Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Monday Market Momentum – Fed Hopes Keep Things Going

AAPL $250!

That's where it looks like we're going this week as Apple (AAPL) closed at $246.58 and it up over $247 pre-market.  At $1.14Tn, Apple is just a bit more valuable than Microsoft's (MSFT) $1.074Tn valuation but Apple made $59.5Bn last year while MSFT "only" made $39Bn so AAPL is quite the relative bargain and we will see just how much of a bargain on Wednesday evening.  

That's not the only thing happening Wednesday, of course.  On Wednesday we also get our next Fed Rate Cut – or else!  Expectations are near 100% that the Fed will cut rates another quarter-point at Wednesday's meeting (2pm) and then Powell speaks at 2:30 to justify how record-low unemployment and record-high stock prices justify record-low interest rates and a record-high Fed Balance Sheet.  He'll probably use the "Chewbacca Defense".

Meanwhile, AAPL stock is up $50 since August and, as a Dow component, it ads about 8.5 points per $1 gained and that, like Chewbacca, does not make sense but it's the way the Dow is structured so that $1 gained by $1.14Tn AAPL stock has the same weighting on the index as $1 gained by $50Bn Walgreens (WBA) or $37Bn Dow Chemical (DOW).  Anyway, $50 x 8.5 is 425 Dow points and the Dow is up about 1,000 points so about half the Dow's gains are coming from Apple and that's true for the S&P and the Nasdaq as well.

We are waiting to see if other stocks pick up the slack – because that's what we'll need to break over to new all-time highs – Apple can't do it all unless it pulls a Tesla (TSLA) kind of move and pops 30% on earnings, which would be another $60 on AAPL.  Of course, that would be ridiculous but so was TSLA's gain and this weekend the company went into a full-court PR press pushing everything from Solar Panels to Trucks to keep the momentum going as Musk looks to re-capture $380, which would put Tesla at $78Bn in market cap – "only" 80 times their best-case earnings projections for 2020 ($900M).

After losing $702M in Q1 and $408M in Q2 this year, TSLA announced on Wednesday night that they made $150 and, even though the numbers are consistently down from a year ago when they made $254M in Q3 with Automotive Revenues -12.2%, Gross Profit -21.9%, Operating Income -37.3%, EBITDA -7.0%, Net Income (-54.0%) and Cash Flow from Operations -45.7% – at least Operating Expenses were cut by 16.1% with a drastic reduction in Capital Expenses – so the company's market cap jumped $15Bn (100x the quarterly profit) - CHEWBACCA!  

Hopefully the rest of the week will make some sense, we have the Non-Farm Payroll report already and the Fed has the doveish John Williams speaking at noon and 2:30 that day – so I think they think they are going to need some spin.  Other than Williams and Powell's speech on the 30th (2:30), there is no Fed Speak this week due to the meeting so we're on our own with the data – and earnings! 

Earnings are still hot and heavy and we have our new Earnings Portfolio to play with as well as our even newer Dividend Portfolio, which we just initiated on Friday.  We started the Earnings Portfolio last week and we're off to a rocky start with only a 3% gain so far.  As noted by Own_Account over at Seeking Alpha, it seems strange to have 2-year set-ups in a quick-trade portfolio but we find it's a great way to sell a lot of premium to suckers who think they know which way a stock is headed and Being the House – NOT the Gambler is what we are all about:

We're very excited about Boeing (BA) as that spread pays $25,000 if BA is back over $350 in two years and, even though we're already up $1,000 from our 10/22 entry, it's still just net $12,013 so more than a double ahead of us from this position – not bad for a 2-year play, right Own_Account?  You don't have to risk short-term options to make short-term money.  We took the BA spread at net $11,000 so it's already up 9% for the week.

Most importantly, it's much easier to CONSISTENTLY make money with more conservative long-term spreads, especially as we have 2 years to make adjustments along the way.  We tend to start out playing conservatively and get a bit more aggressive as the profits roll in – gambling with money that is ahead of our 30% annual returns goal.  For now, we're still looking for "obvious" trade ideas on companies that are way undervalued into earnings:

Image

Image

We already added AT&T (T) to our new Dividends Portfolio on Friday (see Friday's Top Trade Alert) and they did well and should open up about 5%.  That trade idea was:

  • Buy 1,000 shares of T at $37 ($37,000) 
  • Sell 10 T 2022 $35 calls at $4.60 ($4,600)
  • Sell 10 T 2022 $30 puts for $2.95 ($2,950) 

That's net $29,450 and getting called away at $35 ($35,000) makes a nice $5,550 (18.8%) or, if assigned 1,000 more shares at $30, then average entry is $29.275 – which is where we like to buy T anyway.  That will pay $2,040/year for each 1,000-share block in dividends, another 13.8% over two years so a very nice, conservative trade for anyone to add to a portfolio but, again, I'd rather wait for a pullback and, if I REALLY wanted to jump in now, I'd just sell 5 2022 $33 puts for $4 ($2,000) and that's the same $2,000 you'd collect in dividends but a much lower net entry to the downside and, next January, I'd sell 5 more more for the next year's collections (if it hasn't come down low enough to buy and DD and cover).  

Remember, these are very conservative plays and we're going for the dividends, not so much gains on the stocks.  The idea was to create a stable, dividend-producing portfolio where the dividends will go to charity so it's not so much about generating wealth as it is to create a stable source of reliable funds – very similar to what you would want to do with retirement money or even sidelined CASH!!!  

Keep in mind that, as a retirement strategy, if the stock simply holds $35 into January 2022 and you can replicate that 32% return every 2 years going forward and re-invest in more T stock and options, you could ramp up like this:

  • 2022 1,320 shares of T
  • 2024 1,724 shares of T
  • 2026 2,300 shares of T
  • 2028 3,035 shares of T 
  • 2030 4,007 shares of T 
  • 2032 5,289 shares of T 

So let's say, in 2032 (just 12 years from now) your original $29,450 is now (assuming just $35/share) $185,115 and it's throwing off about $10,500 in dividends and the nice thing about blue-chip dividend stocks is both the stock and the dividends they pay off tend to keep up with inflation. 

It's a very nice thing to do with some of your money and the sooner you get started the better.  If you give those 5,289 shares another 10 years to grow (2042), they turn into 21,195 shares ($741,825) and throw off $42,390 in annual dividends (at $2/share) – that's 143% of your initial investment – every year!  If you have a kid or grandkid (you can give up to $15,000 tax-free per kid), set up an IRA for them NOW and put $2,000 a year in invested in dividend stocks like T and your kids will have a nice income for life….

Tomorrow we'll talk about other candidates for our brand-new Dividend Portfolio.

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Good morning!



  2. Interesting stats:

    https://www.axios.com/millennials-vote-socialism-capitalism-decline-60c8a6aa-5353-45c4-9191-2de1808dc661.html

    Nearly half of Gen Z and millennial respondents said they felt the U.S. economic system worked against them — more than other generations. They've grown up in a capitalist country where economic inequality has continued to climb. Many are burdened with college debt, have seen little wage growth and face the threat of job loss due to automation — all while the top 1% continue to accumulate wealth.


  3. Good Morning!


  4. Rolling help – SQQQ Hedge

     

    So I have some Jan SQQQ 30/40 spreads that I want to roll down to 25/35 (I think).

    If I buy back the 30's but keep the short 40's to hopefully expire and capture the .80 – what is the rule of thumb so I don't get burned by keeping the 40's open if SQQQ rockets past 40?

    Bought 30/40 at 4.91/2.60 net 2.31

    Currently at 2.05/.80  net 1.25

    Any help appreciated.


  5. Wow, there is no stopping TSLA now! Cheerleaders are coming out in drove. Irrationality at its peak…


  6. LVVV- I posted on this quite a while back and did very well with it as a highly speculative lottery ticket. Last week I sold most all of my remaining position except for a token amount. The company is having some reported cash flow issues (not paying vendor). Just not worth the risk at this stage.  


  7. Oh, wow, let's short TSLA – *looks back through old posts about shorting TSLA*

    maybe not……


  8. Yes, Snow – BKNG, CMG, TSLA – the trifecta of stocks that are extremely difficult to short – moreso on the upside perhaps than on the downside. 

    Better to stick to safer income trades (learnt the hard way).

    But hope springs eternal (as they say). 


  9. Snow/TSLA – I seem to remember that shorting TSLA took down (as in wiped out) the LTP portfolio – although it may have been cashed out early. In the end I think the TSLA short trade worked out, but too late for the LTP.

    But I've got a laundry list of overzealous short trades that came back to bite me.


  10. Good morning! 

    I didn't get to dividend stuff over the weekend but I will today.  

    TSLA topped out at $340 (so far) but S&P (/ES) 3,040 is much more exciting now.

    MSFT popping 2.5% on $10Bn military contract.  Supposedly they won it because Trump hates Bezos so MSFT got the storage deal.  

    Brexit pushed off to Jan 31st, 2020 – Year 3! 

    Big Chart looking strong now – One more all-time high and we could be off to the races.  

    YouGov/StJ – Well, maybe there's hope for the future but didn't we think the system was broken 40 years ago?   What's really changed?  Now our generation is 63% in favor of that system. 

    SQQQ/Jeff – The Jan $30 calls are still $2.10 so you can salvage most of what you put in by simply rolling those out to a June $25 ($6.20)/$35 ($3.60) bull call spread at $2.60 so 0.50 to get the deeper, longer spread.  If you started at net $2.31, you are then net $2.81 and if you put a stop on 1/3 of the Jan $40s (now 0.80) at $1.20, that's net $3.24 and another 1/3 at $1.80, that would take you to net $3.84 and just 1/3 covered.  Since the Delta on the Jan $40 calls is 0.18, for it to move $1 against you would take about a $5 move up in SQQQ, to $33 so your long spread would be $8 in the money and 1/3 covered with plenty of time to roll (and at that point you should buy another, longer spread and put stops on the lower one – but we can talk about it then).  

    Good job asking at the right time (when the price of the call drops to the net entry on the spread).  That's usually the best time to adjust.  

    TSLA/StJ – Massive PR push over the weekend, they are throwing everything at keeping the momentum going which means this Q is probably a one-off.  I wouldn't be surprised if Musk asks for money again – despite the fact they "don't need it" per their books.

    LVVV/Pstas – Those crazy penny stocks!  

    LVVV- this MJ related stock has been on a tear the past week. I took a small speculative position  some months back and my cost basis is $.0025. Sold some today at $.012 which took my initial investment off the table so now it's house money. This play was/is a pure crap shoot and I rolled the dice simply because I knew some folks involved in the venture. They have a good story. 

    There is no recent news to account for the run up. My guess is this is just more speculation of the pending Jan. CA recreational pot legalization. 

    LVVV- posted on this MJ stock earlier this week. All of the CA based MJ stocks are catching bids anticipating CA recreational legalization come 18-Jan. 

    Sold 1/2 of my position to lock in  a very nice profit; will let the balance ride. 

    Running up again this morning. 

    Pstas Submitted on 2017/12/28 at 12:29 pm

    Ultyguy- LVVV- As I stated in my post earlier this week, this is a speculative crap shoot play on the cannabis industry in general and the CA recreational legalization coming in Jan. I know some folks involved including a sizable investor. The company is focused on infused edibles and plant clones. Pot will be essentially a commodity product and wholesale prices already are beginning to reflect that reality. There is a lot of money sloshing around this business and thus some profit to be had. IMO, it will be niche and value-added players that will reap the benefit. In the mean time, speculative fever abounds so sell peanuts while the circus is in town. 

    Talking about scalping- LVVV- bought some more when it traded down to $.01. Sold today at $.018. 

    Cannabis- I have been monitoring this for a while now and it really is still the wild west. There are many stocks to choose from but most/all are highly speculative. A few I looked at had some rather shady operators with dicey backgrounds. Given the uncertain legal and regulatory status established firms are standing pat for now but recognize opportunity down the road. I expect that not only tobacco but alcohol industry companies will eventually move in. Constellation Brands (STZ) has taken a minority position in Canadian grower Canopy Growth. Another angle has been taken by Scott's Miracle Grow (SMG) providing grower supplies (fertilizer, etc.) 

    My view is the business will eventually devolve into a highly regulated commodity business. There are already over supply issues in CA an CO resulting in falling wholesale pricing. Here in CA taxes on pot sales are very high and the licensing / testing and general heavy handed state oversight leaves a lot of industry participants operating in a marginal situation. Furthermore, the state of CA sets policy but counties and municipalities are free to deny market access. By some accounts, the black market is alive and well.

    Notwithstanding the impediments, there is a lot of cash sloshing around the industry so there is money to be made but a selective approach is prudent. I made very, very good profits on Livewire Ergogenics (LVVV). I knew the people involved and like their story (concentrating on infused edibles and plant clones). My focus going forward  is on emerging firms who take a "value-added"/differentiation strategy otherwise, you are just another "me too" concern that will be whipsawed by fluctuating market prices. 

    FWIW, I talked to one retail operator who told me that most market participants completely missed the boat when CA legalization came to pass as customer preferences are for infused edibles and beverages rather than weed. 

    As to LVVV, I still hold a small position which is completely house money. They, like everyone else in the industry have big plans which could result in big profits but execution in this environment will be an ongoing challenge. I will post any news/developments of interest and hope others follow suit. There certainly will be some gems to be found. 

    MJ Business Dailyis a good info source and you can get on their free email list. 

    TSLA/Snow – What a disaster that short was.  Though it makes a good one now that the squeeze is played out (hopefully). 

    BKNG/Winston – We might have to give up on them – up another $22!    CMG finally going the right way, at least.  Can't lose them all, I guess.  cheeky


  11. System / Phil – Our definition of broken 40 years ago would look very much like a working system for the younger generation though and that might be the difference! We still faced the prospect of doing better than our parents. This has been dashed for many in the new generations! 


  12. CMG – should be great for the PSW hedge fund – congrats.


  13. True, StJ – Things are spiraling out of control these days.   Even worse in CA:

    The Kincade fire continued to rage in the heart of Sonoma County Monday morning, burning across more than 54,000 acres and doubling in size during a 24-hour period, the authorities said. It is now nearly twice the size of San Francisco.

    Governor Gavin Newsom of California declared a state of emergency on Sunday as the wildfire forced hundreds of thousands of people from their homes. More than 3,400 firefighters were battling the blaze over the weekend, and more than 3 million people lost electricity because of forced power shutdowns.

    The National Weather Service said that a combination of powerful winds and low humidity could create what it called a “historic” weather event throughout Northern California.

     Went from 10% contained to 5% contained – is there an UNcontained level?

    The Getty Fire burned near the 405 freeway in Los Angeles on Monday.

    A fast-moving brush fire broke out early Monday morning on the western side of Los Angeles, resulting in mandatory evacuations west of the 405 freeway.

    “What started out as an approximate 50-acre fire has now grown into 250 and growing,” Capt. Erik Scott, a spokesman for the Los Angeles Fire Department, said at a news conference shortly before 5 a.m., local time, adding that about 500 firefighters were battling the flames on the ground and in the air.

     

    The Getty fire prompted an emergency declaration from Mayor Eric M. Garcetti of Los Angeles. Evacuations affected homes in neighborhoods including Brentwood, Mountaingate and West Los Angeles. More than 10,000 residential and commercial structures were placed under mandatory evacuation orders.

     

    Among the evacuees was the Los Angeles Lakers’ forward LeBron James. “Had to emergency evacuate my house and I’ve been driving around with my family trying to get rooms,” he said in a tweet.

    The missing economic risks in assessments of climate change impacts (PDF)

    Summary points

    • Economic assessments of the potential future risks of climate change have been omitting or grossly underestimating many of the most serious consequences for lives and livelihoods because these risks are difficult to quantify precisely and lie outside of human experience.
    • Political and business leaders need to understand the scale of these ‘missing risks’ because they could have drastic and potentially catastrophic impacts on citizens, communities and companies.
    • Scientists are growing in confidence about the evidence for the largest potential impacts of climate change and the rising probability that major thresholds in the Earth’s climate system will be breached as global mean surface temperature rises, particularly if warming exceeds 2°C above the pre-industrial level. These impacts include:

      • Destabilisation of ice sheets and glaciers and consequent sea level rise
      • Stronger tropical cyclones
      • Extreme heat impacts
      • More frequent and intense floods and droughts
      • Disruptions to oceanic and atmospheric circulation
      • Destruction of biodiversity and collapse of ecosystems
    • Many of these impacts will grow and occur concurrently across the world as global temperature climbs.
    • Some of these impacts involve thresholds in the climate system beyond which major impacts accelerate, or become irreversible and unstoppable.
    • When a threshold is breached, it might cause one or more other thresholds to be exceeded as well, leading to a cascade of impacts.
    • Many of these impacts could exceed the capacity of human populations to adapt, and would significantly affect and disrupt the lives and livelihoods of hundreds of millions, if not billions, of people worldwide.
    • These impacts would also undermine economic growth and development, exacerbate poverty and destabilise communities.
    • Economic assessments fail to take account of the potential for large concurrent impacts across the world that would cause mass migration, displacement and conflict, with huge loss of life.
    • Economic assessments that are expressed solely in terms of effects on output (e.g. gross domestic product), or that only extrapolate from past experience, or that use inappropriate discounting, do not provide a clear indication of the potential risks to lives and livelihoods.
    • It is likely that there are additional risks that we are not yet anticipating simply because scientists have not yet detected their possibility, as we have entered a period of climate change that is unprecedented in human history.
    • Some advances are being made in improving economic assessments of climate change impacts but much more progress is required if assessments are to offer reliable guidance for political and business leaders on the biggest risks.
    • The lack of firm quantifications is not a reason to ignore these risks, and when the missing risks are taken into account, the case for strong and urgent action to reduce greenhouse gas emissions becomes even more compelling.

    More than not trusting the Government, we need some leadership or none of thse things are going to  matter.


  14. Vineyards are burning – good time to invest in wine futures or French wine-makers.  


  15. Image may contain: one or more people, text and outdoor

    • TrueCar estimates U.S. car sales will fall 4.7% in October on an adjusted basis to 1,339,420 vehicles. The research firm projects a seasonally adjusted annualized rate for total light vehicle sales of 16.6M units for the month.
    • "Even though consumer sentiment has improved month-over-month, lower incentive spend this month compared with September and the GM strike are contributing to lower sales in October," says TrueCar Chief Economist Oliver Strauss.
    • TrueCar forecast by manufacturer: BMW (OTCPK:BMWYY) +5.9% to 29,157 vehicles, Daimler +3.3% to 34,129, Fiat Chrysler Automobiles (NYSE:FCAU) -6.1% to 172,913, Ford -7.9% to 183,394, General Motors (NYSE:GM) -11.4% to 219,764, Honda (NYSE:HMC) +2.5% to 130,014, Hyundai (OTCPK:HYMLF) +5.7% to 58,220, Kia +1.5% to 47,550, Nissan (OTCPK:NSANY) -10.6% to 102,096, Subaru (OTCPK:FUJHY) -3.2% to 55,702, Tesla (NASDAQ:TSLA) +14.0% to 17,526, Toyota -3.8% to190,895, Volkswagen -1.3% to 50,251.
    • Square (SQ -0.3%) caught traditional payment-processing companies off-guard with its card-reader that plugs into a smartphone or tablet, giving small merchants an easy way to accept credit and debit cards. Now others in the industry are catching up, Barron's reports.
    • That became apparent in its Q2 earnings report — the dollars that flowed through its platform fell below analysts' expectations for a second consecutive quarter.
    • Nomura Instinet's Bill Carcache initiated coverage of Square earlier this month with a Reduce rating, noting that the stock should be valued more like a payment processor than the software company multiples it's been trading at.
    • It's not "worth the kind of premium multiple that the market is putting on it at the moment," Carcache told Barron's.
    • Now Square faces competition from First Data's Clover offering, Verifone's mobile payment options for small business, ShopKeep, a venture-backed point of sale platform.
    • But Square is also looking for new avenues to grow, including its Cash App, which has 15M customers, and its plan to attract larger merchants.
    • Quant rating is Neutral; SA Authors' average rating is Neutral (1 Very Bullish, 5 Bullish, 2 Neutral, 2 Bearish, 1 Very Bearish).
    • Compare Square's key stats with those of its peers; under manage comparables, change peers to PYPLFISVGPNFISMA, or V.
    • Poultry stocks are big gainers after China agrees to lift a ban on American poultry exports.
    • The development was largely anticipated with the nation seeing more demand due to the decimitating impact of African Swine Fever on the pig population.
    • Sanderson Farms (SAFM +14.5%), Tyson Foods (TSN +3.4%) and Pilgrim's Pride (PPC +6.1%) are all on the march higher.
    • Apple (AAPL +0.6%) gets a target boost from $260 to $285 at Jefferies, which maintains a Buy rating.
    • Analyst Kyle McNealy says the firm's analysis shows solid Y/Y growth in iPhone unit sales, contrary to Street expectations of a decline.
    • McNealy says the iPhone 11 is "exceeding conservative Street expectations," citing foot traffic to U.S. retail stores and global web traffic.
    • Upcoming catalyst: Apple reports earnings on October 30.
    • Apple has an Outperform average Sell Side rating.
    • The S&P 500 opens at record highs, stoked by positive reactions to corporate news, expectations for the Fed to issue a rate cut on Wednesday, and reports that the U.S. and China appear close to finalizing some sections of a "Phase One" trade deal; Dow +0.7%, S&P and Nasdaq both +0.6%.
    • Notable early gainers include Microsoft (+2.9%) after winning a $10B cloud computing contract with the U.S. Department of Defense and AT&T (+4.9%) after announcing a "multi-faceted" plan to create shareholder value.
    • European markets are mostly higher after the EU granted a three-month Brexit delay, with Germany's DAX +0.5%, France's CAC +0.2% and U.K.'s FTSE flat; in Asia, Japan's Nikkei +0.3% and China's Shanghai Composite +0.9%.
    • In the U.S., an early look at the S&P sectors shows information technology (+1.2%) in the lead on the back of Microsoft's $10B cloud computing contract with the government, while utilities (-0.5%) and real estate (-0.6%) are the only groups trading lower.
    • U.S. Treasury prices are header lower, raising the two-year yield up 3 bps to 1.63% and the 10-year yield 4 bps higher to 1.84%; U.S. Dollar Index flat at 97.79.
    • December WTI crude oil +0.4% to $56.91/bbl.
    • LVMH (OTCPK:LVMHF) isn't planning on a hostile takeover of Tiffany (NYSE:TIF), according to CNBC's David Faber.
    • On Wall Street, Oppenheimer thinks Tiffany will reject the offer, but that ultimately a deal will be struck as the weak macro backdrop provides a strategic buying point for LVMH.
    • Shares of Tiffany continue to trade well-above the reported deal price of $120 in today's premarket session, topping $130 earlier.
    • TIF +29.88% premarket to $128.01 at last check.

     (basic)

     

    TIF/ Anyone know why this stock is up so much today? 

    Now we know!  Some serious insider trading last week.


  16. GOOG buying FIT!

    Last sale on the 2022 $4 puts was $1.20 – that's not a bad short put idea if you can get $1+ as the worst case is net $3 and, if GOOG buys them earlier, you get a quick 100% return.


  17. Uncontained fires – yeah – Less than about 15% means "we're doing our best, but can't get a handle on it"

    15% – 30% means "okay, if the wind doesn't pick up again, we might beat this thing down."


  18. SEDG – Back In August when SEDG was trading at ~$65, I bot the Jan '21 60/70 BCS and sold Jan '21 $50 puts.  Since then stock is on a terror up ~40% to $95.70, my options position up ~55%. Nothing to complain about there.  How should I think about this or any position now with such a rapid ascent? A Little over halfway to goal with 14 months left… SEDG Reports earnings again Nov 16th so considering taking the money off the table here and re-establishing a different spread. I self identify as having an itchy trader finger from time to time so looking to to my support group here :)


  19. Phil

    Thanks for the explanation on the SQQQ hedge


  20. Fire/Snow – Crazy stuff, you could smell the burning smell in LA when we first got there two weeks ago and, just as it was getting better last week – a fire started the day I left.  More people without power in CA than Puerto Rico now – I wonder if Trump has any Bounty Towels left?

    Image result for trump paper towels animated gif"

    SEDG/Music – Nice entry.  Now the question is, simply, what's it worth now, so let's say $42/34 on the spread is net $8 and you are deep in the money so a very strong chance, say 85-90% that you'll get the full $10, which is 25% more in a year with a high degree of certainty.  The question is, do you have anything BETTER than that to do with your money for the next year?

    Let's say you flip to SPWR and pick up the 2021 $7 ($3.85)/10 ($2.50) bull call spread for $1.35.  That makes $1.65 at $10 so, if you had 10 of the SEDG spreads at $8,000, you could cash those and buy 20 of the SPWR 2021 $7/10 bull call spreads for $1.35 ($2,700) and stand to make $3,300 if all goes well and you have $5,300 in your pocket for other things.

    So, the payoff is clearly better and the capital risk is clearly lower but then you have to decide how CONFIDENT you are in SPWR making $10 vs SEDG holding $70?  I like SPWR and have been waiting to call a bottom and this is just an example but that's how you need to think about these trades if you are getting out early.  Rule of thumb is:  If you have a bird in the hand – don't trade it unless there's at least 2 in the bush!  

    You're welcome Jeff.


  21. SPWR, by the way, has earnings on the 30th and SPWR should benefit from the tariffs being lifted on Bifacial (both sides) Solar Panels.  They do have a lot of debt, which is what freaked people out after last earnings (which popped them up to $16) but, overall, this is still a company losing money (lost 0.22 last Q, should break even this Q) and they have been restructuring and you know how I love good companies that are restructuring!  

    I think we need to see what they are doing with their debt but I'd love to add a trade on them if they have good earnings – or even if they have bad earnings and get cheaper – as long as there's light at the end of the panel…

    Year End 30th Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 2,507 3,027 1,576 2,553 1,794 1,726 1,670 1,967 2,241 -7.2%
    Operating Profit $m 158.9 251.2 -206.3 -371.9 -1,025 -849 -288.5      
    Net Profit $m 95.6 245.9 -187 -448.6 -929.1 -811.1 -216.3 -53.9 28.2  
    EPS Reported $ 0.69 1.55 -1.39 -3.25 -4.49 -5.76 -1.66      
    EPS Normalised $ 0.70 1.62 -1.36 -2.57 -1.48 -3.15 -1.75 -0.34 0.19  
    EPS Growth %   +131.5                
    PE Ratio x           n/a n/a n/a 48.5  
    PEG x           n/a n/a n/a 0.33
    Profitability

  22. Honest question. if markets are at an all-time high, shouldn't bonds be down?


  23. In a normal world, yes, but the Fed is making this market crazy. 


  24. What is the cause and what is the effect – the CB have really made things more confusing with their experimentation.

     

  25. In a good economy, bond buyers have a strong alternative in the stock market, so they demand more money – especially for the longer-term so long-term bond rates go up and investors are worried about inflation, so the longer the time, the more interest they want to be guaranteed.  If investors start putting money into bonds and out of the market, the long-term bonds can get cheaper than short-term and that "inversion" is usually a warning cash is coming out of the market.

    With the CBs acting as another source of cash with money that has no relation to the actual economy (they create it at will) – all kinds of stupid things happen to the curve and the indicator goes out the window – which makes every more nervous than if there were a good old-fashioned inversion.

    Well, sorry I didn't get to dividends – been a crazy day but I'll try to catch up this evening.


  26. Wow, BKNG took a nice dive – glad we didn't panic out!

    Great start for the new STP:

    Now I can start working on the Dividend Portfolio…



  27. Trump hails S&P 500′s all-time high after saying he expects first part of China trade deal soon



  28. Why Bot Wars Are Inevitable



  29. Aramco’s I.P.O. Will Be Less Gigantic Than Promised







  30. Interest rates explained in an easy to understand (yet surprising) way:

    "The correlation coefficient ranges between -1(inversely correlated) and +1(directly correlated). The correlation between interest rates and the height of the Fed chairman is +0.84. Now that’s a strong relationship."

    https://www.tacitim.com/spurious-correlations-interest-rates/


  31. Saudi Aramco aims to begin planned IPO on November 3 – sources By Reut