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Manic Monday on a Short, Low-Volume Week

Image result for china protest"The Futures are up again – yawn! 

Progress was made on the Trade War – again – as China agreed to raise the penaties they never enforce on IP Theft over the weekend but keep in mind our expectations have been lowered so much that the market is now celbrating SOME progress on a PARTIAL trade deal – 2 years after the fact!  When did we all become such idiots?  Because of the trade progress, Trump has left the Hong Kong protesters out on a limb by refusing (so far) to sign Congresses bill sanctioning China for their brutal crackdown.

Fortunately, Hong Kong citizens weren't waiting for Trump and Putin's approval and they went to the polls this weekend and overhwelmingly voted for pro-Democracy (the thing Trump and Putin are against) candidates who won 90% of the seats up for grabs with a record 71.2% turnout at the polls despite China's voter intimidation tactics.  This is very worrying for Trump and the GOP, who are counting on their own voter intimidation tactics to keep potential Democratic supporters away next November.  

Hong Kong's embattled Government took a page out of Team Trump's playbook and attempted to spin reality with this statement:

"There are various analyses and interpretations in the community in relation to the results, and quite a few are of the view that the results reflect people's dissatisfaction with the current situation and the deep-seated problems in society, (The government) will listen to the opinions of members of the public humbly and seriously reflect."

Image result for china protest"Democratic candidates on Hong Kong ran on a central theme of "Five Key Demands" from the protests, which boil down to this:

  1. Withdraw the extradition bill that kicked off the entire crisis (since achieved)
  2. Launch an independent inquiry into allegations of police brutality
  3. Retract any categorization of a protest on June 12 as a "riot"
  4. Amnesty for arrested protesters
  5. Introducing universal suffrage for how the Chief Executive and Legislative Council are elected.

You would think that's not a big deal in exchange for ending protests that are entering their 6th month, but that last one is a big sticking point as China would lose control of Hong Kong (that they are not supposed to have) and they've only just gotten their puppet Government fully in place (leading to the protests). 

Speaking of protests and Governments that need to be overthrown, 4 more witnesses will testify in the Impeachment Hearings this week, including 3 who directly, officially, listened in on Trump's "perfect" phone call.  That's right, the GOP has made a huge deal about there being no direct witnesses and that's been true – because they weren't scheduled until this week – after all the indirect witnesses had been questioned – it's sort of how a trial works.

The US markets are closed on Thursday but we're happy enough with our portfolio positions (only a few) and will finish reviewing them today.  We're still worried about the overall economy and the Chicago Fed was down 0.71 this morning, after being down 0.45 prior and vs. -0.25 expected by leading Economorons.  Dallas Fed is at 10:30 and Powell speaks tonight and we have quite a bit of data coming in this week – squeezed into Tuesday and Wednesday due to the holiday (and no one will be here Friday either!). 

In fact, as you can see by the earnings calendar – Friday is a dead day:

Image

Expect the markets to be pushed higher as we have a lot of window-dressing going on into the end of the month as Wall Street is trying to close out the year on a high note – and they have the full cooperation of the Trump Administration to do that as those guys REALLY need a win of some kind.  Any kind…

 


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  1. Trump spin / Phil – And we had GOP congressmen and senators parroting talking points from Russia's intelligence services this weekend to defend Trump. The ultimate spin… Reagan is turning in his grave!


  2. On a different topic, I was trying out the new Google Stadia cloud gaming platform this weekend and even though it's still feels like a beta test, the technology is incredible. You are playing a game that is running on a server that could be hundreds of miles away and there is virtually no lag between keyboard and mouse input and the game. Got some stutters from time to time but nothing bad. I am no pro gamer so it feels OK to me. If you have good broadband connection, you can play top games on a Chromebook! No need to buy a gaming rig… Microsoft, Amazon and nVidia are doing some testing now.





  3. Hong Kong’s Most Important Election


  4. Good Morning!


  5. Dividend Portfolio Review:  We're already full, so all we're going to do with this portfolio is wait two years and see if we make 35%.  I'm not going to waste time on this one because it's only up 1.4% and only SIG and SKT have paid a dividend so far so you're not missing anything if you play it from scratch but it's dead boring.  

    If we do decide to take on other dividend positions – they will go in another portfolio we will call Boring Dividend Portfolio II – and then we can leave that one alone for two years.  Fun! 

    NLY and SKT got worse while the others (even M) made up for it. 

    Kevin Keyes exits Annaly; CEO search underway

    Annaly Capital's BV, Dividend, And Valuation Versus 20 mREIT Peers – Part 1 (Post Q3 2019 Earnings)

    Annaly Capital Management, Inc. 2019 Q3 – Results – Earnings Call Presentation

    Annaly Doesn't Get Much Cheaper Than This

    Tanger Raises Guidance, Continues Repurchasing Shares

    Tanger Factory Outlet Centers, Inc. 2019 Q3 – Results – Earnings Call Presentation


  6. By the way, playing from scratch I'd go 2x SKT!


  7. 5G / Phil – Right now, not working over cellular. But sure, 5G would in theory be a big improvement over what people get at home now (although range is an issue). But cloud gaming uses a lot of data so they will need to raise their "unlimited" threshold. Which would make sense. Now they throttle you if you exceed 10 or 20 GB of data, but you sell a pipe with 2 Gbps of speed (5G expected in theory), you could theoretically hit that 10 GB limit in 40 seconds. Although you never get that speed anyway. But my point is that these limits don't make sense as you make the pipes bigger. 


  8. Earnings Portfolio Review:  Now it's more like another STP so I wonder if we should keep it?  Most likely, I'll move these over to the LTP when we decide to commit to one.  NO losers is off to a good start, should close it now to keep up my perfect score….

    • HBI – I have full confidence we'll get the remaining $2,415 over time and I guess the strategic play is to be happy with that and only pick up a bull call spread if we see $13(ish) again.  Earnings were the 31st though and they caused a $2 pop, so it's going to be hard to get back there now as the support is forming up around $15.  C'est la vie…

    • BA – Now I wish we sold puts but wasn't appropriate for the small portfolio.  Of course, for GOOGL or AAPL I'd sell puts – because I don't think there's a rational risk that they drop 30% to doom the portfolio but BA COULD, POSSIBLY drop 30% – so not worth the chance.  Still, it's a $25,000 spread currently netting $14,125 so $10,875 left to gain is another 77% left to gain, which I'm pretty confident about – especially after BA did finally get orders at the air show this weekend. 

    We're already up $3,125 (39%) in our first month on the BA but it slows down from here.  Still, you can see why I like this strategy for earnings plays – it has a very nice short-term pay-off – if that's what you are in for – but it also makes a nice, long-term position once you get past the short-term fear and the 2022s would have given us time to adjust if the earnings/guidance were worse than we thought (or they could have been delayed).

    • CLF – All my babies are in this portfolio!  Well, stick to what you know, right?  So here we have a $10,000 spread that's $6,000 in the money and the net is currently $2,810, which is still $1,860 (195%) more than the $950 we paid for it – GOD, I LOVE OPTIONS!!!  So we are very likely to get the next $7,190 (255%), which is still a very exciting return on our current balance and the risk, of course, is a breakdown in trade but I like CLF BECAUSE they are local and may actually come out well in a massive trade war so yes, sticking with these for sure.  

    • IMAX – We've been playing this one whenever it's low for 10 years.  Investors are real idiots with cyclical growth stocks.  So far, no blowback in China but that's a possibility if the trade war escalates.  Terminator disappointed but Frozen is huge – that's show biz.  So it's an $8,000 spread that's mostly in the money at net $3,762 so a healthy $4,238 (112%) left to gain and we're only up $587 (  ) from our original $3,175 entry so you didn't miss much – yet.   Oh – and it pays off in June! 

    • IRBT – I don't love them like I used to but we couldn't resist the chance to buy them on the dip.  It's a wide, $25,000 spread and currently just net $3,425 so $21,575 (629%) left to gain and I really like this one too. 

    So just 5 positions and we're already up net $5,558 overall and we expect to make another $42,293 (42%) over 2 years on just these positions.  Something I realize about myself is that, while I was pretty gung-ho to make earnings plays that first week – I pretty much lost interest after we had 5 good ones because my outlook shifted from "going for it" to "protecting our gains".  I did not, subsequently, see anything I felt as certain about last month – so I didn't follow up with any picks.

    I guess we'll leave these trades here and continue to use this portfolio for earnings-related activity but, when it gets full, we'll have to decide what to do about it.  At the moment, we're not using much buying power – only about 20% of our $200,000.


  9. Did I mention AMTD before? I trust no one listened anyway.


  10. AMTD / Yodi, thanks for this! I bought a very narrow Mar '2020 20/22.5 call spread financed by sold puts. This was a merger of your and Phil's suggestions and it seems to be playing out very well. You are definitely being listened to :)


  11. YODI

     

    HERE , here !


  12. OK I hear you


  13. Phil/SKT

    Why do you like SKT so much?  Can they survive without retail?


  14. R an other of my quiet winners


  15. Hemp Boca Portfolio Review:  F'ing MJ!  It's so annoying.  At least the new shorts are working out but that early loss is a burden.  Still, we can only press on and do better next time.  

    • TAP – They bumped up their dividend – hopefully not priced in Canadian Dollars…  We just added puts to the bull call spread but our conservative entry is net $42.40 and I have no worries about that so I fully expect to gain the remaining $3,750 (98.6%) on the puts, so still good for a new trade.  On the bull call spread, we're down $1,100 – so also good for a new trade at net $7,900 on the $20,000 spread so $12,100 expected to be gained there but $7,900 is $54 and I need more evidence before I begin to say I'm counting on that money – so no green on the rest!  

    • IMAX – As noted in the Earnings Portfolio, I feel very good about this one and we're already in the money at net $3,000 on the $4,000 spread so $1,000 (33%) left to gain if they hold $21 for 2 months.  It's a tepid green since I'm still worried trade falls apart.    

    • M – My now table-banger!  Nice $10,500 potential spread at a net $3,218 CREDIT, so $13,718 (426%) potential gain if M can make it to $20 in two years.  Since the worst-case is owning 1,500 shares of M for $12.85/share – I love the risk/reward on this one.  

    • MJ – The old loss is what it is but it's good for a year and could improve a lot – but nothing to be counted on.  What they do though, is provide an upside buffer so we can be more aggressive selling calls against our 2022 position – if MJ ever improves enough to make call selling worthwhile.  

    • THC – Another one we love to buy whenever investors lose faith.  Miles in the money now at net $4,575 but it's a net $7,000 spread that's 50% in the money so not bad for a new trade with $2,425 (53%) left to gain,  We entered for net $1,000(ish) so up 350% already but now it's pretty much a sure thing so 53% is not boring when you don't even have to think about it.

    So that's $20,893 left to gain despite not counting a thing on MJ and that's 40% of a $50,000 portfolio but we still have 75% of our $100,000 buying power and we will find ways to deploy that over time.  Keep in mind we only trade this one on the Tuesday Radio Show.  


  16. Well there are crooks I never trust, like GM first go bankrupt let the share holders sit with the worthless shares, than just issue new shares and forget about the idiots holding old shares. Must be the yellow clown running the show? The could go to the moon I would never trade that stock again.


  17. Rick Perry confirms on Fox and Friends that Trump is chose by God to lead


  18. God speaks in mysterious ways Tangle!


  19. Schwab bought TD Ameritrade.  Hope this doesn't mean a change in the platform.


  20. Above-ground power lines grow in risk as climate changes



  21. Democrats dream about defeating Mitch McConnell. Can they do it?


  22. Democracies on the verge of a nervous breakdown





  23. Newsletter: The Nunes question


  24. Annie Duke and 6 others follow

     

    David Frum

    @davidfrum

    ·

    2h

    As the early Church pointed out, Attila the Hun was also sent by God. "Ego sum Attila, flagellum Dei"


  25. 5G/StJ – As some point there will be other bottlenecks in the system.  Data is still like a pipe system and it flows from somewhere to somewhere else – you can't just send "unlimited" GB to millions of people.  Will be interesting to see how it plays out.  

    AMTD/Yodi – They seemed risky but SCHW saw it as an opportunity.  And yes, I was listening:

    AMTD/Albo – Good luck, hopefully that's enough.  $57.50 to $34.50 is 40%, that's a good spot for a bounce but let's assume 20% is well-deserved so call it $46 to $37 is the next 20% drop and that's $9 so $1.80 ($35.20)

    AMTD reports tonight and I don't think they are going to miss or cut guidance significantly as all this no fee BS just happened last month.

    Let's make an Earnings Portfolio with $100,000 to do some earnings plays while we wait for a good time to start rebuilding the main portfolios.  For AMTD, we can:

    • Sell 5 AMTD 2022 $30 puts for $4.20 ($2,100) 
    • Buy 10 AMTD Jan $38 calls for $2.30 ($2,300)
    • Sell 5 AMTD 2021 $45 calls for $2.60 ($2,600) 

    That's a net credit of $1,800 on a $7,000 spread where we are disadvantaged by time but not really as an up move or flat would let us cash out Jan and then pick up a 2022 bullish spread to cover the short 2021 $45 calls and a down move would give us a better entry on a 2022 spread and we could roll and DD on the short puts and sell more calls.  

    That was the bell though so not an official play as it's too late but we'll see how it goes.

    SKT/DC – Can Beyonce survive without Kelly Rowland and Michelle Williams (Destiny's Child)?  Can internal combustion survive electric cars?  Can beef survive Beyond Meat?  Can movies survive TV?  Can radio survive TV?  Can non-carbonated drinks survive soda?   People are very quick to call the death of the old whatever but it's not usually that simple.  As I mentioned last week, ECommerce is still only 10% of Commerce and it's growing a bit faster but not enough to get to 20% in the 20s and maybe it never will.  Is that disruptive?  Of course, but it's not a killer and look at SKT's occupancy rates while Ecommerce has gone from 0 to 10% in the past decades:

    Not much difference and management has clearly adapted to the Dot Com bust as well as the 2008 crash so I think it's a bit premature to count them out when there's no actual evidence that it's affecting them at all.  Yes, other mall operators are having problems – especially when their anchor stores close up and they have no new anchor stores to replace them but SKT doesn't work that weigh – they don't use anchors so it's very unlikely any single closing can't be replaced by whatever new does come along.

    Also, SKT's are generally community/event-oriented.  People go there for concerts and holiday promotions as they are outdoorsy and the management spends money to keep things fresh and coordinates their vendors to run promotions for each holiday.  In general, they do the right things in a way the Mega-Mall operators do not (with the possible exception of Mall of America's Triple 5 Group, who are private).  

    Speaking of which – BEHOLD (finally) Xanadu!  

    h/o: american dream 1 1

    This is where Jackie, who is now 17, was supposed to have her 7th birthday party.  It just opened (partially) a couple of weeks ago after 2 developers went bust ($5Bn down the tubes and another $3Bn to finish it).  

    A sprawling 3 million square feet of indoor ski slopes, waterslides, roller coasters, chef-backed eateries and department stores is set to open, at least partially, to the public later this month.

    A private, family run business, Triple Five is perhaps best known for designing the Mall of America in Minnesota, the largest shopping mall in the country by square footage, which spans more than 4 million feet and — in addition to plenty of shops and restaurants — includes a Nickelodeon theme park, an aquarium, mini golf and an escape room, among other family attractions.

     

    And, in a country that already has more retail per person than any other, Triple Five isn’t looking to create just another suburban mall. It knows that wouldn’t stand a chance of surviving.

     

    “We are building something that no other developer in the country has done yet … the Simons, the Westfields, the [Brookfields] — they are all good shopping center developers. But the world today is not about shopping centers, it’s about experiences,” Triple Five President and CEO Don Ghermezian said in an interview.

    “We want to be the developer who produces and delivers tier-one entertainment while at the same time delivering an experiential retail environment,” he added. “We’ve taken what we learned from [Mall of America]. We put it on steroids, went crazy and built American Dream.”

    h/o: american dream 2

    h/o: american dream 3

    On Oct. 25, the Nickelodeon Universe theme park — with more than 35 rides and roller coasters — and an NHL-regulation size ice rink will open to the public.

    Then, on Nov. 27, the DreamWorks water park will open, marking North America’s largest indoor water park when it does, complete with a 1.5-acre pool, over 40 slides and a lazy river.

    On Dec. 5, an attraction called Big Snow will open to the public. It’s an indoor snow park that has multiple hills ranging from “bunny” to “black diamond.”

    Finally, the retail portion of American Dream is slated to open in March of next year, Triple Five Group says, along with the rest of the experiential aspects of the property, including a Legoland Discovery center, Kidzania, an observation wheel and movie theater. In total, there will be more than 350 retail shops, ranging from Tiffany, Saks Fifth Avenue and Hermes to Zara and H&M, and more than 100 dining options.

    This will be an interesting one to watch.

    R/Yodi – I can't play R, I would never be able to find it in a search! 


  26. Phil I know you always listening, you were not included!!!!!


  27. Uk GIF

    Image may contain: meme, text and outdoor

    Image may contain: 1 person, smiling, food and text


  28. Small and mid caps moving up today. 

    IWM at new season high.



  29. Phil- I had a short put position in LB that was assigned to me. I have 1400 shares now and my basis is 27.40. Should I keep the shares and sell 1/2 covered calls or turn this into a bull call spread


  30. Trump Ordered Pentagon Not to Oust Navy SEAL From Elite Unit



  31. LB/Calch – They finally decided to head higher after earnings and I hope the worst is over but HOPE is not a valid investing strategy and neither is needing a 50% pop to get even!  

    You have $26,656 worth of stock at $19.04 and you are down about $11,760 so the real question is – given you have decided to stick with LB, what's the best use to make of $26,656 to get $11,760 back?

    First of all, you can sell 20 of the 2022 $17.50 puts for $5 so that's $10,000 right there and worst case if assigned is $35,000 less $10,000 is $25,000 so, if you cash in your stock now and sell 20 2022 $17 puts, you get $10,000 of your $11,760 back and are obligated for not one penny more than you are now and you drop your hurdle from $27 to $15 (44% lower).  Would seem very silly not to do that, right?  

    Since you now have the potential to own 2,000 shares at net $36,760 ($18.38) there's no point in keeping your 1,500 shares so that's done.   Now, the question is will you be happy to be (almost) even at $15 or are you now greedier than that and willing to put more money to work?  

    You put $38,360 (max risk) to work and got nothing for it last year so let's say it would be a shame not to make 20% so let's see how we can go for $10,000 without adding too much risk.  I see the 2022 $15 ($7)/20 ($4.60) bull call spreads are $2.40 per $5 so $4,800 (20) put to work there will pay $5,200 at $20 and 20 will pay goal at $10,400 but I would not over-commit – you can always take 20 now and add the $17.50/$22.50 bull call spread once you regret not taking 40 of the $15/20s in the first place.  

    So, the end result is that I'd cash the loss and pick up, as a new trade:

    • Sell 20 short LB 2022 $17.50 puts at $5 ($10,000) 
    • Buy 20 LB 2022 $15 calls at $7 ($14,000) 
    • Sell 20 LB 2022 $20 calls at $4.60 ($9,200) 

    That's a net $5,200 credit on the $10,000 spread so, as a new trade, it's got $15,200 (292%) of upside potential if LB is over $20 in Jan, 2022.  

    LB has been excruciatingly slow in their turnaround but, with the market cap down to $5Bn at $19 and earnings well above $500M (1/10th) – I don't mind waiting patiently for them to pull things together get back to the 10% profits they used to drop to the bottom line on their very steady $13Bn in earnings.  

    Year End 02nd Feb 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Revenue $m 10,773 11,454 12,154 12,574 12,632 13,237 13,060 12,993 13,229 +4.2%
    Operating Profit $m 1,743 1,953 2,192 2,003 1,728 1,237 976.8     -6.6%
    Net Profit $m 903 1,042 1,253 1,158 983 644 366 666.2 665.3 -6.5%
    EPS Reported $ 3.05 3.50 4.22 3.98 3.11 2.31 1.30     -5.4%
    EPS Normalised $ 3.05 3.50 4.22 3.98 3.11 3.23 2.80 2.38 2.38 +1.2%
    EPS Growth % +8.7 +14.7 +20.5 -5.7 -21.9 +4.0 +8.7 -26.3 -0.38  
    PE Ratio x           5.57 6.43 7.55 7.58  
    PEG x           n/a n/a n/a 7.83
    Profitability

    Bath and Body Works is growing nicely while Victoria's Secret is down a bit but Pink (VS kids) is doing very well withing so they only need to fix 1/2 of VS.  

    Also, they are paying out a $650M annual dividend – that's a bit wasteful as it's more than profits.  So, if they do cut it – I'll be happy to buy from whoever is dumping.


  32. Damn someone got impatient and sold those LB puts for 4.70. 


  33. LOL, it's hard to be patient.

    Well, another day another record.  Just have to finish the Butterfly Portfolio Review tomorrow and we'll be all caught up for the holidays and that's the one I'm least worried about re. making changes anyway.


  34. TAP/Phil -

    "On the bull call spread, we're down $1,100 – so also good for a new trade at net $7,900 on the $20,000 spread so $12,100 expected to be gained there but $7,900 is $54 and I need more evidence before I begin to say I'm counting on that money – so no green on the rest!  "

    I assume you mean $54 is the break-even on the bull call spread?
    When you say you need more evidence, do you mean you are going to wait until next earnings?   How do you decide between giving up and rolling?

    Because couldn't that $7900 be put to better use on other plays during the waiting-for-more-evidence time?

    TAP did raise their dividend but didn't they give lower guidance and some poorly defined restructuring plan, all in the face of tanking US beer sales?


  35. TAP/Phil, Vidt

    Vidt, I'm glad you asked that. I'd like to know too.








  36. Are we still underrating Andrew Yang?