March 18, 2015

Don’t fight the FED.  Janet Yellen was incredibly dovish today and that sent markets soaring.  I think that will continue in the short term, so the S&P should set a new all time high soon.  I’m thinking the 2150 or 2200 range. Really, don’t fight any FED, the ECB, Japan, etc… I like Europe a bit more because they are just starting their money printing, while the U.S. is dragging its feet in raising rates. Keep drinking the Kool-aid, money is easy still.

As of March 17, the portfolio was up 3.75% while the S&P index was up 1.18%, for an out performance of 2.57%.  My last blog post on March the Alpha score was 0.619%, so its been a good two weeks.  Mostly the gain was the rebound in Baidu & Ali Baba, both of which had weighed me down but had a strong move up on March 5th which allowed me to exit Ali Baba and take a nice profit on Baidu.  There was also a nice profit before the Fed bank stress tests with some call options in Capital One Financial, a stock that consistently goes higher after the Fed announces the stress test results (i.e. 5 out of 5 times).

One thing, I purchased 2 Lumber Liquidators calls on 3/11, then sold them on 3/12, but a trading glitch cost me about $460! The options should have sold for $3.30 each, but were executed at a sale price of $1 (which you can see in the statement & look up the option price history online). So really, my alpha score should be around 2.87%…. but I’ll chalk that up to my error for not putting the trade in as a limit order.  Unfortunately, that led to some frustration and some more losses on Lumber Liquidators….not a good time to go into that battle field.  I do own some stock now, which I like because the PEG is low and the stock is oversold. The scandal will pass, people will stop licking the floors immediately!

Another position I like and am about to begin taking profits from (I did today) is with Tyson Foods which I began buying on 3/13.  Again, it had a low PEG and was in oversold territory.  So what, some bird flu discovered in Arkansas causes a massive sell off?! Sure, I’ll take that opportunity. There is so so much chicken produced in this world, that some production hiccup in Arkansas isn’t going to put a dent into chicken production.  So far, the move has been one way, strongly up. I’m looking at a total exit around $41.  I got in at $37.25 with stock & options.

I exited my position in AIG as the retracement was completed, another stock that had a low PEG & was oversold when I bought it. I bought AIG on 1/16 and sold on 3/10,  for a return of 6.14% vs the S&P 1.43% return over that time frame.

Restoration Hardware gave me a chance to exit the option that had been weighing me down, so I did on Friday the 13th!  That was a loss, like my brief entry into the airlines, American Airlines & Delta. However, I should have held them because if I did so for another week, I’d be up on those trades by almost 10%… doh!  I couldn’t take the pain and the stocks didn’t do what I expected, so I exited. Discipline is a two way street, sometimes it prevents losses, and gains.  Something that also happened with the SPY options positions two days ago…. at a loss, which I should have held to today because they would have been up, big time.

Lastly, I’ve been expanding my international position, which has served me well (except India, but I think that’ll come around).  I pared down the international positions today and went more domestic because of the FOMC’s very dovish conference about interest rates. Something I had predicted. I gained some more Alpha today. There’s no reason to raise rates any time soon. Heck I wouldn’t be surprised if we went into September or later before a rate increase is announced. Maybe even later, since the world is in a “race to the bottom” by printing money. Everyone is printing money. Something to think about for the night.

03-17-15 – Statement