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Amazing AMZN is the portfolio hero again - on a red day. Up more than 50% since I picked it up at triple digits a few months ago.

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15 minutes ago, explo said:

Amazing AMZN is the portfolio hero again - on a red day. Up more than 50% since I picked it up at triple digits a few months ago.

Nice.  I took short positions in DXD and PSQ  to protect against a broader market pullback. It  will limit my upside on bull days but will minimize my downside significantly.

 

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On 2/1/2018 at 8:09 AM, dydo said:

Could not do it, sold with profit bought Cognex instead.

I have avoided a major disaster with marijuana stocks dropping 23% on average in last two days. Literally, I sold 15 minutes before collapse yesterday. I was also rather lucky to buy CHN at 57.05 this morning. While I must apologize for suggesting individual marijuana stocks, I feel very good about suggesting REITs. VTR, CHN, PSA, and SPG, where last two need a deeper wallet for reinvestment than mine.  I also like CONE, DLR, and PLD.  Yields are not as high as the other four but solid companies. For those who are not risk averse SBRA is still my suggestion, but VTR and CHN are considered "big 2" by SBRA management so I made a safer choice seeking prices sink today. 

My portfolio yield is around 6%. I would be interested to hear from the board on how do you invest your dividends

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From the industry, I would speculate on UPS when it dips and if it does around $100.

Another discussion stock ALB now $105. Another save by the bell exit for me. This one will check 52 week low. Not sure why but the pressure is there to see to it. 

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When it comes to dividends, I guess there are three ways to handle them. One, to buy the stock which produces the dividend. The question is what is the point of buying the stock if the price is higher than original purchase? It makes sense if the price is lower, then you average. Of course, the argument is due to dividend original purchase is down by the amount of the dividend per share.

Buying with dividend another stock. Collect cash. I like another stock idea, but It seems like a long period to create a meaningful holding. Not with the amounts  I work with. 

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9 hours ago, dydo said:

I have avoided a major disaster with marijuana stocks dropping 23% on average in last two days. Literally, I sold 15 minutes before collapse yesterday.

Congrats. It seems the broker interviewed here on local TV had a point then. Greed has been a niche (crypto currencies, marijuana, etc.) driver lately and the big net brokers see the resulting retail investor flocking behaviour in their data.

Maybe an early sign of more broad volatility to come (we experienced some yesterday). My struggling hedge funds have been off to a flying start of 2018 and the hedgies managing the ones I invest in sound bullish in interviews for their market turmoil depending strategies. They believe that the tapering of central banks of the decade long free money from low interest rates and QE manipulated low yields will start to create movements in the credit market. This will likely spill over to the smaller equities market.

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14 hours ago, SCSolar said:

Nice.  I took short positions in DXD and PSQ  to protect against a broader market pullback. It  will limit my upside on bull days but will minimize my downside significantly.

 

Good timing. By short selling the index one can re-weight ones Alpha and Beta exposure for given stock picks and weights. I did an analysis of whether it would be beneficial to do this strategically (find one balance that would outperform over time) when the Alpha part was superior to the Beta in risk-adjusted return, but I found that the capital allocation cost and expenses of short selling Beta to buy more Alpha was not a good idea when already being largely diversified and leveraged in a balanced way. However I think this can be very powerful in other cases, e.g. if not already very balanced (beta balanced against many other uncorrelated return sources not just alpha) and leveraged and maybe adding the difficult timing component to it (most of the time it is not beneficial to short sell beta, while a few times is really beneficial).

The big risk of shorting Beta. Is that Beta is a big and proven source of return over time. Alpha generation is a small unique thing that might be very superior during a period in its return production with lower volatility and being uncorrelated to other sources of return, but it is unproven in producing long-term return. It's return might have lower short-term risk, but higher long-term uncertainty.

Maintaining long-term return is always more difficult than managing short-term risk. The long-term return is the real risk, which is why a diversified balance in managing the short-term risk is required. This is the role of the Beta. Although being really negative in its impact on short-term risk if not properly balanced it guarantees a long-term return. So shorting Beta it can be tactically beneficially (if one can beat the market on timing), but not strategically.

A long-term perspective less risky hedge than to short sell the index for cash is for example to short sell cash to for bonds.

 

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10 hours ago, dydo said:

When it comes to dividends, I guess there are three ways to handle them. One, to buy the stock which produces the dividend. The question is what is the point of buying the stock if the price is higher than original purchase? It makes sense if the price is lower, then you average. Of course, the argument is due to dividend original purchase is down by the amount of the dividend per share.

Buying with dividend another stock. Collect cash. I like another stock idea, but It seems like a long period to create a meaningful holding. Not with the amounts  I work with. 

Dividends adds to my cash balance and is used when re-balancing is triggered. I think the main point of dividends is to create a cash income stream in the portfolio in order to allow diversification of the timings of the stock investments and not just diversification of the names of the stock investments.

Note that when a stock pays dividend it in theory takes from it PPS (which had the dividend baked in). You can then choose to buy more shares with the dividend to keep same dollar amount of the stocks or buy general best opportunity for your portfolio. Dividends and share buybacks allow companies to generate shareholder returns without having to grow market cap, e.g. for companies that find it easier to maintain high profit margins than high revenue growth. To me it seems like the stock return has better longevity if it is not based on an ever growing market cap to maintain its return. A share buyback is basically the company making the decision for you how to invest the excess after deciding to not invest it in growth of business (it could be tax beneficial for some shareholders to not receive dividend to buy back the same dollar amount of the same stock). A portfolio with a mix of excess usage on business growth investment, share count reduction and dividends is likely best. The two former intends to grow PPS through growth of the EPS (the first focus on the E and the second on the S), while the latter will not impact PPS over time without dividend growth (which can be achieved by combination with the two former).

My current yield is 2.1%.

 

Edited by explo
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3 hours ago, explo said:

Good timing. By short selling the index one can re-weight ones Alpha and Beta exposure for given stock picks and weights. I did an analysis of whether it would be beneficial to do this strategically (find one balance that would outperform over time) when the Alpha part was superior to the Beta in risk-adjusted return, but I found that the capital allocation cost and expenses of short selling Beta to buy more Alpha was not a good idea when already being largely diversified and leveraged in a balanced way. However I think this can be very powerful in other cases, e.g. if not already very balanced (beta balanced against many other uncorrelated return sources not just alpha) and leveraged and maybe adding the difficult timing component to it (most of the time it is not beneficial to short sell beta, while a few times is really beneficial).

 

I do not normally short. Until mid 2017, I had sold out when I thought the market would go down. This caused me to have much money sitting on the side and losing out on gains as well as losing out on dividends and potential upswings. I now look at shorting the market as an alternative to selling out, though I may deleverage holdings as well. Consider it a short term trade similar to trying to enter specific stocks for a short term gain. This does not always work out, sometimes the markets do not pull back. In general though the portfolio still makes money as the percentage of short is smaller than holdings at 10-20%

 

If I add a 10-20% short position after a sizeable gain,  this limits my downside in case of market retreats. This removes that nervous twitch on market moves that may have you sell out on a bad down day. The flipside is that I reduce the upside near term potential profits. I am comfortable with missing a bit of the gains for the security of knowing the gains will not be wiped out in 1 fell swoop.  I am never short the market as a whole rather use this as a protective put in case of the broader market down trend. In my one account, I had 10% cash and 90% market and withdrew to 40% cash. I then went short 20% to protect my 60% invested from more downside risk.

 

As for this past week, the markets have taken out 56% of the years gain in just 1 week. My account I went short on, lost 17% of the years gains. This does not always work out, sometimes the markets do not pull back but it helps me sleep better at nights.

Edited by SCSolar

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2 hours ago, SCSolar said:

I do not normally short. Until mid 2017, I had sold out when I thought the market would go down. This caused me to have much money sitting on the side and losing out on gains as well as losing out on dividends and potential upswings. I now look at shorting the market as an alternative to selling out, though I may deleverage holdings as well. Consider it a short term trade similar to trying to enter specific stocks for a short term gain. This does not always work out, sometimes the markets do not pull back. In general though the portfolio still makes money as the percentage of short is smaller than holdings at 10-20%

 

If I add a 10-20% short position after a sizeable gain,  this limits my downside in case of market retreats. This removes that nervous twitch on market moves that may have you sell out on a bad down day. The flipside is that I reduce the upside near term potential profits. I am comfortable with missing a bit of the gains for the security of knowing the gains will not be wiped out in 1 fell swoop.  I am never short the market as a whole rather use this as a protective put in case of the broader market down trend. In my one account, I had 10% cash and 90% market and withdrew to 40% cash. I then went short 20% to protect my 60% invested from more downside risk.

 

As for this past week, the markets have taken out 56% of the years gain in just 1 week. My account I went short on, lost 17% of the years gains. This does not always work out, sometimes the markets do not pull back but it helps me sleep better at nights.

I guess your description of it as an alternative to reduce market exposure by deleveraging fits well with my view on it. But the view as an alternative to stop loss is also interesting. Anyway its a good way to avoid selling any holding and still get short-term protection against market pull backs.

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On ‎2018‎-‎02‎-‎03 at 11:13 AM, explo said:

Maintaining long-term return is always more difficult than managing short-term risk. The long-term return is the real risk, which is why a diversified balance in managing the short-term risk is required.

I heeded my own advice and flattened the funds basket with a max 20% single fund allocation. The stocks basket had previously been flattened from a max 4.5% to max 3% single stock allocation. Previously a historically (20 years) superior Relative Value fund was allowed to high allocation due great risk-adjusted return and great anti-correlation with the US dollar (dominating the stocks basket), which also gave a large influence over the optimization of the stocks basket (stocks anti-correlating well with the dominant fund were over weighted). The estimated risk-adjusted return was simply compromised a bit in order to balance the error sources of that estimate.

New balance is attached.

exposure.png

Edited by explo

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The flattened funds basket led allocation of a less risky stocks basket. The health care sector changed to pharmaceuticals dominated from biotech dominated, the consumer staples sector got allocated and utilities dominates the basket to mention a few examples.

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I saw that TAN is the top holding of LDRS after a banner year in 2017. I guess if someone is looking for the ETF leaders and want good solar exposure too this ETF delivers that at the moment.

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2 hours ago, explo said:

The flattened funds basket led allocation of a less risky stocks basket. The health care sector changed to pharmaceuticals dominated from biotech dominated, the consumer staples sector got allocated and utilities dominates the basket to mention a few examples.

WOW Dow down 5.5% and 1400 points. I looked at my portfolio with the protective puts and am down 0.2%. 

 

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40 minutes ago, SCSolar said:

WOW Dow down 5.5% and 1400 points. I looked at my portfolio with the protective puts and am down 0.2%. 

 

Great job. Today was a good day to only be 30% in stocks and to have the ”USD hedge” of them. Looks like SO will be the volatility defiance hero today. That stock just don’t care about the market.

Edited by explo

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38 minutes ago, pg6solar said:

CSIQ is immune even more (ignore AH print). 

Solars don’t like to be like everyone else.

SO is a unique stock though.

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18 minutes ago, stolypin said:

Just in.. CAFD is sold  for 12.35 a share

Yes, well below where it was trading. Interesting to see how this price will reflect on other yeildcos. 

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On 2018-02-03 at 10:49 AM, explo said:

Maybe an early sign of more broad volatility to come (we experienced some yesterday). My struggling hedge funds have been off to a flying start of 2018 and the hedgies managing the ones I invest in sound bullish in interviews for their market turmoil depending strategies. They believe that the tapering of central banks of the decade long free money from low interest rates and QE manipulated low yields will start to create movements in the credit market. This will likely spill over to the smaller equities market.

It seems like this is happening already. Signs of return of long lost inflation have world markets sneezing today from fear of interest rates hikes.

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On 2/5/2018 at 5:16 PM, explo said:

Solars don’t like to be like everyone else.

SO is a unique stock though.

I picked up some Southern today. It is down 20% from its highs.

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6 hours ago, SCSolar said:

I picked up some Southern today. It is down 20% from its highs.

With a long-term view it should be a good time to add here and collect dividends until some of their issues are solved. Utilities offer a nice stability when market volatility is high.

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Explo, I meant to ask this before, with that much debt (hedges), how does your portfolio hold up on big down days?  Is it immune to big market fluctuations? I am sure you think of down days and hedge against them also. 

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34 minutes ago, Jetmoney said:

Explo, I meant to ask this before, with that much debt (hedges), how does your portfolio hold up on big down days?  Is it immune to big market fluctuations? I am sure you think of down days and hedge against them also. 

My stocks are 100% of equity so I'm actually not shielded unless uncorrelated funds counter the down move, which is likely to happen if it is a prolonged slide. Some on the funds thrive on trending markets and a stock market crash is one of the strongest trends available to them so those funds tend to generate income to buy the cheap stocks with. I don't make tactical move in anticipation of a certain direction, but rather trust my strategy to be robust against any thing that plays out.

Although 100% of equity is in stocks the beta is less than 0.7, so you can view the expected stock market movement exposure as rather 70% of portfolio equity. But I've taken a beating too. Solars have not over reacted compared to the general market this time around I think.

My stock holdings are both PPS and USD movement exposed. The USD has moved up as it often does when PPS broadly falls. This helps a bit too.

Edited by explo
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19 hours ago, explo said:

Although 100% of equity is in stocks the beta is less than 0.7, so you can view the expected stock market movement exposure as rather 70% of portfolio equity. But I've taken a beating too. Solars have not over reacted compared to the general market this time around I think.

My stock holdings are both PPS and USD movement exposed. The USD has moved up as it often does when PPS broadly falls. This helps a bit too.

To be concrete my stocks lost 1.7% the last 6 trading days, while the ^SP500TR lost 7.1%.

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2 hours ago, explo said:

To be concrete my stocks lost 1.7% the last 6 trading days, while the ^SP500TR lost 7.1%.

What is your stock basket and weights? The last I saw was your January 7th post of 12 stocks.

That portfolio is down 6.28% in February vs the DJI down 7.49% NASD 7.29% and S&P 7.23%. 

Explo weighted basket.xlsx

For the past week (5 trading days) My trading account was down 4.91%, My static account that I put some protective puts on was down 3.74% and my Ira that sold 3/4 on the first drop 2 weeks ago was down 2.4% and is still positive for the year. The past week the Overall markets was down 5.36%. I figure I am ahead.

 

Edited by SCSolar

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11 minutes ago, SCSolar said:

What is your stock basket and weights? The last I saw was your January 7th post of 12 stocks.

That portfolio is down 6.28% in February vs the DJI down 7.49% NASD 7.29% and S&P 7.23%. 

 

For the past week (5 trading days) My trading account was down 4.91%, My static account that I put some protective puts on was down 3.74% and my Ira that sold 3/4 on the first drop 2 weeks ago was down 2.4% and is still positive for the year. Te past week the Overall markets was down 5.36%. I figure I am ahead.

My updated stock weights can always be found in my profile:

AMZN 5%
BCPC 10%
FB 5%
GILD 5%
JNJ 10%
MKC 5%
NJR 10%
NKE 5%
PSA 10%
SQM 5%
SO 10%
USB 5%
UGI 5%
V 10%

I plan to replace MKC with a doubled USB, which I've already updated for.

In February I'm down 3.1% on my stocks in the portfolio currency, helped by the USD being up 2.6%. The last 5 trading days my stocks were down 1.3%.

Edited by explo

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On ‎2018‎-‎02‎-‎05 at 11:13 AM, explo said:

I heeded my own advice and flattened the funds basket with a max 20% single fund allocation. The stocks basket had previously been flattened from a max 4.5% to max 3% single stock allocation. 

New balance is attached.

exposure.png

The flattening of the stock basket was done on February 1 and then I reshuffled some again on February 5. So my stock holdings haven't been constant in February. (3% of assets corresponds to 10% of equity)

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Last year overall gains were 31.48%, so far this year I am 8.4% down. However, this includes dividend payments paid in this year.

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