Tuesday, January 23, 2024

The Rock gets his name back

Dwayne "The Rock" Johnson, Vince McMahon, and Ari Emanuel ringing the bell at the NYSE 1/23/2024.
Dwayne "The Rock" Johnson, Vince McMahon, and Ari Emanuel ringing the bell at the NYSE 1/23/2024.

The Rock, now the proud owner of his name, spoke to Jim Cramer, Carl Quintanilla, and David Faber in the first hour of Squawk on the Street today, although Ari Emanuel did most of the talking. Meanwhile, Netflix announced a deal to stream TDK's WWE’s Monday Night Raw, boosting the stock over 25% pre-market (it closed over 15% up). It's about time Netflix invested in live; YouTube's been making a killing in it before, during, and after the pandemic (due to an increase in ads and paid subscribers).

I haven't posted here in awhile, so I might as well catch you up with what's been going on.

Since June 25, 2021,

my portfolio hit an all time high in November 2021 and then it was all downhill from there. While I gained 58% in 2021, 

I lost 52% in 2022. 

While everyone was saying a recession was coming, we seemed to be in one. I bought META LEAPS in March and August at the lows, convinced that it couldn't stay bad forever. Sure, Zuck faceplanted in the metaverse, but the fundamentals of the core business were strong. I wonder if the same NVIDIA chips used for rendering high-quality VR graphics ended up being useful for AI processing. Now META's at 52-week highs, and I'm selling.

M7 performed in 2023

Magnificent 7 stocks NVIDIA, META, Tesla, Amazon, Alphabet, Microsoft, and Apple performance in 2023, from CNBC.
Magnificent 7 stocks NVIDIA, META, Tesla, Amazon, Alphabet, Microsoft, and Apple performance in 2023, from CNBC.

And I was in 5 1/2 of them (META, TSLA, AMZN, AAPL, and sometimes MSFT). So it's no wonder my 2023 return was 111.30%. I've heard it said that if you lose 50% in the market, the only way to make it back is to make 100% the next time, so it looks like I'm slightly above even.

2024: M7, AI, and Bitcoin?

The magnificent seven again on CNBC & Bitcoin ETFs start trading chyron.
The magnificent seven again on CNBC & Bitcoin ETFs start trading.

Now everyone loves Bitcoin (and AI and the M7) but you wouldn't know it by what happened in the last few weeks. CLSK went from mega darling at ~14/share to nearly half at ~7, below my cost basis. Of course, I'm averaging back in, but why do I have to take this punishment? I've worked hard to average down in MSTR, MARA, and CLSK already. I thought now was my time to sell. Have I missed the bull already? No. I just think that Bitcoin pullbacks are wilder than equities, and everyone's saying that this is due to Grayscale selling the massive bag they're holding (Ash Crypto, care of crypto.news). And that we'll all see $10k/day wicks up soon enough. Especially with the halving coming in April.

Also, the Bitcoin ETFs may start gaining traction once BTC starts moving again (up and to the right). I placed an order to buy FBTC at 33.55 today, but it never filled. A few people recommended it when I asked in InvestAnswers's Bitcoin Discord channel. One benefit is the .25% fee is waived until the end of July (just enough time to get some free gains and sell, if that's your thing). Another is that Fidelity was early to Bitcoin and they hold custody of their bitcoin through Fidelity Digital Asset Services, LLC

I had some extra money from selling AMZN, META, and WYNN, so I bought more TSLA and VICI.

Oh, and thanks to Martin Shkreli's* daily livestreams in 2022, I found out about OpenAI in June, almost 6 months before they released ChatGPT in November and changed the world. I've already created some cool experiments and chatbots.

*Don't knock the guy, he's really changed since prison. And even before that, we was all for democratizing financial education and fighting for the little guy. He wasn't completely evil, just a businessman.

I'll leave you with this 

deleted scene from Almost Famous


paired with this investigative documentary from Mr. Mythos, 


which both surreptitiously found their way to my recommended on YouTube. Funny how that works.

Friday, June 25, 2021

Cathie was right

I couldn't sleep this morning so I watched Bloomberg TV and texted my reactions to my trading friend. I thought I'd share with you.

Bank stocks passing stress tests and doing well

US banks passed stress tests and are poised to issue large dividends as the past year's pandemic trading this was good for them.

Pic of Bloomberg news showing premarket prices of JPM, 153.40, BAC, 41.40, and WFC, 44.21

Bloomberg: Premarket prices of JPM, 153.40, BAC, 41.40, and WFC, 44.21.

I owned JPM at 101 in Aug/Sep but sold it at breakeven in Oct. And BAC at 26 in Aug and sold for a slight loss at 24 in September. I hate lost opportunity. On the bight side, I may not have made similar gains if I'd kept my money in bank stocks.

Lower impact of inflation to equity market

Next, Bloomberg had Janet Mui, Director of Brewin Dolphin Investments, talking about how her fund is moving toward a balance of value and growth as the fear of inflation wanes. This pissed me off because Cathie Wood and Jerome Powell both said the same things a few months ago—inflation would be transitory over the next year as the economy adjusts to the reopening.

Of course, the financial news had to panic and try to sow fear, uncertainty, and doubt (FUD) amongst retail traders with sensational reactions to every down move after April 15th, which, incidentally, was 2 days after my retirement portfolio reached its highs.

I used the down days to increase my positions in Cathie's ARK funds, including the new ARKX space fund, with the goal of increasing my allocation to 10% of my porfolio for each of the three funds: ARKF, ARKK, and ARKX. I ended up getting close, about 9% for each, before I stopped.

Cathie Wood is one of the only money managers who has consistently been telling the truth regarding the transitory nature of upcoming inflation.

Pic of Bloomberg news showing the 10-year yield at 1.4850 and Janet Mui, Director of Brewin Dolphin Investments with a chyron saying "Mui: More balanced on growth vs value"

Bloomberg: 10-year yield at 1.4850. Janet Mui, Director of Brewin Dolphin Investments, "More balanced on growth vs value."

Mui said despite the Fed’s now hawkish stance, she believes there won’t be rate increases until 2023 and even then, they're just projections, not promises. She effectively signaled her bullish stance. This is probably late, as most likely, her company is in position with their trades, possibly purchased at the lows last month, like me.

This upset me because just a month ago financial news networks were crowing about how the Fed was too dovish and commentators didn’t believe inflation was transitory. They drove fear into the markets and equities suffered, especially Cathie’s funds. 

Cathie wasn't given much respect either, with a ton of articles about how she was a one shot wonder, comparing her to another female money manager from the dot com days (her name escapes me). Opinion pieces and forum posts said her funds were doomed to fail and that there were a ton of outflows from ARK ETFs by investors selling and taking profits. While some of the reporting was true, it implied that her rapid rise to the top was short-lived. The commentary was both unfair and ostensibly chauvinistic.

I used the FUD in the markets in late April, May, and June to increase my positions. Just yesterday I finally reached new highs.

The moral of the story is: Don’t believe the financial news. Trust Cathie. And me ;)

Tuesday, January 19, 2021

A quick update

Trading:

AAPL, AMC, BFARF, GME, MARA, PSTH

Investing:

AAPL, AMZN, ARKF, ARKG, ARKK, ARKQ, BABA, BFT, BND, BNDX, CRSR, EDV, FB, GME, HERO, IPOD, IPOE, IPOF, LMND, MARA, MCHI, MMEDF, MSTR, NTDOY, PLTR, PSTH, QQQ, RIOT, SHOP, SMH, SQ, TCEHY, TLT, TSLA, TSM, VAW, VBK, VCR, VDE, VFH, VIH, VWILX, VWNAX, VWUAX

Wednesday, October 7, 2020

24/7 markets and algorithmic trading

Some notes on 24/7 markets and the future of trading, direct home sales, and the future of transportation and home ownership...

Open markets

  • October 7, 2020 6:58 AM 
  • it's strange that in 2020 the market still opens and closes 
  • I wondered if there would ever be a time when the market trades 24/7. 
  • at first i thought the answer was no, there always has to be a time for the market to be open and to close, to provide a set time for major liquidity 
  • but then i thought, never say never 
  • in the future, perhaps all trading will be done by artificial intelligence
  • and most of the money made will be in yields
  • DeFi projects may be at the forefront of this (See There’s no such thing as a decentralized exchange for a great article on what DeFi is)
  • think of it as more opportunities to shift your assets to greater yield products at higher levels of risk
  • and even that can be set algorithmically, so that all you are responsible for is the level of risk that you're comfortable with, and how it matches up with your financial goals
  • perhaps you don't even have to know much detail about risk and only have to focus on your financial goals... i want to take a cruise, or i want to visit Paris for a month. how much do i have to save to do so? when is the earliest that I can do that? what if I want to do that next year? how will it affect me financially?
  • you can pose your questions to the algorithm (just another name for the AI) and it can give you options, which you can choose
  • so the computer now does the heavy lifting, and you set the parameters
  • let's say you want to retire early. you're 20 years old and want to retire at 50.
  • you tell that to the AI and ask at what level you should live at for the next 30 years.
  • maybe you're comfortable living the next 10 years on a shoestring budget... live with friends, buy a house and rent it (although assets like that may change in this new world too, more on that below). Or maybe you don't even have to be that specific, the AI will tell you, if you eat ramen noodles for 5 years and rent with friends, or buy a house that you rent to friends, and you save X amount, you'll be able to save Y and retire at 50...
  • But your health algo/AI will tell you how eating ramen noodles for 5 years will affect your health, and may have other recommendations
  • You can say you want to relax these harsh standards when you get married, and it will
  • you can put in how many kids you want to have and the algo/ai will take that into consideration and make recommendations too
  • the algo mines history from google/facebook/amazon/apple to tell you the historical data of your potential choices
  • then it projects what these will be like in the future
  • There may or may not be accounting for risks... like another global pandemic, war, a massive fire, flood, or storm, or some other act of God. Maybe you can add those in too

Housing in the future

  • with the rise of direct home sales sites like redfin, opendoor, and zillow, buying and selling a house has never been easier.
  • These platforms have removed the mystery of buying and selling your home
  • perhaps in the future buying and selling your primary home will be as quick and easy as flipping a property
  • and less risky
  • but even more disruptive, why buy a home anyway? why not lease?
  • and not a traditional lease, but lease like an owner?
  • like leasing a car (it may not be an accurate comparison. what I mean is leasing a car is closer to owning it than renting it)
  • for all intents and purposes, you own the home, but it's much easier for you to leave
  • like airbnb for home ownership
  • similarly, cars in the future may not be owned and all cars will become public transportation vehicles a la westworld ('Westworld' Creator on Season 3's Self-Driving Cars: "That Is Absolutely the Future"). If this comes to pass, perhaps homes will become just as fungible
  • of course, the ultra rich will always be able to own their own assets, but will they even do so? perhaps they'll just lease for greater privileges at a higher valuation
  • for example, instead of using any car in the street like everyone else, the rich may prefer to pay up for vehicles restricted only for their use
  • likewise with homes.
  • they may pay up for homes with limited ownership
  • the value of homes in desired places like the hollywood hills and new york will still be high, because the rich will still pay up for them
  • but some may open up for anyone to use

References

Open markets (continued)

  • going back to 24/7 markets, we already have this and have had it in the past
  • most index funds are 24/7 (gld, iwm, qqq, spy, tlt)
  • but the liquidity in the us stock market is still concentrated during open hours, weekdays from 9:30-4.
  • what i'm projecting is that liquidity will rise as algorithmic/ai trading becomes the majority of trading in the markets.
  • not to say that algo trading isn't the predominant form already, but people still trade the markets manually, meaning, they buy and sell with online brokers. fund managers still buy and sell (i'm guessing) and there is human participation in the market (although I could be fooling myself)
  • it would be useful to get some data on the ratio of algorithmic to human trading in the markets
  • even without that data, my projection is that eventually the market will be traded 24/7 at a uniform liquidity, with high volume based on events, like the futures markets
  • for the most part, liquidity will be uniform, unless there are major news events to shock markets
  • and the news events will be released and reacted to quicker.
  • even though reactions to news seem instantaneous now, I think it could be quicker. For example, there seems to be some waiting around until the market opens to react to news from the previous day (although that could be manipulation)
  • and there are the options markets, which are not open 24/7.
  • if derivatives traded 24/7, perhaps we wouldn't see such a delay in market reaction to news events outside of trading hours
  • but going back to the algo/human trading ratio, i think in the future, human trading will be as arcane as trading on the floor of the stock exchange, and your yield will depend on the price you pay for the algos you use to trade with, or some form of cybernetics. but perhaps that's a topic for another post... (see neuralink & Elon Musk’s Neuralink is neuroscience theater)


Friday, September 11, 2020

Crypto and my DeFi journey

I have a new blog about my deep dive into DeFi, starting with yearn.finance. I describe how I got the coin and staked it to participate in governance of the protocol. I’ll be writing more about my experiences there. Follow along at https://mydefijourney.wordpress.com/.

Tuesday, March 27, 2018

Light Sweet Crude Oil Reports

I've been trading oil on and off for 4 years now. One thing I've learned is that oil moves based on numbers from the following weekly reports:
  • The American Petroleum Institute (API) reports on Tuesday 4:30 PM EST. The API is a U.S. trade association for the oil and natural gas industry. Their reports feature inventories of crude oil and oil-derived products such as gasoline and fuel oil. Reports are only available via purchase or through Thomson Reuters. However, less than 5 minutes after the report, you can typically find the key numbers in the $CL_F channel on StockTwits. A typical post might look like this:
  • Crude: -2.62MM, Exp. +3.25MM
    Gasoline -1.69MM
    Distillate: -2.32MM
    Cushing: +905K
    Production: 10.407MMbpd, +26kbpd
    
  • The Energy Information Administration (EIA) weekly petroleum status report on Wednesday at 10:30 AM EST. The EIA is a part of the US Department of Energy. Anyone can access the report at the EIA site.
  • The Baker Hughes rig count report on Friday at 1:00 PM EST. Baker Hughes is a GE company. Anyone can access the rig count report on the Baker Hughes site.
I'll drill into these reports in future posts.

Energy futures contracts are traded on the New York Mercantile Exchange through the Chicago Mercantile Exchange Group.
  • Open: Sunday at 6:00 PM EST.
  • Close: Friday at 5:15 PM EST.
  • Pit trading runs Monday through Friday 9 AM - 2:30 PM EST.
  • Trading stops every weekday from 5:15 to 6 PM EST.
Martin Kronicle offers training for traders. I can't speak for their classes, but I listened to one of their podcasts featuring Brynne Kelly, an energy analyst: What the CL and NG contracts actually mean. She explains how she analyses the oil and gas markets and offers a PDF summary as well.

Thanks for reading! I'll update this blog daily with what I've learned from trading.

The Rock gets his name back

Dwayne "The Rock" Johnson, Vince McMahon, and Ari Emanuel ringing the bell at the NYSE 1/23/2024. The Rock, now the proud owner of...