New Lows after a failed rally, grade C

 A nine percent rally fails and most US stock indexes make new lows for 2022. I navigate the storm seas, losing a bit more, but less than SPY and QQQ. I am down about 11.8% for calendar 2022, down another 1.4% for the trading month.

Here are some ETFs, the damage is wide and severe for 2022:

GLD gold 0.2%
SLV silver -7.1%
EEM emerging mkt -18.8%
SPY SP500 -22.9%

TLT US20 yr -24.4%
IWM Russell 2000 -25.7%
QQQ Nasdaq 100 -31.0%

Perhaps even more stunning than the bear market in US stocks is TLT’s performance. Bond investors are down even more than SPY, thought not as bad as QQQ. I didn’t see this coming, but down 12% is a lot better than -23% or -31%. The only winner on the list is a tiny gain in gold.

To add insult to injury, inflation is high. Prices at the local coffee shop are up up over 35% for 2022. Priced in coffee servings, an index portfolio is down over 50% in coffee purchasing power.

All things are possible. I remain cautious, with decent buying power reserves. I am still losing though. Monday is a stock market holiday. I hope all the readers are finding shelter from the economic storm. 

Stay grateful. If you have money to invest you are in the upper half of the US population. Many are living week to week. Many are falling behind. Many are experiencing severe economic hardship. At some point the pain stops, but the current light in the tunnel looks to me like another train, not an exit.

The steamroller, Grade C-

The steamroller catches up to me. I saw big declines in TGT, WMT, COST on weak retail sales data. These add to the 2022 list of loser that includes AMZN, FB, NVDA. Overall my trading account is down about -10.4% for calendar 2022. Grade C-. For added perspective, my conservative retirement account (no options, no short term trading) is down a similar percentage, -10.7%, for 2022.

For those not familiar with the steamroller reference, the strategy of selling way out of the money puts, is like picking up pennies in front of a steamroller. Once in a great while, a person or the market might slip and get flattened. My saving graces include small position size, large cash reserves and taking losses instead of taking assignment.

For example, I was selling puts on FB and NVDA at least a hundred points higher. While I have a decent size account that kind of loss would still be significant.

Here are some etfs ytd:

GLD gold 0.6%
SLV silver -6.7%

EEM emerging mkt -15.8%
SPY SP500 -18.0%
TLT US20 yr -20.0%

IWM Russell 2000 -20.8%
QQQ Nasdaq 100 -27.4%

Bonds haven’t provided shelter. Gold is the only gainer and had a down month. I have been building a tiny position in TLT, using delta hedging. This might involve buying 2 shares and selling a 2 delta call option way otm.

I hope the readers have survived the storm. It remains to be seen when the indexes will make new all time highs.

I’ll repeat a lesson learned from my dad. He started investing in 1966/67, near all time record highs. The vicious bear markets of the oil shock 1970s made for paper losses of 70%. It wasn’t until 1982 that the market made another all time high in nominal terms. There was high inflation during many of those years, so a nomimal high on the DJIA still meant years on a road to no where in real financial terms.

Thankfully, my dad was able to keep investing during the down years and came out way ahead when the bull roar returned. I’m not predicting another 15 years before new all time highs, but it is a possibility. The country of Japan has experienced more than 15 years of a stock market to no where, after their bubble market in the 1980s. Most young investors have only seen higher highs, higher lows and believe it is inevitable. They don’t understand that nothing is guaranteed.

While the 1970s era bear markets are listed as shorter than the 15 years, there were no new highs, during the short bull moves. Some people that were unlucky enough to go all in at the all time highs, couldn’t keep investing, or had to sell due to job loss during the lean years.

I have to remind myself to remain grateful. Here in Southern California there are homeless people on most areas. Some areas are now third world style shanty towns, with homeless living in tents and crapping in plain sight. We are fortunate to have money to invest, and all our other blessings. Might be cold comfort during tough markets, but it is comfort.

Treading water, Grade C

Stock market is closed for Good Friday. Happy Easter for those who celebrate. Markets tried to rally, but the rally has failed. The long term chart on SPY might be interpreted as ominous. I suffer minor losses for the month, now down -3.7% for the year.

A few bright spots are tiny positions in CHV XOM TWTR HPQ. The big stinker for the calendar year remains FB (Facebook aka Meta). 

Here are some ETFs:

SLV silver 9.9%
GLD gold 7.7%

EEM emerging mkt -7.1%
SPY SP500 -7.8%
IWM Russell 2000 -10.6%

QQQ Nasdaq 100 -14.9%
TLT US20 yr -18.5%

My trading account -3.7%. Not great but my head is above water. Some chastised me for lagging the indexes in the up year 2021. It goes both ways, lower risk tends to mean lower rewards. An exception in 2022 is bonds. Actually much worse than stocks so far for 2022. Precious metals are leading after being laggards for 2021. 

It is difficult to accumulate wealth investing in precious metals. They are more about preserving wealth. Wealthy Russians with physical metal have something. Those with stocks, bonds, real estate, yachts, sports teams, have seen much of their wealth taken away. I suggest a tiny allocation to physical metals for those with substantial wealth (2 to 3 percent for those with substantial wealth). One shoe box full of gold might be enough to start life over, if all else is lost.

Investors as tracked by the AAII are bearish. Some may see this as a contrary indicator, however, the old heads that tend to be AAII members were bullish for much of the long up move. 

As always, predictions are for entertainment. I continue to trade cautiously, and take tiny positions in special situations such as Twitter TWTR or Hewlett Packard HPQ.

Stupid games, stupid prizes Grade C

Markets end the option cycle with a relief rally. The subject line refers to my misadventures in RSX, a Russian equity etf. I sold strangles on RSX. I got assigned on one put, lucked out on the other. I hold 100 shares of RSX which is in limbo. Thank goodness the position is tiny. Someone used the phrase, play stupid games, win stupid prizes for those that traded RSX options and other Russian related options.

Elsewhere, I do okay, now down -3.3% for calendar 2022 in my trading account. This is about half as bad as the market overall. I take tiny positions in CHV, LMT, XOM, long after the train left the station. Still doing my delta hedging. An example might be long 5 shares of FB, short the 5 delta call. This didn’t help much during the sharp decline, but way better than some other bull market strategies.

Here are few etfs, year to date, not including dividends:

SLV silver 7.0%
GLD gold 4.9%

SPY SP500 -6.4%
IWM Russell 2000 -6.8%
EEM emerging mkt -7.1%

TLT US20 yr -10.0%
QQQ Nasdaq 100 -11.7%

Silver moves up to the pole position. Nasdaq100 cuts losses for the year in half. Treasuries continue to languish. Those seeking shelter in long term bonds have gotten rained on. So much for the old conventional wisdom of the 60/40 equity/bond portfolio.

As I have been writing, the new normal for me, is less trades, less risk. I’m sure a few traders are having a great year so far. Just as I am sure, some of the more aggressive traders have suffered terrible losses. I could roll out more cliches, but will spare you. 

Flat land with waterfalls, grade C

Markets go up then down, for a flattish month. There are some waterfalls declines. I get caught in FB Facebook, losing 2% of my account on FB earnings. Overall grade for this option cycle is C.

Here are a few ETFs year-to-date 20222:

SLV silver 4.0%
GLD gold 3.6%

EEM emerging mkt -0.3%
TLT US20 yr -6.7%

SPY SP500 -8.6%
IWM Russell 2000 -10.3%
QQQ Nasdaq 100 -14.2%

My trading account -5.0 for calendar 2022. Not great, but ahead of all the US stock indexes. Many would like market returns without market risk. Unless a person is a wizard, it doesn’t tend to work that way. Lower risk usually translates into lower returns. That means lagging during bull moves, and less of a hit on declines.

Facebook was a big hit. I made some adjustments just ahead of earning, which increased my risk. Oops. I took most of my lumps during the first half hour in the morning after earnings. Thank goodness I am not that stubborn, as FB continued mostly lower. Those that bought that dip saw another big leg down.

Of course we all wish we could time the ups and downs, but it tends to be a few lucky or extremely talented traders that can do that.

A side note, markets are closed on Monday for President’s day. My favorite president is Thomas Jefferson. He wrote the Declaration of Independence, was president, founded the University of Virginia, was a musician. Of course all public figures have flaws. Jefferson tended to spend his money, leaving his heirs next to nothing.

As for the markets, I often say that predictions are for entertainment. While the indexes are not yet in bear market territory, many former high flyers are down more than 50% off their highs. A few large cap tent poles such as MSFT AAPL BRKB are holding up the tent. I continue in what is my new normal of cautious trading, sometimes delta hedging.

An example of delta hedging is owning 5 shares of FB and selling 5 delta calls against that. The small premium isn’t much comfort during a big decline, but better than some other strategies.

Last shall be first, grade C

Last year’s laggards move to the front as the Nasdaq100 and Russell 20000 enter 10% correction territory. I open the year with an ugly -3.9% However, the SPY about doubles that decline, and IWM, QQQ are nearly triple. Considering we are only a few weeks into the new year, that’s ugly. 

Self grade is C.

Here are a few ETFs year-to-date 20222:

SLV silver 4.0%
EEM emerging mkt 0.3%
GLD gold 0.1%

TLT US20 yr -3.1%
SPY SP500 -7.8%

IWM Russell 2000 -11.4%
QQQ Nasdaq 100 -11.6%

Last year’s laggards have moved to the front, though US bonds only offered modest shelter during this storm.

Is this the big one? Ursa Major? The start of a secular bear market? We will only know in hindsight, but best have a portfolio that can weather a big storm if it comes. For my life situation, caution is the word of the day. I’m not about to take any big swings, because my history indicates that I tend to whiff a lot.

I dodged a bullet in NFLX. I sold Jan 400 puts and got out with a nice profit before the freefall after the earnings report. Obviously, if I knew, I would have bought puts and made bank. Timing is always difficult in real time, easy in hindsight.

Be careful out there. Happy Lunar New Year. It is going to be the Year of the Tiger. Let’s hope for a profitable year.

Year end wrap up, C+

My trading account is up 16.4% for calendar 2021. After -37% in 2020, a half a loaf gain is welcome. SPY and QQQ both were up much more, so the performance doesn’t feel great, so the self-grade is C+. The new normal is more cash reserves, smaller positions. Again, if someone had offered me +16 on January 1, 2021, I would have taken it. I’ll take the deal again, but as long time readers know, nothing is guaranteed.

Here are some etfs and their 2021 performance:

SPY SP500 27.0%

QQQ Nasdaq 100 26.8%

IWM Russell 2000 13.5%

GLD gold -4.2%

EEM emerging mkt -5.5%

TLT US20 yr -6.0%

SLV silver -12.5%

Again, my trading account +16.4%. It is worth nothing that precious metals, emerging markets, and 20 year Treasuries all had down years. Diversification didn’t help returns.

For those that believe markets in the “everything bubble,” some day they will likely be correct. But not this year. Their “safe” assets of bonds and gold didn’t do so well.

I wish I had something profound to write, or some boldly accurate predictions. Happy New Year one and all. Let’s hope it’s a good one.

Slight dip, grade B-

I have my first losing month in calendar 2021, as the market dips slightly. It feels more than slight, because there were new highs before the dip. Grade B-

SPY SP500 23.0%

QQQ Nasdaq 100 11.2%

IWM Russell 2000 9.7%

TLT US20 yr treasury -4.4%

GLD gold -5.9%

EEM emerging market -5.9%

SLV silver -7.4%

My trading account +14.1% for calendar 2021. While I lag SPY, I am now ahead of QQQ and IWM, so half a loaf for me. Considering I was cautious all year, that is a decent result.

I understand there are a lot of young people online who continually swing for the fences. That’s not where I am, I am not so young, with not so much income from wages. My account is not a small throw away one. It is a life time’s worth of saving and investing, that can not be recovered if lost on a few YOLO swings.

I know, boring, but it is what it is. FOMO can be a terrible thing, especially seeing people boast about 50% gains or greater for the year. I am old enough and hopefully wise enough to resist the siren call of potentially big gains. Big gains often come with big risks.

I’ll post a year end recap around 12/31 or 1/1. Cheers everyone, be grateful for what you have.

Bulls boom forward, grade B-, compared to what?

SPY, QQQ, IWM all boom ahead this trading month. I thought I was doing well with about a 2.7% gain for the month, but SPY is up around 5% for this option cycle. 

Here are some ETFs year-to-date

QQQ Nasdaq 100 28.8%
SPY SP500         25.4%
IWM Russell 2000 18.7%

EEM emerging market -1.5%
GLD gold                 -3.2%
TLT US20 yr treasury -5.9%
SLV silver                 -7.4%

My trading account +15.1%. In isolation that would be real good, but the question often is “compared to what?” Compared to index funds it doesn't looks so good. Compared to CDs or bonds, looks real good. The new normal continues for me. Less activity, less exposure, which as expect means lower returns. 

Have a happy Thanksgiving one and all. Anyone with money to invest likely has a lot of things to be grateful for. Though, like the market, compared to what can be distressing. Focus on the good and it will multiply.

Late rally gives relief, grade B-

 A late rally lifts the major stock indices to small gains for this option cycle. The new normal for me, is greatly reduced trading activity as compared to 2020. My self-grade this month is B-, with modest gains.

Here are a few etfs, year-to-date, no dividends:

SPY SP500 19.3%
QQQ Nasdaq 100 17.6%
IWM Russell 2000 14.8%

EEM emerging market 0.5%
GLD gold -7.3%

TLT US20 yr treasury -8.1%
SLV silver -12.2%

My trading account +12.0% for 2021. Yes, I am trailing all three US stock index funds. However, if you offered me a peaceful up 12% in January, I would have taken it. Again, after my debacle during 2020, safety first, peace of mind first. I am not a youngster, so don’t have time to earn back huge losses.

I don’t have any great insights as to market action. More than a few got excited about the modest decline, thinking it was prelude to bigger declines. A larger group of perma-bulls have only seen bull markets, with higher highs, higher lows. A secular bear market will eventually come, and those that can’t adapt may see with boats capsize. Of course, while the bull marches ahead, some will say, the bear will never come.

It is true that it is near impossible to time the bear market. At the turn, the majority of market timers will be wrong. It has to be that way, because tops occur with a relative maximum number of buyers, few sellers. That’s the way market work. I wish I had something more insightful, more entertaining to write.

Flat feels like down, grade B

Market is mostly flat for the month, but it feels like down, grade B. I make a few trades, staying in the safe harbor, rather than setting sail. My account is slightly up for this option cycle.

Here are a few etfs, year to date, no dividends included:
QQQ Nasdaq 100 19.2%
SPY SP500 18.1%
IWM Russell 2000 13.5%

EEM emerging market -0.6%
TLT US20 yr treasury -5.4%

GLD gold -8.2%
SLV silver -15.6%

My account up 11.3%. The stock indexes continue to lead, precious metals slide lower. I continue to underperform both QQQ and SPY, but half a loaf isn’t all bad for a cautious stance.

My overwrites have done well. Typically, buy 5 shares, sell a 5 delta call. Rebalance with shares or selling options to stay near the delta neutral line. Premiums are tiny on the way otm calls, but the dollar investment is small on portfolio margin. Risk is that the stock craters or moons. Slightly higher, slightly lower is good.

I’ve mostly stayed clear of the most popular meme stocks. Occasionally taking a tiny position via selling way otm puts.

Vacation, Dog days of summer, grade B-

I took a week mostly off from the markets. My trading continues to be rather boring. CAKE was one position causing consternation, but ended the option cycle ok.

Here are a few etfs, best to worst, 2021 year-to-date, no dividends included:

SPY SP500 18.6%
QQQ Nasdaq 100 17.2%
IWM Russell 2000 9.9%

EEM emerging market -4.2%
TLT US20 yr treasury -4.6%

GLD gold -6.5%
SLV silver -13.1%

My account up 10.4%, grade B- for this cycle. Stock indexes are the leaders. I have been extra cautious in 2021 because of the disastrous 2020. So I’ll take 10.4%. If at the beginning of the year, someone said you can have a 10% gain, with minimal stress, I would have signed up. Of course, onlookers may throw rocks, but I don’t care. 

It is surprising to see precious metals lagging with all the talk about inflation. Recent news regarding the COVID delta variant and upheaval in Afghanistan, create more uncertainty. 

If you look at the one year SPY chart, the trend is higher, with a nice channel uptrend. Of course by the time I spot trends, it sometimes reverses. 

Afghanistan by itself is unlikely to have much impact on American markets. What comes next may. Will the Russians or some other foreign power move in to fill the power vacuum?

As I said in recent conversations, some days it is better to be a dog, and only have to ponder when the next snack treat is coming. Dog days of summer indeed.

Late report, grade incomplete

Sorry for the late report, I lost track of the weeks during these dog days of summer. I hope all are having a decent summer. I only did a few trades, none that really stood out. I did sell my tiny position in ASAN just before it doubled. Still have tiny share positions in PLTR SKLZ, that I overwrite calls on (eg: own five shares, sell delta 0.05 calls against that, need full account authorization).

Right after the third week expiration, the market had a sharp one day dip, but that was all. A brief summer thunderstorm, then back to good weather.

Dip at the End, Grade B-

Markets drift up and down, with a hard down day on expiration Friday. Self-grade is B-. I eek out a small gain, as SPY is flat for the trading month. The minor surprises are strength in bonds, weakness in precious metals. With all the inflation talk in the air, the opposite might be expected.

Here are a few etfs, year-to-date, no dividends

IWM Russell 2000 13.3%
SPY SP500 11.0%
QQQ Nasdaq 100 9.2%

EEM emerging market 5.0%
SLV silver -2.8%

TLT US20 yr treasury -7.6%
GLD gold -7.5%

My account +7.1% for calendar 2021, which lags all major US stock indexes, but is still a decent number for half a year. I make minor forays into CAKE and TXRH, which so far are both losers. I sold my tiny position in ASAN, just before it popped.

Which way from here? I see way too much chatter online about an impending crash to believe that this downturn has much steam. The mantra that has worked for 12 years may still be in effect, buy the dip. As always, my predictions are no better than coin flips.

May Gray, Grade C+

In Southern California, the weather during May is often described as May Gray, because of a morning overcast most days. The stock market advance falters. The QQQ gave up a good chunk of its 2021 gains. SPY still holding on. GLD advanced. I eek out a tiny gain, grade C+. 

I’ve been doing more over writes, buying a few shares, selling way out of the money call to get close to delta neutral. More than a few stocks came out with stellar earnings then flopped. AAPL AMZN FB were some that I did the over writes with. I took a loss in WDC. I took profits in ASAN, which I have had since its first trading day. I still have a tiny position in PLTR. 

Some ETFs year-to-date, best to worst

IWM Russell 2000 12.2%
SPY SP500 11.0%
QQQ Nasdaq 100 4.2%

SLV silver 3.9%
EEM emerging market 2.8%

GLD gold -1.3%
TLT US20 yr treasury -12.7%

My account up 6.3%, so I have moved ahead of QQQ for the year, but still lag SPY. Again, after my 2020 debacle (margin call and -67% drawdown), the new normal for me, is less overall risk, more overall cash.

Here is Southern California, May gray is often followed by June gloom. Will the stock market come out of its funk? Or will a real storm develop? Or will it be blue skies? As always, my predictions are no better than coin flips. My money is made by managing risk.

More Bull, Grade C

I make modest gains as the bull roars ahead. I briefly went net short QQQ. That was a mistake, but I quickly went back to net long. As has often been the case, I lag behind the roaring bull market. 

Here are some etfs, year-to-date:

IWM Russell 2000 14.6%
SPY SP500         11.6%
QQQ Nasdaq 100 9.0%

EEM emerging market +5.2%
SLV silver                 -2.0%

GLD gold                 -6.7%
TLT US20 yr treasury -11.7%

My trading account +6.1%. Normally +6% for four months would be pretty good, but all the major US stock indices are up more than that. Still, after the beating I took in 2020, any gain might be considered a good gain.

Treading water as QQQ corrects, Grade B

SPY held steady for this month, but QQQ corrected. I eek out a tiny gain, on reduced trading activity. Perhaps that is the new normal for my account, as this is the third report in a row with similar comments. Self-grade is B for the tiny gain.

I closed on sold puts on WMT and COST near their respective bottoms, but overall held my small positions during the shallow correction. QQQ is now down for the year.

There are swarms of newbies in the markets. This is usually a bad sign for bulls. A reminder that the news and outlook often look the rosiest at the top. Again, it is a very low percentage game picking tops, so I don’t try. However, I have been around long enough to be extra careful when the little fish are jumping into the pool.

Many of the new people are being “taught” by the one-year veterans, who are teaching them to buy every dip. What could go wrong?

Anyway, enough cynicism, here are ytd etfs:

IWM Russell 2000 15.8%

SPY SP500         4.2%

EEM emerging market 4.7%

QQQ Nasdaq 100         -0.2%

SLV silver         -1.1%

GLD gold         -8.5%

TLT US20 yr treasury -14.6%

My account up 3.2% for calendar 2021, up 0.2% of the month. Yeah, I know, sleepy times. However, after the beating (-42%) I took in 2020, I am even more cautious. Again, that might be my new normal.

Still staying small, Grade B-

I stay small, with reduced trading activity. I am up 3.0% for the period, slightly lagging SPY which gained 4.3%. Self grade is B-.

2021 Year to Date:

IWM Russell 2000 14.9%
EEM emerging market 11.3%

QQQ Nasdaq 100 5.5%
SPY SP500 4.3%

SLV silver 2.8%
GLD gold -6.4%
TLT US20 yr treasury -9.2%

A lot of market news was from Reddit. I am active on the options sub as Rtiger. I played some of the meme stocks in a tiny way. Sold GME Feb 10 puts when the stock was moving up through 300. Trading restrictions made for a bumpy ride for the tiny profit. I have tiny positions in PLTR and ASAN. Just enough to keep me following them, not enough to make meaningful profits or losses.

I am too slow moving to be on the bleeding edge of what is new. I remain cautious, looking for better opportunities.

Small gains, reduced activity B- grade

I start the year cautiously, with small positions, few trades. Self-grade is B-. After the shellacking I took in 2020, I remain gun shy. My trading account is up 0.4% for calendar 2021. SPY up 0.5%, but QQQ down at this point. The bigger story might be the corrections in gold and silver, down substantially from their highs.

Here is the ETF scoreboard for 2021 so far:

EEM emerging market 5.2%
SPY SP500 0.5%
TLT US20 yr treasury 0.1%

IWM Russell 2000 0.0%
QQQ Nasdaq 100 -0.6%

GLD gold -4.1%
SLV silver -6.6%

Here’s to a better year for all.

2020 The good, the bad and the ugly

I posted the following to the Reddit options sub >>

Time for a year in review. For me the emphasis is on ugly.

After a 67 percent drawdown and a margin call in March, I end up with a 37 percent loss for 2020. No need to say I told you so, for those so tempted.

A near perfect storm of an accelerating decline with some sharp rallies, my big ego from a 55 percent gain in 2019, and being sick with the flu, led to some bad decisions.

I had at least 50 percent buying power available when the downside started. That gets chewed up real quick on portfolio margin. I was faked out by many of the rally attempts. Obviously, I was over exposed to a sharp decline.

When the margin call came, I moved most of what I had left to cash and regrouped. Overall I see myself as a cautious trader. I'm sure more than a few were wiped out and most of them tell no tales.

The good is that I got off the mat, up over 40 percent from the account lows. The bad is that a 200 percent gain is needed after losing two thirds of the account.

The good is that I have other accounts, that are way more conservative.

I've gotten better about looking at the task at hand. The day, the hour, the moment directly ahead. My predictions are no better than coin flips, so I'll skip those.

My rule number one is

Live to trade another day

This past year, I survived and hopefully am wiser for the experience. Happy new year to all.