LOL!'s Market Timing Newsletter

[NW-Bound]

Oh, come on. Does anybody live forever? If people make it to 70, I think they should accept that their number may come up anytime. No complaint allowed.

We all have seen people dying of disease in their 50s, even 40s. That truly sucks. At 70+, it's fair. Time to go.

 

[REWahoo]

At 70+, it's fair.

Haven't you heard, life isn't fair.

 

[Oz investor]

What would be scary is if I develop a serious illness that can kill me before I even reach 70. That happens more frequently than people want to admit.

do you want me to tell you about that before or after 70 years after my birth

( 2020 looks to be a pivotal year for me , and i will be 65 then )

however you can deal with the known and have flexible plans for the future

it could be worse i could have lost my sense of humor , and my curiosity to see if my ad-hoc retirement plan works

 

[aja8888]

Oh, come on. Does anybody live forever? If people make it to 70, I think they should accept that their number may come up anytime. No complaint allowed.

We all have seen people dying of disease in their 50s, even 40s. That truly sucks. At 70+, it's fair. Time to go.

Easy to say when you are not to 70 yet!

 

[Oz investor]

Oh, come on. Does anybody live forever? If people make it to 70, I think they should accept that their number may come up anytime. No complaint allowed.

We all have seen people dying of disease in their 50s, even 40s. That truly sucks. At 70+, it's fair. Time to go.

that depends some think i am truly evil (and thus immortal ) and some think i am incredibly lucky ( it will all end some day )

the high school motto was ad vitam plenum ( roughly meaning to 'live a full life ' ) i hated the high school but probably followed that concept ( motto ) a little too hard , but i had a lot of fun on the way , and walked from many a wreck .

 

[NW-Bound]

Haven't you heard, life isn't fair.

Exactly my point, when some good people die young in their 40s and 50s.

Thus, when the grim reaper comes knocking when one is over 70, it's fair and nothing to complain about.

Easy to say when you are not to 70 yet!

If you hang around when I get to 70+, you will see if I complain when my number turns up.

 

[NW-Bound]

Including the recent $100K thrown into the pot, I currently have 1/3 of a million in emerging market funds like VWO, SCHE, etc... Got carried away.

Need to unwind some of the recent trades, if the market is going to give me a chance.

Or do I hold on for longer, going for broke?

My total international equity, which encompasses the above EM, is only 20% of the equity portion of the portfolio.

 

[OldShooter]

Including the recent $100K thrown into the pot, I currently have 1/3 of a million in emerging market funds like VWO, SCHE, etc... Got carried away.

Need to unwind some of the recent trades, if the market is going to give me a chance.

Or do I hold on for longer, going for broke?

My total international equity, which encompasses the above EM, is only 20% of the equity portion of the portfolio.

Well, the answers depend completely on what your investment time horizon is. A long term investor would probably be heavier in international, up to the US% of the world (about 50%) but would not be strongly tilted towards emerging markets. Emerging markets would more likely be weighted to match their weight in the world's stock markets. MSCI's Emerging Market Index is said to be about 10% of the world's stock market cap. (https://www.msci.com/emerging-markets)

For a trader, OTOH, anything goes.

 

[NW-Bound]

I have some core positions, and make +- incremental trades on top of those as I see fit.

Just a rhetorical question as I will most likely do my usual move: wait for a few percent of gains, then write an out-of-the-money covered call about a month out to get a couple more percent on the strike price and the premium.

When the timing is right, it feels good like a shot of XO Cognac after a steak dinner.

When the timing is wrong, it tastes like wine that is on its way to become vinegar.

 

[NW-Bound]

Here's an example of a glass of vinegar.

Walmart just reported wonderful earnings. Stock jumps near 10%. Too bad I have an option out on it, and it is now deep in-the-money. This means the other side of the trade will be able to buy my shares a lot cheaper than it is now, and I am missing out on this big jump today.

Yep, I still make money, but much less than what I would if I did not sell the option thinggy. The thing about selling covered calls is that one may end up selling all his good stocks, and hanging on to his losing stocks. It is never that simple. I never write covered calls on all of my shares, so I usually still have some.

 

[SpartacusSchmartacus]

Including the recent $100K thrown into the pot, I currently have 1/3 of a million in emerging market funds like VWO, SCHE, etc... Got carried away.

Need to unwind some of the recent trades, if the market is going to give me a chance.

Or do I hold on for longer, going for broke?

My total international equity, which encompasses the above EM, is only 20% of the equity portion of the portfolio.

I am long "puts" in EEM emerging markets ETF, meaning overall short. Emerging markets are in for a world of hurt for a while. The EM countries do not have sufficient amount of foreign exchange reserves to pay off external debts. The Turkey fiasco hastens this - headwinds are high currency costs, liquidity, inflation, high interest rates due to default risk, and risks due to the shortage of foreign exchange reserves, strong dollar, the trade war. There are many risks. If you have patience then sit on it and wait, everything comes back.

You have to look at the WMT covered call as a good thing ... you made money they made money. Can always buy it and do again and again. Over the course of a year you'll do OK if you time it right. Hopefully you can read a chart pattern to see when a stock is exhausted - and don't sell to far out in time.

 

[LOL!]

.... The EM countries do not have sufficient amount of foreign exchange reserves to pay off external debts. ....

It seems that would hurt the places that the EM countries owe their external debts to a lot more.

 

[OldShooter]

... The EM countries do not have sufficient amount of foreign exchange reserves to pay off external debts. ...

Oh, I think the Chinese have a little money tucked under the mattress and, of course, $1.2 trillion in US government bonds.

 

[NW-Bound]

A while back, Malkiel (the author of "A Random Walk down Wall Street") said EM equity was good because these countries had lower debt as a percentage of their economy compared to developed countries. Wonder if that has changed.

Some of the EM shares I have are for long-term holding. Then, there are extra ones I bought to play short-term market movements. These are the ones I am thinking about the exit strategy.

 

[redduck]

I have about $50K identifiable in emerging market fund holdings as part of a small test portfolio using DFA funds. I have no idea how they've done so far this year and don't care.

I was talking with Richard Thaler this morning and he asked how you were doing. I told him you seemed to be doing well, but that you recently put about $50K identifiable in an emerging market fund. He seemed to become distressed and asked me to remind you that you might want to consider investing that money in a Total International Stock Index fund. If you are interested, I think that Vanguard may have one of these type of funds.

Oh, he also asked me if you were chattering a bit more than usual. I said. "Perhaps, but I'm not certain."

 

[SpartacusSchmartacus]

It seems that would hurt the places that the EM countries owe their external debts to a lot more.

yup it hurts them and makes these countries reluctant to do it again

 

[SpartacusSchmartacus]

A while back, Malkiel (the author of "A Random Walk down Wall Street") said EM equity was good because these countries had lower debt as a percentage of their economy compared to developed countries. Wonder if that has changed.

Some of the EM shares I have are for long-term holding. Then, there are extra ones I bought to play short-term market movements. These are the ones I am thinking about the exit strategy.

you said it. "A while back" ... check the date on that book, nothing is static

 

[NW-Bound]

His recommendation that I quoted was not in the book. I only mentioned the book which is well-known, because some people may know it and forget about the author who has credentials.

 

[LOL!]

I've decided not to keep the DGS that I bought earlier this week over the weekend. I've started selling the shares with various limit orders at a small profit. I will very likely change any remaining unexecuted limit orders to market orders before the close.
722

Update: Nice pop this afternoon, so I made my 1.5%. And with a bit of insanity, I used the money to buy shares of MTUM (US large-cap momentum factor).

 

[OldShooter]

I was talking with Richard Thaler this morning and he asked how you were doing. I told him you seemed to be doing well, but that you recently put about $50K identifiable in an emerging market fund. He seemed to become distressed and asked me to remind you that you might want to consider investing that money in a Total International Stock Index fund. If you are interested, I think that Vanguard may have one of these type of funds.

Oh, he also asked me if you were chattering a bit more than usual. I said. "Perhaps, but I'm not certain."

Quite funny, actually. Good job!

But I think you must have been talking to Eugene Fama. That sounds much more like something Gene would say. He is the more compact and slim guy. An athlete, actually. No one would ever mistake Thaler (or me) for an athlete.

Please tell Gene not to worry. That emerging market position is part of a test portfolio with DFA, where he is a Director. It is only a small single digit percentage of what we have in total international market funds at Vanguard. Not even enough that I would call it a portfolio tilt. Tell him that I continue to believe in the passive investment gospel of Fama and French.

 

[NW-Bound]

I've decided not to keep the DGS that I bought earlier this week over the weekend. I've started selling the shares with various limit orders at a small profit. I will very likely change any remaining unexecuted limit orders to market orders before the close.
722

Update: Nice pop this afternoon, so I made my 1.5%. And with a bit of insanity, I used the money to buy shares of MTUM (US large-cap momentum factor).

Still have not done anything with my EM overweight shares. They have made me a bit of money but that is masked out by the recent drop of another sector: semiconductors. I also have a few hundred $K in this sector.

Nvidia which I do not own, and Applied Material which I do have, both got hammered after their quarterly reports. That brought down the entire sector. The call options I wrote on this group are now worthless, but the premiums that I pocket pale besides the drop of the share prices.

 

[NW-Bound]

Hello, my old friend Redduck.

How are your dividend stocks doing? I observe that dividend stocks have been doing well, and so think of you.

Looks like the pendulum is swinging the other way, and people may not chase growth stocks further (witness FB performance recently), and they are now rediscovering divvy stocks.

 

[redduck]

Quite funny, actually. Good job!

But I think you must have been talking to Eugene Fama. That sounds much more like something Gene would say. He is the more compact and slim guy. An athlete, actually. No one would ever mistake Thaler (or me) for an athlete.

Please tell Gene not to worry. That emerging market position is part of a test portfolio with DFA, where he is a Director. It is only a small single digit percentage of what we have in total international market funds at Vanguard. Not even enough that I would call it a portfolio tilt. Tell him that I continue to believe in the passive investment gospel of Fama and French.

OK, I relayed your message to Gene. He was quite relieved to hear that you still believe in the investment gospel of Fama and French. He did say that if you ever felt an urge to stray, you should get in touch with either him or with me, because I'm obviously keeping an eye on you.

My confusing Thaler for Fama is so embarrassing. But, then again, I tend to mix up Penn and Teller as well.

 

[Oz investor]

*** But, then again, I tend to mix up Penn and Teller as well. ***

? but even a blind man can tell them apart .. one makes a lot of noise and the other doesn't

 

[redduck]

Hello, my old friend Redduck.

How are your dividend stocks doing? I observe that dividend stocks have been doing well, and so think of you.

Looks like the pendulum is swinging the other way, and people may not chase growth stocks further (witness FB performance recently), and they are now rediscovering divvy stocks.

Hi there NW-Bound,
I'm not quite sure how my dividend stocks are doing, but thanks for asking. Give me a day or two and I'll try to figure it out and then post it on the "2018 YTD investment performance thread."