February 28, 2017… And the Buy Goes On.

February 28th, 2017

Market close February 28, 2017…

SPY ended the month at $236.55 per share, while its 200-day simple Moving Average closed the month at $218.01 per share. That means SPY is still on a Buy Signal.

On December 31, 2016 your 4905 shares of SPY were worth $1,096,415. These shares are now worth $ 1,160,425. So for the two months of 1917 your total profit on SPY, including dividends, is $64,010 or
$32,000 per month. Who said investing in Index ETFs is boring?

The question is where to from here? The model says you should stay invested until a sell is generated at a month end. The model has kept you invested for the past 229 days and given you 17.25% on your investment ( including dividends ).

Think you can do better ? or….afraid to lose what you have?

The following is not advice. My thinking for myself ( very dangerous ) is that the market is due for a pause within the context of the existing buy signal. I have sold everything and I am redeploying my money in 100 shares of each of the following ETFs…SPY, VTI, ITA, KBE, XLF ( 200 shares ), QQQ. At the same time I have written 1 put contract ( 100 shares per contract ), except VTI.for assignment to me at a price which approximates the 50 day moving average price of each ETF purchased. This will allow me to stay invested, receive a premium for each put contract and maybe get assigned the shares at a price that will allow me to average down the price of my long positions.

Richard Maurice Gore

Why I Can’t Support Donald Trump

February 11th, 2017

February 11, 2017

I’ve posted quite a few Trump related comments on Facebook, and the response from Trump supporters has been to accuse me of nonobjectivity, hating Trump, of being a leftist, of being unable to face Hillary’s loss etc. Now, they are saying I should support the President no matter what.

After a while, Facebook comments are difficult to resurrect. In the spirit of ” I told you so “, I believe the time has come for me to go on the record and accept the advice of my old mentor….verba volant, scriptet manent ( sic )….words fly away, written words remain where they land.

I’ve never been against any office holder as much as I have been against President Trump. And, I’ve wondered why. Underlying everything, is his history of arrogance, of belittling people, of self- promotion beyond bragging, of his gargantuan need for acclaim and attentionfame. OK..so I don’t like him personally.

But that doesn’t mean I can’t support him to accomplish goals for America. I would just draw a line in the sand when it comes to allowing him to delegitimize other branches of our government as a means to a position beyond Presiden t …as Emperor Trump.

Here is my Facebook Post of February 10, 2017 defending my objectivity.

Donald Trump has been caught in so many lies which offer compelling evidence of a delusional personality, I find it quite difficult to understand how anyone can believe any Trump utterance.

I do not hate Trump. I subscribe to many of his ideas which I find preferable to those of the Democrats.

Neither am I a leftist. I would describe myself as a grass roots capitalist. I haven’t been paid for an hour of work in more than 10 years and I didn’t work more than 20 hours per week in the 30 years prior to that. In other words, mostly my money works for me and I fit the classic description of a capitalist.

That I have had formal training as an overseas lending officer for a large international bank, allows me, I hope, to consider Trump in an objective and dispassionate way. In my judgment,(opinion), President Trump is missing the third ” C ” of Capital, Capacity, and Character, and that means I would not want him as a business partner or consider lending him money without a strong third party guarantee.

As for me being accused of being a socialist-leftist, I would submit as evidence to the contrary, a two-year 24/7 struggle with the Teamsters where I needed to walk a fine line between my ” Commissar ” at the National Labor Relations Board and invitations to meet informally at a bar on Westchester Avenue in the east Bronx, for proposals which I could consider in the context of ” a short life “. Long story short, we won, and the Union filed to decertify its representation of its bargaining unit. We paid the strikers a fair separation benefit and hired the permanent replacements.

However, I will admit my grass roots capitalist self-description should be modified to the extent that it includes ” leave no deserving man behind as in 100% tuition refund plan for all full-time employees at my company

I know Donald Trump. I’ve seen him before, mostly on film and in history books. His character attributes
are irrepressible, inimitable and bigger than life. But trust me, he is not George Washington, Abe Lincoln, Harry Truman, or Ronald Reagan.

All that being said, I would have voted for him if I didn’t consider him delusional to an unhealthy
degree with a propensity for reactive impulsiveness. To me that spells danger.

All too bad for the struggle we may need to go through,

Richard Maurice Gore

SPY STILL ON ” BUY “

February 1st, 2017

February 1, 2017

SPY ended January 2017 at $227.24 while SPYs 200 day moving closing price average is $215.76.

This means SPY remains on a BUY signal.

It also means on the 4905 shares you held on December 31, 2016 you now have an unrealized profit of $18.198 plus dividends.

For me, it means I am free to invest more in SPY or any other ETF or stock.

For you, it means you have the same freedom, providing you do the underlying work that gives you confidence to invest in a specific ETF or Equity situation.

Looking over my shoulder, my largest ETF position is in IWM , the Russell 2000, smaller cap stocks because it is held that small caps should do better in a de-regulated enviornment and because most of these stocks do business primarily in the USA and do not have the currency translation problems of internationaly active USA stocks

Looking over my shoulder, my largest equity position is in AMZN which seems to be in the process of crushing brick and mortar retailers. I have written put contracts which obligate me to purchase 100 shares at $760 if AMZN is below that price on February 24 and 100 shares at $800 if AMZN is below $800 on February 24. AMZN closed yesterday at $822.52.

Interest rates favor Equities and the only possible cloud on the horizon would be the uncertainty relating to the market’s assessment of the Trump Presidency.

Richard Maurice Gore

Methodology: A Memo to Me

January 21st, 2017

January 21, 2017

I don’t need to spend as much of my time, on the stock market, as I used to.

I’m getting much better results than I used to, and I understand why that is so. The only thing holding me back from a much better annual monetary result is my reluctance to invest a greater portion of my investment funds in positions that I really believe in.

However, Market Rule number 1 is not to lose capital. Market Rule number 2 is to invest no more than 5% of my investment funds in any one position. Rule 3 is that no one ever went to the poor house taking a smaller profit. When I break any of these rules it is because I assess my chances are much better than even.

Leaving aside my safest investment … SPY. ( only market risk -last year, better than 11% including dividends…no trades ), the basis of my macro approach is to decide to what degree it is safe to invest in stocks.

The present situation, low USA fixed income yields versus USA stock yields (earnings divided by price ), gives the stock market a clear advantage. Example: 2.5% interest on a risk-free 10 year bond versus the earnings yield on equities ( S&P 500 ), roughly 2.5%, BUT, the potential growth of the underlying 500 largest USA Companies included in the S&P 500 Index , tilts the decision in favor of the stock market….SPY. Martin Zweig who called the 500 point plus downdraft in October 1986 and who owned the most expensive apartment in Manhattan ( top two floors of the Hotel Pierre ) stated simply that the centerpiece of his thinking is that in a low interest rate enviornment, stocks tend to go up. And, with increasing interest rates, stocks tend to decline.

In addition , presently , the S&P 500 ( SPY ) was above its 200 day moving average at last month end month end…trend positive. “Let the trend be you friend till the end ”

Reading the investment climate is a huge determinant on how much market risk I’m willing to take on. For instance the post-election market rally has been referred to as the Trump rally But, in a Trump market the wind could shift with just one Tweet . So, you can be sure market players associate Trump’s name with market volatility and uncertainty.

The result is that no matter how beneficial Trump’s economic program promises to be, lots of people think he is unpredictble and that the market has gotten ahead of itself. Everyone is keeping an eye on the exits and no one wants to be caught napping. On the other hand, the present situation does not add up to a euphoric situation which normally signals a top.

The more I read the climate/wind as unpredictable, the more likely I am to keep my money in a passive index fund, SPY, and not in specific stocks.

Anytime I venture into individual stocks, I am saying that conditions are safe enough for me to attempt to outperform SPY. And, that is an unattainable goal for 80% to 90% of professional portfolio managers. Even the great Warren Buffett admits that in most years beating SPY is exceedingly difficult.

My quest to beat SPY is part hubris , part seeking a return that will balance an increasing annual expense budget. ( I retired January 1, 2007 ) and part, a learning exercise which I find enjoyable,… an absorbing game of me versus SPY….a 365 day mental marathon. To me , the stock market is a 65 Chevvy, whose engine I enjoy working on.

The stocks I follow are those that have been winnowed from a stream of interesting names from any written or verbal source for further investigation. Since I don’t have a lot of time, cursory investigation is quick and ruthless. And, the most efficient way for me to come to a fast and ruthless conclusion is the stock chart….Blink. ” What you see is what you get ! ” Thank you Confucius !

Once I select a stock for further evaluation, I investigate other data areas such as the back story underpining its chart, the relationship of free cash flow per share to price per share to determine how quickly my investment will be repaid. I am also interested in earnings growth, but even more important, how much am I paying for that growth ( PEG Ratio ).

Other measures I consider are debt to equity ratio, dividends, share buyback program, debt paydown program, need for cash for R&D and cap ex-investment etc., whether growth has been organic or based on acquisition.

Once I decide I would like to own the stock, the next question is when. So, the name becomes one of the 150 or so stock charts I review each weekend, ( my farm system ! ). Each stock is assigned a weekly score of 1 to 5. A stock rated 5 is a buy, 4, a very small monitoring position, 3 means do nothing, 2 is a sell and 1 means cut from the chart review list if the back story confirms chart action.. Like everything in life, there are exceptions.

I started this blog in August 2010 with the intention of recording my journey and that of my 401K funds through the jungle I refer to as Wall Street. Since I have a degree in Economics and in International Finance, and was trained by Citibank to become a resident overseas bank officer, I wasn’t about to sit myself down at the desk of my bank investment advisor and give them a slice off the top.

What I didn’t have, by design, was a licence to give financial advice for remuneration. What I do have are plenty of associates and friends who I believe can benefit financially ( or at least preserve their capital ) by looking over my shoulder…no charge.. If I have helped at all , a thank you will do.

Richard Maurice Gore

SPY Strategy for 2017

January 1st, 2017

January 1, 2017

Looking forward to 2017.

I have 4,905 shares of SPY at a cost basis of $203.87. SPY presently $223.53

But, I’m at a fork in the road in determining how I follow SPY (Buy and Hold or follow the 200 Moving Average Model) and then, whether or not I should consider including other passive index funds which may do better than SPY.

Last year SPY Buy and Hold was the way to go… Except for IWM ( 21,6% which is twice as volatile )

If you had bought and held SPY, your shares would have appreciated by 9.64%, excluding dividends

If you had followed the 200 day Moving Average Model and exited December 31, 2015 and repurchased at the March 31, buy signal, you would now have 4,785 shares worth $ 1,069,591 plus dividends, not 4,905 shares worth 1,096,415, plus dividends.

As a separate test, I intend to follow both Buy and Hold and the 200 day average Model in 2017. I will take half the $116,500 market value and divide it in two,$ 558,250 each. Part A will be Buy and Hold. Part B will follow the Model.

But, I need to wait for the next Sell and then Buy Signals ( earliest sell January 31 ) to implement the plan.

Here is how other passive index ETFs compared with SPY over 12 months…including dividends.

SPY…12%,

Russell 1000 ( SPY plus next group of 501-1000 ) 12%,

IWM ( Russell 2000, (1000 -3000 ) 21.6% ( the generals are following the infantry..supposedly a good sign )

Dow …16.4 %

Richard Maurice Gore

Congratulations..2016 Result for SPY…11.65%

December 31st, 2016

December 30, 2016

You can close the books on 2016 by congratulating yourself for having stayed the course on SPY.

The 4,905 shares you started with on January 1, 2016 ( $1,000,000 ) are now worth $1,096,415. a gain of 9.64% and, don’t forget to add on the dividend yield of 2.01%….11.65% total appreciation.

Your $ 1 million is now worth $1,116,500……a gain of $116,500.

Your SPY portfolio…with one entry, SPY alone, has outperformed 84% of actively managed portfolios over the past 5 years.

Your welcome.

Happy New Year !

Richard Maurice Gore

November 30, 2016 SPY Signal = HOLD

November 30th, 2016

November 30, 2016

Your $1,000,000 investment in SPY ( 4905 shares )as from January 1, 2016 is now worth $1,080,964.

That is a gain of $80,964 for watching grass grow. ( excluding dividends ).

No commission, no risk associated with owning a specific equity, and no share going to a third party investment advisor.

You can also take comfort in knowing that SPY is the standard against which all professional portfolio managers are measured and in knowing that more than 80% don’t outperform SPY.

What is ahead ? Just market risk for the 500 big cap USA companies in your SPY portfolio. And, that risk will be addressed by the fact that, as a trend follower, I will not sit still for a protracted ride down. At any month end where the price of SPY is below SPYs 200 day trailing average of price, I will exit the market.

As of November 30, 2016 the price of SPY was $220.34 while its 200 day moving average was $209.47 and that is why I am staying in the market and holding SPY.

Richard Maurice Gore

Huma Mahmood Abedin….etc

November 4th, 2016

November 4, 2016

I believe in the adage ” Birds of a feather, flock together “, so I thought that knowing more about Huma Mahmood Abedin of Kalamazoo, Michigan, and Jiddah, Saudi Arabia would give me a better handle on “Crooked Hillary “.  Abedin is a Moslem of Indian-Pakistani descent and Vice Chair of Hillary’s campaign as well as being her number three aide when Hillary served as Secretary of State.  She started her work for Hillary as a White House intern during the Clinton administration.  She also works for the Clinton Foundation. She speaks fluent Urdu and Arabic and is an acknowledged expert on the Middle East having followed her growing up years at Jiddah with an educational focus on Journalism and Political Science at British and USA schools. Her acknowledged role model is TV journalist, Christine Amanpour.

But who is she ?  I got an insight by watching the Showtime documentary on Anthony Weiner. She impressed me as a soft, loving, supportive wife and mother, standing helpless and knowing better with eyes downcast and sad, while her husband, Anthony Weiner,  self- destructed and brought shame on her little family.  What I didn’t see was a bag woman for Hillary  projecting a hardened  edge in the vein of a Megan Kelly.  She is widely acknowledged as a person of enormous intellect and it is obvious Hillary sees her as a loyal friend and important asset, especially when it comes to deciphering middle east politics.

Other final thoughts….  It is being said that Comey was in a no- win situation, so he protected his ass. My contention is that he  should have looked beyond the impact on the FBI and James Comey. You and I have skin in the game and it is widely acknowledged that his announcement of further investigatory involvement is benefiting Donald Trump and will be pointed to as a major contributing factor if Hillary should lose. He should have kept his mouth shut and protected the FBI and his reputation by being able to point to an exhaustive effort while the election was playing out.  Nixon won in a landslide but was brought down by the facts that emerged post-election.  That is a better scenario than influencing the election.  And, what if she is innocent ???

I am a self- professed student of World War II and all the mistakes that led up to it including the self -deception of the German Industrialist Class that they could control…you know who….after the election.

I am not going to use the N word ( N-zi ). I am going to substitute the word “demagogue” as in Huey Long, Joe McCarthy, Benito Mussolini and Hitler. The essential cultivating ingredient for the growth of demagoguery is the  willingness of the population to gamble everything for change.  In my opinion, thanks to an obstructionist Congress which refuses to reform itself or  recognize that 1% of the population controls 90% of our wealth, we have created a core group which sees the candidacy of Donald Trump as our sole and last possibility for change. They are willing to overlook the veiled seriousness of comments like I could shoot someone in the middle of Fifth Avenue and still be elected.  They are encouraging the country to follow Donald and jump into the abyss because they see no alternative to haves versus have-nots

I am afraid to think of the aftermath.

I realize this has nothing to do with investing….except that 401ks abhor uncertainty.

Richard Maurice Gore

October 31…SPY still on a BUY

November 1st, 2016

October 31, 2016

As of right now, you made the correct decision to hold SPY these past ten months.

$1,000,000 invested in SPY on December 31, 2015 would now be worth $ 1,042,821 (4.28% excluding dividends )

Please remember, SPY is the benchmark against which all portfolio manager  performance is measured.

So, why pay anyone anything to handle your portfolio, if they can’t outperform SPY.  With just one share of SPY, you have a portfolio of the 500 largest  USA stocks with only market risk, and no risk specific to any one stock. And, you get a dividend of 2.20% plus the future growth of these companies.

Of course, there is still a two-month “wall of worry”  to climb before you can say you made it through 2016 in one piece.

The latest GDP growth figures should encourage Janet Yellen, Fed Chair,  to raise interest rates in December and , probably, the market won’t like that. Also, there is the uncertainty of the USA election and the market abhors uncertainty. Other possible surprises could include a confrontation over Syria, Ukraine, South China Sea etc., domestic terror .  And, who knows what tricks Putin has up his sleeve to create uncertainty in our digitally dependent world ? And, don’t forget this week’s jobs report which could point to economic weakness or an expectation of inflation.

So,  there is your  “wall of worry” for the market to climb.  But, do take comfort in the fact that you don’t have the myriad of negative surprises inherent in owning a specific stock, such as exploding cell phones etc.

I usually add to my portfolio, which revolves around SPY during November / December and this year I’ll begin that process as soon as the market reacts to the election.

Richard Maurice Gore

September 30 Signal

September 30th, 2016

October 1, 2016

Since SPY closed September above its 200 day moving average ( $216.92 vs $206.27 ), SPY continues on its Buy Signal,  up 5.3 % year to date, ( 6.94  % including dividends )

For sure , you know I am convinced the low level of interest rates makes equities ( read USA Stock Market ) the only game in town.

Enter the low energy, orange fluff head,  threatening, at the debate, a  market crash if the FED raises interest rates.

Now, what do you do if you are Janet Yellen, simultaneously being accused of keeping interest rates low to help Hillary Clinton but with insufficient evidence to raise rates…….. The answer……nothing.

In my opinion, this means its safe to invest in the leading stocks of sectors which do their business in dollars with minimal cross currency exposure….if the price comes to you…as it could courtesy of  banking woes and lower oil prices.

I believe in this market,  I am writing puts in companies such as FB and NVDA  instead of blindly purchasing the stock at today’s price. I’d rather take delivery at a discount off today’s price plus pocket a premium for having had the courage to have written a Put that gives me some price cushion without altogether excluding risk.

Richard Maurice Gore