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!

Top of the Market Tuesday – Cashing Out While We Can

TIME TO PROTECT CASH – Aid EssentialsAnd we're out!  

Our Long-Term Portfolio hit $2,027,896 yesterday, which is up $1,527,896 (306%) since we started the portfollio with $500,000 back on October 1st of 2019.  We had cashed our previous LTP with about $2M as well as I was worried that the market was overbought and we didn't have a correction until March – and that was due to the virus, not really a proper market correction.  Then the stimulus made every trade a winner so here we are – back at $2M again and we're not 100% cashing out but we are paring back our positions significantly.  

The LTP is already over 50% in CASH!!! so cutting 1/2 of our positions should bring us to about 75% CASH!!! and then the CASH!!! is our hedge – as we've got tons of money to go bargain-hunting if there is a sell-off and, if there's not – well clearly we know a lot of ways to win.

I started the LTP Review in yesterday's Live Member Chat Room and we'll finish it up here this morning:

Long-Term Portfolio Review:  $2,027,896 is $68,608 since our June 15th review.  Keep in mind we only started this portfolio with $500,000 on 10/1/19 so $68,000 is 13% of our original base in a month!  That's the value of compounding your gains but, unfortunately, we're also compounding our risks and that is making the hedging more and more expensive to protect ourselves.  The STP is, in fact, back down to $90,000 as it took a huge hit from CMG and, of course, the index hedges so, on the whole – we're at the same $2.1M we've been at for the whole summer.  

Still, the question here is whether or not to cash out the LTP and today is one of those days when you do feel like it's silly not to participate in this market as it does seem to bounce back from anything.  Also, I don't have a great alternative to put the money – that's another issue.  What would we do with $1.5M if we cashed in and started from scratch.  I guess I'd buy a lot of T and VZ and GOLD and SPWR – but those are positions in the LTP already and the LTP is already over 50% in CASH – so perhaps what we need to do is just cut back our downside risk?   Let's see…

  • AFL – Downside is owning 1,000 shares of AFL at $50.  So far, we made 20% in two months but we have to consider the risk of being forced to buy $50,000 worth of shares and how it limits our ability to adjust the portfolio.  In a risky market, unless we're dying to own the stock – it's too much risk for too little reward so we'll kill it.
  • AKAM – Already up 65% so why risk anything?  Kill it.

By the way, the trades we kill in the LTP pretty much automatically go onto our next Watch List.  

  • BA – $100,000 - Kill it.
  • BCS – Only risking owning $20,000 worth at net $7.90 and we can make $3,000 more so KEEPER! 
  • CIM – If we are forced to buy 2,000 shares for net $12, the $1.32 dividend would be 11% before we even sell more puts and calls.  KEEPER!
  • DISCA – Bad consumer sentiment means kill it.

  • ENVA – Too cheap to kill.  KEEPER!  
  • F – $60,000 is too much bulk.  Kill it.  
  • FRO – Net $3.70 would be a shame if we don't get assigned.  KEEPER!  
  • GS – Up 86%, kill it.
  • HAL – 2,000 shares at net $17 is actually appealing.  KEEPER!
  • HMY – Up 75%, kill it.  
  • ING – Up 52%, kill it.  
  • KBH – 1,000 shares at net $30.10 is a KEEPER. 

  • LABU – Interesting pullback.  If we didn't already have them, I'd be selling puts now.  Might actually make a full play out of these.  KEEPER!
  • M – Those are done, kill it.
  • MFGP – Not much risk here so KEEPER!  
  • OIH – Good enough, kill it.  
  • PETS – Brand new, KEEPER! 
  • RRD – Up 50% already, kill it.
  • TD – About halfway, kill it.  
  • YETI – Up 22.9% in a month, very nice.  KEEPER!  

So we got rid of 12 of 22 short puts and especially our expensive ones.  That means we'll have more buying power if there is a downturn so we've increased our margin of safety considerably without spending any money.  

  • CIM – As noted above, we love them and we love the dividends and we get called away 33% below the current price so, no worries.
  • SKT – Pulled back off $20 but we love them.  Just paid us an 0.178 dividend too!  
  • TTE – Love them too but we'll be called away at $40 and done with it.

  • APO – So undervalued, have to keep them.  
  • BABA – Big pain recently.  This company is at about 1/2 their proper value. Last Q showed great growth but everyone is freaking out about China but I don't think they are out to destroy tech companies (not all of them).  Going to let it ride.  

  • BIG – Not very exciting.  Kill it.  
  • BRK.B – Miles in the money.  Kill it.
  • CHL – Stuck with these.  
  • CSCO – $56,000 out of $60,000.  Kill it.
  • DOW – Brand new.  KEEPER!  

  • FB – This one is an income-producer so it's a KEEPER!  
  • FNF – $9,000 out of a potential $12,000, kill it.
  • GILD #1 – Too good to kill and 50% more to gain so KEEPER!  
  • GILD #2 – $80,000 out of $100,000 potential would be silly to risk – even though I love it.  Kill it.  

  • GOLD – Can't kill this one, I want MORE!  KEEPER!  
  • HBI – $7,000 out of $20,000 potential with a low-risk of ownership.  KEEPER!  

  • HPQ – Brand new.  KEEPER! 
  • IBM – $35,000 profit, $140,000 if we're forced to own it.  Killl it.  
  • INTC – Can't kill our Trade of the Year, can we?  Let's buy back the short puts to remove any danger and that leaves us net $53,000 on the $75,000 spread.  We started with net $15,750 so already up 200% but $22,000 more to gain BUT if we're buying back the puts we're in for $21,000 and a $30,000 with $17,000 left to gain…  Damn, we have to kill it.  The problem is we can easily make 30% on $50,000 over 18 months - so why leave it in any trade that not going to triple up for us?  

  • LYG – I like it but kill it.
  • MMM – Kill it.
  • MO – They pay a 7% dividend so we wouldn't mind owning them which means there's really no downside.  KEEPER!  
  • MU – Let's just keep the short puts and see how that goes.  We don't mind starting a new position at net $55 and, if it goes lower, we'll just buy a nice, lower-strike spread.  If it goes higher, we get paid $7,000 for not owning them.

  • NRG – $22,000 out of $34,000 potential but we started with $4,000 so it's a "bird in the hand" situation.  Kill it.  
  • PAA – We're effectively half cashed out anyway and enjoying the 7.5% dividend so KEEPER!
  • PBR – Glad to get out of the energy sector with a nice profit.  Kill it.  
  • PFE – $32,000 out of $35,000.  Kill it.

  • PHM – Can double up if it stays flat so KEEPER!  
  • QSR – Small entry and we'd REALLY like to own them for net $54 so KEEPER! 
  • REYN – We just doubled down on these so KEEPER!  

  • RIO – They just paid out a special dividend and screwed up all the options and that's why the stock dropped.  There's nice upside here so KEEPER!  
  • SPWR – You know I'm not letting go of SPWR at $22.  KEEPER!  This is a $112,500 spread at $35 and it's currently net $4,688 so $107,821 (2,299%) upside potential over the next 18 months while Biden is pushing solar and SPWR is headquartered in San Jose.  
  • T – Another 7% dividend we don't mind getting so there's no downside to being assigned and for 15 years we've been buying T when it's under $30 so why stop now?  KEEPER!  

  • TROX – Plenty left to gain and I love them.  KEEPER!  
  • UBS – It's only a $12,500 spread at net $10,000 so no point.  Kill it.  
  • VIAC – We're aggressively long.  KEEPER!  
  • VLO – Not excited about it.  Kill it.  

  • VTRS – Kill it.
  • W – That's a short so KEEPER!
  • WBA – I love them but net $64,000 out of $75,000 potential means kill it.  
  • WPM – Another one I love but only $7,500 out of $30,000 potential is a KEEPER!  

  • WU – I'm not excited enough to keep them so kill it.

So we've cut about half the portfolio and moved to about 80% CASH and I'm much more comfortable riding out the correction like this than having so many (42 full and 22 short puts) to have to worry about.   We'll be making similar adjustments to our other portfolios as the week goes on.

 


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!  

    A note to all our Members, we've cashed out about 50% of the LTP and have moved to 80% CASH!!! – something we intend to do with all our Member Portfolios.  

    I think the market risks currently outweigh the rewards of sticking it out and all cash does is allow us to find more bargains to buy (see our recent Top Trade Alerts for examples).  

    Check in on Member Chat this week as we'll be reviewing all the portfolios and then we get to make a new Watch List featuring most of the positions we're cutting.  Remember – Watch List + Patience = Profits!  

    Be careful out there….


  2. Good Morning.


  3. Phil/WHR:

    Hey Phil.  On July 16, you called for a play on WHR for the LTP: 

    Because the sector is out of favor, this baby has been thrown out with the bath water but $223 is only $14Bn in market cap for a company dropping $1.5Bn to the bottom line with probably 5% sales growth.  They pay a 2.5% ($5) dividend but I just like the good old options play for the Long-Term Portfolio:

    Sell 5 WHR 2023 $200 puts at $25 ($12,500) 

    Buy 20 WHR 2023 $200 calls for $42 ($84,000) 

    Sell 20 WHR 2023 $230 calls for $28 ($56,000) 

    That's net $15,500 on the $60,000 spread that's currently $44,000 in the money.  The upside potential is $44,500 (287%) at $230, which is very conservative.  Of course we'll sell some short calls along the way but let's see earnings first.  Selling just 5 Sept $230 calls for $7.50 would bring in $3,750 for 63 of the 553 days we have to sell, so we're in no hurry.  

    I didn't notice it in the portfolio, what are your thoughts on this play?  Keeper or kill?


  4. WHR/Kinki – I must have missed logging it.  Will include it for next time.  KEEPER!


  5. Phil / VTRS – this was a new position I thought, surprised you killed it. I didn't get in when you did so waiting for an opportunity. Just verifying if I should abandon it. TIA


  6. Phil / DIDI / BABA,

    Did we not have DIDI in the LTP? Also, are you considering any kind of rollout with BABA at 175?


  7. Phil

    Did we not have GM in the LTP ?   

       Jan 2023 $35 PUTS

       Jan 2023 $35/$55 CALLs


  8. Phil/WHR: Cool.  Thanks alot.


  9. Phil:June 14. "AAPL/Wing – I'd rather have the 20 uncovered and be more flexible.  You can always sell to cover if $150 fails.   Also, if you want to be braver, you can leave 20 uncovered longs and sell 20-40 short-term calls for income whenever you feel AAPL is toppy.  

    Rather than selling +20 June $22 $160s for $12.25 ($24,700 over 338 days), you can sell 20 Sept $150 calls for $6.20 ($12,400 over 65 days) 5 times for $60,000.  If you get caught to the upside, you simply THEN roll to  20 of the June $160s but if AAPL goes lower, you can sell 20 $140s for $5 ($10,000) and put a stop on the $150s and wash, rinse, repeat – giving you finer control of the position as it moves up and down."

    I liked your June plan so much I bought back 20 of the short '22 $160 calls I'd already sold (before I saw your note). With AAPL at new highs, would this be a good time to sell some calls? Maybe 10 Nov $155s ($6.2) & 10 Nov $160s ($4.80)?

    PS Thx for PFE sugg btw .. twisted my brain cell a bit. Did end up rolling out my 20 short '23 $40c to $50s for $3.89 using the drop in PFE. Converted the $10 spread into a $20 spread (20 $30/50), spent $7.78k to make (possible) extra $20k. Threw a bird in the hand into a bush but it came back with a friend ;)  

    Hope you would approve .. 


  10. Apple's Stocks App not working today ..  



  11. VTRS/Jeddah – Erroring on the side of caution so killing anything I'm not very excited about.

    DIDI/Jij – Sometimes I miss entering something I intended to but you'd have to remind me when we entered it.  

    BABA/Jij – I'm waiting for 2024 options to come out.  Meanwhile, watching and learning…

    GM/Hicket – Same deal.  If we did there is no reason to hold it.

    AAPL/Wing – I would certainly do at least a partial cover – better safe than sorry at the moment.  Good job on PFE  – and good timing.




  12. Biden Was Right


  13. Taliban announce ‘amnesty,’ urge women to join government



  14. VIAC/Phil

    I’m curious why you wouldn’t close short calls on something like VIAC right now with the thought of selling more if this bounces up? 


  15. Phil I see you are closing my favorit play WBA


  16. No turnaround so far today.

    VIAC/Swamp – I don't think $60 is a realistic target by January so why pay even $500 to close them out – especially as a 1/3 cover?

    WBA/Yodi – Regardless of previous losses, THIS position is up $46,000 so we're done – for now.  Can't wait to get back in!

     

     

    • Rising global temperatures and sea levels are creeping into debt rating calculations.
    • Moody's Investors Service downgrades the Government of Maldives long-term local and foreign currency issuer ratings to Caa1 from B3 (seven levels below investment-grade) and changes its outlook to stable from negative.
    • Overall, Moody's lowered the rating because the government's fiscal strength deteriorated faster than the ratings company initially expected, in a large part due to the pandemic. That has required the government to spend more.
    • In the near term, GDP growth is expected to rebound to 19% growth in 2021 and 2022. Debt burden, though, will only gradually recover to 107% of GDP by 2024 from 117%, Moody's said.
    • But Moody's Nishad Harshit Majmudar points to the fiscal risks the Maldives faces from climate change. "The government is also likely to continue investing in infrastructure to improve resilience to the effects of climate change, including rising sea levels. These projects, while additive to the country's productive capacity, are likely to drive sustained levels of external borrowing."
    • SA contributor Jason Kelly sees little climate change risk for the the S&P Small Cap 600, S&P MidCAp 400, and Nasdaq 100.

    With more than 80 percent of its 1,190 coral islands standing less than 1 meter above sea level, the Maldives has the lowest terrain of any country in the world. This makes the archipelago in the Indian Ocean particularly vulnerable to sea level rise.

    With global sea level rising 3 to 4 millimeters per year, and that rate expected to rise in coming decades, some analysts anticipate a grim future for the Maldives and other low-lying islands. One study concluded that low-lying islands could become uninhabitable by 2050 as wave-driven flooding becomes more common and freshwater becomes limited. The Intergovernmental Panel on Climate Changes anticipates sea level could rise by about half a meter by 2100 even if greenhouse gas emissions are sharply reduced or rise up to 1 meter if greenhouse gas emissions continue to increase strongly.

    Climate Change and Migration in Maldives — Georgetown Journal of  International Affairs

    See it while you can!

    • It's that time of the year when along with kids going back to school and football season starting up, speculation starts growing in earnest about what Apple (NASDAQ:AAPL) has in store for its next version of the iPhone.
    • The company, as is typically the case, continues to say nothing about its next iPhone plans, or even when it intends on showing off what is expected to be called iPhone 13. But, if history is any indicator, Apple (AAPL) will hold an event in either September or early October to debut the newest iPhone and all the bells and whistles that come with the iconic smartphone.
    • And with that timetable in mind, Wall Street analysts have begun speaking out with their opinions about what Apple (AAPL) might have in the works.
    • One of the latest looks at Apple comes from Wedbush analyst Dan Ives. On Tuesday, Ives said that checks with suppliers in Asia lead him to believe that Apple (AAPL) will launch the iPhone 13 at an event in the third week of September, and that the device will make up about 35% to 45% of iPhones produced during the third quarter of this year. Ives is also estimating that Apple (AAPL) will crank out between 130 million and 150 million iPhones in the second half of 2021.
    • When Apple (AAPL) reported its fiscal third-quarter results in July, the company said it sold $39.6 billion worth of iPhones in the three-month period. The company doesn't disclose iPhone unit sales.
    • Ives said that the total number of iPhones produced may change due to ongoing shortages in the chip sector, but that Apple (AAPL) remains on track for strong iPhone sales into next year.
    • "We believe this speaks to an increased confidence with [Apple Chief Executive Tim] Cook & Co. that this 5G driven product cycle will extend well into 2022 and should also benefit from a post vaccine consumer "reopening environment."
    • Among the features Ives anticipates the next iPhone will have are Lidar sensing technology across all new models, and an iPhone 13 with a massive 1 terabyte storage option. Currently, the most storage available for an iPhone is 512 gigabytes.
    • The company is also expected to other improvements to the iPhone in an effort to get customers to upgrade from their current devices.
    • Ives maintains an outperform rating and $185-a-share price target on Apple's stock.
    • Additionally, Ives believes the company will be able to navigate the pressures coming from U.S. regulators regarding anti-trust issues involving the App Store. Ives said that Apple (AAPL) "remains more on the edge rather than the center of the anti-trust spider web," involving the likes of Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB). Last week, legislators in Washington introduced a new bill that could have some impact on Apple's (AAPL) App Store business operations.
    • Ford Motor Company (F -3.6%) plans to shift its business model to one in which buyers order online from a factory and wait six to eight weeks for their new car to be delivered, rather than drive away from the dealership immediately in their new car.
    • An order based system would allow Ford to customize vehicles for their customers, reduce dealer and company inventory costs, and better manage inventory production to match consumer demands. In Europe, this approach is standard, but Americans may have to adjust.
    • A major risk of the model is that Ford may lose market share if customers decide they would rather shop at dealerships that allow them to take home their vehicle right away. “Customers like immediate satisfaction,” commented former GM executive Don Johnson.
    • Ford CEO Jim Farley said the company was committed to reaching a 50-to-60-days supply of inventory at dealerships, down from a historical average of 75 days. This would mean that roughly a quarter of Ford's sales would be factory orders, compared to nearly zero pre-pandemic.
    • "Operating with fewer vehicles on lots is not only possible, but it's better for customers, dealers, and Ford," said Farley in the company's July earnings call.
    • Competitor Volkswagen (OTCPK:VWAGY -3.8%) is also moving towards a build-to-order model and General Motors (GM -4.4%) executives said they plan to stock fewer vehicles at dealerships but didn't provide specifics.
    • The global semiconductor chip shortage has already forced Ford and other auto makers in this direction, having to delay customer orders for weeks or months until inventory is available.
    • While home inventory in July rose 4% from the previous month, the 1.3 months of supply is still the lowest for any July in RE/MAX's National Housing Report 13-year history.
    • Despite a M/M decline in home prices in July, the red hot housing market may have more room to run as the 53 metro areas surveyed in the report indicate "new listings are selling quickly" and "demand is still there," President of RE/MAX Nick Bailey said.
    • The median home price of $331K in July fell 1.2% from June's record $335K and is 16.2% higher than July 2020. No metro areas saw a Y/Y decline in median sales price.
    • Homes continued to sell quickly, though. July's average days on market of 23 was one day less than June and 21 days faster that at the same time a year ago.
    • Home sales in July were the third largest total in the report's history, but declined 8.4% from the prior month and 3.1% from July 2020.
    • "Given all the factors favoring sellers right now, it's the buyers who are driving this very active market," Bailey added. No metro areas reported six or more months of supply, which is typically considered a buyer's market, according to the report.
    • As of Aug. 12, the 30-year fixed mortgage rate is still below 3% at 2.87%, but remains elevated from 2.65% all-time lows in early-January.
    • Note that homebuilder confidence drops to a 13-month low today, pulling down home construction stocks.
    • Real estate brokerage and selling platform stocks also decline — Re/Max (RMAX -0.6%), Realogy (RLGY -2.8%), Compass (COMP -2.4%), eXp World (EXPI -2.3%), Redfin (RDFN -3.8%), Zillow (Z -3.8%).
    • Previously, (August 12) mortgage rates reverse trend on strong jobs data, first gain after three down weeks

  17. Gotta love NY:


  18. Have been closing quite a lot of short puts, not much problems with closing so far, seems to be still buyers around.

    Short put can be the worst in a drop, margins rise terrible.


  19. That's why I wanted to cut back.  

    Finally got a bounce off 35,000 on /YM

    500-point drop so 100-point bounces so 35,200 is the line to watch.  4,437 on /ES.  15,000 on /NQ

    2,180


  20. I'm doing the same as Yodi 

    consumer staples and medical/drug doing the best lately, so not closing any of those just yet 



  21. Five states set COVID-19 records





  22. Only weak bounces into the close – does not look good for tomorrow.