LOL!'s Market Timing Newsletter

[LOL!]

Just submitted an exchange order from US Bond Index to Total Int'l Stock Market index in my 401(k) that will go through after the market close. The amount of money involved is more than the VWO sale the other day, but still less than 1% of portfolio value. It's basically nibbling around the edges after today's 2.5% expected drop in Total Int'l Index.

I am certainly underweight in foreign equites, so I will be rebalancing into them over the near term.

 

[steelyman]

It's going to be more FSIVX for me this month. Cha-cha-cha-chance!

 

[LOL!]

More nibbling today. Exchanged VCSH (short-term bonds) for DGS (small-cap emerging) in a Roth IRA a moment ago. Why DGS? I already own it and it did not go up much so far this morning, and I am underweight in international and emerging.

 

[NW-Bound]

I talked of setting a buy order for EDC earlier. It executed, and alas, I am still in the red on that one.

Last Friday, 10/17, I bought a semiconductor ETF. To hedge, I immediately sold Feb call on it. In just 2 days, Mon and this Tues, the calls are already close to being in the money! Well, I have learned not to be greedy, so it is OK. If the calls get exercised, I still have a gain of 22% in 120 days.

Not a lot of money compared to the portfolio "loss", but as a lark, if a trade like this makes me any few $K, it makes me happy.

 

[LOL!]

Well, DGS bought yesterday has dropped about 0.8%, but I am committed now.

Since I need more international and they are down today, I've submitted an order to exchange about 0.5% of total portfolio value from FSITX (total bond index) to FSGDX (total int'l index) in my 401(k).

I still need to buy more international to get back within my rebalancing bands. Wish me luck!

 

[NW-Bound]

Good luck!

We all need luck.

 

[aja8888]

Good luck!

We all need luck.

I need the good stuff!

 

[NW-Bound]

If luck is on my side, I will have beaucoup money. With which, I can buy "stuff".

Or not! Counting money is fun without spending it for this Scroogy guy.

 

[aja8888]

If luck is on my side, I will have beaucoup money. With which, I can buy "stuff".

Or not! Counting money is fun without spending it for this Scroogy guy.

You remind me of this guy:

 

[NW-Bound]

Only if I have so many gold coins to count!

As it is, I would have to convert my stash to nickels to have enough coins. The big pile of Swiss nickels in the following photo is only $500K. We can all afford that.

 

[LOL!]

I have submitted limit orders to purchase some VWO and VEU a few cents below current bid/ask. Volume is enough for both that I may change to market orders if it looks like prices will not drop in the last 30 minutes of trading today.

It is now more than 31 days after the above Tax-Loss Harvesting move. Furthermore, that VWO position has moved out of the loser category, so that it has a slight gain today while VEU still has a slight loss. The portfolio is overweighted in emerging markets, too.

It makes sense to me to now exchange all the VWO back to either VEA or into VEU today. I have submitted a limit order to sell VWO at a price slightly higher than the current price. I want to sell at a gain so that I don't have to worry about any future wash sales if I decide to buy back VWO.

Astute readers will note that this is an anti-momentum play in VWO, but perhaps not in VEU or VEA.

If it executes, I will make a decision about which ETF to buy with the proceeds and let you all know.

 

[LOL!]

OK, VWO sold at a slight gain (it is trading a few cents lower now). I see that prices for VEU and VEA are slowly dropping, so I have submitted a limit order to purchase VEU at a price about 5 cents below current ask.

Executed, but only after switching from a limit order to a market order. I'll have to eat a cheaper lunch today to make up for the price difference.

(Edit to add: I should have stopped looking as my limit order would have executed if I had just waited.)

 

[NW-Bound]

The short-term play EDC order that filled a month ago finally moves into the green. If I am to sell now, I will book a meager 3% gain. So, I wait.

The other semiconductor ETF I bought, also for a short-term play, has been above the strike price of the call option that I immediately wrote. If I held off till now, would have had 30-35% gain instead of the 22%. Oh well, one does not go broke taking profits.


PS. The EDC I bought is like LOL's VWO, but on steroid. For short-term plays, I like these leveraged high-beta ETFs or stocks because I can commit less money for the same effect.

 

[LOL!]

I'm glad I sold VWO near today's high, but I should've waited to buy VEU.

OTOH, I can sell VEU to tax-loss harvest and buy VEA and VWO whenever I want without worrying about wash sales.

 

[steelyman]

FSIVX (international index) it is for this month. The order's in. Just a few months to go

 

[papadad111]

LOL !

do you ever consider vxus instead ? Or do you dislike the small cap component of vxus?

 

[LOL!]

LOL !

do you ever consider vxus instead ? Or do you dislike the small cap component of vxus?

Yes, I consider VXUS, but have not used it for several small reasons.

1. It was not available when I initiated a LARGE position in VEU. I try to simplify my investments whenever possible, although it may not seem like it. So I prefer to add to VEU than start a new position in VXUS.

2. I like to overweight foreign small caps and like to slice-and-dice, so I own a VERY LARGE position in VSS (small-cap foreign index), less in SCZ (small-cap developed), and DGS+EWX (small-cap emerging markets). So these easily make up what is missing from VEU.

3. I own a little bit of VTIAX (same as VXUS) in a small IRA. It is in set-and-forget mode, so I don't write about it in this newsletter.

4. Splitting international into VEA+VWO+VSS or VEU+VSS is more tax-efficient than owning VXUS. I can have the less tax-efficient VSS in tax-advantaged accounts, while having the tax-efficient VEA, VWO, VEU in a taxable account.

5. VXUS just doesn't have the daily volume that VEA, VWO, VEU have and seems to have an average bid/ask spread about twice what these more liquid ETFs have. See https://advisors.vanguard.com/VGApp/iip/site/advisor/investments/bidaskspread

6. And the most important reason of all: FSGDX (Fidelity Spartan Total Int'l index) is just like VXUS, but is available in my 401(k). I own lots of it and as noted in recent posts have purchased more of it.

Do you like my reasoning?

(Today is going to be a great day for VEU and VEA and FSGDX. Japan was up almost 5% overnight. I should charge for this newsletter )

 

[LOL!]

Something just doesn't make sense to me at today's opening of the US markets.

Why are my foreign ETFs such as VEA, VEU, and VWO trading at lower values after Draghi's ECB comments AND after Europe stock markets popped at the end of their day?

Here is a something from Yahoo finance:

I expected VEA and VEU at least to be up by 1% or more. Is Yahoo Finance giving me bad data?

Since Japan has started some QE and it does look like Europe is finally going do something and Ukraine has a gas contract with Russia, it just seems to me that foreign developed stock markets should be rocking and rolling. I guess I will have to make a prediction: Foreign developed stock markets will be going up sooner rather than later.

 

[MichaelB]

Single or same day prices for non-US assets have large tracking errors because markets aren't in sync. International ETFs often close with differences between price and NAV. Next day opening prices will reflect that. This seems especially so when there is important news on days after European markets close.

 

[LOL!]

True, but it looks like bad data from Yahoo Finance to me right now as Bloomberg paints a different story. European Stocks Rise as ECB Says More Stimulus If Needed - Bloomberg

 

[NW-Bound]

Is it possible that the real-time price conversion of the foreign equities includes the effects of currency exchange, which moves against the foreign indices although the latter are going up in their local currencies?

On the other front, I just sold the remaining shares of the leveraged semiconductor ETF I bought on 10/15. Paid $79.33, and just sold for $110.40. The other shares, I would have sold too, but have already written covered calls on them.

Not at all a bad take, but hardly makes a dent to the rest of the portfolio (which is below its all-time high) as this is just a small bet of less than $50K as a lark.

 

[MichaelB]

While int'l developed markets rose, the US$K rose even more, the net was negative. Looks like the $$ was up even more against some of the primary EM currencies while many of those markets fell, making for a big decline.

If tracking foreign markets directly it helps to keep an eye on UUP, which tracks the US$.

 

[LOL!]

@MichaelB, thanks for that. It looks like nothing big can happen until after a meeting in December.

@NW-bound, nice profit on your part. What's next?

 

[MichaelB]

Have you thought about using currency hedged ETFs for some of your timing trades?

 

[LOL!]

I have not.

My timing trades are very rare, but not as rare as my tax-loss harvesting trades. My rebalancing trades occur less rarely. And unlike NW-Bound, I do not like to use leverage anymore.

I think I need to go sit on my hands for the month of November.