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dydo

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9 hours ago, odyd said:

I have executed the switch which has left me with about 7.7% drop in value since Sept 23rd, averaging $23.80 ownership to current $21.95. NYLD has dropped 11.9% in the period. So from that perspective, it was a bit better after all, and I am to collect on the dividend by Oct 31.

In the same timeframe, CSIQ gained 13.4%, and JKS did 7%. So staying away from CSIQ and its lowest seems to cost me. Now in a long-term view, I still see an opportunity for low prices. We have not seen any financial impacts, but surely CSIQ is trying hard not to look bad.

I think the hesitant strength in manufacturers is from the very green light we've in seen past couple of weeks in upstream prices.

http://pvinsights.com/

Now the final verification of this pushing up the panel price remains for the integrated panel brands to show less hesitant strength I think. Dips around ER are likely as conditions are still bad in quarters to be reported although improvement seen beginning of Q4 will be talked about as a sun on the horizon on a rainy day. It's always nice to see the pricing of all future profits (the PPS) being slashed due to a dip in a few near-term quarters (not affecting the sum of all future quarter profits much and thus should not affects its pricing much) as it gives unreasonable discounted stock prices, but I find it very hard to speculate how much the market will stretch such irrational discount based fear/greed emotions.

When CSIQ swing between $12 and $44 its not because its intrinsic value swings that much it is because fear/greed based emotions controlling the market pricing let the perception of its value over shoot this much. All we can do is try to stay less exposed when its flying too high and stay more expose when its flying too low, e.g. automatically by re-balancing exposure with uncorrelated assets.

 

Edited by explo

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How is this good news for CN4?

Isn't stronger component prices in the face of low module prices the kiss of death for panel manufacturers?

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1 hour ago, disdaniel said:

How is this good news for CN4?

Isn't stronger component prices in the face of low module prices the kiss of death for panel manufacturers?

It will push up module prices, thus boosting margins for integrated manufacturers relative to non-integrated ones.

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I need to be stubborn here.  Mfgs are up and I am dwelling in wind yieldco but I am waiting for results of Q3 and Q4. I wonder who is getting screwed, those on the fence or those who are holding to be hit with a massive selling around quarterly PRs.

I think someone is setting up a trap, now I am confused who is getting trapped.

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8 hours ago, odyd said:

I need to be stubborn here.  Mfgs are up and I am dwelling in wind yieldco but I am waiting for results of Q3 and Q4. I wonder who is getting screwed, those on the fence or those who are holding to be hit with a massive selling around quarterly PRs.

I think someone is setting up a trap, now I am confused who is getting trapped.

That is the question. I know from your article that you have a timeline of around mid next year where a bottom of slightly below recent lows will be formed so there's plenty of time to wait out any fake rip. I'm not sure about the trap. PPS seem to respond to an aggressive turn around in wafer and cell pricing. This is likely interpreted as excess inventories being rapidly digested now and thus fading the glut.

The cell ASP needs to push up module ASP though to have a positive effect on tier 1 integrated panel makers. The cell-module spread remained constant at slighly above 20 cents as the cell prices slumped from above 30 cents to below 20 cents, but that spread is shrinking now to below 20 cents. So now is the first time the margin for panels using non-in-house cells is actually going down. This needs to be restored or at least stop falling while the margin on panels using in-house cells rises for the market to like the pricing environment CN4 operates in. For FSLR it's a bit different. They primary like poly shortage pushing up the whole c-Si chain prices.

 

Edited by explo

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On 2016-08-24 at 10:28 AM, explo said:

Considering the bleak outlook for the bonds market and the short-term uncertainty about the stock market after a long cheap money driven recovery cycle without a booming economy I did a general strategic risk analysis of the portfolio and concluded that I have too high exposure to high risk funds i.e. to the market correlated bond and stock funds and to the market neutral high risk hedge funds.

A suitable allocation change to improve risk-adjusted return over the long-term was found as moving 40% to low risk hedge funds with 20% taken from the bond funds, 15% from the high risk hedge funds and 5% from the stock funds. The timing also serves the short-term market uncertainties as 25% are moved from quite high flying market correlated funds to market neutral funds and further the high risk hedge funds have done very well after a big surge on the Brexit while the low risk hedge funds have had a weak performance.

Due to some funds only trading monthly and timing is important a move like this takes time. At best it is completed in one month, but might take longer to optimize timing of funds sales.

The "Allocation" section on the "About Me" page in my profile has already been updated for this allocation target change.

I did some asset allocation re-tuning again within the different fund classes. Relative Value (low risk) hedge funds was reduced from 180% to 150%. CTA (high risk) hedge funds were increased from 70% to 100%. The main reason for this move is that the CTA fund I'm using has two version. One which I did not use before is daily traded without purchase fee, but with higher annual fee. I will put some in this for trading as these funds are volatile but market uncorrelated which creates a big opportunity to milk the volatility.

I also decreased bond funds allocation from 60% to 50% and increased stock funds allocation from 40% to 50%.

The move was also driven by a combination of risk-adjusted return optimization, more even and  natural allocation desire (including avoiding too excessive Relative Value allocation) and opportunistic timing to make the move.

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20 hours ago, explo said:

The main reason for this move is that the CTA fund I'm using has two version. One which I did not use before is daily traded without purchase fee, but with higher annual fee. I will put some in this for trading as these funds are volatile but market uncorrelated which creates a big opportunity to milk the volatility.

The strategy is somewhat changed from the funds serving as passive return generators to actively milking the volatility by opportunistically allocating more towards daily traded and free of trading fees funds. Liquidity is still less than stocks that can be momentarily traded intra-day, but they are less costly to trade since there is no trading fee and they offer the more tradable Alpha-volatility.

Edited by explo

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The (new, one year old) portfolio hit a new ATH yesterday after a post FOMC surge, especially for the highly leveraged funds (surprisingly the bonds fund have done best of all, being global is its key tool and it's used it well).

More interesting is maybe that the funds have generated enough cash now for the cash allocation to hit its maximum 25% limit, which is triggering reallocation of cash to individual stocks. The timing for this flow of funds within the portfolio into the individual stocks asset class it not bad I think. Especially considering that the sector I invest in is at better bargain pricing levels than the general stock market.

Generally I have a positive feeling about all asset classes of the portfolio now and hope that this recovered draw-down and thus time of printing new highs will last for a longer while than previous recovered draw-downs this year. There is still a long way to go to hit the average expected return.

A quick look at the broad top up opportunity here for my stocks:

CSIQ, price $12.50, 52-week range $10.25 - $29.83

JASO, price $4.99, 52-week range $4.90 - $7.88

JKS, price $15.79, 52-week range $12.72 - $29.50

FSLR, price $35.11, 52-week range $28.60 - $74.29

In short the pack have rebounded around 20% off their 52-week lows and still have around 100% left up to their 52-week highs.

Whether cash generation from the funds will continue can be tracked in my holdings to the left. When more cash is generated (from continued rising funds) the cash allocation will remain at 25% and the stocks allocation (now at 18%) will grow. If instead cash is depleted (from the funds falling back again) this will be seen by the cash allocation going down while the stocks allocation remain flat (until cash allocation reaches the minimum limit of 15% at which point individual stocks have to be sold to stay within the minimum cash allocation limit).

Edited by explo

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Explo -

  I'm surprised you are so bullish on these solars these days!  The glut is still on and deepening, just as odyd has been describing for months.  Trump too.  Too many things in the way.  I think we'll see prices bounce between a little above post election lows & what we've seen the past few days.  

  Because the overall market is way over wound up, we might see a correction -- once Trump takes office.  That'd set everything lower a bit.  Keep some powder dry!

  Wild card for me right now is US Residential.  I'd imagine it will be up as a vote of protest to Trump.  According to PVinsights, US PV demand is now weak.  Let's keep an eye on that.  It could be a source of upwards surprise.

Matt

On 12/17/2016 at 0:48 PM, explo said:

In short the pack have rebounded around 20% off their 52-week lows and still have around 100% left up to their 52-week highs.

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The individual stocks is maybe the part of the portfolio were I don't have a positive felling, but I'm positive to the cash generation phase triggering me to buy stocks now when they are discounted to their 52-week high. I will not try to time the buys. I'll simply buy whenever upper cash limit is exceeded.

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On 2016-12-17 at 1:48 PM, explo said:

The (new, one year old) portfolio hit a new ATH yesterday after a post FOMC surge, especially for the highly leveraged funds (surprisingly the bonds fund have done best of all, being global is its key tool and it's used it well).

Well that came to a halt with a new drawdown beginning immediately after recovering the last one (i.e. very short period of printing new highs).

Here are the end of year performance stats for the first year of the new portfolio (updated in my profile too):

Portfolio / TAN / S&P 500 new performance stats, 2016-12-31

  • Inception 2016-01-01
  • Return since inception -1.06% / -46.31% / 9.14%
  • CAGR -1.06% / -46.31% / 9.14%
  • Alpha -5.03% / -59.33% / 0.00%
  • Volatility 23.93% / 30.29% / 12.91%
  • Max drawdown -18.16% / -46.54% / -10.54%
  • Portfolio return breakdown
    • Stocks + Funds + Interest + Tax = Portfolio
    • -6.82% + 14.07% - 6.84% - 1.46% = -1.06%
    • PPS + Currency + Dividends + Expenses = Portfolio
    • 3.00% + 5.42% + 0.45% - 9.93% = -1.06%
    • Commission + Forex + Interest + Tax = Expenses
    • -0.95% - 0.68% - 6.84% - 1.46% = -9.93%

16FY_return.PNG

 

Comments

The S&P 500 beat the portfolio on all performance metrics (CAGR, Alpha, Volatility, Max drawdown), but the portfolio beat the TAN on all performance metrics. The TAN had a horrible year with an ever growing drawdown from the start, while the S&P 500 had a nice year and the portfolio a stable but return-wise disappointing year.

The portfolio ended the year 1.1% down. The stocks dragged it down with 6.8% pre cost of leverage or 7.0% including cost of leverage. The funds countered that with a 14.1% gain pre cost of leverage or 6.0% including cost of leverage, i.e. it was just 1% short of covering it's own cost of leverage plus the 7% loss on stocks.

Looking at the TAN (solar ETF) being down 46% for the year and all my stocks being solar stocks I should probably be happy to only be down 7% on my stocks and 1% in total, since I always stay fully invested in stocks. This is because the strategy does not allow reducing stock market exposure. It does allow reducing sector and company exposure by moving stocks exposure to an index fund for example. However the allocation to individual stocks (set by portfolio rules) started the year around 25% and ended slightly below 20% at the end of the year. Assuming an average stock exposure of 22% during the year I should have been down 10% with the TAN performance, so the picking and trading likely outperformed the TAN, i.e. sector outperformance was achieved but still severely underperforming the general market.

With my old "strategy" or lack there of it was not uncommon to have 150% exposure to solar stocks and then I would have been down around 47% or similar to the horrible TAN performance. So during its first year the strategy served mainly the capital preservation purpose rather than the capital growth purpose. I hope the latter can be served this year.

Besides gain coming from the funds asset class the gains also came more from currency gains (asset nominal currency appreciating against the portfolio currency) rather than net asset value gains in asset nominal currencies, although both contributed.

 

 

 

Edited by explo
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While my own trading strategy isn't nearly as advanced as yours, my results for the year were similar--I actually have a slight gain.  Not on portfolio value (I'm still holding some positions from much higher levels), but in terms of trades closed out.  So while solar stocks in general tanked 40-50% as you noted, I was able to at least partially offset those (paper) losses with (real) trading gains.  I'll take it--under my old strategy, I would have just kept doubling down during the slide, using more and more margin, and eventually margin calls would have forced me to take some more huge losses.  I at least avoided that this year.

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Good job Pete. Combing trading and holding is a great strategy to increase risk adjusted return. I use it myself by frequent rebalancing within each asset class. It´s a bit more effort to break out the trading and holding components (they together make up the PPS component of my return breakdown now), but it would be interesting to do so. I´m sure the risk-adjusted return over time is much better for the trading component than the holding component.

 

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On 2017-01-03 at 3:03 PM, explo said:
On 2016-12-17 at 1:48 PM, explo said:

The (new, one year old) portfolio hit a new ATH yesterday after a post FOMC surge, especially for the highly leveraged funds (surprisingly the bonds fund have done best of all, being global is its key tool and it's used it well).

Well that came to a halt with a new drawdown beginning immediately after recovering the last one (i.e. very short period of printing new highs).

New portfolio ATH printed again yesterday after recovering a two month drawdown. Hoping for more than one day ATH printing before next drawdown this time.

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On 2016-12-17 at 1:48 PM, explo said:

Whether cash generation from the funds will continue can be tracked in my holdings to the left. When more cash is generated (from continued rising funds) the cash allocation will remain at 25% and the stocks allocation (now at 18%) will grow.

Rising funds are now triggering broad stock buys. Seems like the eleventh hour since they are getting out of the gates now.

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On 2/16/2017 at 3:37 AM, explo said:

New portfolio ATH printed again yesterday after recovering a two month drawdown. Hoping for more than one day ATH printing before next drawdown this time.

Explo,  Good job!  I like your approach.

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13 hours ago, Jetmoney said:

Explo,  Good job!  I like your approach.

Thanks Jet. This time around it looks much better than previous surges to ATH that were immediately followed by several months drawdown. This time the initial surge to ATH day was followed through by a moderate ATH growth the next day and then a two-day breather with moderate retreat followed by yesterday's big surge to a new ATH again and this time the stocks were actually the biggest contributors to the surge. It lead to the portfolio Alpha finally turning positive yesterday.

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19 minutes ago, solarpete said:

Well, yesterday's surge was certainly short-lived.

Sigh....

Nice breather :). I need more time to accumulate stocks. I deployed some excess cash to stocks today and hope more excess cash can be generated by the funds this week.

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