LOL!'s Market Timing Newsletter

My portfolio has rebounded a bit more than 10% from the bottom in [-]12/14[/-] 12/24. Of course, I lost more than the market on the way down. My stocks dropped faster, hence bounced stronger. :)

I have been busy writing covered calls again. Many will expire next Friday 1/18, and are in the money now. If the price hold, I will be forced to sell and my stock AA will drop perhaps 5%.

Today, seeing that the semiconductor sector is going strong while other sectors are falling by the wayside, I sold off a bit, then sold cash-covered puts to buy the shares back at below current prices.
 
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I think you might mean bottom on 12/24? Even Vanguard Total Stock Market Index fund total return is up 11% since then, isn't it?
 
The bottom was on 12/24. I mistyped.

Yes, the US market bounced up more than 10%. But I am not 100% in stock, yet match the increase. And the emerging market which I have is still lousy too. Developed international stocks also trail the US stocks.
 
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The last trades were not helpful and I would have been better off not making them, but the degradation of portfolio performance was minimal. The performance is still more than half a percent YTD ahead of all the benchmarks, so I am now thinking of just sitting back and matching the benchmark performance. In order to do that, I just have to invest exactly like the benchmark (60/40) and make no trades.

Now that the news is out on Parliament's Brexit vote the anticipation of the vote cannot move stocks anymore. (Duh!)

Even news of any shutdown resolution is probably not going to move stocks much either. The damage has been done and it will take some time to work past it. Same for the China trade tariffs.

I've asked my wife to sell all her US large-cap fund shares in her 401(k) today and exchange the money into a bond fund. This helps get our portfolio back towards where our US large-cap allocation should be, but not all the way back. I won't know whether she actually follows through on this exchange until this evening.

I will still need to sell more equities and buy bond funds to get back to 60/40, so stay tuned.

And if I get back to 60/40 for the rest of the year, the portfolio should finish at least 0.5% ahead of its benchmarks at year end. That's a long way away though.
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Update: My wife told me that she didn't have time to make the exchange yesterday. I have asked her to hold off for now, but if today's trading goes positive towards the end of day, I will text her and see if she has time before the market closes today. If not, then I'll repeat trying to sell on an up day.
 
With the S&P500 up a little bit today, the exchange order has been placed: VFIAX (S&P500) to VBTLX (US bond index). This is about 4% of the total portfolio, so a pretty big chunk, but still not enough to get back to 60/40.
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Update: Oooh! Look what happened since the exchange order was placed! :)

Update 2: And the one day delay didn't cause any damage at all.
 
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It was a great week for the portfolio. The rebalancing exchange yesterday was at least one day too soon in hindsight, but the portfolio is still overweighted in US large caps, so it benefited from the overweight once again and gained on its benchmarks.
 
A few of the covered calls I sold in late December 2018 expiring last Friday were assigned. The raised cash lowered my stock AA by a few percent (still higher than 70%).

With the cash on hand, I turned around and sold cash-covered February puts to buy back these shares at below their current prices.

If the share prices stay the same or go higher, the return of the option premium on the cash is way better than interest rates on CDs or bond yield.

If share prices drop, that will force my AA to go back high, and I will have the same shares back, plus the cash from both the covered calls to sell the shares, and the puts to buy them back, and the difference in prices from selling high and buying low.

See how well it works in theory? In practice, well, it's an interesting journey. :)
 
I sold Berkshire Hathaway, plan to invest in Verizon as even in a downturn people will keep their cell service. I looked at telecommunication ETFs and didn't find their allocation more interesting than a pure VZ investment.
 
OK, today looks like it is going to be a good day to sell the shares of MTUM that I bought on 12/24. I'm posting now just to make sure I go ahead and do it. I will probably sell half in the next 30 minutes and the other half later today.
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In the meantime, I'll entertain suggestions on what to do with the 6-figure proceeds from selling. Thanks!
 
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LOL! said:
... I'll entertain suggestions on what to do with the 6-figure proceeds from selling. Thanks!
Click to expand...

Blow the whole thing, gain and principal, on a month-long world cruise in a suite, then a fancy new car if there's anything left after the cruise? :)

Oops, this is not the "dough blowing" thread.
 
^I like that! I'll tell my wife that the home remodel is out again this year.
 
She may be fine with it, if she's going to get the new car.

As for me, I have gained several $K from the cash-covered puts I sold just earlier in the week. That is in addition to the several $10K's I gained from the shares that I still have.

Of course, I would have made even more money if I held the stocks and did not write covered calls on them, which were assigned and I was forced to sell the shares on Jan 18.

Fear is changing into greed. Never fails.
 
A detailed look at my portfolio asset allocation this past weekend showed that I was slightly underweight in equities and specifically large-cap foreign equities. So I have submitted a limit order to buy SPDW (ex-US developed world) with a little bit of the cash from last Friday's sale of MTUM. I don't have much of a conviction to do this, so I set a limit price low enough that I don't expect it to get executed today. 510
 
The FOMC is really helping markets today and everything is higher than I last sold things for about a week ago, so not selling would have resulted in a higher portfolio value. But I should still match my benchmarks pretty well today. 752

And I didn't buy that SPDW that I mentioned a couple days ago. That's gonna cost me a little bit of pride.

If I wasn't so close to asset allocation nirvana and was overweight in anything, then I would be selling today.
 
Up, up, and away...

My stocks are up 2.88% today. Diluted out by MFs and cash, the stash is still up 1.87% total. Way too good compared to the S&P at 1.55%. Can this last?

This reminds me of last year, when I was up 7.4% for the month of January before it all came tumbling down because of the VIX fund meltdown. Do people here remember that fiasco?
 
The market is going crazy again. Having sold a few shares due to covered calls getting assigned on Jan 18, my stock AA is getting down to 65%. I have sold several out-of-the-money puts to buy them back, and because the share prices keep climbing the option premiums are mine to keep.

With more options expiring on Feb 15, I will have more shares taken away from me. My stock AA will drop lower. Greed is taking over, so I just bought shares of some companies that I did not own. They have already risen up quite a bit since the low in December, and although their earnings and prospects look good, the share price rises may take a breather in the immediate future.

So, right after buying the shares, I sold slightly out-of-the-money covered calls on them. If the options get assigned on Feb 15, which is just 2 weeks away, I will have made a 3% profit. That's the same as the interest for an entire year in CD, had I kept the money in cash.

Of course, the shares may just drop, and I lose money on these deals despite pocketing the option premium. It will also drive my stock AA back up to 70%, which is OK.
 
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Yes, things are a little bit too active for me. With the gains this week, my asset allocation is perfect and I have to resist making any trades. I guess I got used to making lots more money than my benchmarks, so now that I am back to tracking the gains/losses of the benchmarks, I am bored. Please knock some sense into me. Thanks!

I read that January will be one of the best months since 2015.
 
Things are still rocking. 401K Up 10% right now. Hopefully a China deal is will be closed and we will see a "banner" year in the market.
 
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The market takes a downturn today. I already purchased back most of the out-of-the-money Feb 15 put options, and the few contracts left have strike prices quite a bit below current market prices. I let the latter be, expecting them to expire worthless, but weird things could happen (and force me to have to buy more stocks).

The covered calls are cushioning the fall today. Many were sold early, so got in-the-money, and if the market holds I will have to sell quite a bit of shares on Feb 15.

Whether the options are assigned or not is fine with me. I already made money on both the shares and options, hence have no right to complain. Or if the market drops and the options become out-of-the-money again, well, how do I complain for the additional $10K+ I get each month from these options?
 
Another crazy day today.

The market opened down. At the start, all of my stocks were in the red. The ones that I wrote covered calls on, many were way below the strike prices of the options. They may just expire worthless next week, but as I could buy them back for 1/10 of what I sold them for, I decided to go ahead to do that. With the market being crazy as it is, I would rather book the short-term profit when I could, instead of waiting another week to potentially gain another 20c/share and risk losing $2/share.

So, I closed out 20 option contracts on various stocks, netting $3,500 for these options I sold from 1 month ago to just last week. Then, the market turned around near the end. I made a good move.

Still have more than 40 contracts outstanding, many expiring next Friday. I may let them expire. Some will be worthless, some will be in-the-money making me selling some stocks. It's all OK.

Gain from option trading is $9912.55 YTD, net after all trading costs.
 
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I sold 5% of my networth in Stocks yesterday. I felt markets had bounced back a lot and even if a deal comes through, the earnings are going to be hit and the slowdown in the world will hit US companies sooner or later and SPY is like very close to its highs.

Is my action justified? I am now considering selling SPY 250 Dec 2019 PUTs. What do you guys think?
 
@revhappy, I cannot say for sure if justified. If your equities were a few percent more than described in your desired asset allocation plan, then Yes, it is justified.

I see that retail sales for December had a sharp, unexpected decline of 1.2%.
https://www.reuters.com/article/us-...n-retail-sales-rattle-investors-idUSKCN1Q31YZ

Perhaps that was because of the fear generated by the stock market drop through Christmas Day and the government shutdown that last 10 days of December?

There are at least 2 big issues still to be resolved:
1. China trade talks and tariffs.
2. Brexit

Both could go either way in that they could cause stock markets to either tank or pop. We just don't know and cannot predict. 413
 
In the past week, I have been simplifying and cleaning up the portfolio. The impetus was the Vanguard's introduction of VFSAX which is the Admiral share class of VFSVX and VSS -- both of which we own in Vanguard IRAs.

So I have decided to put one single fund in each of our Vanguard accounts and turn them into set-and-forget modes. I already had a couple accounts that way, but now they will all be that way. This involves converting VFSVX to VFSAX which is trivial and selling VSS and buy VFSAX.

Also, I will move one Roth IRA into another Roth IRA and reduce the number of accounts by 1. The two Roths were from separate tIRA to Roth conversions back when recharacterizing was allowed.

In other news, my portfolio performance is well ahead of a benchmark that has both US & foreign equities, but since foreign equities are now lagging US equities for 2018 YTD, my portfolio now lags a 60/40 benchmark with no foreign equities. I'm going to have to do some market timing to catch up.
 
revhappy said:
I sold 5% of my networth in Stocks yesterday. I felt markets had bounced back a lot and even if a deal comes through, the earnings are going to be hit and the slowdown in the world will hit US companies sooner or later and SPY is like very close to its highs.

Is my action justified? I am now considering selling SPY 250 Dec 2019 PUTs. What do you guys think?
Click to expand...

A reasonable thing to do.

It looks like several call options on my stocks will get assigned tomorrow Feb 15. It will reduce my stock AA from 77% to 67%.

My next move will be selling puts to buy them back at lower prices, but do not know when I will pull the trigger.
 
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