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TGIF – Trump, Tariffs and the Game of Monopoly – Why You Should Care:

$505 Billion!

Trump has now threatened to put a tariff on every single Dollar's worth of goods we import from China, ratcheting up the Trade War talk to unprecedented levels.  Of course, we're still at just $50Bn and Trump never followed through with his threat to add $200Bn before doubling down to $505Bn but he is still the President of the United States and you can't totally ignore the things he says – no matter how much you wish you could.  

As you can see from this WSJ chart, despite all the bluster, not much has actually happened so far but thank God for that as just the $50Bn that's already been enacted is causing disruptions in Corporate Earnings and Economic Outlook – there's no question in rational people's minds that actually enacting $250Bn worth of tariffs, let alone $505Bn, would be devastating for the Global Economy and yes, deplorables, the Global Economy INCLUDES America!  

Tariffs are a TAX on the American people and the real reason your President wants to put a 25% tax on $505Bn worth of Chinese Imports is that it will generate another $126.25Bn that he can use to give more tax breaks to his family and friends and it will allow his budget committee to project collecting $1.26 TRILLION in revenues over the next decade, which he can then use to either claim he has brought down the deficit or use to offset more military spending, etc.  

And who pays this tax?  Attention Wal Mart shoppers – it's YOU!  Who do you think is the primary consumer of Chinese goods?  $505Bn happens to be the exact annual sales of Wal Mart and, if I had a TV show, I would challenge people coming out of Wal Mart to find something they've bought that didn't come from China.  Of course there are plenty of things but you'd be very surprised how much is Chinese as well as, of course, the Dollar Stores, phones, etc.   

So a tariff is just a fancy word for a tax on American consumers, especilly the poor ones who can least afford it and no, they will not switch to "lower-priced" American goods because we don't even have factories that make 90% of the stuff China ships to us and all a tariff does is make everything more expensive – there's no incentive here for China's competitors to LOWER their prices for consumers, is there?

Image result for smoot hawleyThis is why tariffs don't work and, in fact, this is why tariffs are a disastrous policy that the World abandoned after the Smoot-Hawley Tariff Act of 1930 triggered the second wave of the Great Depression, reducing the EXPORT of US goods by more than 60% while making everything more expensive for US consumers – just at the time they were struggling to pay their bills.  

1,028 Economists wrote a letter to Hoover begging him to Veto the Smoot-Hawley bill, much like almost every rational Economist now is begging Trump not to pursue this Trade War idiocy but, as I noted above, this is not about doing what's good for the American people, this is about lining the pockets of Trump and his friends as well as creating a massive distraction from all the scandals and indictments within the Administration (just like Hoover!).  As I noted yesterday – there's just too much crap in a single day for people to keep up with – that's how they get away with more crap…

Image result for smoot hawley

If you want to bring back American Manufacturing Jobs your enemy isn't China, it's Technology!  Manufacturing Efficiency in the US has never been higher and our Manufacturing Output has never been higher – it's just that we don't need humans to make these goods anymore.  What's happened since the 80s is that first computers and now robotics have led to a 100% increase in US Manufacturing Production WHILE DECREASING the amount of labor required by 50% and that is not a trend that you can stop with tariffs – it's the Rise of the Robots, Stage 1.

Image result for manufacturing output employment

If you REALLY wanted to address this problem, you would put a tax on Automated Output so, in effect, a robotic factory worker would have to pay the same amount of taxes as the worker he's replacing.  That would make the manufacturer think twice before spending $1M on a machine that replaced 20 $50,000 workers, right?  But that's not what happens, what happens is the owner who was paying 20 people $1M a year and 7.5% matching Payroll Taxes ($75,000) and parking spaces and bathrooms, etc. now only spends $1M a year (maybe less) on a Robot and he gets to depreciate the robot!  

The factory owner gets richer and the Government no longer collects the taxes from 20 former workers, who are now called "lazy welfare parasites" and the $350,000 they used to pay in taxes is NOT only NOT taken from the Factory Owners additional profits (in fact, we just gave him the biggest tax break in history), but now we're going to put a 25% Tariff Tax on all the things the Welfare Parasites need to live on.  Wow, what a clever policy if your goal is to be the Sheriff of Nottingham (as I warned about in "The Dooh Nibor Economy (that’s “Robin Hood” backwards!)" back in 2007)! 

Related imageWhat gets me angry at you people (and yes, I mean YOU, the person reading this specifically) is that you have ALL played the game Monopoly, which is essentially a game of pure capitalism and you all KNOW how that game works if you let one person end up being the Banker and they cheat and make up all the rules.  Once they get a little bit ahead in the game, it's over. 

  • The Bad Banker simply keeps accumulating more and more property until each roll of the dice for you pray that you don't land on one of their properties.
  • Bit by bit, turn by turn they manage to buy up all the properties and then they replace their semi-affordable houses with unaffordable hotels on all their properties and, when you can't pay, they force you to sell your houses and properties for pennies on the Dollar.
  • Then they turn around and put hotels on your former properties until the board is ALL theirs and you PRAY that you land in jail – as it's the best way to avoid paying those ridiculous rents.  
  • While all the players have to pay the Luxury Tax and other penalties, the wealthy Banker can afford it while each poor turn of chance moves you one step closer to the inevitable bankruptcy so it's really not "fair" at all, is it?

This is what happens when you elect a famous Monopolist to be President.  Trump has been playing Monopoly his whole life with real buildings and hotels and not only is he now in charge of the game as President, but he's packing the courts and writing the rules and you KNOW he's been a cheater his entire life – how do you think this is going to end for you and your family if you sit there and say and do nothing to stop it?  

We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is: ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’

Well, I’m not gonna leave you alone. I want you to get MAD! I don’t want you to protest. I don’t want you to riot – I don’t want you to write to your congressman, because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. (shouting) You’ve got to say: ‘I’m a human being, god-dammit! My life has value!’

So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell: ‘I’m as mad as hell, and I’m not gonna take this anymore!’

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. Again Phil down to earth comments but unfortunately it falls on death ears. If they can down the twin Towers why can they not down an idiot.

    But talking about idiots and twin Towers. After ten years feeding the body guard of Bin Laden, his four children and wife, estimated at about 2000€ per month paid by German social security  for the last ten years here in Germany, they finally decided to put him on a charted plane and deport him to his home country Tunis. He was listed as an endangered criminal and hate preacher. However his attorneys were fighting in court to keep him in Germany, as, so he claimed, they would torture him in Tunis. Now part of our ass hole Government wants him flown back to Germany because the court case was not finalized.

    May be they should have better flown him to the US where over 3000 people got killed due to Bin Laden and his cronies. For me the world is really out of joint.

    So for me the Americans better find a brave man to take this idiot out of his misery.


  3. I obviouly misspoke myself, as I ment the body guard!!!!!


  4. Good morning!

     

    Yodi, free speech is a great thing but it's not acceptable to talk about physically attacking our leaders, no matter how much you disagree with them.


  5. Phil – A powerful message this morning.  Well said !



  6. Good morning! 

    Dollar crashing and holding up the markets – good for /KC!  

    Well, all better now on my Gold, Silver and Coffee bets but only because I was scaling in with conviction on the way down – just popped $12,000 this morning on my open set.  Unfortunately, there's so many cross-currents that I'll have to lighten up into the weekend – even though scaling in is great and you end up owning a lot of whatever's cheap, things are so uncertain these days you never know if something will last.  


  7. Phil you right I am sorry to be expressed that way.


  8. Phil/: what is your recommendation for our new SKX trade?  It is falling like a rock.  Thanks 


  9. How the 1% spend:

    https://www.theguardian.com/news/2018/jul/19/how-to-spend-it-the-shopping-list-for-the-1-percent

    But this sort of experience may no longer be what the rich desire most. An even more significant indicator of what separates them from the rest of us can be found in The Sum of Small Things, a rare clear-eyed book about the rich, published last year by Elizabeth Currid-Halkett, an American academic who studies the west’s wealthiest cities. In recent years, she argues, the rich have begun to “spend significantly less on conspicuous consumption and more on inconspicuous consumption”, such as “education, healthcare, pensions, and personal insurance”. They are buying the security and long-term elite status that are more valuable, in perilous times, than escape or pleasure.

    “Top income groups,” she continues, “are not just living good lives in the present, but making sure this standard is maintained into the future and for [their] family members” – ensuring that another generation will have more wealth than they know what to do with. Which is good news if you’re in the business of telling them how to spend it.


  10. Good Morning


  11. Good book/all – Phil, have you read Democracy in Chains?

    (https://www.penguinrandomhouse.com/books/533763/democracy-in-chains-by-nancy-maclean/9781101980972/)

    I'm remembering a few years ago when on this board we discussed Hayek vs. Keynes, and that's a thread Maclean exposites in some detail. The major theme so far, and I'm just at the "Contract with America" point in the book, is the Charles Koch – James Buchanan partnership and its implications. I recommend the book.


  12. Some diverse market:

    http://theirrelevantinvestor.com/2018/07/19/pareto/

    This chart shows that the five largest S&P 500 stocks have a market capitalization equal to the bottom 282 S&P 500 stocks.


  13. FU GE!!!!!


  14. Wow, markets flipped right back up – amazing.

    I'm out of /YG and /SI and back to just 2 long /KCN9.  If the markets could reverse like that, then so could my commodity plays and, while I'm only up $2,000 after all that work – I was down about $10,000 – so I'm thrilled to get clean into the weekend.  There will always be something else to trade…

    Thanks Albo.

    Big Chart – NYSE continues to struggle right at the Must Hold line but other indexes technically very strong.

    NP Yodi.

    SKX/Rookie – Well I'm doing the LTP review this morning so we'll adjust it then. 

    More importantly, Skechers' forward-looking guidance failed to meet Wall Street's expectations. It sees revenue between $1.2 billion and $1.225 billion in the third quarter on EPS between 50 cents and 55 cents. Analysts are expecting revenue of $1.26 billion yielding earnings of 68 cents a share.  

    So they predict a rough Q after earning just 0.36 this Q so let's say they make $1.80 for the year ($2 was the previous lowest estimate) – that's still a p/e of 14 so I'm willing to hang on and give them a chance to show us something.  

    Long Call 2019 18-JAN 28.00 CALL [SKX @ $24.24 $-9.01] 20 7/16/2018 (182) $11,600 $5.80 $-4.18 $5.80     $1.63 $-4.88 $-8,350 -72.0% $3,250
    Short Call 2019 18-JAN 34.00 CALL [SKX @ $24.24 $-9.01] -20 7/16/2018 (182) $-6,000 $3.00 $-2.45     $0.55 $-3.55 $4,900 81.7% $-1,100
    Short Put 2020 17-JAN 30.00 PUT [SKX @ $24.24 $-9.01] -10 7/16/2018 (546) $-5,280 $5.28 $3.02     $8.30 - $-3,020 -57.2% $-8,300

    $25 is the net of our short puts so that's about as low as I felt SKX would go – I certainly didn't expect it this soon and Jan certainly isn't enough time to recover so we will buy 40 SKX 2020 $23 ($6.40)/27 ($5) bull call spreads for $1.40 ($5,600) and we will buy back the 20 short Jan $34 calls for 0.55 ($1,100) and we will put a stop on 20 Jan $28 calls, now $2, at $1.50 ($3,000) but hopefully they bounce back to $3 ($6,000) so we have an almost even roll to the new position.  

    Even if we spend the $5,600 and the $1,100 and only get back $3,000 on the Jan calls, we're still in 40 of the 2020 $23/27 spreads that are $2 in the money ($8,000) and we spent $320 on the original trade so now net $4,020 on the $16,000 spread that's $8,000 in the money.  Like I said earlier this week – these are not tragedies – they are opportunities!  


  15. I'm looking at a 5K loss on the HMNY spread we have in the OOP. I believe someone mentioned that we could sell puts in an attempt to try and recoup some of this loss. Did we recommend selling the 2.50 2020's? I suppose I could sell enough to cover the loss? TIA


  16. FTR – New low.


  17. On this side of the atlantic and the other, I observe the political comments with curiosity:

    Toute nation a le gouvernement qu'elle mérite - Every nation gets the government it deserves.

    Joseph de Maistre (1 April 1753 – 26 February 1821)


  18. Phil / Edible Cannabis – do you have a sell pack or investor package for this?


  19. SKX – I often bitch about not being able to get the fills that Phil's (tongue twister intended) trade ideas recommend – but not this time. 

    It is only a mistake if you don't correct it.


  20. Wealth/StJ – I agree, with no inheritance tax, you can now plan on how to make your great grandchildren Billionaires with pretty simply compounding strategies over 100 years.  It's kind of nice to be remembered fondly by future generations but, unfortunately, most people don't think that far ahead.

    $450,000 at 8% compounded annually is $989,892,565 – seems like a fair gift to prosperity.  It's pretty much the price of a house so figure a house was $8,000 so if my great Grandfather (my Grandfather was born in 1906 so seems right) had left put $8,000 into a fund that matched the market's 8% average return, I'd have $17.5M now.  Even after inflation – that's pretty good money.  

    And that is why repealing the inheritance tax only assures that the great grandchildren of the Top 1% will OWN your great grandchildren (just like in Monopoly) because they are going to start the game with hotels on dozens of properties while yours (well not most of us but most people) are sitting there trying to figure out how to afford to pay for your funeral.  

    Those of us who have Millions and not Billions need to consider what we can do to protect our family in the far future.  Before you buy that next beach house, consider setting up some long-term annuities for future generations and, even if it's not $450,000 – anything helps give your grandchildren a leg up and they, hopefully, will be able to put away $450,000 for their grandchildren.   

    That's the real difference in the Top 1%, they learn to think of generational wealth – but that's why letting them accumulate it without taxation is so dangerous.  It's a rule change that will change the game drastically in years to come – leaving the bottom 99% with no chance to catch up.

    Democracy in Chains/Snow – I have not read that yet but keep meaning to.

    5 Stocks/StJ – That is CRAZY but, as noted in the graph, not really abnormal.  

    GE/Jabob – Used to be one of the 5.

    HMNY/Soma – Selling puts doesn't "recoup" the loss as you still have the obligation to pay that money back down the road.  I just said that I think it's a good bet if someone will give you $2.45 now for a 2020 $2.50 put because all you have to do is make 2% on the money and you're good.

    Meanwhile, still can't fill HMNY at 0.10.

    FTR/Albo – Maybe they will fill at 0.10?  

    Cannabis/Batman – We should have something in writing at the end of the month.  For this stage, we are time-sensitive and looking to raise a quick $1M to take a 20% stake in the Medical MJ company we're going to be working with, so we don't have anything formal written up.  Stage 2 will be a $5-10M raise for other MJ projects we've been considering.  Oddly enough, it's easier to raise $5M or even $20M than it is to raise $1M.

    Holy crap, Dow is green again.


  21. 1 House Republican’s chilling warning on Trump and Russia



  22. I'M MAD AS HELL AND… now I have to pay a fine for disturbing the peace. 

    The deck has been stacked, get as mad as you want now, it isn't going to matter until the system falls apart.


  23. Phil

    It would be interesting to see what investment you would use for your

    “great grandchildren Billionaires “ 

    stock portfolio


  24. Phil, requesting some help on QQQ. 

    Yesterday, I had the pleasure of meeting the grand son of a friend of mine who has a very high class problem. He was fortunate to have his wise old Grandpa buy for him a boatload of QQQ way back in 2009 to establish future education funding. Now he has a very sizable profit and is looking for some protection at least through the year end. He plans on taking some off the table next year. He already reduced other holdings to raise cash in an uncertain market so he will have a hefty tax bill this year already.

    Would like your suggestion for hedging this through year end- 2000 shares of QQQ with an obscenely low cost basis ($30). 

    By the way, the "kid" is wicked smart and got scholarships to defer tuition expenses and is now a PhD candidate in Aeronautical Engineering at CalTech- so he will be a real "rocket scientist" down the road. 

    TIA



  25. Investment/QC – I'd go with the Butterfly Portfolio, of course.  Worth hiring someone to manage it.  That's one of the reasons I started a hedge fund, I realized I'll need to train people to run my portfolios after I'm gone.  I used to think I'd teach my kids and they'd teach theirs but the girls have no interest in stocks (even though Jackie's a natural) and I'm not going to force them.

    QQQ/Pstas – In 2009, QQQ was at $30, now $180 so 6x – nice move!  Let's say it was $30,000 and now $180,000 and you are saying, since he already has to pay tax, he doesn't want to take a $150,000 gain off the table now and pay more tax but he'll take it off next year and pay the same tax then so for now, he wants to spend money to lock in the gains he's not taking.  It really doesn't make sense – the transactions don't have anything to do with each other.   

    Let's say the Nas drops 20% and he loses $36,000 on QQQ.  You can hedge that with SQQQ 2020 $12 ($3.30)/$20 ($2.25) bull call spreads at $1.05 on the $8 spread so he needs 50 for $40,000 worth of protection less the $5,250 he spends.  If QQQ drops 20%, then SQQQ goes up 60% to $19.20. If QQQ drops 10%, SQQQ goes up 30% to $15.60 and the spread is $3.60 in the money ($18,000) so net $12,750 against an $18,000 loss on QQQ but, as you know, not so easy to cash out until close to Jan 2020.  That's essentially the cost of insurance – $5,250

    Those spreads work for us as they are just insurance and we will ALWAYS need insurance so the policies, from our perspective, retain some value as we roll them along.  In your friend's case – he only needs term insurance until he sells the asset and there he'll get a bit less protection due to the retention of premium on the short calls you sell.


  26. Investments Phil Have the same problem with my son, finds trading boring. Hard to tell some one you can also make money with the click of a mouse.


  27. DAX is still down 1% but we're flat – we'll see what happens now that Europe is closing.

    I told you we'd get another whack at $68.50.  I'm taking $500/contract and running – it's going to be an expensive weekend in Florida with my daughters so I need the cash!

    /RB very tempting short at $2.075

    Honey badger feeling better:

    No regrets so far on my commodities exit:

    Trading/Yodi – It's supposed to be boring if you're doing it right!  cool


  28. Boring Isn’t winning exciting and losing nerve racking?


  29. Interesting to watch PM as well as MO yesterday in the cellar today PM up 3.2% as I said a crazy world. No direction.


  30. Phil/HMNY

    Put option pricing looks messed up.

    2020 $2 Put option – you can buy for 1.12 ?? shouldn't it be at least 1.88

    regards


  31. Winston what side of the pond are you sitting?


  32. GE/Phil- what you think about their latest earnings?


  33. Long-Term Portfolio Review (LTP) Part 1:  $634,441 is up 26.9% but, like the OOP, we got ripped off on VRX, which should be another $8,000 once we get credit under the new symbol.   On the whole then, we're flat to last month's $643,761 but a lot of wild gyrations as we were 30% yesterday so up and down $50,000 is a bit unstable and that's because we have a lot of leveraged, bullish plays that are getting more dangerous to leave open or uncovered (of course, that's how we made 30% in the first place!).  It's not so much the securities that are moving up and down as it is the VIX (and, since we sell a lot of premium, a high VIX hurts us in the short run).  

     

    Keep in mind, we don't have a big STP hedge at the moment and now we're back to worrying about the market becoming unstable so it's either add STP hedges or close the LTP longs we need the hedges to protect so my goal is to close more longs today.  We started in Jan with $600,000 in the LTP/STP paired portfolios ($500/100K) and now we're at $745K so up a combined 40% – nothing wrong with taking that off the table and calling it a good year – even if it is only July!      

    • FMCC – I'm sorry but stock with no options bore the crap out of me!  It's up 16% but so what?  It's going to hit $2 and then we're out with a 50% profit - yawn!  
    • Short Puts – We're up about $15,000 on the open positions and stand to gain another $70,000 if we don't get to buy these stocks at great prices.  Not worried and none are so deep in the money that I want to cash them out.
    • ETM – On track
    • FTR – Below our range but we're waiting for earnings to decide what to do.
    • NRZ – On track.
    • SKT – Over our target and a nice $700 dividend coming this month so we'll likely get the full $40,000 + (6 x $700 =) $4,200 == $44,200 back and currently net $33,260, which is a lovely $10,940 (33%) between now and next Jan.  I know, yawn….

    Well, nothing to cut in that section but that section is dividend-payers and stocks we want to buy cheaply WHEN the market pulls back so that makes sense…


  34. I think our option plays are a game of patience. I like to draw your attention to IBM. Yesterday the stock was on fire. My Jul 20 150 caller was already ITM. Would have been a problem today. It is amazing to watch when all sheep are jumping on a running train when they actually passed the station when the stock was at 143 144 or even 145. At 151 they need the stock as it is going to the moon. I ignored the noise, as the noise happens in the down as well as in the up draft. Today I could not even sell a decent cherry call for next month. Patience as the praying menthes.

    Regret I am a bit late with MSFT the noise is only today and I have to roll. But even during the day the noise of the sheep buyers is cooling down already, so we wait to the last minute.


  35. Is the trade – Wait for earnings.  Wait for direction next day and go opposite.     


  36. thatway it is not always that easy, otherwise every one would be a millionaire here. You need to get familiar with the stock, the news, earning in the past and I watch very much my charts, they can tell a lot, you can not simply follow the sheep!


  37. Winning/Yodi – I don't know, I get no pleasure out of FMCC in the above example.  I'm glad we got it right but tying up $13,600 to make $2,200 is very, very dull – even if it has been only 2 months.  I don't think people should be trading for excitement, that's gambling.  Trading is a profession and even rock climbers and daredevils do all they can to take the excitement OUT of their jobs – the ones that last, anyway…

    MO/Yodi – I wasn't worried about MO as the US is a very different market than what PM has to contend with.

    HMNY/Pat – You would thing but who knows if it will actually fill?  So much crazy speculation on these stocks.  

    GE/Dave – Right in line with a long, slow turnaround in progress.  Traders want to see immediate improvements and that's just not going to happen.  

    The company, assuming they ditch Health Care and Baker-Hughes, is down to Aviation, Power (GE Power generates 1/3 of the World's electricity), 3D Printing, Financial Services and Digital Business – everything else will be gone by the end of the year.  Aviation just got a $22Bn order at the air show and they will be building engines for all those BA planes that have sent that stock to the moon.

    People are freaking out because profits are down 26% from last year but that's because THEY SOLD THE DIVISIONS THAT MADE THE 26% – can investors really be that stupid?  Well, yes, they can….

    Aside from beating estimates, the company said they'll make $1-1.07/share for the year and maybe $1.10+ next year.  I'm certainly willing to play that under $15!

    Patience/Yodi – Good point. 


  38. Yodi – I've been spending the summer in Finland. Still recovering from the Trump/Putin visit. But I watch Brexit with interest, and even more amazed that Juncker is still standing – here's one of his performances at the recent NATO summit


  39. There I was worrying that CLF would never break through resistance at $9 – and today it punches through that ceiling to zoom past $10 (up 15% post earnings). And there I was worrying that CMG would zoom past $450 and it starts sticking to it like super glue. 

    This market responds much better to voodoo than fundamental analysis. 


  40. Winston a bit to much north for me, but I trust you aswell enjoy the summer seldom seen in the northern part of Europe.

    Juncker looks like he looked to deep in the bottle, but I think he has impaired balance problems. It all happens when you get older. Hope his brain is still in balance.

    Voodoo is the new trent


  41. Survey: 68% of CEOs Admit They Weren’t Prepared for the Job




  42. Crazy summer – Lapland, north of the Arctic circle more than 35 degrees celsius!!!!!


  43. Phil- thx for the SQQQ spread. I agree by the way that if he intends to sell next year anyhow then it just make more sense to just do it now and pay the tax and avoid the "insurance" fee. Mixing investment and tax decisions can be tricky. 


  44. QQQ Phil & pstas – Couldn't you use a collar in this case.  Buy a put in 2019 and finance with a call (sold) in 2020.  If the stock is below 180 next year you exercise the put and if not you let the stock run and possible get taken out by the caller.  You can do these with a credit as well.


  45. Long-Term Portfolio Review (LTP) -  Part 2:  

    • AAPL – Not worried about this one and the short $190 calls at $2.25 can be rolled to the short Sept $190 calls at $7.50 for another $2,500 in our pockets while we wait.
    • ABX – May as well buy back the short 2020 $20 calls for 0.37.
    • ALB – In know I'm trying to take money off the table but I think they will pop on earnings (8/7), so let's buy back 10 short 2020 $130 calls at $4.40 ($4,400) and 10 short 2020 $95 calls at $14.50 ($14,500) to lock in $15,650 worth of gains on those positions leaving us in the 20 2020 $75 calls for net $39,500 so our net is $95, right where the stock is now with almost no premium.

    • ALK – On track
    • AMGN – We're net $14,000 but it's a $37,500 spread that's right on track in a stock I love so I guess we'll stick with it but lets sell 5 Sept $190 calls for $6.20 ($3,100).
    • ARR – Right on track.
    • BBBY – Stupidly cheap down here but we're already aggressively long with a 1/3 cover.  
    • BJO – Let's buy back the 25 short Sept $48 calls for 0.40 ($1,000) and roll our 25 Sept $44 calls ($1.05) down to the $42 calls at $2.05 for net $1 ($2,500) and see how that plays out before selling more short calls.  
    • C – On track but net where we started. 
    • CDE – Kind of flatlining but our conservative spread is doing well as sold premiums expire.  
    • CHK – Net $4,000 on a $15,000 spread that's almost in the money – have to leave that one…

    • CHL – Let's buy back the short Sept $47.50 calls at 0.17
    • CMG – At $450, we would gain $18,000 from the short calls and the spread would be $60,000 in the money so net $78,000 and currently showing net $22,895 so no reason to change this one!  

    • DIS – 10 short July $110 calls ($1,700) can be rolled to 5 short Sept $110 calls at $4.75 ($2,375) so we collect another $600 and wait to see how earnings (8/7) play out.  Otherwise, the long part of the trade is right on track.

  46. Collar/Fel – Great idea!  If he's going to sell anyway, the collar would do the trick but, then again, what's the point of keeping it open?  There's no tax advantage to doing so.


  47. Is JCP worth semi-lottery play?  One day somebody will buy them out for left over retail space? It's pocket change for bezos.



  48. Advill…I think us LB investors would be better off with advil or medical marijuana ;-)


  49. Long-Term Portfolio Review (LTP) – Part 3:  

    • F – In our zone and paying a great dividend.  
    • FNSR – We are $35,000 in the money at $17 but the net of the trade is $29,550.  Earnings are not until Sept and we are already aggressively bullish.  
    • GE – Down a lot but my main issue is fighting the temptation to put more in!   The 2020 $8 ($5.50)/13 ($2.10) bull call spread is $3.40 and you can sell the 2020 $13 puts for $1.65 so net $1.75 on the $5 spread that's 100% in the money for a potential $3.25 (185%) gain.  That's good for a new trade and we have net -$1,000 and we need to make $16,000 back so should we leave it and hope for $16.50 to get even or spend about $10,000 to roll to 50 of the new set-up with a max payback of $25,000 at $13?   I think we'll wait for now as 2021 will come out in a few months and it either gets cheaper to roll to 2021 or, if it goes back up – then we won't need to roll anyway.
    • GIS – No attractive rolls so we'll leave it.

    • HBI – Right on track but it's net $9,000 out of $12,000 so let's take it off the table rather than wait 18 months for 33% more money.
    • IBM – WE have such a low spread that we're almost 100% in the money already and net $20K out of $45,000 is plenty of room to run on a stock we have a lot of faith in so all is well here. 
    • IMAX – On track and we're only 60% covered. 
    • LB – Outrageous price on the short calls means we won't buy those back.  Waiting for 2021 to come out to roll short puts but not even a loss on those.
    • MO – On track.
    • MT – Back in the bottom of the channel on tariff issues so let's buy back the 20 short 2020 $37 calls for $2.40 and give it some time.

    NLY – Steady in the channel and on track.  We just keep  collecting the dividends.  

    NYCB – On track.

    OPK – Caught a nice run on them but only netting $5,000 out of $12,000 at $7 so have to keep this one too. 

    • PBR – Sometimes I see something and say "what was I thinking" as I don't like PBR much but, looking at the chart, I don't have to like it much to "buy" it for under $10 at the end of June.  It's like, I don't like a $23,000 Toyota Corolla but, if you offer me one for $10,000 – I'll take it and figure out what to do with it later.  Now it's up $3,500 but it's a $24,000 spread at net $8,500 so miles to go and our target ($15) is about right and anything over $12 locks in $15,000 and that's still a double from our net so – Yay PBR!  

    • QCOM – Another one I don't like but they are cheap (ish).  Call it on track.
    • SBUX – Brand new and still on sale.   I walked past a SBUX I assumed was closed (the rest of the building is being remodeled) but then saw new-looking boxes so I went in the door, walked down the long hall and yes, indeed, SBUX is the only remaining tenant in the building – and there was a line!  We'll stick with them.   
    • SKX – Yikes, that turned sour fast.  Adjustments were made earlier in chat, saying: "we will buy 40 SKX 2020 $23 ($6.40)/27 ($5) bull call spreads for $1.40 ($5,600) and we will buy back the 20 short Jan $34 calls for 0.55 ($1,100) and we will put a stop on 20 Jan $28 calls, now $2, at $1.50 ($3,000) but hopefully they bounce back to $3 ($6,000) so we have an almost even roll to the new position."

    It's not about the chart, it's about the numbers.  They had bad news last time and the same bad news this time is taking them down again – that's just silly.  What matters is what they can make me back on my $4Bn and last Q they made $137M and this "terrible" Q they made $45.3M so let's say $90M more for the next 2 is $272M for a p/e of 14.7 if they don't improve at all.  

    As I often say, while it would be nice if our net $320 investment zoomed up and made the full $12,000 we were hoping for, that's not what happened but our fallback is to spend no more than $3,800 more (about $4K total) to be in a $16,000 spread that's 100% in the money and already they have bounced back a bit so our Jan $28s are now $3.70 ($7,400) vs our worst-case $3,000 so the new spread is back to being net free but now far, far lower in strike.   

    Have a trading plan – follow through with your trading plan!

    • SPWR – Another victim of Trump but I refuse to spend $1 to buy back the 2020 $12 calls as our target hasn't changed so why pay them?
    • UCTT – The really strange thing about these guys is they are MAKING $25M a quarter so $100M a year yet you can buy the company, at $16, for $620M.  I don't understand it but I'm sure not getting out of these.  It costs $2.50 to roll the $15 calls down to the $10 calls – let's do that!  

    • VRX – They changed their symbol to BHC but we're waiting for the update to our options.  Same price ($22.62) so about $8,000 better than it looks on the $14,000 potential spread that's 100% in the money.
    • WBA – Not down enough to make it worth changing but I love these guys long-term.
    • WPM – Took a huge hit with Silver crashing but that's just silly so good for a new trade.

    Well, that was a complete failure!  These positions are all too good to take off the table.  I guess if I can go through 50 diverse positions and not find a good reason to sell any of them, I shouldn't be too bearish on the market, right?  

    My worry about the market is a Macro concern, the individual stocks are great – I'm just worried about the economy taking a hit and the high-flyers correcting and taking everything else with it but this is a very fine collection of solid companies so we'll just have to add some more hedges and stick with them.


  50. JCP/That – Not sure why I'd spend $750M for 872 JCPs when I can buy 547 Sears and 432 KMart stores (SHLD) for $239M.  A lot of those Sears stores are the anchors for TOWNS, not just the malls.  Also, with all that inventory floating around to be liquidated, I wouldn't be too keen on buying anyone for "left over retail space".  Specifically for Bezos, SHLD would be the way to go as they are firm anchors in malls (JCP usually 2nd fiddle) and, as I said, often the biggest buildings in town centers and that's where he'd want to be – a proper hub.  

    Aerie/Advill – Be careful of activist "analysts" who want to see something fail:

    Mary HanburyThe strategy appears to be working: Aerie has seen 16 consecutive quarters of same-store sales growth while Victoria's Secret, whose bread and butter has long been padded bras and sexy ad campaigns, saw negative sales growth for the past year up until the most recent quarter.

    As we all know, LB had 4 quarter of negative growth because they cut their swimwear line from the stores so it was NOT POSSIBLE to beat the 4 previous quarters but, now that that's washed out (the most recent quarter), they are back to growth.  Did she do no research or does she have an agenda against LB?  I don't know…

    Retailers like J. Crew are ignoring a $20 billion opportunity — and it's infuriating shoppers

    Guess what the opportunity is?  Plus size clothing!   

    /KC packing on the profits!  


  51. Good link Phil!.

     

    Thanks and have a good weekend.


  52. /RTY takes a little dip into the close but generally stable all around.  

    Have a great weekend folks, 

    - Phil


  53. Nerd post: Just finished the director's cut of Lord of the Rings.  Seems to me Trump is Saruman and Putin is Sauron.


  54. Get thee to Comicon, Tangled! 


  55. Great lecture on the universe - Where are all the aliens? https://www.ted.com/talks/stephen_webb_where_are_all_the_aliens



  56. Risks pile up for Trump as Manafort heads to trial




  57. WSJ: Tesla seeking cash from suppliers



  58. Inspector warned duck boat company of design flaws last year




  59. Toronto gunman kills woman, injures 13, police say




  60. Good morning!

    Just the usual Trump idiocy over the weekend.  Maybe he declared war with Iran – who can tell these days?  Smacked oil right up this morning:

    Dollar still down:

    Copper still making those pennies for us over $2.75:

    Submitted on 2018/07/11 at 12:44 pm

    I also like /HG long above the $2.75 line with tight stops below:

    Submitted on 2018/07/12 at 12:41 pm

    /HG still good over $2.75 too but don't be greedy, I'd take half off with a tight stop on the rest (below $2.78).

    Submitted on 2018/07/17 at 10:29 am

    /HG $2.75 is still our long entry but tight stops below that line.

    /KC with a nice pop too:

    Indexes flat, Europe down half a point.  Not much to be bullish about but it's Monday, anything can happen.