Category Archives: Daily Market Update

A few weeks ago, 2 weeks to be precise, as I don’t write very much anymore, I did something that I had never done before.

That was to sell positions in order to raise cash.

The positions that I sold, weren’t in my usual “covered option” portfolio. They were all uncovered index funds that I had held for quite a while and had some nice long-term profits on them, as they just went along for a long market ride.

2 weeks ago on a day that the DJIA went about 144 points higher, I sold 50% of those accumulated shares.

I did so because I saw nothing to warrant the belief that we were heading even higher, at least not for a basket of stocks kind of portfolio.

Individual names, maybe. A basket? Not so much.

But, I did so with the intention of going back in with the cash to buy once again, although not all at once if the S&P 500 had retraced a mere 3% or so.

In those 2 weeks, the portfolio that held those index funds outperformed the S&P 500 by 0.5%, partly because the S&P 500 fell about 0.1% in that time period.

Yesterday, on the heels of a 130 point gain in the DJIA, I sold the remaining 50% of those index fund shares. read more

I’m a bit more rambling today than usual, but it was an unusual day after an eye opening weekend.

A few years ago, maybe about 5 years ago at this point, I wrote an article about a lower maintenance approach to hedging a portfolio.

It involved the use of a well diversified portfolio of about 10 names. They would, ideally, all be high and safe dividend paying companies.

The idea was to use LEAPS and try to stagger the expirations and then just sit back.

Sit back and collect dividends and add that income to the premiums from having sold the options.

For the LEAPS strategy I had also planned on using a strike price that would reflect a fair amount of capital; appreciation over the year or two. Say 7% a year? 10%? read more

The June 2017 option cycle ends tomorrow and it was looking as if L Brands was going to get assigned.

At a time when I really do want to increase cash holdings, ordinarily, I would be pretty happy about seeing that position get closed.

After all, it had done pretty well.

In the event that it had been assigned tomorrow, the 3 month holding would have returned 11.7%.

That’s pretty good when you consider that for the comparable period the S&P 500 returned only 2.4% or, even you want to give benefit of the doubt and include dividends, maybe 2.8%.

But as I was looking at the coming month and wondering what exactly was I going to do with the money that I would have lying around, I looked at the risk – benefit proposition in front of me.

That risk – benefit proposition was this:

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Sometimes it’s hard to explain what you did.

It’s bad enough explaining to yourself, but if you also have to explain it to other people after you had a hard time convincing yourself, then your work is really cut out for you.

Today I made one of those trades that takes some explaining.

The explanation probably can go all the way back to the original trade that sought to eke out some option premiums from a real non-performing position.

The was “The Gap.”

Actually, for 2017, I had made 9 trades on the position, in order to try and cut down the large paper loss that I’ve been sitting on for far too long. read more

As I’ve gotten older, I realize that there are lots of things that I forget and have forgotten.

For example, I don’t really remember if I used to enjoy looking at photos like this, or not.

If I did, I’m not certain that I remember why I liked it.

Looking at it, though, I do recall a few years ago when LuLuLemon had a little bit of a debacle with its sheer athletic yoga pants and that issue related to quality control took shares lower after an almost fairy tale kind of rise up until that point.

Again, looking at the picture, I don’t really recall if it demonstrates what was bad about the quality or what was good about the quality.

What I do, remember, however, is that as all of this was unfolding, the founder of LuLuLemon and its Chairman, at the time, made the unfortunate mistake of saying that not all people were meant to be wearing his company’s clothing. read more