World attention is moving from pandemic to climate change. Markets are moving that way too and somewhat shrugging off the inflation ogre. A quiet trading week nibbling away in Europe, getting back into oil services and clearing out dross in some altcoin portfolios - going to focus on Top 20 from here on.
Portfolio News
In a week where S&P 500 rose 1.35% to reach an all time high, my pension portfolio rose only 0.52% with big drags from Japan and Marijuana socks. Japan is no surprise ahead of Sunday election. Watch it bounce if LDP retain the majority.
Big movers of the week were Maxeon Solar (MAXN) (+23.9%), Loop Industries (LOOP) (+21.3%), Decarbonization Plus Acquisition Corporation III (DCRC) (+19.1%), Centrus Corp (LEU) (+16.3%), United States Steel (X) (+15.3%), First Solar (FSLR) (+12.6%), NVIDIA Corporation (NVDA) (+12.5%), Stem Inc (STEM) (+12.2%), Livent Corp (LTHM) (+11.9%), SunRun (RUN) (+11.6%), Canadian Solar (CSIQ) (+10.7%)
Themes are clear to see - apart from US Steel and NVIDIA all the big movers are in alternate energy/recycling ahead of the COP26 Summit. US Steel move is on the back of announcing a big stock buyback.
Inflation is bubbling along - my gut tells me it could be like the seventies all over without the hair. I am still working out good ways to trade it - maybe short the dollar.
Climate Change
World leaders (minus a few notables) are meeting in Glasgow in COP26. It feels like a complete furphy when China head chooses not to go. The 2nd largest deforesting nation in the world chooses not to go. Here in Australia the Prime Minister agrees a deal with his coalition partners for 2050 - no models exist - just words.
My portfolios are showing what to invest in - things like solar power, uranium, recycling but they are not giving big messages yet about oil and shipping and China/India - i.e., the big polluters. The reality is markets do not look that far ahead - 2030 and 2050 are a long time away.
Crypto booms
Bitcoin price tried to push higher to start but drifted lower by 7% (ignoring the spike down) finishing the week 2% lower than the open.
Ethereum moved against the trend ending 4% up but biggest mover in my portfolios was New Economic Movement (XEM) up 12%. STEEM was not far behind.
Bought
Carrefour SA (CA.PA): French Supermarkets. Somehow I landed up with 2 covered call contracts with not enough shares to cover the call if needed. Rather than buy back the sold call, I added to my holding to average down my entry price. Dividend yield. 3.1%. The covered call premium was 1.6% with price coverage of 5.8% with less than 10 days to expiry. Carrefour is a laggard with valuations well below the other supermarkets (PE of only 9.28 vs 13.57 for Ahold Delhaize (AHOG.DE) or 13.79 for Sainsbury (SBRY.L)). The other French chain Casino Guichard (CO.PA) also lags at PE of 8.58.
Deutsche Bank AG (DBK.DE): German Bank. Deutsche Bank announced earnings which exceeded expectations yet stock price dropped 6% on the day. As the bank was on the list of laggards in my analysis last week, I took the chance to buy a small parcel. This was at a 2.9% premium to the last time it was assigned in this portfolio in May 2021.
Oil Services
I read a Wall Street Journal article which highlighted the earnings gap between oil services suppliers and major oil companies. I had a look at the top 10 components of the VanEck Vectors Oil Services ETF (OIH) and did the price comparison chart to look for laggards. The chart goes back to the March 2020 lows.
I picked three of the laggards - look on the right margin - OIH was +188% - laggards are below that. I did choose to skip undersea and deep sea and Argentina. Bought small parcels of the following three.
Baker Hughes Company (BKR): Oil Services. Dividend yield 2.84%.
NOV Inc was National Oilwell Varco (NOV): Oil Services. Now emerged from bankruptcy - no dividends yet
Helmerich & Payne, Inc (HP): Oil Services. Dividend yield 3.15%
ABN AMRO Bank N.V. (ABN.AS): Dutch Bank. Shares added through dividend reinvestment program - avoids withholding tax. I will round up the holding to make it 100 share parcel to write covered calls.
Sold
ING Groep N.V. (INGA.AS): Dutch Bank. With price opening at €13.19, rolled up a December 2021 strike 12 call option locking in 21.7% profit since May 2019. This trade has survived the switch to negative interest rates by the ECB. I deployed part of the proceeds into a June 2022 strike 14 call option and averaged down my entry price on December 2021 strike 14 call option. I am sceptical about price reaching €14 by December expiry but I can double my investment if it gets half way.
Hostess Brands, Inc (TWNK): US Packaged Foods. I bought warrants with November 2021 expiry in July 2018. I received an exercise notice from my broker - yes exercise I said as I am happy to write covered calls until the market finds an exit. Message comes back saying exercise has to be done direct with the agent and requires 2 DWACs each costing $100. $200 cost for the right to buy 150 shares - I think not. So I sold the warrants and locked in 97% profit since July 2018. In TIB257, I set out the rationale and the model - in that post I wrote these words
It is the price behaviour of the warrants if price reaches the first target of $16 that interests me
Let's look at the chart which shows the warrants (orange line) plotted against the stock price (the bars) and goes back to when the stock was relisted. Price crossed the $16 target line in June 2021 and again in September and stayed above this time - the warrant price exploded - and that is what I wanted. Profit banked (and saved $200 DWAC fee).
Shorts
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. A sad story of learning how to deal with volatility. The investing thesis is that yields have to rise as inflation rises. One of the ways to trade that is to be short this ETF which is long long-dated Treasuries. I use bear put options as the way to express the view - often ratio spreads. It was looking last month that I could land up having to buy shares as price was below my sold put strike (142). I sold a covered call (143) with different expiry anticipating the exercise at 142 and locking in my exit at 143. Well it did not work that way - I was not exercised and price moved up and not down ($147.24 closing on Oct 28). I bought back the sold calls for a nasty 298% loss on a pending order well away from the market.
I went back to normal strategy this week and bought a 147/142 ratio put spread for November expiry - as the spread is wide, this is not cash neutral. It is a bit like getting back on the horse.
Cryptocurrency
Fantom (FTMBTC): Price was pumped - I saw the signal after the peak but did sell a small parcel for a partial exit for 729% profit since August 2021
Algorand (ALGOBTC): Algorand has reached the Top 20 in market capitalisation on the back of the huge run from August lows. I deployed part of proceeds from FTM sale - always disappointing to see an entry on a spike.
Theta Fuel (TFUELBTC): Theta was one of the coins I added to my new fastest risers portfolio (like FTM was). Its chart is not very pretty with my first entry on a false break. I averaged down on the hope that the downtrend has been broken this time with price showing more than a week of moving up - unlike the last two spikes which lasted only a few days.
In my Gate.io account, I closed out a bunch of rats and mice constructed into a fast risers portfolio in 2018 (DRGN, ICX, DATA, ELF, RDN, QSP). Aggregate capital loss was 83%. Out of the 10 coins in this portfolio, only LEND (now AAVE) prospered and it did enough to cover the whole portfolio investment. I have one coin left to sell (QASH) which is on a pump as we speak.
Income Trades
A quiet income trades week with 3 covered calls written (US 2, Europe 1) and 4 naked puts written (US 2, Europe 2) across 3 portfolios.
Naked Puts
Two key naked puts written on stocks I would be happy to own at lower prices
Starbucks Corporation (SBUX): US Consumer
Ford Motor Company (F): US Automotive. Ford is motoring ahead. I will be assigned on covered calls yet again. Naked put income keeps me in the trade.
Wealth Selector
I am working with a friend to build an investment service to help investors plug the gap in their wealth build using ETF's. We are targeting people who are happy to do it themselves but are fed up with banks and investment advisers and their fees. As part f that I have started to explore some investment game platforms - start with a simple core portfolio and then tilt it with the big winners coming out my own portfolios.
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Trading: Binance offers a wide range of coins to trade, tight spreads and low fees if you use BNB to pay https://mymark.mx/Binance
Tracking: Keeping track of your crypto trades is a whole lot easier with CoinTracking.info. Get 10% off all your account upgrades https://mymark.mx/CoinTracking
October 25-29, 2021