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PhilStockWorld December Portfolio Review

Image result for one million dollars animated gif$1,535,280!  

That is up a lovely $48,402 from our November Review for, which is very nice for a month we played very cautiously,  We're up 155% for the year in our paired portfolios (LTP/STP) but the STP is, at the moment, down 42.5% as the market has been all uphill since we rebooted our hedging portfolio on October 28th.

We reviewed the Long-Term Portfolio in yesterday's Morning Report.  Well, not a review as we didn't change anything but, at the moment, I'm not inclined to.  The market keeps rising and our long positions are doing extemely well so now it's time to put some of that $48,402 in profits to work adjusting the protective hedges in our Short-Term Portfolio.  This locks in the gains of the LTP and allows us to leave those positions in play – even though we are unsure the rally will keep going.  We've been nervous since September – the hedges are what let us keep participating in the upside – they are the cost of insurance.

Short-Term Portfolio Review (STP):  $114,960 is down $76,885 from our Nov 18th Review but the gains in the LTP more than made up for it.  As noted yesterday, we cut about 1/3 of our LTP long positions on 11/17 and that left us leaning much more bearish – now we are too bearish if the market keeps going higher but we do have tons of cash in the LTP ($800,000) to deploy on longs.  Meanwhile, we'll maintian our hedges over the holidays – just in case. 

  • FXP – This is our new hedge on China (ultra-short) maybe not being as strong as people think.  It's alreay up so that's a good sign for us – not so much for China….

  • TQQQ – Still has that new trade smell.  In this case, we are shorting the ultra-long ETF for the Nasdaq as we think the Nasdaq is toppy and the 3x Ultras tend to decay over time so we think this could be a nice winner – even if the market stays flat.

  • CMG – This one is killing us.  We knew it was more of a gamble but holy cow!  The $1,300 puts lost a surprising amount of money and not much offset by the short puts (half-cover).  It costs $45 to roll the 2022 $1,300 puts up to the 2022 $1,400 puts, so that would be $27,000 and we could sell 5 of the Jan $1,250 puts for $10 ($5,000) so, effectlively, the 2022 roll will be paid for by a series of short sales so we may as well make that investment.  

  • SQQQ – Overall, it's about even so a good hedge.  We'll have to roll the short Jan $21 puts along but no hurry.  The June $18 puts are $5.50 and SQQQ is at $16 so we'll be fine and we'll sell more short calls when the Jan $25s expire but also no hurry.

  • TZA – In this case, there's no point in the April $25 calls as they only have 0.13 left to give us over the next 4 months so let's buy those back.  We don't need to buy back the Jan $40 calls as there is no chance they won't expire worthless.  The April $10 calls are just 0.75 so we can roll those to the 2022 $5s at $3 for net $2.25 ($45,000) and pay for that by selling 200 2022 $15 calls for $1.40 ($28,000) so we are investing net $17,000 more in the trade to be $40,000 in the money on a $200,000 spread.  Realistically, a 20% drop in the Russell would be a 60% gain in TZA to $11.20 so we'd get about $120,000 on our $47,000 insurance policy (including what we paid before).  

Money Talk Portfolio Review:  We had a bit of carnage on the 8th as we cut positons in Ford (F), Barrick (GOLD) and Viacom (VIAC) as they made TOO MUCH MONEY and they weren't worth keeping.  We added our 2021 Trade of the Year, Intel (INTC) just in time for them to take off (or maybe it took off because we announced it) and now we stand at $151,058 – up 51.1% for the year, which is fantastic on a portfolio we only adjust once a quarter.

This portfolio is protected by having $124,275 (82%) in CASH!!!   Of course the positions have leverage but there is plenty of money to adjust with and there's not a position there we wouldn't be happy to own more of so now we can just wait and see what happens over the next few months (next time I'm on the show).  

 


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  1. December 17th, 2020 at 9:31 am | Permalink Ignore this user

    Good Morning.


  2. December 17th, 2020 at 10:29 am | Permalink Ignore this user

    I suggest everyone read this in Phil's Favorites on the growth of retail investors etc

     

    https://www.philstockworld.com/2020/12/17/he-said-it/


  3. December 17th, 2020 at 10:31 am | Permalink Ignore this user

    THE MOST DANGEROUS GAME

    Enter the unwashed masses. Thanks in part to the proliferation of commission-free trading, Joe- and Jane-Six Pack have carved out a prominent position in the Wall Street food-chain of late, as retail investors accounted for upwards of 25% of trading volume over the summer, Joseph Mecane, head of execution services at Citadel Securities, told Bloomberg TV last week. That compares to about 10% in 2019.  

    That influx of greenhorns helped spur the revival of one bygone financial innovation: fractional share trading.  The Wall Street Journal reported Monday that digital custodial firm Apex Clearing Corp. has processed some 17 million fractional trades per month this year, accounting for 47% of total trading volume through the platform. 

    In tandem with that retail renaissance comes an explosion in options activity.  Bianco Research noted yesterday that some 1.94 million call options have changed hands using the CBOE’s rolling 22-day average, the most since 2011.  The ratio of 2.37 calls per put over that period is the highest in at least 20 years. 


  4. December 17th, 2020 at 10:36 am | Permalink Ignore this user

    AT&T – Morgan Stanley – Simon Flannery  downgraded to 34 (from 36)  overweight to equal weight - 


  5. December 17th, 2020 at 10:48 am | Permalink Ignore this user

    Good morning. Here is the replay of yesterday's webinar.

    https://youtu.be/zOMjfqt-RTs


  6. December 17th, 2020 at 10:52 am | Permalink Ignore this user

    RSS feed.

    Any updates on fixing the RSS feed?  It is still not working.


  7. December 17th, 2020 at 11:07 am | Permalink Ignore this user

    Time to load up on T


  8. December 17th, 2020 at 11:18 am | Permalink Ignore this user

    T   I'm on batman's side of the fence on this one.   Liking the pullback in HZNP though.  Manufacturing of a key drug have been stopped at a contract manufacturer to make room for Covid vaccine production.  This is a short term problem that will go away


  9. December 17th, 2020 at 11:32 am | Permalink Ignore this user

    Stockbern, 

    To me you comparing apples with oranges. T with a 7 % yield in communication  and HZNP 0 yield in Pharma. 


  10. December 17th, 2020 at 11:44 am | Permalink Ignore this user

    Yodi, its not a one or the other comparison.  I own lots of T , its just that I agree with batman.  

    HZNP, its a profitable growing company that has a temporary problem.  I can buy the 2023 $55/$70 bcs

    and sell a low strike put for a net credit.  


  11. December 17th, 2020 at 11:46 am | Permalink Ignore this user

    Phil's MO Play good today aswell 


  12. December 17th, 2020 at 11:47 am | Permalink Ignore this user

    Stockbern,

    I don't know the stock but it must have a good reason to get such high premium for the put!


  13. December 17th, 2020 at 12:08 pm | Permalink Ignore this user

    What ever happened to the UPRO position?


  14. December 17th, 2020 at 12:27 pm | Permalink Ignore this user

    Hi Phil:

    I am needing to hedge about $200k from a potential market drop.  Was looking to the TQQQ's again and wondering if the existing trade in the STP is what I should do or if you had another TQQQ spread recommendation. Thanks.

    TH


  15. December 17th, 2020 at 12:51 pm | Permalink Ignore this user

    Good morning! 

    Been working on the portfolios….

    Yes, very good article, Tx.  

    RSS/Lotter – I thought they fixed it.  Checking.

    /ES 3,700 coming around the mountain again for a shorting opportunity.  

    UPRO/Deep – I don't remember that.

    TQQQ/Hicket – Yes, I still like that trade based on the decay over time advantage. 


  16. December 17th, 2020 at 1:31 pm | Permalink Ignore this user

    -Lotter….can you please email me at andy@phistockworld.com

    to discuss the issue you are having?

    Thanks


  17. December 17th, 2020 at 1:44 pm | Permalink Ignore this user

    Phil,

    I have SPWR1 2022 10 short Puts any recommendations on where to roll them up to?

    thanks


  18. December 17th, 2020 at 1:59 pm | Permalink Ignore this user

    AT&T -1.6% as Morgan Stanley downgrades, with near-term catalysts subsiding

    Dec. 17, 2020 10:49 AM ETAT&T Inc. (T)By: Jason Aycock, SA News Editor97 Comments

    AT&T (NYSE:T) is off 1.6% in early going after Morgan Stanley cuts to Equal Weight, as the "balance of catalysts seems to be shifting towards the downside."

    The stock has rallied off some clarity on free cash flow and the dividend, the firm says. But other risks are showing up in the C-Band spectrum auction and the prospects for wireless switching.

    There's three key reasons to head to the sidelines, Simon Flannery and team write: They're "increasingly concerned' that the C-Band auction will be more expensive than expected, creating "incremental strategic and financial risk"; a robust 5G smartphone upgrade cycle next year creates risks for AT&T; and there's a lack of near-term catalysts after the company's dividend freeze and provision of early FCF guidance.

    Getting a lot of C-Band spectrum will be key for AT&T and rival Verizon, to be able to build a mid-band 5G network to compete with T-Mobile's rollout, the firm says – and early bidding suggests upside risks for AT&T.

    Morgan Stanley's base case is for AT&T to spend $7.2B for about 100 MHz of nationwide C-Band – but current bidding (auctionwide) has already paced it toward the total acquisition costs over the next three years, and bidding is still rising more than $4B per day. And AT&T may be constrained by its balance sheet, compared with Verizon.

    With high levels of consumer interest in the new iPhones, the industry could see heavier churn along with upgrade activity (and rivals are offering attractive incentives to switch away from AT&T). "Earlier this year we analyzed prior smartphone cycles with our quant team and found that AT&T's equity returns are negatively correlated with changes in smartphone sales growth."

    Morgan Stanley cut its price target to $34 from $36, now implying 14% upside.


  19. December 17th, 2020 at 2:39 pm | Permalink Ignore this user

    the UPRO play is here. Using a bid/ask midpoint for pricing (because of the wide spreads), and assuming had you entered at the prices indicated on 10/13, the spread is up $625 despite UPRO rising from 64 to 75.


  20. December 17th, 2020 at 3:11 pm | Permalink Ignore this user

    Phil/tsla

    good afternoon!

    Trying to determine how high tsla goes up tomorrow as index funds jockey in to adjust their positions to include the stock as the S&P includes it on Monday.

    can you guess from your prior experience/observations of other companies?

    Thanks


  21. December 17th, 2020 at 3:15 pm | Permalink Ignore this user

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  30. December 17th, 2020 at 3:22 pm | Permalink Ignore this user

    Phil / CHL

    https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-securities-investments-finance-communist-chinese-military-companies/

    Got an email from my brokerage that there is a closing only restriction to CEO, CHA, CHL, & CHU

    I closed my CHL position expecting more pressure on the stock. Of course, it could change with Biden as the president. 


  31. December 17th, 2020 at 4:05 pm | Permalink Ignore this user

    CHL – I closed out 1/2 my position in May at 35/ SH I should have closed all of it….  This is going to be bad for a long time….  They are kicking CHL out of ETF funds, and I expect this is just the tip of the iceberg more rtfs' will follow..  I lost another 25 % by waiting….. I see not reason. this is. not going to stay down for years if not for ever.   I see no reason why then wouldn't exit US market and move to Shanghai or HK and trade there….   I other countries will pile onto this train soon and more pain…..  Just my two cents.


  32. December 17th, 2020 at 6:11 pm | Permalink Ignore this user

    SPWR/Coulter – Do you mean the original puts?   They are not very liquid – I'd let them expire.  The regular 2022 $10 puts are $1.35 and why would I pay anyone $1.35 so I don't get "forced" to buy SPWR for $10 (about 60% off)?  Would you pay someone $2.75 to make sure you aren't forced to buy a pair of Levi's for $20?   That's how silly it is to buy back those puts.  

    I would not sell puts as SPWR is toppy at the moment.

    T/Batman – Seems like a stretch to make a case but we'll see. 

    UPRO/BDC – We forgot to enter them.  I'll put it in for tracking purposes but would have not added TQQQ if I remembered that one. 

    TSLA/Maya – I think it's going to be a "sell on the news" event.  Maybe a squeeze but then what catalyst.  More likely people take advantage and dump out into the forced buying.  

    CHL/SK, Batman - What a fantastic way to force selling and drive a stock down.  

    Options are still trading.  You can sell 2023 $27.50 calls for $4.20 and net out at $31.70, protection to $23.30 and, if you don't think that will hold – why are you waiting to dump out?


  33. December 17th, 2020 at 7:16 pm | Permalink Ignore this user

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  51. December 17th, 2020 at 7:34 pm | Permalink Ignore this user
    Why Capable People Are Reluctant to Lead
    By: Harvard Business Review