LOL!'s Market Timing Newsletter

[NW-Bound]

The upside is limited to the premium I received. The ultimate downside is I lose all of the cash to secure that put if the S&P goes to 0 (100% loss). It's not a straddle.

The S&P was at 2640 when I sold the put to buy it at 2560 or 3% less. If it drops 500 points to 2140, that means I will have to pay 2560 for a stock worth only 2140. That is a 16.4% loss (not counting the premium). But that loss is on this bet, and this bet only.

 

[LOL!]

I feel redeemed about my buys last Friday. MTUM is higher than my purchase price and Total Stock Market has done even better. Now I have to decide how greedy I want to be. But it looks like I should've bought my other favorite: DGS
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Time to walk the dog before I do anything rash.

 

[NW-Bound]

Bought back some semiconductor shares as I threatened to do, not on this thread but another one somewhere. Blew not quite a 6-figure number.

Also closed out a few covered call options that were sold out-of-the-money, and have become even more so. Usually, I just let them expire worthless in order to pocket the entire premium, but April 20 is a long time away. So, I bought them back at 1/3 to 1/4 the price of what I sold at. With the market expectation now subdued, I want to wait a week or two, then write covered calls again but at a lower strike price, squeezing more "dividend" out of my stocks.

I am still down beaucoup money compared to the top on Jan 26, but as long as these trades bring in positive returns to reduce the loss, I am quite OK with it. One of these option contracts is enough to pay for the meal I paid for 5 at the Brazilian steakhouse in Scottsdale yesterday.

 

[street]

To much stress and buying/selling for me. I'm not smart enough for all that and I know in the end I most likely would lose my butt any way. LOL

I buy and hold and have stocks I bought in 1980 I haven't touched. There has been a lot of growth from those accounts in 38 years.

 

[NW-Bound]

I did not have any stock in 1980. Was too busy paying the 14% mortgage.

 

[street]

NW-Bound >>>> when you talk about all that buying/selling put stuff it makes my head hurt. LOL

You are so far above me I don't understand it. LOL It doesn't take much though to be over my head.

I buy hold and pray for the best.

 

[NW-Bound]

I actually do just simple call and put options. No straddle, strangle, condor, butterfly and all that fancy stuff.

When my stocks go up like crazy, I say they are good, but not that good. So, I bet that they will not go up even more.

When my stocks drop like crazy, after checking to be sure that they do not deserve to be spanked that bad, I bet that they will stop dropping.

That's all. I have been wrong quite a few times, but I never bet so heavily that it hurts badly.

I keep hearing that the average investor loses money by trading. So why don't I take the opposite side?

 

[Coolius]

I used to be active in trading Butterflies, Iron Condors, and Diagonals strategies, but gave that up a few years ago for a simpler lifestyle.

As one gets older, calculating Black-Scholes and Greeks values, became more of a burden than the modest gain received - and certainly had my share of large losses as well.

Now, like NW-Bound, I confine myself to single leg options; selling cash covered Puts and then covered Calls if/when assigned.

On stocks like LMT and BA, it juices the return to about 5-6% after including dividends.

 

[LOL!]

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OK, with MTUM up 3% today and Total Stock Market up 2%, I have sold off about 85% of what I bought on Friday. I have purchased VCSH (short-term corporate bond index) which is trading down a few cents from last Friday.

I didn't expect such a nice one day gain and things may go higher later today and later this week, but I got more than I expected, so I have unwound most of the previous session's buys. In effect, it is like I made about 2% on the short-term corporate bond index shares in about a day. Of course, that's not what really happened, but I started with ST Corp Bond and I ended up with ST corp bond. I haven't been this lucky in a while, so I am liking it.

Update: And all the equity shares I sold closed higher than the price I sold them at. Oh, well.

 

[LOL!]

I wanted to add a little note about Market Timing here. I read all the time that one shouldn't do market timing because one has to make two great decisions: (1) When to Get In and (2) When to Get Out. Or sometimes it might be stated as (1) When to Get Out and (2) When to Get Back In.

I have no issue with the fact that one has to make 2 decisions, but I will state that one doesn't have to make great decisions to make money. If one makes good enough decisions or even more good decisions than bad decisions, then one might be able to do better than buy-and-hold.

I like also the buy, hold, and rebalance creates a method of making decisions: Not only when, but also how much.

Another common theme of Market Timing detractors is that they assume one goes from 100% stocks to 100% cash and back. That's not happening in this Newsletter.

Followers of this LOL!'s Market Timing Newsletter will note that the portfolio is essentially a 60/40 buy, hold, and rebalance portfolio of index funds. The Market Timing is overlaid on top of such a portfolio with excursions to a higher allocation than 60% to equities from time to time. The higher exposure to equities comes from exchanging from bond funds to equity funds for short periods of time as chosen and reported by LOL!.

 

[NW-Bound]

Of course you do not have to tell me.

If I sell, then being able to buy back at a lower price, that's good enough. Can't really hit exact tops and bottoms. Individual stocks move +-5% during the day anyway, and you have to be an super clairvoyant day trader to catch that.

Also, never 100% stock or cash. I would vary my stock AA +-10%. That's enough. Used to be +-15% or more.

By the way, today is a good day. Individual stocks up 3.78%. MFs up 1.47%. Cash 0%.

Overall up 2.61% today. Slowly making up for recent loss. Cash is down to 28.8%. Thought about buying more, but got scared. Scared can be good, I think.

 

[NW-Bound]

Sold several call options today after market open.

Market rose, then crashed. The above options brought me a couple of $K, as a consolation prize for losing several tens of $K today. Better than nothin', as I keep telling myself.

Such is the temperament of the market.

 

[LOL!]

Hmmm, I didn't expect such a drop the day after I sold some shares.

But since MTUM dropped more than 3.3% since yesterday's close, I bought some shares that I had sold yesterday.

 

[hesperus]

I wanted to add a little note about Market Timing here. I read all the time that one shouldn't do market timing because one has to make two great decisions: (1) When to Get In and (2) When to Get Out. Or sometimes it might be stated as (1) When to Get Out and (2) When to Get Back In.

I have no issue with the fact that one has to make 2 decisions, but I will state that one doesn't have to make great decisions to make money. If one makes good enough decisions or even more good decisions than bad decisions, then one might be able to do better than buy-and-hold.

True, maybe... But I'm too busy having fun to bother trying to bump gains by maybe a fraction of a percentage point

 

[LOL!]

True, maybe... But I'm too busy having fun to bother trying to bump gains by maybe a fraction of a percentage point

Me, too.

Most of this can be automated because one's broker will send an alert to one's smart phone. Also, one does not need to act on every possible opportunity. If they fall in one's lap though ....

OTOH, I suppose that one could have a hobby that keeps them busy having fun and that hobby could be setting up investment alerts to go to their smart phone.

 

[LOL!]

Hmmm, I didn't expect such a drop the day after I sold some shares.

But since MTUM dropped more than 3.3% since yesterday's close, I bought some shares that I had sold yesterday.

I'm losing quite a bit of money from this most recent purchase, but I may buy more equities later today if things get worse. Since my international ETFs are not down as much as domestic ETFs, I expect my portfolio to increase its lead over my benchmarks which have somewhat less invested in international than my portfolio. 325

Some of you must be buying today, right?

 

[NW-Bound]

The put options with April 20 expiry that I sold a couple of weeks ago are all deep, deep in-the-money. In effect, I already "owned" these shares, and that's a 6-figure number when the options get exercised.

I still have a lot of cash, but need to reserve some dry powder. I will try to sit on my hands today. Very tempted to buy more.

 

[NW-Bound]

OK. Just threw a low 4-figure sum into my favorite tech stocks: semiconductors.

It's so that I can claim I bought at a low, if the market rebounds tomorrow. If not, well, I can always consider it a community service, helping out desperate sellers.

PS. It was a low 5-figure sum, not 4.

 

[LOL!]

Earlier this afternoon: Sold the VCSH (short-term corp bond index) bought most recently and used the money to buy some VTI (Total US stock) which was down about 3% at the time.

My intention is to sell some Total Stock Market index shares in the next day or so after they go back up. If they don't go up, then I will very likely sell more fixed income and buy more Total Stock Market.

Update: VTI is up almost $1 a share since purchase earlier today. And icing on the cake: VCSH closed 4 cents lower than I sold it at.

 

[NW-Bound]

I also got a bit of gain on the purchase today, when the market rebounded a bit at close.

The dollar amount of the gain is $103.5 to be exact. I do not daytrade, and intend to hold my stocks for a gain of several percents.

The above gain of course does not make a dent in the loss today, which is close to one year of living expenses. Yes, tech stocks got hammered today.

And tomorrow, when the market shreds another 2%, I may regret the stock buy today.

 

[copyright1997reloaded]

Seems like we are oversold here. But, the market seems "tired" to me. Maybe it is just the fear/pessimism sinking in to my thinking, but I'm glad I had sold more stuff last Thursday.

 

[LOL!]

My intention is to sell some Total Stock Market index shares in the next day or so after they go back up. If they don't go up, then I will very likely sell more fixed income and buy more Total Stock Market.

Sold a moment ago shares of total stock market index in another account, no commission, no taxes. I still want to sell some more ... maybe later today.

 

[LOL!]

Update: Sold more shares of Total Stock Market Index ETF in two different accounts. A very nice pop happened here in the last hour today. This was a nice 4-figure one day gain which I'll take any day.

And in case you are wondering, I did not buy at the low yesterday and I did not sell at the high today.

Of course, I'm down tens of thousands of dollars since last Friday.

 

[NW-Bound]

Earlier today, I plopped down another $10K to buy shares of an electronic distributor. It's hard not to buy stocks when everything is down.

Not selling anything yet, and will not start until the market is up a few percent from here. If it does not go up, I will tough it out.

 

[LOL!]

My wife made her 2018 Roth IRA contribution yesterday, so I had her buy shares of MTUM this morning just to see what happens with them. 834