Virtual Portfolio Insurance

This is an article I was saving for the private site but news has forced my hand so I'm going to start picking up some of these next week. Insurance companies are always good in times of trouble and should hold up better than the Dow in a plunge (but will not be immune to it so we sell calls against or get out in a downturn). Currently the IYF insurance ETF is 10% behind the Dow's rally but usually outperform the Dow (move the time-line further out, resting neatly at the 10% rule. I'd like to give a shout out to my man Warren Buffett who took the time over the weekend to pump my beloved BRK.A, saying "you ain't seen nothin' yet" (I may be paraphrasing) while at the same time jumping on our bandwagon and taking a stab at Exxon for sqandering Billions on buybacks and dividends. Berkshire Hathaway was my stock of the year selection for 2006 and, although it was outperformed by some, there were none that made us feel safer through thick and thin! This puts a lot of pressure on my 2007 pick... I think that Warren Buffet taking the time out of his busy day to tell you his company is still a good 30% undervalued at $107,000 a share should tell you something about the markets, especially the insurance sector. AIG comes to mind as a possible play, with 2007 earnings projected at $6.26, up a mere 8% from 2006. "Yawn"you may say, but then you would be sleeping through the story! AIG only earned $3.33 a share in 2005, which was it's best year ever, but still fell from 2004 highs of $77 a share down to $49 during "the scandal." That was then, this is now, AIG is so similar to Berkshire that they co-insured deals and poor Mr. Buffet was even slightly tainted by that nonsense back in '04 but he's moved on and so should we with the AIG Jan '09 $70s for the "I'm Not Kidding Price" of $10.40. You can produce an income against them by selling the Jan $70s for $1.70 AND covering yourself with the Feb $75s for .40 but I would just do half as long as the stock holds $70 because you don't want to miss a nice pop. Now here's a freebie for my hedge fund buddies (as you need a lot of equity and patience to play this one). Buy the Jan '08 $70s for $6.70, sell the Jan '09 $80s for $5.60 AND the Jan $70s for $1.70 AND cover yourself with the Jan $75s for .20. That gives you .60 in cash on a $0 investment. The strategy is very complex but generally, you hope it stays flattish but you are playing to sell for the premium each month but with some protection. If it goes up, you can roll it, if it goes down you don't care once you get past the first month. As a reference, the Jan '08 $80s are just $2.40 so your goal is to make another $1.80 (you made .60 taking the position) to cover your eventual buyout of the '09's but everything else is pure gravy. This allows you to play the insurance game while laughing at natural disasters! If Mr. B's comments boost Berkshire, then there are several other nice companies we can take a look at: Insurance is a game of inches and the whole sector has been very out of favor in the latest rally as sexier stocks have gotten all the attention. Just like an old boyfriend, investors will come running back to these old reliables as soon as they have a fight with their new squeeze. AFL is certainly famous enough and trades right in line with the industry in p/e (14.72) but is growing about 10% faster than most. May $45 are $2.05. If they ever stop spending money on advertising, their cash flow should skyrocket! I meant to write this last week and there's a post-it on my screen with PGR (car insurance) written on it. They got a Bernstein upgrade last week (c'est la vie) and stopped at the 5% rule at $24. These guys are NOT doing a good job of growing but they have been unduly punished for it and have fallen way behind the sector. Jan '08 $25s are $2.05 and I'm not selling against them until they test $25. PRU got away from us last week but CB has made such a mess of their year that they are getting no respect, despite trading at a 20% discount (p/e 10) and, at $20Bn, being a more attractive takeover target. They are buying back 5% of their stock so the Jan '08 $52.50s for $4.50 seem safe(ish) but I won't rest easy until they break the 50 dma at $52.75. I am dumbfounded that GNW is still at $32! They added 13% to the bottom line this year and project another 10% next year on about 8% more sales. They missed last Q and I sometimes wonder if my love of this old GE division clouds my judgment but I have to take the Mar $35s for $.75. They should have a tough time at the 200 dma with a death cross 50 dma at $33.75 but there are 9M shorts who will be in a 5 day "House of Pain" if they break it. According to Yahoo, this stock is 101% held by institutions. Good luck to the retail shorts getting out of those positions if it takes off... I'm in no hurry on this one as I will happily get other $35s once it breaks out! TWGP just came down to where I want it with the Jan $35s at .85 that were $2 just 2 months ago before a 48% increase in earnings caused the stock to drop 20% as the company lowered guidance by a penny (I know, people are idiots!). I'm very sorry I missed it then! ALL is being probed in CT for pulling new policies in CT, NJ and DE as they are looking to get out of the storm business. Don't they have the right not to insure? Well the way they are doing it is sneaky - they are requiring Connecticut homeowners to install hurricane shutters to maintain coverage. That way they get to say you left them, they didn't kick you out! As an insured I say Boo! to the evil corporation but, as a shareholder, I say "why insure people we might have to pay?" If they come down closer to $63 I want the July $65s, hopefully for $1.50.
 
 
 

Zero Hedge

Krugman's Latest Twitter Meltdown Lays Out Democrats' Next Steps

Courtesy of ZeroHedge. View original post here.

In our initial take on the WaPo report of a "secret" CIA assessment, according to which Russia, without a shred of evidence,  helped Trump win the election (it remains unclear just how Putin "hacked" several hundred thousands Rust Belt workers into believing Hillary Clinton would offshore their jobs), we summarized in five point how this was nothing short of a "soft coup" attempt by leaders of the US Intel community and Obama administration...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

OPEC, Russia see smooth road to global deal on output cut (Reuters)

Russia and Saudi Arabia said they expect OPEC and non-OPEC producers to reach an agreement on Saturday to curtail oil output and prop up prices in the first such joint move since 2001.

OPEC, Russian Oil Cut Deal Pushes Up Asian Natural Gas Prices (Forbes)

The OPEC agreement reached last week to cut oil output by 1.2 million b/d (removing around 1% ...



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Kimble Charting Solutions

Gold could blast off, if this resistance cluster holds!

Courtesy of Chris Kimble.

Below looks at the US Dollar/Gold Ratio over the past 30-years. When the ratio is heading lower, US$ is weaker than Gold/Gold stronger than US$. When the ratio is heading higher, US$ is stronger than Gold/Gold weaker than the US$

At this time, the ratio in the chart below, has created a Power of the Pattern setup, that is seldom if ever seen.

CLICK ON CHART TO ENLARGE

A rare cluster of resistance is in play for the US$/Gold ratio at (1...



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ValueWalk

Is Pakistan And Russia's 'Friendship' A Big Myth?

By Polina Tikhonova. Originally published at ValueWalk.

Russia is solidifying its support for Pakistan at the Heart of Asia conference. Russian envoy Zamir Kabulov rejected India and Afghanistan’s criticisms of Pakistan. In what serves as a yet another indication that the ice between Moscow and Islamabad are melting, Kabulov praised Pakistani Foreign Affairs Advisor Sartaj Aziz’s speech at the HoA conference for being friendly and constructive.

Image: Pakistan, Russia Flags

Saying that it’s wrong to criticize Islamabad, the Russian envoy urged the parties to drop the blame game and start working together. Kabulov also downplayed Russia’s joint milita...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

U.S. Rig Counts Jump in Wake of OPEC’s Production Accord: Chart (Bloomberg)

U.S. oil and gas producers increased drilling activity the most since April 2014 after OPEC agreed to its first production cut in eight years last month.

Oil Climbs as Saudis Show Commitment to Cut Output Before Talks (Bloomberg)

Oil advanced as Saudi Arabia was said to have informed its customers it will stand by its commitment to cut production before OPEC meets with producers from outside the group to discuss reductions...



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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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Members' Corner

How To Poop At A Party?

Courtesy of Nattering Naybob.

Once again, it's "Toilet Thursday" or "Thursday in the Loo", so we follow up on Second Hand Stink with How to Poop At A Party. 

This hilarious video demonstrates how to control the Shituation when needing to Poopulate at a gathering, in no uncertain terms. 

We hope this recurring bathroom humor theme "shits" well with our readers. So please do relax, drop the cursor below, click and enjoy.

...

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Chart School

Dow Jones Gann Angle Update

Courtesy of Read the Ticker.

When the Dow Jones moves the media must have an explanation for it. However the insiders have the nod to what is going on.

The media story so far is that since the TRUMP win, managers have been rotating their portfolios to represent TRUMP trends (lower taxes, go easy on the 'too big to fail' Wall Street banks, more jobs for Americans). Prior the election the stock market was set up for a HILLARY win, due to more of the same, status quo, FED support. But....

Using Richard Ney logic, the short answer is, stocks were always going up and the election results do not matter nor would a higher 10 yr bond or lackluster fundamentals. The real story is the marke...

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Promotions

Phil's Stock World's Las Vegas Conference!

 

Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas

Notes

Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...



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OpTrader

Swing trading portfolio - week of December 5th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Largest US Bitcoin Exchange Is "Extremely Concerned" With IRS Crackdown Targeting Its Users

Courtesy of ZeroHedge. View original post here.

Last Thursday we reported that in a startling development seeking to breach the privacy veil of users of America's largest bitcoin exchange, the IRS filed court papers seeking a judicial order to serve a so-called “John Doe” summons on the San Francisco-based Bitcoin platform Coinbase.

The government’s request is part of a bitcoin tax-evasion probe, and se...



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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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