Monday, November 6, 2017

Week of November 6th

Sunday - Since I forgot to say anything Friday, I'll start with my uninformed thoughts on the new Fed chair Jerome Powell. From what I heard, if you liked Yellen, then you'll like Powell. He seems to be a good continuation and has been Hawkish in 4 of the last 5 votes to raise rates. Meaning he voted to raise them. Which I think is a good thing. Especially when Janet had said that the Fed's goal is to return interest rates to normalcy. Looking at the big picture, normalcy is equal to about 3% or 4%.

If that is in fact the big-picture goal, then that type of mindset is important. There are signs pointing to a strengthening economy and there are signs pointing to an inflated, false high economy. If the thought is this is a strong and strengthening economy, then this is the prime time to raise interest rates. Inflation is still below the ideal levels - levels set forth by the Fed - which could be a reason for leaving them as is. But, in the event of another recession the go-to move will be to lower them again.
You can't lower them if there is nowhere else to go. I realize Germany went negative, but that shouldn't even be a thought. That just raises a whole crop of new issues.
 - The grey bars in the 'Fred' screenshot indicate recessions. Just by doing a quick once-over, you are able to see that, especially in the last 30 years, the reaction is to lower interest rates.

Portfolio - Here is an interesting spot of news. CVS on Friday fell by 14 cents. My call position, showing Sunday night at 8:11 pm as up 8.92%. That $17.49 brings up my overall position to in the hole $144.21. Which yes, it still sucks ass and I screwed up and I think about it every time I see the price of CVS under $70, but something is better than nothing. I had bought Chipotle a while ago when it dipped to $300. That's the opposite of good right now.

To be very honest, most of my portfolio is purchases from a year or two ago that I didn't do the necessary research on and jumped in one one note of positivity. I read one paragraph or heard one little nugget on the company and convinced myself that they were going to the moon. What on Earth was I thinking? I have lost quite a bit of money. Which, in hindsight, set me up to get this started in an effort to figure out where I went wrong and how not to do that in the future. I do believe I have gotten better. Not that much better, evidently.

Moving forward there area a few areas I want to focus on and thins I want to remember.

  • If I am entering into a call option after a big market move down, it needs to be short term. Studies have been completed showing that stocks continue to trend down after bad news; on earnings or otherwise. However, I do believe that in many situations the market overreacts to news and there can be a short term upswing.
  • Take profits at roughly 20%. I did that with AMD and with BBY, but with CVS I started to get big headed. Thinking there was no end in sight. It can reach $80 a share no problem and my position will be up 60%! Dude, stop. Take the profit. 
  • Favor technical analysis for the short term and fundamental for the long term. 
  • Don't buy against the trend. 
  • When the market corrects, or we enter into a recession. Be patient, buy the dip. It won't be over in a day or even two. Patience, patience, patience. 
  • Take profits at ~20%.
  • Pay attention to the bid/ask spread.
  • Take profits at ~20%. Did I mention that?
Monday - (7:30am)A quick note before I am off to work. Last night before going to bed I bought some more crypto currencies. I've got some money in Bitcoin, Ethereum, and LiteCoin. I think the future is bright. I thought it was bright a year ago, too...just wish I had stayed invested.

At this point I am just sad. It's my own fault yada yada yada, but come one. SOME good news would be super great right about now. CVS reported earnings before market open and, even though they beat both top and bottom line estimates, they still fell by 3.50%. There are some days that just make you think. This is one of those days. Why am I doing any of this if I suck so bad. I have been thinking of just blowing up my portfolio and starting over, but I'm not exactly swimming in the dough right now. Plus, my track record is abysmal, save for a few good trades. Speculating I have done mostly okay, investing I have done poorly. I am trying, believe me. But man I just can't seem to make the right move anywhere. Talking to my friends and reading other peoples success has been hard. Especially during a time when the market has done exceptionally well. And I am still sucking. Maybe that's a sign. I'm not even getting lucky. I should just stop.

That's where I'm at today. Full of sunshine and positivity. Hope everyone else is doing something better with their lives.

Tuesday  - Yesterday I was sad. No way around it, over it, or through it. Today though! Much less sad. Let's go more in depth into my portfolio and the big movers. We'll start with my favorite and I'm sure your favorite as well. The options positions!

First off CVS. My number one. This morning before work I pulled up the Q3 presentation that they put together and it made yesterday all the more confusing for me. CVS beat on top line and bottom line estimates AND kept their projections in check with EPS growth for Q4. And yet the share price fell 3.50%. Could it have been the Aetna bid? Possibly. Another thing to note that may affect - negatively or positively - the bottom line of CVS would be the corporate tax rate. In the third quarter adjusted effective corporate tax rate was 37.9%. If the Trump tax plan goes through and the corporate tax rate is lowered then CVS would be positively impacted and help the company and ultimately the stock. Now, since all that information is already public it can be assumed that it is already baked into the current stock price. If it doesn't go through, it can also be assumed that the share price would take a dive.
Like I said earlier, today was less sad than yesterday. First of all, I did buy another call contract with the same strike and expiration date as the previous. For CVS I mean. My first contract was bought with a unit cost of $3.58. The SECOND contract was bought with a unit cost of $1.54. Give you an idea of how far down the original contract fell. My total unit cost has not been updated to $2.56. So instead of being down 48.42%, I'm only down 27.85%!! The new contract, which I bought yesterday, is up 20% after the big moves today by CVS. After moving 3.52% today, my position increased by a total of $89 buckaroos.

Secondly (I know, my transitions are killer),  is Infosys. We have had a rocky relationship so far, but it's been getting better. It went up today by only 0.17%, but my contract position increased by $25.00. All told, the overall loss (still a loss) is only down 18.27%. I'm pretty sure the spread is going to destroy me on the sell anyway, so my hopes are most definitely not up with INFY.

The other really large mover today for me was Valeant. VRX. They reported earnings this morning and evidently killed it. Finished the day up 17.11%. Gave my overall portfolio a boost of$18.54. In the grand scheme of the portfolio....not much of a kicker. It's still down over 50%. Oopsie. This increase was actually negated by my holding in Tripadvisor. TRIP. They also reported earnings this morning, or last night, but either way it fell 23.22%. Docking the portfolio a total of $64.26. Stop me if you've heard this before. It's still down over 50%.

Let's talk about Cara Therapeutics and Disney. Cara reported earnings last week and had a rough week. Today, though, I saw my position increase by $41.82 - the equivalent of 4.27%. Now, it's still down 30.53% all told, but a good day is a good day. Oopsie. I'm really hoping my original thoughts about CARA will come to fruition at some point.
News has come out that Disney is trying buy Fox. I haven't looked into it that much so I really don't know anything about it. But it seems like it's good news for Disney since their stock has appreciated since that news came out. Today it went up 0.96% and netted me $13.77 of unrealized gain. My overall investment of Disney, the largest in my portfolio, is down 2.72%.

Pretty disappointing that in this market, with such great growth in almost all indices, my holdings are down a lot. Makes ya think. Or, makes me think about how I suck and how I would go about doing it differently.  

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