I Can’t Complain

. . . but sometimes I still do.

–   Joe Walsh

Why do people complain even when things are going well?  Is it because of what could have been?   Is it because they feel that they have missed out on something even better.

“What could have been?”

In regards to investing, most people have rules by which we use to govern when to buy and when to sell.

Sometimes these rules, designed to protect us, or rather our capital / profits, can be seen as preventing us from earning even greater returns.

Some personal examples from the past month or so for me are . . .

OLED:

  • Bought 200 shares in April at $81.90.
  • Soon after OLED went on a nice 10% run (~$1800) but leveled off the week before earnings.
  • Happy with my quick profit, I sold 100 shares.  Still up ~ $900.00
  • But then I started thinking about all the “what if” scenarios around earnings.
  • Long story short, I bought a May 19 $95 call for $2.70 and sold an $85 put to finance it.
  • The stock reported record blow-out earnings and revisions and jumped 22%.
  • My remaining equity position made an additional $1900.
  • My out of the money call ~$900. Oh and the premium for the put brought that up to ~ $1200.
  • Yes, there was that voice saying I should have just kept my original investment.  Even though I was up a good $3000.

Greed is a terrible emotion.

EA:

  • I actually liked both EA and ATVI but EA was reporting after ATVI and had really good (cheap) options.  So I bought 3 May 12 $96 calls of EA before ATVI reported for $1.8 each.
  • Basically nothing happened.  The stock didn’t move much at all as a result of ATVI’s earnings.
  • So I sold 2 of the 3 for a very, very measly profit right before EA earnings report.
  • The next day those calls were worth somewhat north of $1100 each.
  • Who knew EA was going to pop 12% on earnings.
  • Certainly not the market.  They had options priced in for less than half that amount of a move.
  • Again, that little voice in the back of my head gave a very vocal 2200 cough.
  • Even though I was in the money by nearly another $1000 or so.

This week presents another “alternative” like minded play on earnings.  Similar to EA and ATVI.

Not that I am predicting a double digit return but the price is right.  IMHO.

Home Depot (HD) reports on the 16th.

Lowes (LOW) reports on the 24th.

The retail sector has taken a beating lately thanks to the likes of Macy’s and other big name brick and mortar retailers.  As a result LOW stock has fallen along with the sector.  HD has actually held up quite well.

One could very easily be tempted to buy HD before earnings because they are more directly related to the housing industry which has experienced remarkable strength lately.  LOW falls into this same category.

So even though they are “retail” companies.  They both play to a fairly strong housing sector.

Why am I looking at LOW instead of HD.  Because their weekly option premiums and volatility are significantly lower than that of HD because HD reports this week and LOW does not.  If HD has a really strong quarterly report and forward looking estimate, the market could very easily drive up the price of LOW before they report a week later.

Indeed, if one looks at the numbers, the market is already pricing in the moves for each companies reports.

HD reports on the 16th and options are reasonably priced with the market pricing in approximately a 3.3% price move based on May 19th expiration date.

LOW reports a week later on the 24th and options are even more reasonably priced with an approximate 2.3% price move for this weeks May  19th expiration.

But all those numbers for LOW’s more than double for the “after” report expiration date for May 26th.

What do you think?

Would you invest in both or play one off of the other?

No Love For The Bear

The stock market is nearing all-time highs.  In fact, it seems to keep reaching new ones on a regular basis.

Advancers are leading decliners.

Percentage of stocks above their 20/50/200 DMA is higher than stocks which are not.

The only thing that the bears can take some comfort in with these charts is that some of the volume and oscillators are indicating a possible downward trend.

Yes, there has not been a whole lot of love for the bears lately and they are feeling left out.

The contrarian would say, this means we are due for a correction.

The conformists or anti-contrarians say lets keep the party going.

The realists say, perhaps we should look for stocks or sectors holding up well enough but not yet joining the party.  Perhaps stocks with some “safe” characteristics such as dividends would be nice to include too.  Perhaps these are just waiting for the right invite.

The chartists say the overall market is doing well.  SPY and DIA charts look strong . . .

Though, the QQQ is perhaps looking a bit extended.

So where do we look for stocks and or sectors holding up well just waiting to rally?

Mr. Bull, I’d like you to meet Mr. Financial Sector.  He’d like to join the party.  He’s just waiting for the right conditions.   Like . . .

–          Financial Reform

–          Tax Reform

–          Inflation and Rate increases

Those are the tickets that will get him out on the dance floor dancing the happy dance.

The technical charts for the financial sector look promising.  They look like they are poised for a breakout.

Of course, bulls are hoping for an upward breakout, and the bears are hoping for a breakdown.

Unfortunately for the bears, there are the three catalysts, previously mentioned, just waiting to kick in.  And they are pretty strong catalysts.

Unfortunately for the bulls, the current administration and congress is painfully dysfunctional.  When and if all this is going to happen is anybody’s guess.

So until then, we wait and hopefully enjoy the ride.

What Would You Tell Trump To Do?

Today marks the 100th day in office for POTUS Trump.  Depending on who you ask, and which news agency you follow, you will get different answers on how successful he and his administration has been.

One thing is clear.  It is not anything like anybody would have imagined.

Trump himself admits “I thought it would be easier” and that he “missed his old life”.

So, on this 100th day of judgement and reflection, what would you like to tell Trump?

IBD recently asked this very question to a bunch financial experts.  Their answers might be a little bit surprising.

“The biggest problem we face is not saving enough money for retirement”.

“Social Security needs to be reformed”

The president and congress could start by looking at increasing not only the age limits but mandatory contributions.  Yes this is a political hot potato and good luck getting Americans to be mandated to be told what to do with their money or allowing the government to take even more of it away, but the problem exists and the system needs to be fixed.

“People need to be financially educated and make wise investment decisions”.

Addressing financial literacy early and often throughout the educational system is key.  A standardized curriculum, similar to math, science and history, which focuses on the basics of balancing budgets, how saving plans work, compounded interest, mortgages, loans, managing debt, what different investment vehicles are available and what banks and other financial institutions have to offer.

“A Lifetime Plan”

Instead of the voluntary approach to learning, saving and investing, there should be a mechanism in place which contributions are required.  To a certain extent, some companies are already doing this.  I for one have seen mandatory 1% 401K contribution and AD&D and Life insurance policies put into place.

And yes, I have heard many an objection to this.  But anybody who has worked in HR or a leadership position in a company and has the “experience” of an unexpected death or disabling injury occur to a co-worker or their family knows how valuable these contributions and plans can be.

“Tweak Deductibles for everyone”

An example of this is Health Care Costs.  Corporations can deduct it as a business expense.  Why not make all health costs deductible for everyone?

So, what would you add to the list?

Planning A Wedding? Be Ready For Sticker Shock


My oldest daughter is getting married this week. We love her dearly and have given our blessings to both her and her fiancé. They make a beautiful couple and they have been engaged for well over a year. Ever since their relationship became “official”, my wife and I started helping them plan the wedding. My wife is the consummate planner and thinks literally of everything; even things I didn’t know existed (hint, she spends A LOT of time on Pinterest). I on the other hand, play a multipurpose role of support, financier and cheap labor.

Early on, I joked by saying they should just elope and send us pretty postcards.

I was looking to perform my role as efficiently as possible . . .

But that would ruin the wedding experience and celebration. Besides, my little princess had always dreamt about her wedding day and my wife had always dreamt about planning it.

So, not to ruin anybody’s dreams we started pricing out some things and coming up with a budget.

Warning! Sticker Shock

According to recent estimates, the average cost of a wedding has now reached record levels. $35,329.00. Mind you, that is an average. The fact that our budget, which is a fraction of that amount, plays into that average, tells me there are some folks plunking down some serious cash.

There are a lot of things one can do, besides eloping, to help reduce the sticker shock of paying for a wedding. We have some real life experiences and discovered tips and tricks to pass along to aid you in your wedding planning and financing journey.

First hint: Most of these involve the internet.

Secondly and not to be under-rated by any stretch of the imagination . . .

Luck: I’m not going to lie. We were lucky to find some things at incredible bargains.

The Reception Venue: Our lovely couple were set on a country wedding, and farm/barn weddings are quite popular now with the best places often fetching the highest prices. As with any good and popular venue, Barn venues can easily book a year or more in advance. So if you want a wedding with a ceremony and a reception that is not in your back yard, you can pretty much guarantee a long engagement. As it turned out, we were lucky enough to find a location which was just starting out and willing to offer discounts to attract customers. In fact, they had all of two weddings under their belt and one of them was their own daughters. My daughter found their listing the day it was posted on the internet, (I think it was on wedding wire) and called them the very same day. We liked what we saw and heard and the owners/proprietors treated us like family (they liked) and most importantly, the price was right. So we booked the date soon after our site visit.

Because they had only done a couple weddings at the time, the facility was nice and clean (amazing for a working farm). The owners were very open and honest about what they could and could not do, but also very honest about future plans for their barn. That was last nearly a year ago. Since then they have made a ton of improvements and are currently booked solid through the remainder of this year and into the next. And, they now charge twice as much as our rate.

Note: I have a general open search on various realtor sites for farms for sale. It’s an idea for supplementing my second career (retirement). I know it is a ton of work but being able to pull in up to 5K, or more, a weekend for 6 out of 12 months is somewhat appealing.

 

The Dress: My daughter found “the dress” at a local bridal shop. It was perfect. It was also twice the budgeted price. My wife is the ultimate internet sleuth. She was able to note the make and style of dress and search for it on the internet. (this is a good tactic for just about any purchase now a days and is one reason why traditional brick and mortar retailers are struggling).

Eventually, my wife found a place in Idaho that was advertising a close out price on that exact dress and in my daughter’s size. And willing to ship it to us. Best of all, it was under our budget!

Note: Many bridal shops will not order a dress in your size. They will order it one size too big. This way they also get a chance to perform the alterations – which are not cheap. Yes, they will argue that it is far easier to take something in rather than let out, which is true, but a larger size guarantees addition revenue.

My wife says it was a gift from God because she had become convinced that nobody in the whole world had this dress, in this size and yet, suddenly, there it was.

Tip: Patience and determination are key virtues when it comes to internet searching.

Sell and Resell: Many venues and caterers charge incredible mark up prices for things that you will never use again. They, on the other hand use them over and over. Plates, Glasses, Utensils, Place and table settings, etc, etc. IF you are willing to search and put in a little extra work, one can find all these things at good prices on the internet.

Note: You also have to find a venue and or a caterer willing to do this and allow you to set up ahead of time and clean up afterwards.

You can then turn around and sell all this stuff back to somebody else, via the internet, recouping most of your money. Yes it does involve a lot more work – such as washing and cleaning (twice) and setting up the tables yourself the day before – but the savings can be well worth it.

While searching around on the internet for settings, it is worthwhile to see if you can find a good restaurant supplier. Not necessary, but helpful.

BTW: If you are not sentimental on the dress, don’t want to save it for future generations, and convinced you will not need it again . . . . you can resell this too.

Drinks: Alcohol is also expensive. Catered Bar Service is even more expensive. You can rent a bar tender to serve drinks and buy the liquor yourself.

Again, you have to find a bar tender, and or venue/caterer willing to do this. We are able to provide enough wine and beer for all our guests, for 3 hours, for the price some charge for one hour of catered bar service.
This way not only can one cut down on the price but you are able to, we believe, have better control over inventory AND you can get a refund from the store for unopened inventory.

Food:  Caterers can also be expensive. There are a lot of decisions to be made which can affect your cost. From the menu, to number of servers, appetizers, desserts, after dinner drinks including coffee and tea.

Tip: It helped to find someone who is looking to expand their business.

Similar to the venue, we were fortunate to find someone who was looking to outgrow their home based catering business and expand their area of operations.  They came highly recommended, passed the sampling test, and like the venue, were willing to cut us a deal in order to develop another business partner.

Both the venue and the caterer were looking to build new business relationships, so we were able to facilitate this for both to have a win/win arrangement.

Again, a bit of luck.

Financial Independence !!!

Financial independence has always been a goal of mine. It is the primary reason I invest in the stock market.

Over the years I have developed and refined my trading style from investing in standard mutual funds, to investing in individual stocks to recently, trading options.

Thanks to Oracle, Adobe, Darden, Western Digital and Amazon, the month of March was a very good month for me on the option front.

However, that is not the reason I can claim financial independence.

Last night I hit the jackpot!

Ironic, after all these years of working like a dog, scraping and saving and investing to eventually retire comfortably and all I had to do was win the lottery.

YAY!

But don’t worry, I will still keep blogging about the stock market and finances. But don’t be surprised if I throw in a couple posts about some exotic vacation spot from time to time.

My biggest worry now is how to properly set up trusts and funds for myself and my family. I never thought I would do this but now I guess I will also start looking for a financial management advisor and or estate lawyer.

It’s a nice problem to have.

Oh, and no I have not told my boss yet.  Shhhh . . .

I’m going to wait until the check clears to do that.

Until next time.

Trade well my friends.

Cheers!