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PhilStockWorld August Portfolio Review – Part 1

Actually, this is kind of part 2, as we reviewed the LTP in yesterday's Report.

The Dow fell 500 points from Tuesday's close at yesterday's low and we're not cutting back our positions because of that but we are cutting back our positions because THAT is how easily this market can fall.  We've had a very low-volume rallly, petty much for the last 18 months and the problem with low-volume rallies is they don't tend to build any support – so you can give up your gains with incredible speed.  

Yesterday's drop erased the entire month of August's gains as we got back to 35,000 on the Dow and our strong bounce line is 35,200 – which is right where we are this morning but I think we'll fail and head lower and there's no real support until 34,000 – which is only down 5% – so not a big deal, even if it happens.  

Key support for the S&P 500 is 4,200.  On the Nadaq it's 14,500 and on the Russell – back to 2,000 – 10% lower than we are now.  Although we are very well-hedged for a 10% drop – why ride it out.  We had a lot of trades in our Long-Term Portfolio that already made a lot of money and protecting those gains is expensive (hedging costs) so it's easier and smarter to just get back to CASH!!! and let September play out before jumping back in.   This is something we did almost exactly two years ago – and we certainly didn't regret that.  

Money Talk Portfolio Review:  There's not much to review here as we only adjust the MTP when I'm on the show, which I will be in two weeks.  Being up 100% is a nice place to quit and start a new portfolio but we'll decide in two weeks.  We actually lost a little ground from last month as we're now only up 95% at $195,008 from $199,489 in our last review.  As it's a touchless portfolio other than our quartely Televised adjustments, these are generally bullet-proof positions so we'll see what we can bear to part with:  

  • GOLD – This is a $17,500 spread currently with a net $1,175 credit so the upside potential is $18,675 (1,589%) at $27 in Jan, 2023. GOLD did crash down to $12.42 last March but then rocketed higher to $30.75 last August and then was back to $18.57 in February and now $19.97 so we may go lower before we go higher but the upside potential, the fact that gold (the metal) is a great inflation hedge and the fact that we REALLY don't mind owning 1,000 shares at $23 for the very long-terrm, make this one a KEEPER!

  • IBM – This is a $24,000 spread at net $17,230 so there's $6,770 (39%) left to gain if IBM holds $140 into January but we already made $25,290 as we started with a credit due to aggressive put selling that paid off already.  So we're really risking $25,290 to make $6,770 (26%) more and, though it's short-term, the risk does not justify the reward so we're going to kill it.

  • PFE – Booster shots are coming.  With 16 months to go we're at net $5,280 on the $7,000 spread but we have no imaginable danger (and we don't mind owning 500 shares of PFE at $35) and we don't need the cash so I guess this will be a KEEPER with $1,720 (32%) left to gain.  

  • SKT – Miles in the money now so we're going to get called away at $10 for $10,000 and it's now net $9,757 and they just paid us a $178 dividend, so 5 more of those is $890 and $243 more for the stock at $10 is $1,133 and that's only 11.6% and we can do better things with our money so kill it.

  • SPWR – They pulled way back and barely better than our entry on this $15,000 spread, which is currently net $3,337 so $11,663 (349%) upside potential if SPWR reclaims $25 in 16 months.  This one I'd be happy to DD on – KEEPER!

  • VIAC – I cannot believe this is cheaper than last month ($43.44).  Another one I'd rather double down on than cut.  It's a $30,000 spread and $45 is not very far away as a target – so nothing to adjust.  We're at net $7,375 despite being $18,000 in the money (I kid you not – options are FANTASTIC!) and there's $22,625 (306%) upside potential.  KEEPER KEEPER!! (our first double keeper!).  

So it looks like we're killing 2 positions (1/3) and the 4 that are left have $54,683 of upside potential between now and Jan 2023, which is a fine amount to make in any portfolio.  Even better, we are about 80% in CASH!! so we don't have to worry about a downturn and we have tons of money to shop with if there is one (or even if there is not).  

These decisions are not final until a week from next Wednesday's show but not likely to change.  Also, we will probably have to come up with a new trade – other than doubling down on SPWR and VIAC….

Future is Now Portfolio Review:  $189,227 is down $12,188 from our last review but still up 89.2% overall.  As I said last month, these are stocks of the future – not of the moment so they are going to be choppy.  We'll see how they stand up to a skeptical review in an atmosphere where I'd rather not take any risks:

  • NAK – Still a lottery ticket pending their environmental review, which is chugging along at slow speeds.  KEEPER.
  • JETS – Covid resurgence has taken away our reason for this trade.  Kill it.

  • CIEN – Well over target at net $9,665 out of $15,000 potential and we love them long-term so KEEPER with $5,335 (55%) left to gain.  
  • COWN – Very undervalued and only net $2,775 on the $5,000 spread so $2,225 (80%) left to gain and we only risk owning 500 shares.  KEEPER.

  • F – Here's we're only net $3,350 on the $15,000 spread so $11,650 (347%) left to gain.  We don't mind owning 2,000 shares of F and $15 does not seem like an aggressive target so – KEEPER.  
  • FF – Future Fuel is Falling Falling since paying out a $2.50 special dividend (the sheet is wrong – we have the old calls that are worth more) so far far but they made $3.5M last Q and they paid another 0.06 dividend.  The problem was the price of feedstock for their biofuels went up faster than they could raise prices – that's the commodities game.  More importantly, sales were up 56% and we're buying the whole company for 347M at $8.17 so we are going to roll the 15 Nov $10 calls at $1.50 ($2,250) to 30 of the Feb $7.50 calls at $1.30 ($3,900) and we won't roll the puts yet – we'll see how things play out.  The old puts are $2.25, not $4.50 so having the wrong FF options on our sheet exaggerates our loss by about $4,000.   It will fix itself when they expire.

  • IGT – Has not done well since we picked it in early July.  Seems silly as they beat on earnings by $1.38 (0.11 expected) and revenues were up 73.3% for the year and that was a 14% beat and they raised outlook.  Don't ask me why our fellow traders are such idiots but let's take advantage and roll our 20 2023 $20 calls at $4.15 ($8,300) to 30 of the 2023 $12 calls at $8.15 ($24,450) and now we're aggressively long.  If we end up hitting our target, we'll collect $45,000 on what is now net $16,150 so $28,850 (178%) upside potential at $27.  

  • SPWR – You already know it's a KEEPER, right?  It's a big position with a current net loss but $35 is still a realistic target and I'm waiting for 2024s to come out before we roll the $20 calls out.  It's a $75,000 spread and currently net $6,800 so $68,200 upside potential at $35 but let's call it $43,200 (635%) upside potential at $30 to be a bit more conservative.  

  • WTRH – They finally stopped falling.  This was intially a net $1,500 credit so our worst case is ownng 2,000 shares at $3.50 ($7,000) less the $1,500 is net $5,500 or $2.75/share.  That's our worst case and our losses are limited to that $5,500 – even if they go BK.  BUT, I see these guys signing up another fast food chain every week and I think they are just grinding it out in early stages so I'm not inclined to sell with a $3,900 loss when all we can do is lose $1,600 more.  HOWEVER – I'm also not inclined to spend more money – so we'll just give it another quarter and see how things progress.

As expected, just one position to kill and the rest will wait for the future.   There's $73,560 of potential gains (in the positions we believe in enough to assign value) and that's plenty for this size portfolio to make in the following year so no pressure.  

 


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  1. Good morning, everyone. Here is the link to today's webinar.

    https://attendee.gotowebinar.com/register/4779046398925169935


  2. Good Morning.


  3. Good morning from hot ,dry and sunny No Wisc. Might as well be in Fla; in the 90's every day, but no rain again for over two weeks. At least the lake is still cool and refreshing. 


  4. Good morning!  

    It feels good to cut back on positions – kind of like losing weight.  

    Covid everywhere and Afghanistan in chaos before we even get to leave and heat waves and droughts at home.

    The Biden administration is expected to call Wednesday for a third Covid-19 shot for Americans who were fully vaccinated with the two-shot regimen, citing the threat from the Delta variant.421 5 min read

    The cellphone carrier said the stolen data included first and last names, birth dates, social-security numbers and driver’s license information from a subset of current and potential customers. 2 min read


  5. Phil and all, had my subscription on hold while I paid off some surgery bills. Back and just wanted to say hello! 


  6. Welcome back Bdonn!  Hope all is fixed.

    I just updated the Future Is Now Portfolio (above post), only 4 more left to update…

    Indexes still hovering at the strong bounce lines but that's not a sign of strength on day 2.  

     

    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

    35,235, 4,438 and 14,990 are the current levels – not a coincidence…

    And that was my call 22 hours ago.

    • Volkswagen de Mexico (OTCPK:VWAGY +0.7%) announces that it has agreed to a 5.5% salary increase for union workers, along with a 1% increase for worker's savings funds.
    • The raise approximates the Mexican Central Bank's annual inflation prediction of 5.7%, up from its previous June forecast of 4.8%.
    • "An environment of challenges, where the automotive industry struggles to keep its recovery going after more than a year of the coronavirus pandemic, and in the face of the semiconductor shortage" led to the increased compensation, Volkswagen said.
    • Volkswagen, along with many other major automakers, was forced to cut production this year due to the global semiconductor chip shortage. Competitor Ford (F +0.9%) is moving towards an order-online-and-wait business model.
    • Canadian Solar (CSIQ +0.3%) ticks higher after shedding 17% over the past three days, as it warned that all panel imports from China risk being detained by U.S. Customs officials.
    • GLJ Research downgrades shares two notches to Sell from Buy with an $18 price target, as analyst Gordon Johnson says while Canadian Solar remains the "best house in a bad neighborhood," he sees substantial near-term downside risk from the Biden administration's actions against China.
    • Johnson foresees a "sharp hit" to Canadian Solar's near-term margins, EBITDA and cash flow as the U.S. order against "silicon metal bellwether" Hoshine – which supplies 45% of the world's solar modules, heavily weighted to Chinese producers – is "causing CSIQ's solar panels to be detained at U.S. ports, [with a potential] 7-12 months for CSIQ to develop the [capability] to prove it is not using Hoshine's material."
    • Johnson believes "the lion's share of Wall Street pundits have not yet internalized just how bad this is, near-term," for Canadian Solar.
    • Solar shares generally also may have been falling recently because of new uncertainty over the proposed $3.5T U.S. budget resolution.
    • The ongoing Covid-19 pandemic is causing Apple (NASDAQ:AAPL) to tap the brakes on its plans to move some of its China-based device production to Vietnam.
    • According to a report from the Nikkei Asia, Apple (AAPL) will  start producing the next version of its AirPods at facilities in China instead of Vietnam, as it has been doing for about two years. The company reportedly still intends on moving 20% of its AirPod production back to Vietnam at a later date.
    • Apple is also said to be putting on hold plans it had to move some of its MacBook and iPad production to Vietnam.
    • The recent rise of new Covid cases due to the Delta variant of the virus is causing the governments of China and Vietnam to clamp down travel across their nation's border, thus resulting in production and shipping delays for many consumer and enterprise tech products.
    • The change in Apple's production plans doesn't appear to include the manufacturing of iPhones. Speculation on Wall Street is growing over what Apple has in store when it unveils the next iteration of the iPhone, likely within the next month.
    • Marcie Frost, CEO of California pension fund CalPERS, said Wednesday that she sees limited upside for equity markets from current levels and has taken steps to reduce the risk of a potential correction.
    • In an interview with CNBC, Frost also revealed that the fund doesn't currently hold any cryptocurrency, but that she wouldn't be surprised if it did five years from now.
    • On her equity outlook, Frost noted that as a pension fund, CalPERS is more sensitive than many investors to downside risk and only holds about 60% of its assets in publicly traded stocks.
    • The head of the largest public pension fund in the U.S. said private-equity investments provide a better asset class at this point, so the fund is looking to make additional investments there.
    • Frost said private equity is currently outperforming public stocks due to differing management styles and "historically lofty" stock-market valuations.
    • On cryptocurrencies, Frost reported that CalPERS "does not spend a considerable amount of time" thinking about the asset class, as volatility makes it a risky investment for a pension fund.
    • However, while she isn't "bullish there yet," Frost said she wouldn't be surprised if the fund held crypto five years from now.
    • Frost isn't the only market watcher worried about downside risk in the equity market. SA contributor Kirk Spano says "a correction is due and it could be deep."

    • The Biden administration is preparing to offer a third COVID-19 shot from vaccine developers Pfizer (PFE +1.7%)/BioNTech (BNTX -2.0%) and Moderna (MRNA -1.7%) starting September 20.
    • The joint statement issued on Wednesday confirming the booster program was signed by CDC Director Dr. Rochelle Walensky, acting FDA Commissioner Dr. Janet Woodcock, White House chief medical advisor Dr. Anthony Fauci and other U.S. health leaders, CNBC reported.
    • “The available data make very clear that protection against SARS-CoV-2 infection begins to decrease over time following the initial doses of vaccination, and in association with the dominance of the Delta variant, we are starting to see evidence of reduced protection against mild and moderate disease,” the statement read.
    • The plan calls for all Americans who received Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA) to obtain a third shot eight months after their second dose.
    • A booster dose is likely needed for those who received the single-dose shot from Johnson & Johnson (JNJ -0.8%), but the plan will be announced later as relevant data are still under review, according to officials.
    • The U.S. government has reportedly acquired one billion total doses of Pfizer (PFE)/ BioNTech (BNTX) and Moderna (MRNA) vaccines.

    That's great, I look forward to being knocked out for another couple of days…


  7. Nasdaq – Just dropped 100 points in a blink.  What are you all doing on the webinar?


  8. That was us selling.  wink

    Just the Fed Minutes – they said they will be tapering a bit in the near future and that's all it takes to spook the markets.

    Currently they buy $120Bn a month in TBills and Mortgages and they are only talking about cutting it back to $100Bn/month ($1.2Tn/yr) so this is just a silly reaction but we were bound to pull back anyway.

       

    Speaking of pullbacks – Oil $65!

        

  9. Ouch, bad finish!


  10. Personal buys today: SOFI and DNUT. 


  11. Phil:  Is DIDI a keeper these days?  You suggested a play not too long ago.  I purchased the December 2022 5/10 spread.  DIDI is now $7.45.  Is this a keeper?  Thank you.