Thursday, October 31, 2013

Great October!

No, it's not about October Revolution (1917) in Russia. It's about stock market in 2013. I spent half of the month on vacation, so I rested while my portfolio worked. I should say, it worked quite good.
What now? Who knows? I still think that we are going to have rally straight into year end. But there are problems (aren't they always?). Stocks are somewhat overvalued. GOP in Congress is determined to kill economy in order to save it. Commodity prices are still high (with exception of corn, which fell off a cliff this year). As always, market climbs a wall of worry, confusion and resistance.
So far, I didn't trade much lately. Missed most of shutdown/debt ceiling debacle, which was very tradeable, and happy about it. Picked up Restoration Hardware (RH) and DSW Warehouse (DSW) on dips.
In the couple months remaining in the year, I'm planning to do the same. Pick up whatever I can on drops. Maybe buy something I'm pretty sure about. Maybe take some profits. This market is scary and exciting, my goal is not to be scared much and keep my excitement in check.
Disclosure: I am long DSWRH.
Additional disclosure: Positions can change any time.

Monday, October 21, 2013

Back From Vacation

I am back after some R&R. Jamaica was great, and I intentionally didn't watch or listen to any news, except weather reports. Government shutdown and threat of the default aren't good for your mental well being.
Now, this crisis was totally tradeable. Starting with beginning of October (shutdown) you could buy SPY or QQQ calls on Thursday, sell them on Friday and buy puts, selling those puts on Monday. Because market believed that deal would be made on the weekend. Yeah, right. The last trade would be to buy calls on Oct 15 and sell them on Oct 18. Because the reality of the default is so awful, people with money would not allow it to happen. Sometimes the fact that congressmen are mostly wealthy is a blessing.
The bad side of it: default is a very destructive weapon. It's a weapon of mass financial destruction, including self-destruction. As any person familiar with weapons knows, you don't play with guns. You never point a gun at something you don't want to shoot. Even if you know for sure that gun is not loaded. The fact that we have enough idiots ready to play with a weapon of mass financial destruction, is scary.
The ugly side of it. Tea Party, which supposedly started as a protest against bailouts, in reality represents ultra conservative, socially reactionary part of society. They are closely related to Heritage Foundation, which was proud of the fact that they managed to sponsor anti-gay law in Uganda. That law included long prison terms and even capital punishment for "sodomy". Now, they might be fit enough to govern Uganda, but they are not any close to US mainstream. They are losing positions every day (today's signing of gay marriage law in NJ is a good sign). The problem, as with any fundamentalists, is that they are ready for extreme measures. And if it was Tea Party choice, we would have a default.
Well, possibility of default was (and is) still remote. Life is good. I expect market to go up for the rest of the year (of course, I might be wrong). So I added to my DSW Warehouse (DSW) position today.
Disclosure: I am long DSW.