Now you swear and kick and beg us
That you're not a gamblin' man
Then you find you're back in Vegas
With a handle in your handYour black cards can make you money
So you hide them when you're able
In the land of milk and honey
You must put them on the table, yeahYou go back Jack do it again
Wheel turnin' 'round and 'round
It's deja vu all over again as we're back to test the 2,100 line on the S&P, right where we were two weeks ago today when I said: "Yay, S&P 2,100! Now what?" At the time we were still shorting oil at $53.50 (now we're long at $49 (to $51) after a $4,500 gain) and we shared 4 bullish trade ideas that were all huge winners that morning so please, Twitterverse, stop calling us perma-bears!
NOW we are bearish (short-term) because NOW things are really topping looking and we reviewed our Short-Term Portfolio in yesterday's Live Trading Webinar and there wasn't a single bearish trade that we're regretting, so far.
Despite being "bearish" for the past two weeks, our Short-Term Portfolio still sits at $195,525, up 95.5% over 15 months. As I noted in yesterday's article on Portfolio Insurance, we are INVESTING in hedges to protect the gains in our Long-Term Portfolio as well as giving us the courage to deploy more long-term money (12 times in Feb) as we turn up bargain stocks worth of investments.
Bargains like LL, which we just added to our LTP on Monday. As you may know, the company was attacked on 60 Minutes, which is on a network that I seem to remember seeing a few Home Depot (HD) and Lowe's (LOW) commercials on (in fact, here's CBS recommending LOW and HD the same week they attacked LL). Since we are Fundamental Investors who research the markets, we knew the attack was coming and we'd already decided to invest. In fact, last Thursday morning, we were discussing a possible investment in our Live Member Chat Room and I said:
Submitted on 2015/02/27 at 6:00 amLL/Albo – Not good to have liquidate already part of your name. I'd wait until the 60 minutes segment as that will probably spook the last group out of the stock. Also, there will be actual negative results from 60 minutes as a lot of consumers will look elsewhere for product since it seems to focus on their crappy quality and slave-labor sourcing from endangered rain forests. Figure they earn $2.30 (same as this year) next year and give them a 20 p/e and $46 is where they are likely to find some support.
As you can see, it's a good thing we waited as $46 was only support on Thursday and Friday and the 60 Minutes piece cost them another $9 but we stuck to our guns and, at 1:35 on Monday, I sent out a Top Trade Alert to our Members saying:
Those LL 2017 $40 puts ended up selling for $12.50 once trading began (about 11) and are still there now for a net $27.50 entry and the 2017 $35s dropped to $13.50 and the $55s are fetching $6 so net $7.50 on the spread is about what we were looking at but with a short $12.50 on the $40s, it's now a net $5 credit, which drops the worst-case net entry to $35 so let's do 5 in the LTP so we can see how it goes.
LL is already bouncing but you might still be able to get a good credit on what can be a $10,000 spread if LL makes it back to $55 over the next two years. That would be a 10-bagger on your cash and THAT is why we always like to have CASH!!! on the side – no matter what the market conditions – you never know when these kinds of opportunities will come along.
So "Cashy and Cautious" doesn't mean we're not playing the markets – we LOVE playing the markets and there are always opportunities if you are a selective buyer – especially if you are a buyer who has CASH!!! ready and waiting.
I sent out a News Alert this morning (you can find it on Twitter) so I won't get back into it here but I will say that conditions continue to deteriorate and the Central Banksters continue to throw more money on the fire to make it stop. It's an interesting economic experiment, to say the least.
