Archive for January, 2013

Warren and me….

Monday, January 28th, 2013

January 27, 2013

I started this blog as a journal to record my efforts  to determine whether someone of slightly above average intelligence ( me ) and with a pretty good academic and practical grounding in economics and international trade and banking  can be successful  using his retirement IRA assets  to earn a living buying and selling equities on Wall Street  ( See Post #1, August 2010 ).

I was also curious to see  ( using my results ) whether the Bush initiative to privatize Social Security had any possibility  of being a beneficial alternative to the current defined benefit system where Social Security funds are not segregated but find their way into the general Budget and are used by the government to help balance the budget.

And, you all know from my most recent posts that after many years of disadvantageously following accepted investor practices , I believe I have found the ideal investment vehicle  ( S&P 500 Index ). Exemplified by SPY, IVV and VOO and other similar ETFs, I use these ETFs to escape all the snares, booby traps and nasty surprises which have made the financial industry suspect .

So,………. you could have bowled me over when I tuned in to CBS Sunday Morning, January 20 and watched Warren Buffett say that ,in his opinion, the only safe way for a private investor to succeed on Wall Street is to invest regularly in an index such as SPY over the long term because it offers the broad diversification that insulates an investor from specific risk!

Thank you Warren !  Too bad I hadn’t watched you say this 10 years ago.  It would have saved me a great deal of trial and error loss.    But, better late than never !  Never mind, I’m still here and packing sufficient monetary firepower to put this wisdom to good use.

Warren and I  may agree on what to buy, but that is only half the story.   We definitely do not agree on the buy / sell  mechanics.  I still need to make a living and think I can do so  by buying and selling SPY and its siblings following the dictates of momentum mechanics. ( Surfs up…all aboard for a ride to the beach )

Warren  would prefer  I buy regularly and never sell.  That would be great if I were much younger. But, I’m not.

As of today,  my SPY type holdings are up 5.5% from January 1 . You only need to listen to radio or TV to know that the Dow is approaching an all time high and  that money is migrating out of fixed income investments into the stock market.  The internals of the US equity  market are signaling THRUST and telling me to ride SPY in front of this wave until wave  momentum  dips below predetermined parameters.

With almost 60 percent of my working capital already riding this wave, I am on the verge of  peeling out to catch a trailing wave with a larger percent  of my  capital  because I can really feel the power of  surf beneath my SPY board.  I guess ” feeling ” power translates into experience.

Incidentally, $1 million invested in SPY seven months ago would now be worth $115,000 more….( 11.5% gain in 7 months).   Had I not taken $25,000 ( 2.5% profit in July ) and had I not  uttered those famous words about nobody going to the poorhouse taking a smaller profit.

My new  motto….,  follow the prescribed sell mechanics don’t get off the board unless the underlying thrust  indicators say this ride is over  !.

I intend to enjoy the ride  at least until the mantra  ” Play till May then Go Away ” begins to intrude on my thoughts and fight for consideration.

You will know the outcome.

Richard Maurice Gore

 

 

 

2013 ETF Portfolio – July 6, 2013 Update

Monday, January 14th, 2013

January 14, 2013

 

This is not advice because I have earmarked almost all my liquid net worth resources to SPY…… BUT, if not for SPY, this is how I would have invested this money if someone insisted I needed to have a portfolio of ETFs.   I am listing these ETFs to test my old thinking against SPY thinking and to see how good my advice would have been if I had a fantasy storefront somewhere and ordinary people wandered in looking for honest to goodness free advice.  And, you know , as well as I , anything free is worth…..zero…right ?

Here are the December 31 prices….for me to reference later on.       JULY 6, 2013

FBT ( biotech ) $45.95…………………………………………………………………………$60.51

XHB ( building and home improvement) $ 26.60…………………………………..$29.45

KRE ( regional banks )  27.97……………………………………………………………….$35.93

VNQ ( real estate  investment trust ) $65.80………………………………………….$68.83

MOO ( agriculture )  $52.76………………………………………………………………….$51.30

QQQ ( Naz Daq 100 )   $65.13……………………………………………………………….$72.58

VEU ( European large caps )  $45.75……………………………………………………..$44.41

VZ ( Verizon )  $43.27………………………………………………………………………….$51.30

XLV ( health care )  $ 39.88…………………………………………………………………$48.22

VTI ( Total USA stockmarket )  $ 73.28…………………………………………………$84.28

This portfolio has already gained 3% since Jan 1, 2013 – I will adjust the final result for that ( late publication ) even though I had these ETFs on my final list on Jan 1.

Let the games begin….

Richard Maurice Gore

 

I See a SPY Wave to Ride

Friday, January 4th, 2013

January 4, 2013

I have increased my SPY position to 3,872 shares which is approximately 58% of the funds I have allocated to SPY type investments.

This is beyond the 37% reserved for straight up investments in SPY and poaches on the 37% I have mentally reserved for SPY Puts.  And, why not.  When SPY is rolling , the premiums on SPY Puts will be miniscule and the risk of accepting a higher strike price will be greater than when fear  enters  the equation.   Conversely, when SPY noses down,  and Put premiums expand, that’s the time to expect  a relatively risk free strike price and higher premium.

So, I won’t be surprised if I step onto the shore concluding a SPY ride and almost immediately get ready to paddle out for a PUT ride.

As of this moment, including trades today, the SPY position is ahead 2% ( $11,215 ) on an average cost of $143.49.

Had I not taken my profits too early on my June 11 ride, I would be ahead $86,000 on a $1 million investment.  That premature sale convinced me to impose mechanical restraints on my compulsive tendencies.

Depending on how I read the thrust of this ride,  don’t be surprised if I invest more  money into SPY, and use up the remaining funds nominally earmarked for SPY Puts.

And, I do like the 2013 prospects for mergers in the biotech ( FBT) and in the Regional Banks( KRE) sectors.  And I may invest some money just to prove to myself that I can’t beat SPY and am only wasting time trying.

Richard Maurice Gore