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Money Talk Tuesday – Reviewing our Televised Portfolio

$195,900.  

That's up 95.9% in less than two years for our Money Talk Portfolio, the one we we only trade quarterly in our live appearances on BNN's Money Talk but, due to Covid, we pre-tape on Tuesdays so I put up the reviews the day we're taping instead.  It's tricky to pick stocks that we aren't allowed to adjust so, needless to say, these are all trades I love but it is time to close our IBM trade – as we expected in our August 18th Review.  

As you can see from our last show (May 12th), we were at $187,000 so we've gained $8,000+ since then but we want to stay "Cashy and Cautious" coming into Q3 earnings, which we think is going to indicate a somewhat disappointing Summer as Covid began to re-surge.   We are also concerned that the Fed is going to be forced to taper soon and that the Government is not going to be able to keep spending 20% of our GDP on stimulus to maintain a 6.6% growth rate – not as we cross over $30Tn in debt the next quarter.  

That is the true cost of our record-high markets – a $3.1Tn (so far) this year).  If we pass the infrastructure bill, that's another $1Tn and we'll be over $32Tn by next June.  Our entire GDP is "just" $20Tn and 15% of it is debt financing in order to BUY our "growth" – that is why we are being cautious – it's clearly unsustainable but Japan is close to 300% of their GDP in debt yet they keep borrowing – so why shouldn't we?  

On the May show, we added trade ideas for Viacom (VIAC) and Barrick Gold (GOLD) and VIAC has been flat, but Barrick got weaker.  Despite being flat, we gained on our VIAC position as the volatility died down – a huge advantage we have in the market as premium sellers – time is always on our side on these trades.  

Since we are so much in CASH!!!, we will take advantage and improve our GOLD position and there are still bargains to be had, so we can add a couple of new ones as well:

  • GOLD – This is a $17,500 spread that's currently a net $1,150 credit so there is $18,650 of upside potential if GOLD is over $27 in Jan of 2023, which is still a very realistic target.  The Fundamentals on gold haven't changed and we still like Barrick long-term so let's just take advantage of this dip by rolling the 2023 $20 calls, which are now $2.87, down to the 2023 $15 calls at $5.65 for net $2.78 so we're buying $5 of intrinsic value for $2.78 – a 44% discount!  That widens our spread to $30,000 and our initial outlay was $2,950 so now we're in for net $9,900 with $20,100 of upside potential.  

  • IBM – This is a $24,000 spread at net $16,570 and, if we were able to trade it every day I'd let it ride as we can make another $7,430 if IBM holds $140 into January but we're worried about the market and we already have a massive gain so it's silly to take the risk – we're going to cash this one in.

  • PFE - Booster shots are coming.  With 16 months to go we're at net $4,765 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 $2,235 (46%) 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 $9,730 and they just paid us a $178 dividend, so 5 more of those is $890 and $270 more for the stock at $10 is $1,160 and that's only 11.9% and we can do better things with our money so we're going to cash this out.  .

  • SPWR – They pulled way back and barely better than our entry on this $15,000 spread, which is currently net $3,612 so $11,388 (315%) upside potential if SPWR reclaims $25 in 16 months.  When the 2024 calls come out we are going to roll out our long calls and get more aggressive but, for now, this is great for a new trade as well.  

  • VIAC – I cannot believe this stock is so flat.  They just made $1.036Bn last Q after making $911M in Q1, so on pace for making $4Bn this year and, at $40, you can buy the whole company for $26Bn, which we would love to do!  This is a $30,000 spread we paid net $4,600 for and now it's net $9,175 so we still have $20,825 (226%) left to gain at just $45 so this too is fantastic for a new trade – even though we're already up $4,575 (99.4%) – aren't options fun?  

So here we have 5 remaining spreads with $54,548 of upside potential, another 50% gain on our originally $100,000 portfolio but we're only using a small amount of our buying power so we're in a great position to add a couple of new trades to the mix:

Getting rid of IBM has left us with only SPWR for tech so let's pick up Hewlett-Packard (HPQ) who had great earnings but sold off a bit as the CEO warned of supply constraints due to ship shortages.  While it may cause short-term problems, as long-term investors this is an opportunity!  $29.74/share is only $35.75Bn in market cap and HPQ drops over $4Bn to the bottom line fairly consistently so a p/e under 10 for one of the bluest of blue chip corporations sounds good to me and we can leverage our upside using options as such:

  • Sell 20 HPQ 2023 $27 puts for $3.30 ($6,600) 
  • Buy 40 HPQ 2023 $30 calls for $3.75 ($15,000) 
  • Sell 40 HPQ 2023 $35 calls for $2.10 ($8,400) 

Here we have a $20,000 spread for net $0 so we have the whole $20,000 of upside potential if HPQ is over $35 in 16 months.  Our worst-case, since we are using no cash, is to be assigned 2,000 shares of HPQ at $27, 10% below the current price – and we already think $30 is a bargain!  

On-line sports betting is legal in most of the US now and Boyd Gaming is poised to take advantage of that with 28 low-rent casinos that make very good money ($500M) already yet you can buy the whole thing for just $7Bn at $62.  Even better, they only lost $135M last year so we're not terribly worried about another shut-down either.  With way lower operating costs than their peers, BYD is poised to win big on sports betting.

  • Sell 10 BYD 2023 $50 puts for $6.50 ($6,500) 
  • Buy 20 BYD 2023 $55 calls at $16 ($32,000) 
  • Sell 20 BYD 2023 $75 calls for $8.50 ($17,000) 
  • Sell 5 BYD Jan $70 calls for $4 ($2,000) 

That's net $6,500 on the $40,000 spread that's $14,000 in the money to start so the upside potential is $33,500 (515%) at $75 or better.  We made a 1/4 sale of short calls using 144 of our 508 days.  Three more sales like that and we have a free spread so no reason to press our luck.  Worst case is owning 1,000 shares at net $56.50 – still 10% off the current price.

That's another $53,500 of upside potential on our two new trade ideas so now the Money Talk Portfolio has the potential to make another $108,048 between now and Jan, 2023.  Remember, this is a no-touch portfolio – we're stuck with these trades until the next time I'm on the show, probably around Thanksgiving for my annual Trade of the Year pick.  

CASH!!! is our hedge in this portfolio – we have plenty of it on the sidelines.  

 


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  1. Phil/RIO

    In one of our portfolios we had RIO Jan 23 puts and BCS, did we close it or leaving it?


  2. Good Morning.


  3. Good Am. Just heard So Lake Tahoe is being evacuated. 600 have already left as the fires continue to advance. Waiting to hear from relative, but such a beautiful area. Just makes me sick. Our fires in BWC were doused with three days of rain as we were so ours are dampened though still closed down up there. It was 48 this AM so thankfully, hopefully the heat has broken. The good with the bad.


  4. It will be weird to ski in charred woods…. :(



  5. 1020-the upside-no trees to hit, but maybe hidden stumps? This climate change has discussed since the early 70's? And here we are reaping the rewards of doing nothing to forestall it. My sister said to me when I voiced this ultimate doom scenario, 
    " We won't live long enough to experience it. I'm not worried."" In this case I wish she were right. Since then her 1 Mil dollar cabin burned to the ground in Colorado when it was just finished & only2 years old. Was that 8 years ago. It overlooked Roosevelt National Forest with gorgeous views. They didn't rebuild as their insurance company ripped them off. No worries.


  6. Best Beavis Fire GIFs | GfycatGood morning!

    Indexes took a little dip this morning but we came back a bit because Consumer Confidence was so awful it's likely to keep the Fed on the table for a lot longer.

    • Aug. Consumer Confidence: 113.8 vs. 123.0 consensus and 125.1 prior (revised from 129.1).
    • Present situation index: 147.3 vs. 157.2 prior.
    • Expectations index: 91.4 vs. 10.38 prior.
    • "Consumer confidence retreated in August to its lowest level since February 2021," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. "Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a

    How's that for a ridiculous reason to bounce?

    • Aug. Chicago PMI:  66.8 vs. 69.8 consensus and 73.4 prior.
    • While still a strong print, it's the weakest level in four months. "New Orders languished markedly," write Lee Commons and Irene Prihoda from MNI, and Order Backlogs tumbled 14.1 points.
    • Prices Paid, meanwhile, rose to the highest level since December 1979.

    This is how long ago that was – these were the top songs:  

    477November 24"No More Tears (Enough Is Enough)"Barbra Streisand and Donna Summer[47]December 1[48]478December 8"Babe"Styx[49]December 15[50]479December 22"Escape (The Piña Colada Song)"Rupert Holmes[51]December 29[52]

    NFP expections have come down from 900,000 to 750,000 so far – I think less.  

    • U.S auto sales are forecast to fall about 9% in August due largely to a tight supply market amid the ongoing chip shortage and supply chain slowdowns.
    • Naturally, lower supply means higher prices in the market. Checks by JPMorgan indicate average transaction prices in the U.S. will set a new monthly record of over $41K in August, driven by continued beneficial mix and by an expected -55% Y/Y plunge in industry-wide incentive spending amidst the shortages. That pricing tailwind should be kept in mind for automakers like General Motors (NYSE:GM), Ford (NYSE:F), Stellantis (NYSE:STLA), Honda (NYSE:HMC), Toyota (NYSE:TM) and even Tesla (NASDAQ:TSLA) if the volume numbers look disappointing.
    • JPMorgan expects new vehicle prices could rise as much as +16% Y/Y in August to accelerate from the +13% pace in July. The impact of Hurricane Ida on petrochemical availability and pricing is also in the mix. The hurricane may have also damaged a large enough number of cars in New Orleans and other larger cities to move the meter. The  upward pressure on new and used vehicle prices and rental car prices as demand for replacement cars grows is seen potentially benefiting LKQ Corporation (NASDAQ:LKQ) and Avis Budget (NASDAQ:CAR), while surge costs can in some cases offset the obvious benefit to revenue for a company like Copart (NASDAQ:CPRT).
    • The biggest gainer in the auto sector on the day is Lightning eMotors (ZEV +14.7%) after its new bus deal. Meanwhile, Hyzon Motors (HYZN +3.4%) is higher after Wedbush reiterates its bull case on the stock. Nikola (NKLA +2.4%) and Electric Last Mile Solutions (ELMS +2.5%) are also notable advancers, while Li Auto (LI +3.3%) is leading the Chinese EV sector.
    • The auto manufacturer with the biggest year-to-date share price gain? It is not an electric vehicle startup, but a company founded in 1945.
    • China is reportedly looking at banning some of its leading e-commerce companies from doing business in the country if they fail to abide by its intellectual property laws.
    • According to a report from Bloomberg, China's State Administration for Market Regulation has drafted a change to the country's e-commerce law that calls for more restrictions on companies if they fail to address serious IP violations of vendors that use their e-commerce platforms. At the extreme, companies such as Alibaba (NYSE:BABA) and Pinduoduo (NASDAQ:PDD) could have their business licenses revoked if they don't act accordingly against IP violators.
    • The report said the Chinese regulatory body is seeking opinions on the proposal until Oct. 14.
    • Among U.S.-traded Chinese companies, Alibaba (BABA) shares rose 2.7% on Tuesday, while Pinduoduo (PDD) was up by 1.5%, Baidu (NASDAQ:BIDU) edged up by 0.6%, JD.com (NASDAQ:JD) rose by 1.5% and DiDi Global (NYSE:DIDI) was off by 1.1%.
    • Last week, a report from the Wall Street Journal said China is considering prohibiting the country's big-data tech companies from holding IPOs in the U.S
    • Walgreens (WBA +2.2%) will stock US WorldMeds' Lucemyra (lofexidine) for symptoms of opioid withdrawal beginning Sept. 1.
    • Lucemyra is the only FDA-approved, non-opioid, non-addictive treatment for the condition.
    • Eligible patients with commercial insurance will pay nothing for a Lucemyra prescription. Those without insurance may be eligible to pay $300.
    • Verizon (VZ +0.6%) has launched its private edge computing solution as an on-premises option for business, tapping into Microsoft's (MSFT -0.2%) Azure Stack Edge.
    • The cloud computing platform solution uses Verizon's 5G Edge and Azure Stack Edge for on-premises computing and storage services. Businesses such as retailers and logistics partners can use it for near real-time information processing to increase inventory accuracy, cut downtime and gain end-to-end visibility across all processes.
    • Verizon noted that Ice Mobility, a logistics company, has used Verizon 5G Edge with Azure Stack Edge for computer vision-assisted product packing to improve site quality assurance. The firm is exploring more 5G applications with computer vision and 5G Edge investments for automation enhancements.
    • Sampath Sowmyanarayan, Chief Revenue Officer of Verizon Business, said, "Our partnership with Microsoft brings 5G Edge to enterprises, dropping latency at the edge, helping critical, performance-impacting applications respond more quickly and efficiently. 5G is ushering in next-generation business applications, from core connectivity to real-time edge compute and new applications and solutions that take advantage of AI transforming nearly every industry."
    • GoPro (NASDAQ:GPRO) lands a patent from the United State Patent And Trademark Office for systems and methods for determining predicted risk for a flight path of an unmanned aerial vehicle.
    • GoPro's USPTO filing: "This disclosure relates to systems and methods for determining predicted risk for a flight path of an unmanned aerial vehicle. A previously stored three-dimensional representation of a user-selected location may be obtained. The three-dimensional representation may be derived from depth maps of the user-selected location generated during previous unmanned aerial vehicle flights. The three-dimensional representation may reflect a presence of objects and object existence accuracies for the individual objects. The object existence accuracies for the individual objects may provide information about accuracy of existence of the individual objects within the user-selected location. A user-created flight path may be obtained for a future unmanned aerial flight within the three-dimensional representation of the user-selected location. Predicted risk may be determined for individual portions of the user-created flight path based upon the three-dimensional representation of the user-selected location."
    • Shares of GoPro are up 1.83% on the day and are showing a 19% YTD share price return.
    • Morgan Stanley's annual "Vintage Values" collection gathers a list of stocks to hold for 12 months: "mid- to large-caps likely to realize superior risk-adjusted returns over the next year."
    • It's the 12th year in a row that the firm has put together the list, and it starts with asking each North American analyst for their top pick under those criteria.
    • The resulting list of 60 names got a look from the research department's Stock Selection Committee working with the U.S. Equity Strategy team, Morgan Stanley says.
    • And they looked at a wide variety of factors, including macro exposure, industry positioning, valuation, and "crucially" the risk-reward profile – as well as quantitative ranking, and even ESG scoring.
    • Looking back at last year's performance, the firm says its 2021 list produced a 44.2% return from Aug. 20, 2020 to Aug. 20, 2021 – outperforming the S&P 500 by 903 basis points.
    • And turning to this year's list brings 15 stocks total. It's biased toward high-quality stocks, Morgan Stanley notes, adding the group is also less expensive than the market on price/earnings, price/sales, and several price-to-cash flow measures. It also has a beta under 1, the firm notes.
    • It favors large-caps. And it's roughly balanced in terms of style: 33% of the list is classified as "Growth," while 27% is classified as "Value."
    • And by Morgan Stanley's sector classifications, Technology is well represented with four names, starting with Microsoft (NASDAQ:MSFT), where "commercial cloud and expanding margins drive underpriced teens earnings growth." In that sector, Microsoft is joined by fellow picks Cognizant Technology Solutions (NASDAQ:CTSH)NCR and Visa (NYSE:V).
    • Consumer Discretionary/Industrials is next-most represented with three stocks – and an interesting inclusion in Ferrari (NYSE:RACE). It's a leading luxury brand with high-quality earnings and a path toward electric vehicles, along with a 12-month-plus customer order book, the firm says.
    • It's joined there by Johnson Controls International (NYSE:JCI) and Northrop Grumman (NYSE:NOC).
    • Four other sectors are represented by a couple of names each. In Consumer Staples, that's Coca-Cola (NYSE:KO) and Mondelez (NASDAQ:MDLZ). Coca-Cola shows "compelling" risk/reward leveraged to the COVID-19 recovery, it says.
    • In Financials, the stocks are Apollo Global Management (NYSE:APO) and Synchrony Financial (NYSE:SYF). Apollo is seeing accelerating growth across its assets under management, with fee-related earnings not yet priced in, Morgan Stanley says.
    • In Healthcare, the names are Gilead Sciences (NASDAQ:GILD) and UnitedHealth Group (NYSE:UNH). Gilead has "significant downside protection" from its big cash-generating business, and "that key catalyst such as Trodelvy in HR+ breast cancer can drive the stock higher."
    • And in Media, it likes Alphabet (NASDAQ:GOOGL) and Warner Music Group (NASDAQ:WMG). For Alphabet, it says Google's websites growth is set to rebound in 2021 with "several underappreciated products driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization.
     

  7. RIO/Ravi - Top of the Market Tuesday – Cashing Out While We Can

    • 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!  

    RIO Long Call 2023 20-JAN 67.22 CALL [RIO @ $74.89 $-1.17] 15 5/25/2021 (507) $27,000 $18.00 $-6.00 $18.00     $12.00 - $-9,000 -33.3% $18,000
    RIO Short Call 2023 20-JAN 87.22 CALL [RIO @ $74.89 $-1.17] -15 5/25/2021 (507) $-13,500 $9.00 $-4.95     $4.05 - $7,425 55.0% $-6,075
    RIO Short Put 2023 20-JAN 67.22 PUT [RIO @ $74.89 $-1.17] -10 5/4/2021 (507) $-7,750 $7.75 $1.50     $9.25 - $-1,500 -19.4% $-9,250

    Tahoe/Pirate, Dave – That map is terrifying.  Knowing that area so well the size and scope of those fires is crazy.  How come they can make it rain in Dubai but not in Tahoe?

    Charred woods/1020 – That's how we get powder bowls though….  

    Hehe..hehe...hehe he said "wood". - Beavis and butthead | Meme Generator

    Reaping/Pirate – Wow, that sucks for her.  How ironic.  


  8. Phil/RIO – Thk u!


  9. Yes thanks for the maps. It is terrifying. It looks like both fires can join together and move toward Nev. Now the roads are clogged since you can't go south down 50. Only choice is no on 50 towards Carson City or 89 no. towards Truckee. 


  10. Phil/WBA  With WBA popping over 50, would you still sugg to sell the Jan $50calls, now in the money, to cover my extra 5 '23 $40 longs? Was waiting to sell them and they've gone from $2.55 to $3.50.

    Thx




  11. US home prices soar at record pace in June




  12. Phil, is your Money Talk interview broadcast later today then?


  13. WBA/Wing – Finally getting some love.  Just keep an eye on them, you'll feel really silly if it retraces (like PETS) but finally we are getting some loving on Yodi's favorite stock!  You can always sell a few, then a few more to blend an average.

    Money Talk/Wing – Recording at 5pm (I've been pre-interviewed etc today) and broadcast tomorrow at 7pm

    Indexes drifting along.

       

    Oil at $68.50 with the holiday weekend coming.  

        

    With the high price of gas, I don't think gas stations will top off this week so tomorrow's EIA is likely to disappoint.


  14. WBA the man does not forget!!!!! Hope is the last thing which will die.