Covering High return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
February 07, 2016
Charles Moskowitz Discussion
Week 5 was short on trades and primarily short the market. We had only 3 trades and one of those was a 50% down loss in the GLD. The other 2 were great gains in the QQQ puts and SIG puts. For the week we came pretty close to doubling our entire month of January performance (which wasn’t too shabby). We netted $994 bringing our YTD performance up to a whopping $2,295….almost 23% in some of the ugliest and erratic market action. We closed the week with only 1 position in TLT (interest rate ETF) puts…seeking higher rates, and funds in use of $684.
There are several issues at work here and none of them are positive. The path of least resistance is down, and most notable are the massive vacuum of buyers under anything that doesn’t meet even lowered expectations or gives anything but great guidance.
Personally, I believe a big part of the problem is the unexpected consequence of the Dodd/Frank prohibition of “prop” trading. It prohibits banks from trading for their own accounts. In case you didn’t see it back in 2008 or so, many, like Goldman Sachs and Morgan Stanley and most of “the street” became banks. What this means to you is that since they are not as involved, they have no interest or motivation from maintaining an orderly market in the stocks they own. This is similar to the major difference between the NASDAQ market-maker system of decentralized players and the NYSE specialist system. At the NYSE, specialists function to “maintain an orderly market.” There are financial incentives that have nothing to do directly with profits, but rather to limit the financial exposure of these firms. At the NASDAQ, the market makers have nothing but the profit motive at work. If you don’t have the carrot of gain why would you bother to be involved with a falling stock? You just wait for the dust to settle and then come back…or not……..
We’ve had several discussions in this space about “stuff,” being the building blocks of our economy, and the fact that this “stuff” can’t go to zero…and low and behold, basic materials have come roaring back in the past 10 days. Copper, Gold, and other commodities based investments were the standouts this week. I mean really, LinkedIn worth 46% less than last week, and Alcoa worth 12% more??
We are certainly oversold again in many names and approaching important support in many indices and I’m looking to buy any further decline on Monday. There will be no new trades tonight. Use the free texting service for new trades….It’s free, and we’re up over 22% to start Week 6…If you’re not a subscriber, you should be……..CAM
All trades were based on your participation in the texting service to receive updates. Previous closed out trades not listed here may be seen in previous market letters.
New trades $ 10,000 account...In Texting we have a limited amount of words. In the interest of brevity: OPTIONS ONLY: 1 January , 2 February. The Quantity and Strike Price for each trade is specific. Trading is hypothetical. We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25th 147 Calls or Puts.For questions please call 702 650 3000. Closed out positions are found in previous letters dating back four years: Feb 1st;Jan 25th; 18th; 11th; 4th; Dec 28th;21st;14th; 7th; Nov30th; 23rd; 16th; 9th; 2nd; Oct 26th;19th;12th; 5th;Sept th;21st;14th;7th;Aug 31st; 24th; 17th;10th etc
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