Covering High return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
April 17, 2016
Charles Moskowitz Discussion
This Always Ends Badly, But When ??
Week 15 was another profit of $644 bringing YTD to $4,099. It was fueled primarily by our trade on the short side of SIG. The puts we bought @ $1.40, and sold the first half on the 100% up rule last week @ $4.30 (they gapped there) were sold on Monday at $6.50. We had 2 small losses in QQQ puts and GLD calls. Those GLD calls were also a second half of the original trade and the net of those was also a profit.
So, here’s my conundrum; all the world governments are working to print as much money as they can, to debase their currencies as fast as they can, and as it says above, this always ends badly. Google “history of fiat money” and you’ll see what that means. The problem is that the whole world has all of this cash sloshing around in the markets, driving up asset valuations, including bonds, and everyone is chasing returns and yield.
As we saw after the December rate hike, the markets don’t really like the rising rates since it’s pure math, bond yields go up when prices go down. Bonds, even the “safest”. Treasuries are already out there in the market and if you buy them with a 2% yield, and rates advance, those bonds are losers. When return on capital becomes less important than return of capital, all hell breaks loose. No one is immune to this scenario since it affects the banks, their 401Ks, and asset values across the board.
The issue is when. The scenario has been playing out now for quite a while in the US, and with the EU following in our footsteps, as well as China and the rest of Asia, how far off can it be? The old traders saying’ “the market can remain irrational a lot longer than you can remain solvent,” certainly comes to mind.
With the exception of the Transports, the news this week was bad; retail, non-durable manufacturing, industrial production and capacity utilization, and minor earnings of dramatically lowered projections from some of the financials. All those financial beats occurred (as usual) on layoffs and cutbacks, accompanied by revenue misses. And yet, the market continued higher. It’s tough to fight the fed…
We will continue to try to make low risk trades in both directions with close stops…..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: April 11th;4th; March 28th;21st;14th;7th; Feb 29th22nd; 15th; 8th; 1st;Jan 25th; 18th; 11th; 4th; Dec 28th;21st;14th; 7th; Nov30th; 23rd; 16th; 9th; 2nd; Oct 26th;19th;12th; 5th
3rd Week expiration When the month is listed without a date
New Trades Options Account:
( 1 ) Buy 4 SJM May 125 Puts @ $ 1.45
( 2 ) Buy 4 FXE June 109 Puts @ $ 1.16
NEW Trades $ 100,000 account :
( 1 ) Buy 8 SJM May 125 Puts @ $ 1.45
( 2 ) Buy 8 FXE June 109 Puts @ $ 1.16
( 3 ) Buy 500 NVAX @ Market
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