LOL!'s Market Timing Newsletter

[LOL!]

Quote:

Originally Posted by LOL! Sold some BND (total US bond) and bought some VSS (small-cap foreign).

Above is from Feb 5, so today I am selling the same number of shares of VSS that were purchased. The gain over doing nothing is about 3% (2% from gain in VSS, 1+% avoiding a loss in BND). I have submitted a limit order and will update after a bike ride.

Update: Back from bike ride. Limit order executed and VSS has gone up even more. If bond ETFs keep heading up, I will exchange some VBTLX shares into VMMXX at market close.

[LOL!]

I had a limit order in for BIL in order to soak up the money from selling VSS. I was surprised to see it execute late in the trading day.

Bond ETFs have kinda of faded here in the last hour, so I will exchange a reduced amount of the VBTLX to VMMXX.

[LOL!]

Today was a good day to make some rearrangements in my portfolio. They were mostly to reduce costs and not have to worry about future commissions. I can say that if TDAmeritrade had not ditched Vanguard ETFs from their no-commission list, then I would not have made these trades. TDAm did give me free trades to sell the Vanguard ETFs though, so none of the following trades created commissions.

I sold all VSS in one account and bought VSS in another account that already had VSS.

I sold all DGS in one account and bought DGS in another account that already had DGS.

I sold all VEA and all VEU in one account and bought VTIAX in another account.

I also simplified the total number of holdings across all accounts, so that was a plus.

[NW-Bound]

I wrote some covered call options on the stocks that went up today, despite the market being down today.

I wrote some cash-covered put options on the stocks that have been down for a month.

So, it's same old, same old. Right now, I have more call options out than put options, because I see more stocks up than down.

Last year, the option premiums generated added up to the same as my expenses. This year, YTD I made more than my expenses so far. Of course, if the market drops big time, the option premiums are nowhere near enough to compensate for the loss. But every little bit helps and it generates money I would not have if I did nothing. And it is fun to do.

[LOL!]

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So I wish I had only sold yesterday and not bought anything back. Oh well.

The only thing that dropped enough today to make me think of buying it was DGS, so I submitted a limit order to buy and here in the last minute it executed and I've almost doubled my position in it. A problem I have with DGS is that the volume is not that high, so trades only happen every few minutes.

This is truly a falling knife. but since I saved so much money selling most of my total US bond funds, I was feeling generous with too much cash in my pocket.

I intend to sell shares of DGS soon, so please remind me if you don't see an update on that in the next 10 days. Thanks.

[copyright1997reloaded]

Since my 2/21 post:
Bought a little Teva on 2/26 in premarket@ $19.65 - so far not so good.
Sold a number of things as I am trying to get rid of some smaller holdings to get the number of unique positions down - I have way, way too many. Sold some HST @ 18.52, some BDX @ 226.25. Also trying to finally do some account consolidation. My first victim was a small 401k which I am transferring to a Schwab Rollover IRA (and where I have other assets). So in order to do that they had to liquidate assets. All of this (other than Teva) was done yesterday 2/26. Net effect is about a .75% decrease in equity %...to approximately 67.2%.

[LOL!]

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I have been wanting to sell the DGS shares that I bought on Feb 27 at a nice gain, but every time it pokes its head above water, it only shows it eyes and doesn't get much further above breaking even before it sinks back down into shallow water.

I can take some consolation in that many other equity classes have lost money since 2/27, so the DGS was not a bad purchase (so far). Right now DGS is in the positive for me even though it is one of the worst performers for today. Yet it is not positive enough to make me want to sell.

[NW-Bound]

Semiconductor stocks are on a roll again. Many of my covered calls expiring next Friday are in the money, and if the price does not drop big next week, somebody will buy mucho of my shares.

This drives down my stock AA, and particularly my overweight in this sector. I still believe in this tech sector, so start to sell put options to buy them back at the same price I will be selling them, or even lower.

There are always bulls and bears in any market. When stocks go up good, I sell options to the bulls who bet stocks will go up even more bigly. Then, I turn around to sell options to the bears who bet stocks will crash.

[LOL!]

OK, got a limit order to sell DGS in. And a limit order to buy Total US bond index. Let's see what happens, but prices seem to be going the wrong way now. 726

Update: And the sell DGS order executed this afternoon.

[LOL!]

I bought several thousand shares of FLRN this morning with the money from selling DGS. FLRN is an ultrashort bond ETF: SPDR® Bloomberg Barclays Investment Grade Floating Rate ETF that I will try out for at least a month or so. 86

If anyone else has used, owned, or is considering buying FLRN I'd would enjoy reading any thoughts on this ETF. Thanks!

[NW-Bound]

At expiry last Friday (3/16/2018), many of my covered call options were in the money, were exercised by the other side of the trade, and resulted in me selling the shares. That reduced my stock AA from 73% down to 65%.

Today, some shares have dropped below what I sold. Heh heh heh...

There were also covered calls and puts that expired worthless, and I get to keep the option premiums and my shares too. So far, the options generate cash that is more than my expenses.

I have quite a bit in cash now, and am planning what to do with it. In the past, I would buy back the shares at a bit lower than what I sold, then write more out-of-the-money covered calls.

This time, I think I will wait a bit, then write out-of-the-money cash-covered put options to buy back the shares I sold for even cheaper. If the shares drop that low, I get the shares cheaper than what I have to pay if I buy back now. It would bring my stock AA up.

If the shares never get that low before the options expire it's OK too, because the option premium is a lot more than the interest I can get on the cash.

[LOL!]

Quote:

Originally Posted by NW-Bound At expiry last Friday (3/16/2018), many of my covered call options were in the money, were exercised by the other side of the trade, and resulted in me selling the shares. That reduced my stock AA from 73% down to 65%. Today, some shares have dropped below what I sold. Heh heh heh...

Isn't it nice when a plan works out well?

I haven't figured out what today's market action is all about. US Large-caps seem to be the worst performers while US small-caps and foreign equities have gone down noticeably less. I see the news about Facebook and tech, so maybe that's an excuse for folks to start selling.

I just don't know, so I have no plans right now to make any trades.

[NW-Bound]

The options getting exercised helped, but I still lose much money today. I just lose less.

But at least, that means my defensive maneuvers using options work. A lot of people think options are volatile and risky. But as with any tool, you can use options to achieve different objectives. I use them to hedge, which limits my potential gains, but also reduces the loss if the market turns bearish.

[Brat]

I think it is sentiment about what is going on in DC. When things look stinky better to sit on the sidelines.

[LOL!]

Efficient Market Hypothesis: Not!
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Everybody knows that the FOMC will announce a FFR increase later today. The prices of bond funds have already been adjusted for this prediction for some time.

So why have bond ETFs such as AGG and BND dropped more than 0.3% in the past couple of days? I think it is just that folks are waiting for the news. I think these bond funds will go back up over the next few days, so I have put in a limit order to buy a few shares of total bond market this morning. I don't actually expect the order to execute until the gyrations that happen right at the FOMC press conference.

And you might ask: Why bother with a small order and potential 0.3% gains? I don't have an answer for that. Sorry. I guess perhaps I like making predictions in this Market Timing Newsletter.

[NW-Bound]

Quote:

Originally Posted by LOL! ...And you might ask: Why bother with a small order and potential 0.3% gains? I don't have an answer for that. Sorry.

I did. That's $300 on a $100K bet. Personally, I like to bet on more volatile individual stocks, and stand to make or lose $3K or more on $100K bet. Of course the risk is higher.

One tries to make money whichever way he can think of or is comfortable with, I guess.

Quote:

I guess perhaps I like making predictions in this Market Timing Newsletter.

I do not make specific predictions per se, other than semiconductor and biotech sectors will continue to do well and better than the entire market. Also EM.

However, when these sectors surged like crazy, I wrote covered calls on them. These companies are good, but not that good. I usually try to set the prices so high that I do not think they will be reached, but not so high that the premiums are puny.

The last batch of call options, I underestimated the market appetite for semi stocks, and ended up selling a bunch of them. They dropped big on Monday, in sympathy with FB it looks like. Lucky me. Crazy, as what do semi stocks have to do with FB, but that's the efficient market for you.

So, I have sold put options to buy them back at even lower prices. The stocks recovered, and it looks like these put options will not hit (and I will pocket the premium). However, I like to hold these stocks for long-term gain, so may buy some back at the current prices to continue to write covered calls on them.

[LOL!]

Quote:

Originally Posted by NW-Bound I did. That's $300 on a $100K bet. Personally, One tries to make money whichever way he can think of or is comfortable with, I guess.

I am just following my Investment Policy Statement to make money.

I can write that I am overweighted in equities per my asset allocation plan, so that I need to buy some more fixed income here ... or not buy anymore equities. Thus, if I find myself with a little cash, I buy something, and today (my order was executed about 20 minutes after placing it), I bought bond ETF shares.

[NW-Bound]

I am more like Groucho Marx.

"Those are my principles. If you don't like them, I have others" -- Groucho Marx

Actually, I do try to limit my stock AA at both the high and low ends, and also the concentration in any individual sector. But without doing something different than the market, I might as well do index and call it quit.

Here's a good day for a non-indexer: my stocks are up nearly 1% while the broad market is down nearly 0.2%. When diluted out by cash and some MFs, the portfolio is still up 0.62%. That's quite more than a few $K, and in fact the same as 3 months of living expenses for me (if I can hold on to this gain that is).

What happened? Well, the sectors I am heavily in, like biotechs, semiconductors, EM, energy (oil), chemical, and mining all surged. It's like having a 12-cylinder engine and suddenly 10 of them fire, instead of taking turn sputtering.

Maybe tomorrow I will pay for this, but such is the life of a non-indexer. The interesting thing even if I do not beat the market is the conundrum that it presents; why these things happen, and what makes investors suddenly pay as much as 9% more for a stock compared to what they did yesterday (or will tomorrow).

It may be the same weirdness as the morbid interest of watching insane patients in an asylum, but I am hooked.

[JPatrick]

The past year or so I've been trading the VIX using VIXY covered calls.
Volume is low, but thus far it has been good. Best just to paper trade for a while if you don't have a feel for what the market action does to VIXY.
Right now I have the APR 30 calls written. A few days ago I rolled the Mar 30 calls.

[LOL!]

Quote:

Originally Posted by NW-Bound Here's a good day for a non-indexer: my stocks are up nearly 1% while the broad market is down nearly 0.2%.

Ah, but an indexer can choose which index funds/ETFs they will invest in and over what time periods, so an indexer still has a chance to outperform the broad market indexes.