LOL!'s Market Timing Newsletter

[NW-Bound]

About the aforementioned leveraged semiconductor ETF that I bought in mid October, as a hedge I immediately wrote covered Feb 2015 calls on some of the shares, with strike prices of $90 and $95, pocketing premiums of $11 and $10. It was done a bit too early, and I left $20+ per share on the table. But as they say, nobody goes broke taking profits. The semiconductor sector is the most volatile of the volatile tech stocks, then when you go 3X leverage, oh la la !

Anyway, after I sold the unhedged shares for $110.40 yesterday, the price slumped and is now at $108. For the shares that I still hold, I bought at an average price of $84.37, and as long as the price stays above $73.87, I am still in the green. But of course, it can drop through that price too.

What to do now? I just sold off another ETF, this one a 3X leveraged small cap. For a commitment of $21K, I netted $3091 including some option premiums. This is not that great, as this trade started 5 months ago, before the correction.

And then, I still have several hundred shares of 3X leveraged emerging market ETF, which I bought at $26.50 as mentioned in an earlier post. I was in the green a few days ago, but now slightly in the red (price at $25.92).

So, I made a bit of money with these trades, but am I happy? Heck no. I still lost beaucoup money in my long-term holdings, and need around $100K to get back to my all-time high. Well, maybe less if I consider what I have withdrawn and spent.

 

[aja8888]

About the aforementioned leveraged semiconductor ETF that I bought in mid October, as a hedge I immediately wrote covered Feb 2015 calls on some of the shares, with strike prices of $90 and $95, pocketing premiums of $11 and $10. It was done a bit too early, and I left $20+ per share on the table. But as they say, nobody goes broke taking profits. The semiconductor sector is the most volatile of the volatile tech stocks, then when you go 3X leverage, oh la la !

Anyway, after I sold the unhedged shares for $110.40 yesterday, the price slumped and is now at $108. For the shares that I still hold, I bought at an average price of $84.37, and as long as the price stays above $73.87, I am still in the green. But of course, it can drop through that price too.

What to do now? I just sold off another ETF, this one a 3X leveraged small cap. For a commitment of $21K, I netted $3091 including some option premiums. This is not that great, as this trade started 5 months ago, before the correction.

And then, I still have several hundred shares of 3X leveraged emerging market ETF, which I bought at $26.50 as mentioned in an earlier post. I was in the green a few days ago, but now slightly in the red (price at $25.92).

So, I made a bit of money with these trades, but am I happy? Heck no. I still lost beaucoup money in my long-term holdings, and need around $100K to get back to my all-time high. Well, maybe less if I consider what I have withdrawn and spent.

You could always recoup the losses by doing some part time work.

 

[NW-Bound]

Speak for yourself, buddy!

I consider my short-term stock trades my part-time work. And of course all the time I spend BS'ing on this forum.

 

[LOL!]

I had to raise some cash to pay some bills in November including property taxes and a big travel bill, so I sold a few hundred shares of the VEU that was recently purchased for a small inconsequential gain.

Still holding on to the rest, but a college tuition payment is coming up. I'd like these recently purchased shares to go up 50% before I have to pay that tuition.

 

[steelyman]

I put in my November order (equal amounts of FSITX and FINPX).

Just two more months to go. That final month will have a lot of piddly orders to drain all the cash in the account, but still try to get close to the original allocation.

 

[LOL!]

Today I exchanged some shares of VEU (with a short-term gain) back to VEA mostly because I am less interested in emerging markets in the short-term plus VEA was down slightly today. As background, VEA(developed)+VWO (emerging markets) is essentially VEU, so it was like unloading some emerging markets equities. This will probably backfire on me since EM (VWO) has dropped recently as much as 3.5%.

Anyways, this completes the tax-loss harvesting move of VEA to VEU and then back to VEA. I guess the plus is that VEU was up for a small profit, while VEA was re-purchased at about 1% lower. Thus, the transactions did not hurt me.

 

[LOL!]

So my 12/03 purchase of VEA is underwater. And the rest of those recently purchased shares of VEU are also underwater. This calls for some more tax-loss harvesting. Since next week both VEA and VEU go ex-dividend, I do not want to be receiving dividends from short-term shares that I am going to tax-loss harvest (otherwise any qualified part of the dividend will not be qualified). Thus, I have to sell these positions between now and 12/18.

In addition, VWO has dropped more percentage-wise than both of VEA & VEU.

So here is what I am going to do: I submitted an order to exchange from FSITX (bond fund) into FSGDX (FTSE ex-US international) in my 401(k) today for about the total dollar amount of the VEA and VEU positions that I am going to sell in the next 5 days. I will not sell VEA and VEU today, so will be "doubled-up" in this bit of international with the hope that I can sell VEA and VEU after they go up a little bit more.

After I sell them, I will stay in cash until after a few other Vanguard ETFs go ex-dividend, then I will decide what to do with that cash. It is likely I will buy some VTI (total US market) in taxable and/or in Roth IRAs*, then exchange from FUSVX (S&P500 index) back into FSITX (bonds) in the 401(k).

(*We will use some of the cash to make our Roth IRA contributions for both 2014 and 2015.)

Got that? It's a bit complicated, but I typed it in here more as notes for myself to follow in the next couple of weeks.

Anybody else got some year-end maneuvers that they would like to chime in with?

 

[CoolChange]

I also need to sell VWO to lock in a short term loss; but, I have not decided where to redeploy those funds yet.

I have also taken a bath on DBC (PwrShs DB Cmdty Idx) since purchasing it. So, I need to sell and am looking for a replacement since I actually want to increase my allocation to commodities (at least my GTU trade to get some gold exposure is paying off).

 

[LOL!]

When looking for replacement shares of the same asset class, I always go look at the links at www.altruistfa.com/dfavanguard.htm

 

[LOL!]

That last exchange of mine was pretty bad market timing. Oh, well.

 

[LOL!]

Today's pop was my opportunity to get out of the recent buys of VEA and VEU both for a loss. Just following the plan I posted on 12/11.

The cash will be used for 4 Roth IRA contributions and a semester of college expenses over the next month.

 

[LOL!]

I sure could've timed that better.

This morning I did take some cash and buy some DGS (emerging markets small-cap) in a tax-advantaged account, so that I am unconcerned with buying a dividend. I have not had any luck with DGS, but my mantra is to buy low and this is the lowest price I have bought in at least 3 years.

Despite the recent pops, the market is still at a relative low point, so folks who rebalance late in December or early in January might be happy.

 

[NW-Bound]

Well, I am not a good market timer either.

The lot of EDC that I bought at 26.50 3 months ago is still underwater. It closed at 28.12 a month ago, but I did not sell. It is now at 21.80. Two days ago, I added a bit at 19.95. Will see if the whole thing makes me any money.

On the other hand, the semiconductor ETF I bought at $84.34 on Oct 17, then sold options to effectively sell it at $103 in Feb 2015, went as high as $146!

So, I sold the good one way too soon, while keeping the bad one too long. So far, loss cancels out gain, leaving me not too happy.

 

[steelyman]

Yesterday after the market closed, I placed orders for approx. equal amounts of FEMKX (emerging markets) and FNMIX (emerging bonds). I put the rest of this month's investment allotment in FAGIX (loosely high-yield bonds).

One more month to go in this 2-yr investing program. The 2014 return, according to my spreadsheet that factors in MRDs (and I believe is correct or very close) is 9.25%.

I'll post the actual allocation (with tickers) when done at the end of January.

 

[papadad111]

Does this imply market underperformance compared to indexing?

Can't wait to see the study.

And ask how well did you sleep at night ... That is an important vector to consider too.

 

[LOL!]

The 2014 performance numbers are now in. The results …

I suck at market timing, but I beat my small-cap and value-tilted benchmark by almost 1%, despite being more tilted to lower performing asset classes. I am not unhappy, but I have been happier about performance in past years.

Good things: Took advantage of the dips in late Jan to early Feb and in mid-October. Also did the tax-loss harvest thing in December. Had a 35% annualized return in emerging markets when EM ended up flat for the year.

Bad things: Too much international. Doubled-up on international in December when I should not have. Not enough US large-caps and sold REITs too early.

 

[papadad111]

What was your portfolio return including dividends for the year ? Did you manage to beat the SP500 for example ?

 

[steelyman]

The 2014 return, according to my spreadsheet that factors in MRDs (and I believe is correct or very close) is 9.25%.

The online fund company's data was not up-to-date when I posted the above on New Year's Eve. Now it seems to be, and the final return for this inherited IRA for 2014 is 10.93%.

I think that's less than the S&P 500, but better than my forward estimate of 6% annual return post-retirement, so I'm OK with that. After all, although the markets have rolled the past few years, they actually rock & roll

 

[Brat]

Thank God for a balanced portfolio. My total is actually up today while the DOW went down 330.

 

[NW-Bound]

Thank God for a balanced portfolio. My total is actually up today while the DOW went down 330.

I see that some REITs are up. What about tomorrow, if the Dow & SP go up will that REIT go up some more?

And how about some other investments that you have? Mutual funds have not reported yet, have they? It's only 1 hour after market close as I write this.

I do not need my MF reports to know it's bad. I have more stocks than MFs, and they are getting a big hair cut today.

 

[Brat]

Yes, my O went up. Vanguard reported Wellington Income value as of 1/5/15 so I assume they have a mighty fast 'puter. Other holdings are ETFs which were down at the margins, international is still a stinker.

 

[clifp]

I was thinking last week as I was doing some last minute trading, that I bet we will see a wave of profit taking first of the year.

I guess the answer is yes, pity that my thinking saved me exactly zero dollars.

 

[NW-Bound]

Yes, my O went up. Vanguard reported Wellington Income value as of 1/5/15 so I assume they have a mighty fast 'puter. Other holdings are ETFs which were down at the margins, international is still a stinker.

Right after reading your post, I went to Vanguard site, and saw that the MF quotes were still the value of Jan 2nd. Perhaps I did not see the same screen as you did.

Then, just now, 2-1/2 hours after market close, my Quicken screen just updated the MF price. Wellington is down -1.1%, in line with its stock AA and the S&P drop of -1.83% today.

Darn, several months of living expenses gone just like that. If this continues, I will need to learn to make scrapple to save what I can on grocery expenses.

 

[LOL!]

Back on Dec 11th, I wrote:

After I sell them, I will stay in cash until after a few other Vanguard ETFs go ex-dividend, then I will decide what to do with that cash. It is likely I will buy some VTI (total US market) in taxable and/or in Roth IRAs*, then exchange from FUSVX (S&P500 index) back into FSITX (bonds) in the 401(k).

(*We will use some of the cash to make our Roth IRA contributions for both 2014 and 2015.)

Got that? It's a bit complicated, but I typed it in here more as notes for myself to follow in the next couple of weeks.

So I have all this cash in my taxable account ready to do something. I will use some cash to make Roth IRA contributions, but leave it in cash in those accounts for now since I am in no hurry. I think I will have to wait until the end of January because of three things on the calendar:

1. ECB meeting on Jan 22
2. Greece vote on Jan 25
3. FOMC meeting on Jan 27

The state of the union speech is earlier.

I am going to bet that the Greeks will vote to stiff the ECB out of paying back their loans. I think the markets see this happening and are already factoring it in. I am going to lighten up on developed markets this week by about 0.7% of portfolio value because there is a small position of VEA left in an IRA. Otherwise, I will ride the foreign stock markets down with all other indexers.

It would not surprise me if Draghi and the ECB actually jump the gun and do something before the Greece vote despite saying that they don't want to do anything to influence the vote. They would have to do it before their meeting, too, otherwise it would not be a surprise. OTOH, nobody likes the Germans anyways, so who knows what will happen?

(I did invest some year-end dividends created in my IRAs into VTI and VCSH today, but these were small amounts not worthy of really messing with. Since VTI is down 2% YTD, there is a good chance that I will outperform VTI by 2% for the rest of the year.)

 

[Brat]

Wellesley is down only .44% today. I am just a smidge down.