Comment by phil

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phil
December 11th, 2016 at 10:00 am

Asia/QC – If you are finding yourself to be well-balanced in this madness, then going to Asia probably won't hurt much but 3 weeks is a long time – if you are not 50% cash, I'd consider doing some purging.  I agree, the 2019s are not likely to be a problem, I imagine our Government has another market rescue in them – especially as it's now a subsidiary of Goldman Sachs!  

Also, you might want to consider a proper disaster hedge.  For example, in the LTP, we have BHI, which I pulled from the OOP and will likely pull from the LTP as well as it's so in the money.  It's net about $30,000 and we had sold 20 Jan $55 puts so that makes BHI 2019 $55 puts at $4 a perfect offset to a disaster hedge as I don't REALLY want to get out of BHI so I'm happy to get back in 20% cheaper.

So now, with $8,000 free dollars in hand (because I'm happy to get BHI for $55 so all the money I get for promising to buy it is play money to me) I can pick up a spread that makes money, not if the market corrects 5% or 10%, which I can deal with with my half cash portfolio and existing hedges, but if the market falls 15% or 20%.

15% on the Russell would be 45% on TZA and TZA Feb $21 calls are $1.10 and the $25 calls are 0.55 so it's 0.55 per $4 protection and you have $8,000 so you can buy up to 145 contracts that pay $58,000 but, of course, we expect to lose and maybe risk $4,000 to buy 70 contracts for $38.50 which pay $28,000 if TZA goes from $19 to $25 (31%), so that's just a 10% Russell correction to pay you between now and Feb expirations.

If you want more protection, I'd find another position to sell that you REALLY want to get back into and wash, rinse and repeat – preferably with whatever indexes your portfolio is exposed to.  

Keep in mind, if the rally continues and things go well through 2019, then you still make money on the short puts so this is very cheap insurance indeed – especially if your other longs cover the initial loss in a good market.  

Assets/StJ – Wow, those numbers are amazing, especially small caps all around.  Didn't realize ASHR was down for the year but they gapped low on Jan 1 and have since recovered pretty well.



One has to wonder if they didn't gap down just to be able to show yet another good year into the close?

Health care/StJ – I can't even understand the concept of denying people health care.  And it's not "normal" – most other civilized nations consider health care a basic human right – for reasons such as the ones highlighted.  How can anyone claim to be a charitable person while actively working to deny medical care to another human being?  

Water/Scott – PHO is the best one, we've said that before.  They don't have good options so I don't play them but made a big comeback after dipping this year.  



PIO is a more international version and there's FIW and CGW to check out but water is very long-term speculative and fusion (yes, fusion) is likely to make large-scale desalinization practical long before there's a planetary shortage of fresh water and then all the water hoarders will begin to look like OPEC – sitting on lots of product with declining demand.

Steady progress has been made since in fusion devices around the world. The Tore Supra tokamak in France holds the record for the longest plasma duration time of any tokamak: 6 minutes and 30 seconds. The Japanese JT-60 achieved the highest value of fusion triple product—density, temperature, confinement time—of any device to date. US fusion installations have reached temperatures of several hundred million degrees Celsius.

 

Fusion research has increased key fusion plasma performance parameters by a factor of 10,000 over 50 years; research is now less than a factor of 10 away from producing the core of a fusion power plant.

Achievements like these have led fusion science to an exciting threshold: the long sought-after plasma energy breakeven point. Breakeven describes the moment when plasmas in a fusion device release at least as much energy as is required to produce them. Plasma energy breakeven has never been achieved: the current record for energy release is held by JET, which succeeded in generating 70 percent of input power. Scientists have now designed the next-step device—ITER—which will produce more power than it consumes: for 50 MW of input power, 500 MW of output power will be produced.

 

ITER will begin writing the chapter on 21st century fusion. But it will not be striving alone in its quest—fusion machines all over the world have re-oriented their scientific programs or modified their technical characteristics to act either partially or totally in support of ITER operation. These machines are conducting R&D on advanced modes of plasma operation, plasma-wall interactions, materials testing, and optimum power extraction methods, contributing to the success of ITER and the design of the next-phase device. (Find these devices and laboratories in our International Tokamak Research section.)

I think it's such a grind to get there that people don't realize it's almost here.  Kind of like how people attempted to fly for 100 years before Kitty Hawk and then two guys figured it out.  No one too the Wright Brothers seriously either – until they were able to demonstrate a working model and, even then – no one believed it.

Hola Jrom!  If Russia is a good investment then Dow 40,000 is too as this is also turning into a Kleptocracy.  I'd make sure oil prices are stable into the spring (and also figure out what our foreign policy actually is next year) and Japan should be interesting but Putin knows how to turn on the charm when he wants to.  

Dow 20,000/Latch – Well it's only 250 points away, would be a shame not to hit it…





Hey, I'm at the Nasdaq again tomorrow – I'm staying in the city tonight so I don't have to rush in.