Sunday, November 28, 2010

T20YM Update: Emerging Markets and GLD

What a strange, strange week.

If you were looking for volatility, you got it. Up one day, down the next. Mr. Market is one fickle son of a bitch. The selloffs, by my calculations, were overblown. An Irish debt crisis… how long have we known that this was coming? Other than driving the price of the dollar through the roof, this has very, very little effect on US equities. The total GDP of Ireland is equal to the state of Nevada. In the grand scheme of things, this is a drop in the bucket. When/if we get to Spain, then we can start to get worried. The idea that the world stock market is selling off because of Ireland is ridiculous. People need to put on their big boy pants and stay in the game.

The second big worry we have was North Korea shelling a South Korean island. Again, I think the markets’ reaction to this noise was overblown. This happens on a monthly basis in Korea. This type of border clash is not war; it’s the North Korean’s form of negotiation. Even IF there was full scale war on the Korean peninsula, this would not be a reason for every market in the world to tank… The conspiracy theorist in me thinks this was just an extension of the US/China trade war. China politely asks North Korea to fire a few shells at the south, the Asian markets tank, the US Dollar sky rockets and Helicopter Ben and the whole QE2 experiment turns into a gigantic waste of time and money.  This is classic Cold War politics. If the President Obama wants a trade war with China, he will quickly realize they won’t be playing by the same rules. If this is truly a start to a Trade/Cold War with China, then we will have something to worry about. As I see it now, both our economies are too intertwined to isolate the other.

Over reaction to macro events is often a strong sign at a 'top' of a market. I'm not saying this is a long term top, but a small pullback prior to year end is in the cards. 

I have been looking for an entry point to add some Emerging Market exposure to my portfolio. Last weeks volatility offered me a few decent entry points. I started some small positions in some broad based foreign ETF’s. I chose to put some money to work in China, India, Brazil, South Africa, Turkey and VWO. My current portfolio is as follows:

Price Paid
Market Value
GLD Dec 18 '10 $134 Call
SLV Dec 18 '10 $26 Call

As you can see, I have a few some short term option plays on Gold and Silver. I am down on the GLD position, flat on the SLV. I am having trouble pegging the moves in gold. It seems to have a mind of its own. One thing I do know is that it likes to go higher. This is a perfect environment for GLD, it either tops here or pushes to 1500. Two weeks for me to find out.

Monday, November 15, 2010

Quantitative Easing Explained

Just a little humor for a Monday morning.....

Good luck during this volatile week.



Saturday, November 13, 2010

Top 100 Dividend Stocks November 2010

Top 100 Dividend Stocks November 2010

Check out this great article by the Intelligent Speculator. I plan on buying a few of these companies on pullbacks.

Thursday, November 11, 2010

The QE2 Cometh....

How I’m playing the QE2

First, I have learned to never fight the fed. This seems cliché, but it’s the honest to god truth. Bernake gave us a free ‘put’ on the market; it would be asinine to over think the situation. In the short term I think we head higher, in the long run my outlook is not so positive.

My trades for the last week have been fairly simple. I’m shorting the TLT via puts. Long term treasuries are going to be hammered. I’m long commodities via calls: CVX, NG, GLD. Dollar goes down, these go up. I’m long leaps on C, these were too cheap to pass up. I started a small position in PCL, another commodity play with a decent dividend. Short bonds, long commodities.

I also took a flyer on BIDU today at the close. POMO Is going to hit the market everyday for the next month. I think high beta names are going to pop.

The dollar is going to lose value fast. Make sure you put it too work in something that will sustain value.

Someone needs to gag Chambers.

This is like a broken record. CSCO reports decent earning, Chambers gets on the conference call and tanks the stock. Two quarters ago, he proclaims ‘this is as good as it gets’ stock sells off… Last two quarters he gets on the conference call and tells us the sky is falling. If I was on the board, I would gag this guy after earnings… Lucky for me I picked up some Nov 24 puts for .50 cents. I expected a selloff, but not of this magnitude. When Chambers talks- short the stock.

Saturday, November 6, 2010

All quite on the T20YM Front.

Sorry for the delay in posting, it’s been a quite couple weeks on the trading side. I have been licking my wounds after the Google debacle. That error took a considerable bite out of my trading capital. I have been making small moves here and there and have had some success. I have not initiated any new long term positions since I last updated the portfolio. I am personally finding it difficult buying at the current levels, but I have been saying this for 100 points on the S&P. Sooner or later I will have to stop being so stubborn. I guess there are no called strikes in investing.

Since I have nothing profound to write, I guess I’ll list some take away s from the last two weeks:

  •        I hate the VXX. Anytime I have used the VXX to hedge an investment it steals my money. I feel like I am donating to the stupid tax when I open a position. It does a terrible job at mirroring the VIX in general. If I am worried about volatility, I am either going to outright short the market or do nothing. I will not buy this again, I’m better off spending the money on scotch.
  •           QE2 is here and I am not fighting it. I am not saying people should push all in on equities but you should increase your exposure. The U.S. dollar is losing value faster than Cavaliers after Lebron. The easy trade is long commodities (gold, oil, ag), short long term bonds (TLT puts, TBT), and play the high growth names (CMG, AAPL, NTAP, etc). I want to be clear, I don’t agree with quantitative easing, and I don’t think this ends well.  
  •           Elections are over and the red tide cometh. I’m pretty sure we will see Bush era tax cuts extended for all. Additionally, I think we will see the capital gains and div tax extended. This is a positive for the market. Let’s hope the Republicans keep their promise and try to reign in spending. We need to get our fiscal house in order.
  •           I have a few small option plays on NTAP Nov 55 Calls. Looking for direction Monday or Tuesday. I also have a spec play on Nov BP 44 calls. Word came in late Friday of a potential bid for the company by XOM. We will see how they play out.
  •           I am going to increase my commodity exposure with either REMX or GLTR.
  • Can you believe the Giants won the World Series? are we in bizzaro world? Some crazy Giants fan made a boat load on that bet. 
It’s been a crazy week at work and school. Look for me to be more active after midterms.
Good luck to all,