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$EUO

Holding Steady

I have a smaller cash position than the 50% I was holding this summer. My current cash level stand around 20%, with purchases of HCLP, NRP, DRI, RMCF, SCO and a handful of dips in my current assets eating up the 30% cash position.

I sold EUO weeks ago.

I’m not sure if I chose exactly the moment to lever up into the firestorm but I’d say we’re about to find out.

What I do believe, though, is that feminism has seized Ben Bernanke’s chair, and Janet Yellen can smoke blunts with the best of them.

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Sold EUO

I dropped out of my euro hedge, EUO, for $18.61, for a 2% gain. I could have been +10% if I hadn’t held onto it for so long, but that’s not necessarily the purpose of having a hedge.

The next leg of the euro crisis doesn’t appear imminent, and even though I’m not exactly cheery about the position the Europeans have put themselves in, our two economies appear to be leveling against one another.

I can’t say how long until the ECB will need to devalue the euro again. It’s coming; maybe a few years at most. But we could just as easily get hit here at home first.

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Going Strong Today

Welcome, and I hope I find you well.

I’m coming into the afternoon with strong rallying across my portfolio. AEC and CLP are both up over 100 points. CCJ, RGR, and BAS are all pushing 200. The euro cracked this morning, and EUO is now up 150. Silver is enjoying a relief rally, but it’s down so much inside of this year, it seems stupid to talk about.

The only place I’m losing money today are the TSLA puts. And since they’re puts at 2-3% of the account, I really don’t care.

I’m actually looking to add to the Tesla put position, this time targeting the 2015 expiries. A $70 strike price should do nice – maybe as low as $50.

I believe TSLA is the new NFLX; sans the recovery.

All in all, I’m still up over a percent so far, with a 30% cash position to boot. But if I were to be honest, I would say I still expect the summer to end dreadfully.

Have a great day.

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Kicking Myself About Utilities

Every now and again, I like to look back over where I’ve been to see what I should have done. Sometimes I find I was exactly right. Sometimes I see the errors (hopefully not relevant). And sometime, much to my frustration, I see I was exactly where I should have been but then decided to wander off just before the party got started.

Utilities more or less sum up those frustrations.

I called the utility move about 2 years ago. My reasoning was essentially that a utility is equivalent to a publicly insured bond (a company with a legal monopoly and appropriate guarantees), and that since these bonds have (had) a nice yield, they would become the de facto target if bonds held low prices. But even if bonds somehow fell, they were good enough value to warrant the buy at the time.

Then I picked through and found my favorite utility – AWK (water).

I bought AWK in the low $20’s, road it up to $30, and then…I just sort of wandered off.

So much money got left on the table. Did I leave the utility play because I thought the move was done? No, I mostly left because I thought we were going to sell off and wanted to trade both ways. So I raised cash.

I cannot tell you how many times I’ve overplayed my hand like this, trying to nail the inflection like an ace. And what I’ve witnessed, in hindsight, is that I’m a much better stock picker than I am a market timer.

Which brings us to oil.

I just sacrificed some more money on the alter of oil. But this time, instead of shorting more like a beast, obsessed with “being right”, I’m taking my drubbings and walking off. I’ve been almost perfectly hedged the past few months (excluding silver, which I treat as almost an off balance sheet position at times). And I refuse to let the SCO “hedge” (read, loser) sink my year, which has been very profitable. EUO is doing well, I have a healthy cash position, and BAS, CCJ, AEC, CLP, and RGR will all prove winners. Of this I am confident. The only other thing is the TSLA puts, which are low single digits of assets and will cause as much fluctuation in my portfolio as the month of June, should they burn out.

Or they make my year.

The message here is flexibility. Learn to have it – don’t waste away your hard labors on the rash emotions of the moment.

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Not Touching Anything

Have a quick look at the graph on this site. I haven’t audited any of the numbers, but if the author has done his homework, it fortells fairly clearly what oil longs have to expect.

For the moment, all of my short exposure is being pesteringly resilient; most probably because I am counting on those positions to even out my account. So of course, oil is holding up here, the euro is trying to push higher, and TSLA recovered a $3 move.

There’s no reason for any of those things other than that they hurt Cain Hammond Thaler. The market is trying to harm me, because that is the only consolation anyone in these positions will ultimately have…if they can shake me out.

But I have the patience of sheet rock. You will not win.

Current positions by size (greatest to least)

Cash – 27%
CCJ – 18%
CLP – 8%
AEC – 8%
SCO – 8%
EUO – 8%
Silver – 8%
BAS – 7%
RGR – 7%
January 2014 TSLA 35 Puts – 1-2%

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Not Done Yet

Overseas markets have continued to melt down unabated for weeks now. The Yen carry trade is dead and anyone caught in it has been trapped. And now numbers coming out of Europe continue to reinforce sustained recession with no exit strategy in sight.

The million barrel oil drawdown was confirmed by the Energy Department, which has so far kept crude prices elevated. But the summer demand will continue to slump shortly, reversing the pricing and exacerbating melancholy market sentiment into depression.

Oil futures are solidly in backwardation. Demand is slacking, as indicated by the ISM numbers and European country statistics. Throw on top of it all the energy revolution taking place in North America, and this summer sometime we’ll see a hemorrhage.

For the moment, I’m taking it two ways, as my long sell off and my “hedges” lose me money every single day. But EUO and SCO will prevail, into a summer selloff. I’ve been here before.

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