Posts Tagged ‘BRK.A’

Tempting Tuesday – As Usual

If it's Tuesday we must be bouncing!

Clearly, from the recent sell-off, we have a whole lot of bouncing to do.  Yesterday we failed our Must Hold lines on the Nasdaq, the NYSE and the Russell (the Dow never got there) and the S&P was briefly below 1,360 and recovered to end the day at 1,366 – still below our weak bounce level of 1,372.

That leaves us in the same place as we were on the 11th, when I titled the morning post – "Weak Bounces and Beige Books."  As we expected at the time, we made it to our 1,384 level on the S&P and then failed to hold it and now we come in for our 2nd tests of our 3 significant levels – 1,360, 1,372 and 1,384 – that's our range until it breaks and THEN we can make some directional bets.  

In this market chop, our best strategy has been to bet both ways and our virtual $25,000 Portfolio is now up about $16,000 for the year but that's nothing compared to our completely neutral FAS Money Portfolio, which has turned a $2,000 spread into almost $8,000 in profits in the same 4 months – just using our very simple strategy of selling premium on a regular basis:  

Last year's FAS Money Portfolio was also a great performer and it's a great time to get started following as the current position is down $706 so you sure didn't miss anything but a loss by taking up the current position.  It's a great exercise to set up a virtual portfolio and follow these trades along as we are constantly managing these positions to maximize the amount of premium we sell so it's a great practice portfolio for rolling and adjusting short positions, teaching you the value of BEING THE HOUSE!  

Woodstock for Capitalists: A Film About Warren Buffett, Charlie Munger, and Berkshire Hathaway Shareholders RallySpeaking of investing value – don't miss our contest to win 2 passes to Berkshire Hathaway's Annual Shareholder Meeting!  Hopefully we'll get a nice report from whoever wins – it's always good to get a little insight into what the Oracle of Omaha is thinking.  

My thinking is that – while our Virtual Portfolios are all performing very well this year – I still can't shake my overall feeling that the markets are very weak internally.  Today we are hoping that AAPL will save us (earnings…
continue reading


Tags: , , , , , , , , , , , , , , , ,




S&P Downgrades US to AA+ – Tied With Belgium!

Uh-oh!

Officials at ratings firm, Standard & Poor’s, said U.S. Treasury debt no longer deserved to be considered among the safest investments in the World.  S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy long-term picture for America’s finances. It downgraded U.S. debt to AA+, a score that ranks below Liechtenstein

S&P said "the downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics." It also blamed the weakened "effectiveness, stability, and predictability" of U.S. policy making and political institutions at a time when challenges are mounting.

In other words, the ship is sinking and the captain and crew are doing nothing but rearranging the deck chairs.  S&P was supposed to release this report this afternoon (Friday) but the Treasury Department caused a delay by arguing the math the S&P was using (a $2Tn discrepancy).  At 8pm, the S&P decided the Treasury was wrong and went ahead and released the report, not only downgrading our Debt to AA+ but giving us a NEGATIVE OUTLOOK as well.  Now we have to contemplate what the effect of this change may be…

Let’s first keep in mind that this was expected.  In fact, it’s ridiculous how long it took for someone to downgrade us.  JPM estimates that $4Tn worth of treasuries are pledged as collateral by borrowers such as banks and derivative traders.  The change in status from one ratings agency is unlikely to trigger any immediate covenants (a primer on Sovereign Debt Ratings)  but it may take only one more before borrowers are required to come up with many, many Billions of Dollar of cash or securities to keep their creditors at bay – essentially – it’s a margin call on America!  

Well, I say this was expected but I mean by us.  We cashed out today (see morning post) but Little Timmy Geithner, who blew his chance this week to resign with America’s credit rating intact under his watch, was on Fox News in April SPECIFICALLY stating that there was "NO RISK" that the US could lose it’s AAA rating.  Read the article or watch the video –…
continue reading


Tags: , , , , , , , , , ,




Warren Buffett’s Secret to Making 100% a Year

I love the Berkshire Hathaway annual report!  

Especially Warren Buffett’s letter to shareholders.  The report gives us a great view of the overall economy from a man who has his finger in every pot and his letter to investors gives us a very good insight as to how things are going in the various sectors his operations cover.  Most importantly, what I have learned in my own 40 years or reading Mr. Buffett’s reports (my Grandfather was a shareholder) is what should shape any long-term investing strategy:  Patience and performance.  

I often preach to members the joys of letting gains compound and our $25,000-$100,000 Virtual Portfolio, which is currently at $27,531 (up 10%) after 4 weeks, is an exercise in how to quickly compound small gains over the course of a year.  Primarily, we try to follow Warren Buffett’s Number One Rule of Investing, which is: Don’t Lose Money.  Buffett’s Rule #2 is: See Rule #1 and like us, it’s not that nothing Warren Buffett ever buys loses money – it’s just that he doesn’t ever buy things he isn’t willing to stick with UNTIL they make money.  Sure we take a few losses along the road but, by being selective in our entries, we don’t discard stocks that we carefully selected just because the market temporarily disagrees with our valuations.  

In our $25,000 Virtual Portfolio, it’s only been a month so we’ve only closed our winners so far and they were SPWRA with a 100% gain (these are option trades), INTC with a 40% gain, NFLX with a 42% gain, EDZ with a 75% gain, XLF with a 15% gain, VIX with a 50% gain, USO with a 53% gain and XLE with a 5% gain.  In 19 trading day we have made 28 virtual portfolio moves (counting each leg) and, as I said, netted a 10% return to date.  Interestingly, we’ve been playing it very cautious as we still have over $18,000 of virtual cash on the sidelines, hoping for a sign to get a little more aggressive next week.  

How, you may wonder, are we going to get to $100,000 by December with just $27,531 in February?  THAT is the lesson Warren Buffett has to give us and that lesson is COMPOUNDING RETURNS!  Since 1965, Berkshire Hathaway has returned an overall gain of 490,409% to it’s shareholders.  $10,000 handed
continue reading


Tags: , , , , , , , , , , , , , , , ,




Smart Virtual Portfolio Management III – The $1,000,000 Virtual Portfolio (Members Only)

You can't lose what you don't have.

The reverse is true for people with Millions in a stock virtual portfolio.  Phil points out that the reson you don't run a large hedge fund trying to make 100% gains is that the people who invest in those funds are more interested in what we call "preservation of capital" rather than generating wealth.  Generally, the people who have $1M of investable cash to play the markets have already achieved a great deal of success, often by taking their own risks along the way.  For most of us, $1M is hard to come by and, while we want to put that money to work – we certainly don't want it wondering off and joining the circus.

As a high net-worth investor, you need to decide how to diversify your assets to suit your long-term goals.  We're not going to get into that here – let's just say that if you want to gamble and go for some of our "more exciting" plays, perhaps allocate a portion of the virtual portfolio to those.  Whether that's 5% or 10% or 30% is up to you but it is good to fence off your risk to a sensible, manageable amount that you really can afford to lose while keeping the bulk of your market allocation well diversified and well-hedged. 

I have my own 5% Rule.  Phil's famous 5% Rule deals with the predictable movement of stocks in their trading ranges but my 5% Rule, which Phil also agrees with is simply "Do not put more than 5% of your virtual portfolio in the stock of any one company! This is so much easier said than done for many reasons!!

[1] Transition to Large Numbers

Moving from a 5 or 6 figure account to a 7 figure account has a profound impact on many traders. In fact, our friend Dr. Brett refers to the effect “performance anxiety” can have on a virtual portfolio and notes that one of the causes is the responsibility felt by traders as larger dollar amounts are traded.  Phil advocates a system of "purging" Short-Term Virtual Portfolio gains when they gets too large and shifting money into safer investments in a Long-Term Virtual Portfolio – it is good to have a strategy for balancing out your holdings, not just target goals.

While it might be acceptable to put
continue reading


Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,




Monday Medical Miracle – Health Care Finally Passes

Paul Krugman summed it up nicely:

There is, as always, a tunnel at the end of the tunnel: We’ll spend years if not decades fixing this thing.

Love it or hate it, the US has just taken a big step towards nationalized health care so maybe now we can finally stop talking about it and move on with the investing!  I think medical devices (IHI) should do well with 32M new patients – that's a play we made quite a while ago though and, like pretty much everything else in this market – they look a little toppy. 

As I noted in the Weekend Wrap-Up, we came to the decision to get back to cash on Friday, removing all uncovered bullish bets and adding our disaster plays, no longer hedges (as there's not much to hedge) but as bets that the Global markets are due for a little correction at this point.  I'm already feeling good about the decision as the futures look awful this morning (8am) as the Hang Seng dropped 2% (437 points) and couldn't get back over 21,000 during the session and has now given up all of March's gains.  The Dow is still up about 400 points in March as well – hopefully our fall won't be as violent as what the Hang Seng saw this morning.  India held up well, only losing 1% after Friday's surprise rate increase. 

The Dollar was very strong after the Health Care vote and we're sitting below $1.50 to the Pound and we've bounced off $1.35 to the Euro twice this morning – a break below there could get very interesting!  The Yen is staying down at 90.5 to the Dollar, which is a relief for Japanese exporters but I'm not sure they'll hold 90 this week.  Copper broke below $3.40 on Friday – confirming our bearish turn and is at $3.32 this morning.  Gold once again is testing $1,100 and silver failed $17 at $16.82 with $16.50 being a bearish signal for metals.  Oil dropped all the way to $79.31 this morning and we'll see if they can get back over $80 but we are going to be thrilled with our short plays (see wrap-up) in that sector

Risk aversion has come up after developments in India and Greece,” said Henrik Gullberg, a fixed-income strategist at Deutsche Bank…
continue reading


Tags: , , , , , , , , , , , ,




Another Weak Weekly Wrap-Up

This is getting tedious!

We were bearish going into the week but not this bearish.  It is unusual though that we have a weekly wrap-up with nothing but negative plays as we did last week but there was nothing very positive in the outlook after the action of the week of the 16th through the 20th, pictured here on this chart.

As I said in the last Weekly Wrap-Up: "Of course nothing beats sector specific covers against your own mix of positions but we like using the DIA puts as general virtual portfolio coverage although, as I mentioned last week, both the DAX and the Qs may now have farther to fall."  The Qs ended up dropping 8.5% for the week while the DAX tumbled 6%, underperforming other global indexes as we had expected it would.  Our hedge play , the DIA June $77 puts, which we went with at $8.22 on Friday and half covered with March $75 puts at $3.85 ended up at $9.85 and $5.40, not much improvement but accomplishing it's goal of converting a net $6.29 entry into puts that are now 100% in the money to our net entry.  At this point, every point down on the Dow is a penny we realize in intrinsic value.  Per our original plan, the $75 puts can still be rolled to 2x the Apr $66 puts, now $2.32, allowing for our long puts to be $11 in the money against the puts we sold.  The reality is more complex than that as we day-traded the covers around and rolled up the longer puts but we went into this weekend with the same bearish half-cover, not wanting to take chances after Friday's poor performance.

On Monday morning, I was not at all enthusiastic about our prospects for the week as we had the Bernanke testimony Tuesday and Wednesday and Trichet started us off with a thud by stating: ""In recent weeks we have seen the first signs of falling credit flows.  An important part of this fall is demand-driven. However…there are indications that falling credit flows reflect also supply-side factors and tight financing conditions associated with a phenomenon of deleveraging.  If such a behavior became widespread across the banking system, it would undermine the raison d’etre of the system as a
continue reading


Tags: , , , , , , , , , , , , , , ,




The Oracle Speaks – Words of Wisdom From Warren Buffett

Boy is this a tough market, even Berkshire Hathaway profits dropped 96%.

First of all, stop right now if you haven't read Warren Buffett's Chaiman's Letter in the Berkshire Hathaway Annual Report.  He can tell you a lot more about the state of the economy than I can.  Although I will go over some of the highlights of The Oracle of Omaha's 100-page report, you should read the whole thing – go ahead and read it, then come back – I'll wait… 

Berkshire Hathaway has produced a compounded annual gain in value of 362,319% since it's founding in 1964, about 10 times what you would have gotten investing in the S&P 500, roughly a 20% annual growth rate.  Included in that figure is a 9.6% decrease in book value last year, the first loss since 2001 and the second loss EVER.  The average S&P company dropped 37% of their book value in 2008 and this year is looking worse already.  "By the fourth quarter," says Mr. Buffett, "the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear."

Buffett does not provide a positive outlook, he expects a rough 2009 and "for that matter, probably well beyond" but that does not shake his outlook that, over time, investments made today will pay off in the future.  He has a quote that is almost identical to one of mine: "Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down."

Commentary on the housing market was: "The 1997-2000 fiasco should have served as a canary-in-the-coal-mine warning for the far-larger conventional housing market. But investors, government and rating agencies learned exactly nothing from the manufactured-home debacle. Instead, in an eerie rerun of that disaster, the same mistakes were repeated with conventional homes in the 2004-07 period: Lenders happily made loans that borrowers couldn’t repay out of their incomes, and borrowers just as happily signed up to meet those payments. Both parties counted on “house-price appreciation” to make this otherwise impossible arrangement work. It was Scarlett
continue reading


Tags: , ,




 
 
 

Zero Hedge

Three Shot In Times Square Including Four-Year-Old Girl

Courtesy of ZeroHedge View original post here.

New York's Times Square was temporarily cordoned off on Saturday after at least three people were injured in a shooting, according to NBC News, citing police. The suspect, pictured below, was caught on camera.

Earlier today, 3 people were shot in @TimesSquareNYC, including a 4-year-old child.

Help your @NYPDDetectives identify the man pictured below — they want to talk him about the incident.

Call...



more from Tyler

Phil's Favorites

How big is this crypto boom?

 

How big is this crypto boom?

Courtesy of John Hempton, Bronte Capital

Google Trends doesn't predict stock market rallies, well somtimes it does. But more likely it is coincident with them, the suckers at the end of the boom being the biggest (yet) wave of retail buyers.

Here is a five year trend for the phrase "how to buy stocks" for the USA.

 

It has two peaks, one at the height of t...



more from Ilene

Digital Currencies

How big is this crypto boom?

 

How big is this crypto boom?

Courtesy of John Hempton, Bronte Capital

Google Trends doesn't predict stock market rallies, well somtimes it does. But more likely it is coincident with them, the suckers at the end of the boom being the biggest (yet) wave of retail buyers.

Here is a five year trend for the phrase "how to buy stocks" for the USA.

 

It has two peaks, one at the height of t...



more from Bitcoin

Biotech/COVID-19

India COVID crisis: four reasons it will derail the world economy

 

India COVID crisis: four reasons it will derail the world economy

India is the fifth largest economy in the world. Deepak Choudhary/Unsplash

Courtesy of Uma S Kambhampati, University of Reading

The second wave of the pandemic has struck India with a devastating impact. With over 300,000 new cases and 3,000 deaths across the country each day at present, the total number of deaths has just passed the 200,000 mark – that’s about one in 16 of all COVID deaths across the world....



more from Biotech/COVID-19

Chart School

Yellen can not stop the dollar decline

Courtesy of Read the Ticker

Printing money results in a lower currency, so long as the currency does not fall too fast.

Previous Post: US Dollar Forecast - Weakness

Here are the very strong fundamentals for a lower US dollar: 

(a) US inflation exploding.
(b) Massive US twin deficits.
(c) Better conditions in Europe.

However French election worries in 2022 Q1 and Q2 may provide US dollar strength (via European weakness) after Christmas, but this strength may come after a low in the DXY near $84.  

It looks like Yellen knows a down swing in the US dollar is near because ...

more from Chart School

Politics

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

 

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

Over the past few decades, hundreds of millions of Chinese citizens have become part of the middle class. AP Photo/Ng Han Guan

Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology

China’s large and impressive accomplishments over the past four decades have spurred scholars and politicians to debate whether the decline of the West – including the ...



more from Politics

ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



more from ValueWalk

Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



more from Kimble C.S.

Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



more from M.T.M.

Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



more from Promotions

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.