to one news event, or one bad day or week.

The pipe dream of being able to time highs and lows doesn’t go away. However, realism from so many years of trading sets in. I am who I am. Just getting there for me, was a long journey, because the psychology of trading was a big topic for me. Almost everyone has some emotional attachment to money. May five percent can be near emotionless from the start. For maybe 10 percent, the emotional issues are front and center.

The big picture plan remains in place. Buy signficant dips, over weight big cap tech. Some trimming along the edges might be done. Good luck to all. 

Weathering the storm, C+

The stock market has a V-shaped correction and recovery. I weather the storm, not doing much, escaping without major damage. During the lows, the subject line might have been: Timber! Or Look Out Below.

Here are some ETFs year to date:

SLV silver 21.3%
GLD gold 16.7%

SPY SP500 16.6%
QQQ Nasdaq 100 16.0%

EEM emerging mkt  8.0%
IWM Russell 2000  5.9%
TLT US20 yr -1.5%

My trading account +18.3%, grade is C+. The glass half empty person might see the missed opportunities. Nimble traders that rode the roller coaster down then up, made good money. The glass half full person sees the potential for getting in wrong on both moves. I have never been great at timing short term market moves. 

My tendency is to balance back towards a neutral stance. My instincts tend to be terrible. I have to fight the emotional responses, and tell myself what is likely to happen. Rule number one remains, Live to Trade another day. Those with substantial accounts (more than 10x annual wages) can not afford to have huge drawdowns.

The rally seems suspect. Nvidia earnings may be a market mover. However, so many are taking positions, expecting a big move, that it may be near non-event. That’s what I am leaning towards, a slightly bullish stance, selling premium. For the market, same, leaning bullish, but not aggressively so.

Bulls keep running (early report), grade B-

Bulls keep running. Markets feels stronger than the month indicates, but 2% up in less than a month is strong.

Here are some etfs year-to-date:

SLV silver 23.9%
QQQ Nasdaq 100 20.8%
SPY SP500 17.8%

GLD gold 16.7%
EEM emerging mkt 10.7%

IWM Russell 2000 6.2%
TLT US20 yr -5.0%

My trading account +19% or so. I stay slightly ahead of SPY. Doing so with large cash reserves, is a good result. My buy and hold account is up in the 9% range for the year, because it has more fixed income. TLT, 20 year treasury ETF continues to lag. A pause to refresh would be a good thing and give the bulls more staying power.

Precious metals doing well this year. IWM has a few strong days after a year of under performance.

With more travel on my schedule, not sure how much trading I will do. Right now, I have other priorities. Thank you for reading, enjoy the rest of the summer.

Riding the NVDA rocket B-

QQQ and SPY bound ahead, mostly on the strength in NVDA and other AI related stocks. NVDA moved sharply higher after a 10 for 1 stock split. A lots of folks are on board, so a pause is my most likely scenario.

Here are some ETFs year to date:

SLV silver 23.9%

QQQ Nasdaq 100 17.3%
SPY SP500 14.6%

GLD gold 12.4%
EEM emerging mkt 4.6%

TLT US20 yr -5.0%
IWM Russell 2000 -0.2%

My trading account +16.8%. I’ll take that. Slightly ahead of SPY, hopefully with less risk. Almost half my gains are from NVDA, even though I have a modest position.

Off topic, I tell traders to stay humble and keep on learning. I recently bought a guitar and am learning a new instrument at a not so young age. I am self taught on piano and penny whistle so understand the nature of the long journey. My attitude is do a little bit every day and in six months to a year, see how far I’ve traveled. If it isn’t very far, maybe sell the guitar. So far I am enjoying it, but am very early in the journey.

It would be nice if trading results came from consistent modest effort. I tend not to believe that. Some people have a talent, or luck. A few are self-destructive and will find a way to lose no matter the market conditions. The average person takes 1000 hours to reach apprentice level at any complex task. I’d guess 90 percent of novices blow up their options account before they know what they are doing.

As for my year, Toyota TM, TLT 20 year treasury ETF, Tesla TSLA are among the very few losers. Leading my ytd winners are NVDA, BRKB, AMZN and the big index etfs. At this point, it likely gets harder to predict the winners in the AI revolution. In hindsight, all will be revealed. My thinking is SPY and QQQ are the best ways to play it, because some big winners will surprise everyone.

Early report, back to highs, grade C

Market bulls see a rebound off recent lows. I participate, grade C. I am going on vacation so wanted to post a week early.

Here are some ETFs year to date:

SLV silver 18.3%
GLD gold 14.4%

SPY SP500 9.6%
QQQ Nasdaq 100 7.9%
EEM emerging mkt 5.7%

IWM Russell 2000 1.8%
TLT US20 yr -8.9%

My trading account up 9.7%. I close out some small positions, including dumping the last of my TSLA shares near the lows. I may buy back 1 or 2 shares after Elon Musk proved he can still move the stock with minor actions. I also dumped AMD, CRM, SBUX. Moved some of the proceeds into BIL (Treasury bill ETF), and SPY. 

I retain a large cash reserve along with an overweight position in NVDA. NVDA reports later this month. We will see if they can continue their streak of leaping higher after earnings. As a stock gets to mega cap status it gets harder and harder to move the needle. When a company gets big, enemies, regulators, haters, see it as a threat.

So I will enjoy my time off, with minimal trading. The market will be there when I get back. There are always new opportunities.

Slip sliding away, Grade C

A hard down week in US equities close this option cycle. Other subject lines to describe the action include, Tech Wreck, I’m Melting (Wizard of Oz), as QQQ gives up most of its 2024 gains. Tesla, Apple are among the losers. I lose about 2% in my trading account, which sounds bad, but SPY, QQQ did worse.

Here are some ETFs 2024 calendar stats:

SLV silver 20.3%
GLD gold 15.6%

SPY SP500 4.2%
QQQ Nasdaq 100 1.3%

EEM emerging mkt -1.2%
IWM Russell 2000 -3.8%
TLT US20 yr -9.8%

My trading account +5.4 for 2024, so I am holding my own. The correction feels worse than that because there were higher highs. In fantasy land, I buy the low, and sell the high. Real life trading tends to be a lot harder for most of us. Precious metals had a good month, and now lead the pack, after years of underperformance. 

Bonds continue to lead lower. If yields go up over 5 percent, they start to be a significant headwind for equities. My big picture plan has been and continues to be to add to SPY and QQQ longs on significant dips. We are at 5% from the highs, and I added a smidge. At 10% off the highs and maybe 20 percent off the highs, opportunities look better. No one knows when the short term bottom is, and how big a bounce we might get from there.

I close positions in CRM, NFLX, reduced longs in AMD. I also went net short for a brief while on TSLA. The TSLA play was debit put spreads, which I closed at 30% profit on the tiny position. After several down days and earnings next week. I decided to book one of the few winners. NVDA saw a vicious correction. I remain overweight long NVDA. It is difficult to stomach the 20% decline off the 964 highs. I delta hedge shares by selling way out of the money calls, but am still overweight long.

Tough week for bulls. Good luck to all. Several big tech names report earnings next week. I have small long positions in META MSFT and other big cap techs, along with QQQ.

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.

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.

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.

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. 

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!

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.

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.

Another late report, slow erosion, Grace C+

The US stock market continue lower, feels worse than the monthly numbers indicate. I lose a bit. Here are a few ETFs 2023 year-to-date:

QQQ Nasdaq 100 34.4%
SPY SP500 12.5%

GLD gold 5.3%
EEM emerging mkt 1.5%
IWM Russell 2000 1.3%

SLV silver -2.0%
TLT US20 yr -8.2%

My trading account +15.8 for 2023, good not great. I have a large cash reserve. The portion invested leans towards big cap tech. Bonds are leading the way lower. I started building a small long position in TLT and was way early. I delta hedge a bit by selling way otm calls, but the decline has been too steep, so TLT is one my few losing tickers for the year.

Adding longs becomes a lot more interesting if we get to a 20% decline from the recent top. In rough round numbers that is 370 for SPY, 310 for QQQ. At -20% bear market news gets real popular. The headwind from bonds is real.

Like I wrote last month, adding QQQ longs on dips seems like a solid way to proceed. 350 is approximately 10% off the recent high. A seasonal play is to look to buy stocks making 52 week lows at the end of October to December. Looks for solid companies that may be seeing tax selling.

Late report, AI train, Grade C+

 Market dips slightly. This report is a week later than my usually third week time. Overall, I tread water for the month, which is slightly better than most indices.

Here are some ETFs 2023 year-to-date:

QQQ Nasdaq 100 36.7%
SPY SP500 15.1%

IWM Russell 2000 5.5%
GLD gold 4.7%
EEM emerging mkt 2.7%

TLT US20 yr -4.6%
SLV silver 0.9%

My account +16.7%, so back ahead of SPY buy and hold. Probably near dead even after dividends. This is a good result, because I feel like I have less downside risk than buy and hold.

I was wrong about a few things. I try a debit call spread on AMZN post earnings, and it is near a total loss. Overall, this minor market dip felt worse than the numbers indicate.

I have been telling people that I believe AI is a big deal. That it probably leads to three more big inventions. The analogy is the steam engine, which tangentially led to railroads, steel, oil, electricity. These big inventions change everything. There will be winners and losers. I tend to think that companies with a significant AI department will be able to out compete those that don’t have that. AI has the potential to improve many processes. The hype says 5 to 10 times more efficient. I doubt that in the short term, but in the long term, those kind of gains may be possible.

Unlike the 1800s and 1900s where physical plants and rail lines had to be built by hand and later machine, the modern revolution is mostly about ideas. AI can help develop new ideas, even though its current state is mostly about taking what is already known.

What does an investor do? My idea is to add to QQQ on every dip. We are a long, long way from bubble stage. That said, the price action of a leader like NVDA after good earnings is a cautionary tale. A lot of people have already leveraged long for the short term. Those may not have the staying power to handle any dips. So keep plenty in reserve, but lean to the long side.

The AI train has a long run ahead. It is near impossible to predict long term winners and losers, thus the thinking to buy QQQ. There are likely new companies or tiny companies that will become big because of the wheels set in motion by AI. Think about going back in time to the invention of the steam engine, and predicting that railroads, steel, oil would become huge industries. A regular worker back in the day would not even begin to imagine what you were predicting, because those industries did not even exist.

If AI is the big deal that I tend to believe it is, we are on the start of a long journey. Social disruptions may be the biggest risk. Industrialization changed how people lived. AI and what follows is likely to marginalize many jobs. That doesn’t mean a bleak future, but it may lead to political and social upheaval. 

Industrialization was a factor in the rise of Communism and modern Socialism. AI may be the catalyst for similar changes. Enough soap box talk, again the idea is to add to QQQ on dips, while keeping plenty in reserve. The AI train has a long run ahead, despite some bumps along the tracks.

Falling behind, Grade B-

I fall a bit behind the rally. My trading account is up 17.2% for calendar 2023 vs. 18.2% for SPY. QQQ is the mega-star, up a stunning 41.1% for the year. Those that got scared and moved to in money markets, CDs are up around 2% to 2.5% for the year so far.

Here are a few ETFs, year-to-date, dividends not included:

QQQ Nasdaq 100 41.1%
SPY SP500 18.2%

IWM Russell 2000 11.5%
GLD gold 7.4%
EEM emerging mkt 6.4%

TLT US20 yr 3.1%
SLV silver 2.5%

Again, my trading account up about 17.2%. The minor pullback led by NFLX and TSLA looks to be a healthy pause, not the end of the road. I don’t have my ear to the ground as closely as I used too, but I haven’t heard or seen any real red flags to signal the end.

Five or ten percent corrections can happen at any time. Especially with QQQ up over 40% for 2023. These are likely to be shake outs, dips to be bought, not the end of the current bull run.

I will be traveling next month, so trading activity may be even less than slow summer movements. AI is real. It is likely to be a game changer. Virtually every company is looking at AI and how they can improve their operations with more technology. 

As with any big new inventions, there will be winners, losers and disruptions. Those on the short end of the stick may suffer. If enough people suffer, social and political upheaval may occur.

Golden Goose v Lean Chicken, grade B

Mega cap tech stocks lead stocks higher. One online person from Investor’s Business Daily waxed poetically about a golden goose, flapping her wings and blowing money all over the place. It was that way this month for those long calls on certain stocks. As almost always, I tend to be cautious, and my meal was more along the lines of lean chicken. I was up about 4% for the trading month, about 14.9% for calendar 2023.

Here are some etfs year-to-date:

QQQ Nasdaq 100 38.2%
SPY SP500 14.9%

EEM emerging mkt 7.9%
GLD gold 7.1%

IWM Russell 2000 6.6%
TLT US20 yr 3.1%
SLV silver 0.7%

I am pacing SPY which is decent. I feel like I have less risk than all in buy and hold, so matching market returns with less risk is a good outcome. At the start of 2023, almost everyone would take +15% for the first half of the year.

With all that, another Investor’s Business Daily online commentator talked about making money but feeling miserable because they were under-invested. I won’t go that far on the feelings, but certainly there were home runs that I did not take advantage of. I was long NVDA. One position was a NVDA bull call spread, long the 300 strike, short the 320. That spread tripled in value, which sounds great, and is great. However, straight call buying returned 10x to 20x+, depending on the strike.

An old tiger can’t change it’s stripes. It was a stretch for me to buy premium at all. Almost all cautious investors are lagging QQQ, which is up an incredible 38% for calendar 2023. I talked to a relative and despite a huge position in NVDA, that person says they are not near their all time account highs. I am in a similar boat, but suffered a near catastrophic margin call in 2020.

The AI revolution is the real deal. Society changing technology, perhaps as big as the invention of the steam-engine or the widespread adoption of electricity. It may spawn dozens of new companies that are not even public yet. That said, trees do not grow to the sky, moon shot stock chart often explode like sky rockets.

I told someone else that NVDA is likely in a range between 300 and 500 for the next year. Rough plan is to sell calls above 500, sell puts below 300. Captain Obvious will tell you there isn’t much premium at 300 when the stock is near 430. Why 300? Because Cathy Wood (ARKK manager) sold her NVDA around 300. She would love to get back in near those prices. Why 500? Because after the news, two analyst with years of training gave 500 as their one-year price target.

Again, it is a rough outline. The golden goose of NVDA is no where near done, but overly aggressive option buyers are unlikely to be rewarded so well going forward. Reddit gamblers are still buying puts on NVDA—that’s a big bull. Fundamental amateurs are saying it is way over valued. All good news for the bull case.