Week 34 - Aug 23 Investment Moves

Week 34 - Aug 23 Investment Moves

• Today US current market conditions @ 11:55 am (EST)
• Aug 23 Option Trades @ 11:30 am (EST)
• Fed Rate CUTS - "The Time has come".
• Opportunities during painful cycles.

Today US current market conditions

The markets are GREEN and everyone is starting to predict what will happen 6 months from now. Remember that the markets are often FORWARD-looking. If you are a day trader, forward might mean a few minutes or 2 days down the road. For other investments, it is what happens over the next few months as the "market" shifts.

One of the biggest shifts is the selling of the TECH stock and the rotation into the RUSSELL (or IWM). This has been talked about for the last 2 months especially with Tom Lee of FundSTAT predicting the IWM be around the $300 mark.

Aug 23 Option Trades @ 11:30 am (EST)

Here are my investment moves for today:

Summary:

• Adding risk to the Visa Put credit spread. I have covered calls that are at $270 and $275 strike price. So this is a way for me to get some premium-using options.
• Adding risk to the MRVL Put credit spread. Getting $18 for each contract.
• "Pair trade using Future Dividends" - This looks strange, but Ford's dividend is coming on Sept 3. The Ex and Record Date is Aug 7. I ended up selling 85 shares of Ford before the actual dividend that will come in on Sept 3. I using that proceeded to purchase 100 shares of RIOT.

This serves multiple purposes:

1. Timing with the dividend payment forces me to follow a quarterly schedule.
2. Selling before the Ex/Record Date does not make sense to me. Remember I using the dividend capture on Record Date plus some of the STOCK has the "funding" source of the new capital being deployed.
3. Selling more than the actual dividend forces me to TRIM down the original position. It might take me 2 or 3 years before it gets down to the size that I think might be right.
4. Buying a different asset that I think will outperform the one I just sold. In this case, I think BITCOIN and Riot stock will beat Ford by a wide margin if you look 5 or 10 years down the road.
5. This method follows a DCA approach. I don't worry about timing or the price of underlying stock. No stress in using this approach. Do it over and over and it will work.
6. I starting to see my QQQM position growing into $2K, and I would expect this to be worth between 20K and 30K at some point 3 or 4 years down the road.

Fed Rate CUTS - "The Time has come".

The FED has spoken while meeting at Jackson Hole.

What will happen during this new "cycle" of downward interest rates?

• Housing will switch hands. The largest owners are BABY Boomers with either pay-off homes or low-interest rate (2%-4%) mortgages. This might be the last window of opportunity to downsize into their retirement condo or smaller home. Most retirees will "cash out" of their homes to use the cash to enjoy retirement life. Housing prices will continue to drop, but that is a good thing for the next generation to buy these "larger" homes. Remember that GOVT works for the largest lobbyist group --> the baby boomers. This is not done to help 25-year-olds, but the boomers that will EXTRACT value from the housing industry.
• The Auto industry is struggling with too many $70K-$120K cars on the dealer's lot. Many of these cars are 2023 and 2024 model year with 2025 hitting the dealership now. High interest rates have stopped financing of these expensive cars. The 40K-60K market will see some demand increase as the interest rate drops, bringing 4%-6% auto loans back to consumers. I know since I have a 3.25% loan on my car. I have no reason to upgrade to another car at the moment.
• Companies will continue to downside (FIRE, LAYOFF, etc) their workforce to improve their bottom line. This is expected. We might see more involuntary layoffs for those aged 55-65, who often get a nice lump sum package to walk out the door.
• Credit Card / Personal Loan / Debt. No relief here. The cost of carrying debt is very expensive and that will continue to squeeze many middle-class families into hardship. Some of that debt is student loans, but the mortgage debt will be the biggest story of them all. We often don't think your HOME is a bad investment, but we are starting to see the cracks that are changing middle-class views. The insurance on your home has rocketed in the last few years (esp in places like Florida, and California). The property tax impacts the owner after the 2nd year of moving into that "new to you" home. The mortgage payment has jumped 10%-15% for some homeowners after moving into a new home.

Opportunities during painful cycles.

We can debate if we are in a PEAK or Recession cycle. Some might even think we are already in the RECOVERY phase. What is clear is the best opportunities are there but hard to see when you are living in the moment.

During 2010-2014, you could have moved and upgraded your home. Or you could have continued to pour money into the STOCK market and done well with that decision also. The window of opportunities is often missed because we are often only looking at life ONE month at a time. If you can see 5 years down the road, that can often help you make better decisions.

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