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Wonderful Wednesday – More Stimulus and a Vaccine?

Goldman Sachs made money!  

Yes, I know, that's not really a surprise but the markets are acting like it is this morning and the Dow is up almost 500 points, pre-market with Goldman Sachs (GS) contributing 50 points with their $9 (4%) jump on better than expected earnings.  Mainly we're up because last night Moderna's Covid Vaccine showed positive immunity responses in all 45 people tested and now they are heading into a much bigger phase two study (30,000 subjects) at the end of the month.

The new “Cove” study, scheduled to start July 27, will aim to enroll about 30,000 adults at nearly 90 different U.S. locations. Many of the study sites will be in states where the virus is surging, such as Texas, Florida, California and Arizona, according to information posted Tuesday on a federal database of medical studies.

Among the people researchers plan to enroll are those at appreciable risk of infection because of where they live. Testing the vaccine in coronavirus hot spots could help generate answers about the vaccine’s efficacy sooner, because people there are more likely to be exposed to the virus in everyday living compared with people in places where new cases have declined.

Researchers, however, still don’t know what level of a neutralizing immune response would be needed to guard against either infection or severe disease, and for how long a vaccine could provide such protection.

More than half of the study participants had side effects including fatigue, chills, headache and injection-site pain. Three participants who received the highest dose level tested had one or more severe adverse events, the researchers said. That highest dose level isn’t being tested in the large phase 3 study.

We're still a good 6 months away from a proper vaccine roll-out, even if everything goes perfectly and the Global Economy is still severely damaged so of course this is a massive over-reaction but it's better than no vaccine, right?

This should give everything a nice boost but hopefully not Tesla (TSLA), which is killing our Short-Term Portfolio (see yesterday's review) but, fortunately, great for the Long-Term Portfolio, which closed yesterday up 80% for the year at $900,238 and should make a quick $50,000 today if we hold this pre-market rally.  

Let's take a quick look at the LTP.  I've been itching to cash it out and stop the madness but, every time we review it, the positions are too damned good to sell!  In the interest of time, I'm not going to say anything about positions that are "on track" that we're not even considering removing.  I just want to shed a little light on my internal thoughts regarding our positions.

On the macro level, I think we have more stimulus coming though the Unemployment Bonuses run our in two weeks -that would be bad if the don't cover it but I think they will and Q2 earnings aren't terrible so far – or no more terrible than expected – and that's a positive!

  • Short Puts – All great stocks we offered to buy at very low prices so I'm not worried.
  • PAA – Performing badly so far but paid us an 0.18 dividedn on 4/30 and 0.36 on Jan 30 so our net cost per share is $3.16 on 8,000 shares and, if we get assigned 4,000 more at $8 our net cost goes to $5.58 and 4,000 get called away at $5, which would be an 0.58 "loss" on the sale so the net of the remaining 4,000 would be $6.16, which is our true, uncovered cost on 4,000 shares.  Meanwhile, if we collect another 0.32 in dividends this year and 0.68 next year, our net cost will be down to $5.16 ($20,640) – so this is a keeper, even though it looks bad on paper at the moment.

  • AVGO – Through the roof.
  • BRK/B – If they don't do well, we should be out of everything.
  • CAT – Still good for a new trade. Biden says $2Tn for infrastructure so the CAT comes backWe have 5 short July $120 calls and they are in the money at $17 and we're going to roll them along to 5 short Aug $125s at $14.50 so we're paying $2.50 to roll up $5.  

  • CSCO – Almost at goal already.
  • FL – On track

  • GILD – Another contender in the virus race but a great overall company.
  • GM – At goal already.
  • HMY – Miles over our modest target.
  • IMAX – March options should be out soon and I don't want to pull the plug vs giving them more time to recover.

  • LABU – Biotech!  How can we not love it? 
  • M – Still not dead.  It's a real estate play.
  • MIDD – I knew they'd come back, already over our goal line on trade 2 and we may even recover trade 1 (we bought back the profitable legs already). 

  • MJ – Finally in the green on our MJ stocks!
  • MMM – We have the short July $150 calls at $8 and we can roll them to the Sept $155 calls at $109 so let's do that as we're going up $5 and getting paid $2!  Still good protection – though I don't think we'll need it.

  • MO – Gotta love the sin stocks.

  • RH – Gotta love the stocks that cated to the top 1%.  RIDICULOUSLY in the money already.  
  • SKT – Still down in the dumps but I still love them long-term.
  • SPG – Another mall REIT but this one doing well because we took a super-conservative entry and let premium decay do our job for us.  Very clever!  

  • VLO – A great long-term inflation hedge.
  • WBA – We got more aggressive with them so now we wait.  

See, they are too good to close!  Don't forget we've already done 3 purges this year in the LTP so these are the positions that we couldn't bear (don't say bear!) to part with each time.  I can justify cutting IMAX and maybe even SKT (though it would make me cry), JO is a gamble but nothing else I wouldn't want to ride out since this portfolio can make another $400,000 from here as it stands.  

We have huge protection in the STP and we're at about $1.3M vs our high of $1.4M in our paired portfolios so nothing really to worry about – as long as you don't consider giving up $100-200,000 of our $700,000 gains worrying because that's what's at risk as we go for $1.8M – keep that in mind – there's no free lunch here.  


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  1. Good discussion on Market Value

    Voices of Pimco past: Gross, El-Erian warn against growth stocks

    Pimco co-founder Bill Gross expects value stocks to outperform the big growth stocks in the near term, while former Pimco CEO Mohamed El-Erian warned against stocks “decoupled from fundamentals”.

    In an investment letter, Gross argues that falling real interest rates juice dependable growth stocks, which is what the Fab 5 megacaps are benefiting from now.

  2. Good Morning.

  3. This is really concerning – I"m concerned the HHS ( under pressure from Trump) will manipulate numbers ( Something like what FLA Governor is already doing) 

    Hospitals now have to send their data on coronavirus patients to the Trump administration instead of the CDC. Michael Caputo of the Department of Health and Human Services confirmed the change, saying the CDC’s system for gathering hospital data is inadequate, and the administration will implement a “new faster and complete data system” that the CDC will participate in but no longer control. President Trump and CDC officials have been criticizing each other for months over their respective coronavirus responses. This week, four former CDC directors blasted the administration’s efforts to disregard and politicize guidelines from the agency, and said the President is trying to undermine the CDC’s attempts to address the crisis.

  4. The PhilStockWorld live weekly webinar starts at 1pm EST today. Follow the link to join.

  5. Batman/numbers – that's exactly the plan, the numbers will be falsified. Partly because the CDC director, albeit a Trump appointee with some religious baggage, isn't saying what the WH wants.

  6. good morning all 

  7. i came to psw late in the game, with a  portfolio of brkb, hd, ma, v, jnj etc all with good profits. i'll convert to ltp and stp overtime but i'm thinking of adding short strangles while i drip into some of Phil's recommendations. i would certainly sign up for new ideas but in the meantime --any thoughts on that idea?

  8. Trump taking over virus data thats the most disturbing thing ive heard in months. He can fudge the numbers all he wants the virus is still king and trump is just digging himself a deeper hole. Looks like the border to canada is going to be closed to all but essential workers from usa for a very long time.

  9. StuartJ

    You quote stock simbles but no positions. If you hold the stock or a leap BCS you I would sell 1/2 short term calls at this point, selling puts no, stocks have come up to quickly.

  10. these are all long stock positions

  11. thanks yodi, i'd be happy to add long stock as i also have a lot of cash, however holding off for now. i did start some t and mo covered short strangles for the dividend, as per phil's idea for income portfolio 

  12. StuartJ,
    I send you my account number!!
    But I would hold on a bit longer to my cash, as the market is very high in comparison to today’s situation

  13. Phil—-just starting my 2nd quarter with you.  Just wanted to say thank you and its been great being a part of the casino thus far vs some other subscriptions I have…. (maybe not for long).  Today's review is an example of what I call the value add here.  

  14. haha welcome, well let me be more specific, if one had long stock brkb and cash to double the position and lots of unrealised pl, what would you do? 1. sell and go to bcs, or 2. buy more or 3. buy covered short strangle? anyway i'm going to sleep now, it's 1am in Sydney. thoughts welcome.

  15. StuartJ

    Checking on the stocks you mention, to me they do pay none or little div. I am always have stock positions which pay at least 3.5% div. Depending what the US charges you on the div paid, you need to check up your position, Like if you live in Europe, the US withholds 35% on your div. Mexico for example only 10%. I would than go for leap BCS and sell at this stage only short term calls against them.

  16. That is what I call a good trader, he earns his money while he sleeps!!!!!

  17. Phil/DIS – I am short the Jan 2021 135 Calls against my long stock.  They are at the price I sold them now.   I feel like I should roll them.  Would you roll to the 135 Strike 2022 Jan or Jun and get a credit or roll up in strike for the same money?



  18. interesting moves in the markets….

  19. Good morning! (finally)

    Had to go to the bank (again), took longer than expected (again).   Gosh, Greg's job is hard!

    TSLA down but the market is retracing hard too.

    Value/Batman – Always does better in the long-run so why pretend to know who's going to grow?  Like right now Musk is ahead of Buffett but who's going to win in the end?

    Data/Batman – So blatantly ridiculous.  If I were back in school and my teacher started talking about our great system of "checks and balances", I would be laughing my ass off…

    Trump just appointed a new gut to run the post office and the first thing he does is slow down first class mail – which will invalidate millions of mail-in ballots.

    New ideas/Stuart – Well we're waiting to see how earnings season goes and there will be plenty of things to play but I'm not a big short strangle fan.  Over the years we see a lot of people tell us how fantastic they are doing with those and how we should all be following them until, one day, their trades blow up and they disappear in a puff of smoke (with all of their profits).  TSLA is a good example of that in our STP – came close to wrecking the portfolio on one trade.  Of course that was crazy but if it's 1/100 and you play 100 short strangles – guess what happens?

    Thanks Hicket and glad to have you on board.

    BRK.B/Stuart – Well, let's say you had BRK.B at $150 and now $190.  I do want them for the long run but I'm worried about a 20% dip back to $150 so I sell the June 2022 $150 calls for $55, effectively selling the stock for $205 but I still get the dividend and I can offer to buy DD by selling June 2022 $150 puts for $12, which drops your current net to $83 with a call away at $150 – and you still get the dividends.  

    Dividend/Yodi – Good point.  

  20. So is Greg just on vacation?

  21. Phil BRK.B does not show paying dividends

  22. Phil

    Is BRK.B paying a dividend  ?


  23. DIS/Fel – I don't have a good feeling about re-opening. A couple of people get sick, lawsuits start flying….  DIS is only at $120 and you are worried about calls that are more than 10% out of the money?  Roll them when they lose most of their premium, not when they are 100% premium.

    Greg/Tangled – Nope took a job with a big cloud company doing important but nebulous work.

    BRK.B/Yodi, QC – My bad, I thought they did.  

    Webinar time!

  24. Dis/Phil – How did that 2015 measles outbreak affect them? I watched that from an epidemiologist's viewpoint, not an investor:

  25. Phil / TSLA S&P – I know you covered this in webinar…. But – am I missing something on this?  based on the below looks to me like they would be eligible if they have a positive earnings this qty?  


    4 qtrs of positive earnings – They have 3 if they are positive this quarter, they get to 4.

    50% of Stock available to public – they have about 79% outstanding 

  26. ARNA…butterfly coming in Sweet

  27. Phil,

    Is it worth shorting CL again here at 41.08? 


  28. Indexes all over the place but finishing strong.

    Measles/Snow – I don't think it was a thing.  People don't usually think of catching something like that.  It's like Zika, you hear about it but you don't change your life.  This thing is just so wide-spread it's a different sort of animal.

    TSLA/Batman – That's a loose definition of eligible the way they do their books.  Same goes with the stock, mostly held by institutions, little true public float:

    Share Statistics

    Avg Vol (3 month) 3 14.73M
    Avg Vol (10 day) 3 22.24M
    Shares Outstanding 5 185.48M
    Float 147.62M
    % Held by Insiders 1 20.51%
    % Held by Institutions 1 57.93%

    Hey, there are no rules anymore so maybe TSLA gets in but 10% daily turnover?  That's just terrifying.

    Oil/Kgab – Below the $41 line with tight stops above I'd give it a toss but it's risky.

  29. Good morning!

    As countries across Asia Pacific struggle with resurgences of the coronavirus, one data point is steering government responses: the share of cases with no clear indication of how infection occurred. These patients cannot be linked to other confirmed infections or existing outbreaks by virus responders, indicating hidden chains of transmission impossible to break. A growing proportion of such cases in a city’s resurgence pushes governments, like those in Australia and Hong Kong, to take broad and blunt action, returning entire cities to lockdown-like conditions. “You can hardly contain the outbreak because you have no idea where they will come out next,” said Yang Gonghuan, former deputy director general of China’s Center for Disease Control and Prevention. “When there’s more cases where the origins are unknown, it adds to the difficulty for containment.”

    Bailout Binge

    The Federal Reserve’s efforts to keep debt markets flowing have things looking a little like 2009, with concerns about the U.S. economy abundant — but times still great on Wall Street trading floors. It's meant a $10 billion windfall for the biggest U.S. banks as their bond traders seized on big market swings to set new records, and their bankers arranged a slew of debt deals for companies desperate to raise cash. That helped keep JPMorgan and Citigroup profitable despite a surge in loan-loss provisions, and even delivered a surprise earnings increase at Goldman Sachs. The market bonanza has for now eased fears about the type of bank capital concerns that fueled the last crisis and prompted government bailouts. Still, it also raises questions of whether the Fed’s efforts have disproportionately benefited financial firms rather than small businesses.

    relates to Five Things You Need to Know to Start Your Day

    Apple just won the fight against the EU over a $14.9 billion tax bill.

    A Covid-19 vaccine front-runner is months ahead of her competition.

    The father of the "Z-Score" predicts a surge in "mega" bankruptcies.