Churning Nowhere

The 9th Floor has been quiet for a week. The lights were dim and inside, you espied flickering shadows cast from the hearth, fluttering across the drawn blinds. In the dim pale pressing into the night, you could make out…was it a figure?

For I was here all along. Watching you. Plotting…

By day, my machinations held my focus; secret efforts springing forth to physical being. The drawing of my pipe casting smoldering red over the papers scattered at my fingertips. The ash that chanced on the work below my only distraction.

A rare glance up from the work table showed me that my positions in the market were going nowhere cumulatively, though individually they are all over the map. Churn and chum would be a description for it. My high flyers pulled back. My losers and lollygaggers advanced.

And nothing happened.

My focus returned quickly from that sight, back to work.

I’m A Seller Into This Rally

The market is running and I have made much profit. My gains this year stand respectably north of 15% with the summer closing behind us.

HCLP is back to announcing omnipotent re-pricing and supply extensions. Natural gas continues to see robust expansion to the glory of BAS and ETP. CCJ defies the uranium market. AEC and MAA are riding a multifamily wave that almost no housing analysts foresaw. And the coal market is stealthily shoring up BUT and NRP, with fundamentals that will catch the mainstream opinion off guard. Even the silver market has held onto some pittance of gains this year.

To be sure, the past 18 months have been a glorious time to be alive.

But that will all end soon enough.

It is not just any specific prophesy of doom I’m latching onto here. For the most part, we’ve seen the ability of markets to price out specific events. But I have gone back through every stock market crash since the establishment of the Federal Reserve, and what I have seen (albeit with what little data is available) is a left skewed distribution of such frequency that makes me think the chances of our current state of affairs casually drifting past the 7 year mark without recidivism are…poor.

So I will raise cash going into Fall (as I have several times in the past). And knowing that if I am wrong, there will be plenty of time to make yet more money.

Friday’s Purchases Working Hard Today

The buys of CCJ, HCLP and BAS I made before leaving for the weekend are all working today, up markedly.

Everything else I have is also pacing, as we reached oversold levels last week that warranted a strong bounce.

I’ll give you a small hint: I’m personally terrible at these short term inflection points. My style is very much long term allocation to the right place at no particular time. It works; sure I have no complaints on my own performance.

But even though I have no personal trading skills, I’ve still made a killing trading the past few years. How, you ask yourselves?

Why with the help of The PPT, of course.

The quality work of The PPT has enabled focused investors like myself to become well rounded performers. Where before I would have been limited to strictly my own strategies, I can now diversify my tactics to a trading pattern around those strategies, multiplying my profit potential.

It is a community where each of us outsources our strengths to one another. And it is high time you get off the fence and add a subscription.

Down Over 2% Today

Well, the hubris post did it, and pointing out that when I crossed 20% YTD gains timed the top with almost cruel exactness. Just as we all knew it would.

BAS is taking the session the hardest for me, down almost 7%. They started a correction after earnings, and it looks to be picking up speed. My guess is a retest of the 200 day, putting them just over $20 a share, at which time I will be a buyer.

MAA is second worst, down over 5% on a disappointing…Core FFO number? FFO is very important in the real estate market, because it prices out depreciation of construction (which so long as your structure is sound is irrelevant). But they also just doubled their operation by acquiring my old position CLP, and seem to be continuing the spirit of development and expansion. They have sound debt levels making the process easier, with plenty of room to add leverage. And a strong wind at their backs in the form of a rising rent environment. I’m holding here because a 4% dividend and steady growth make MAA a sound enough investment once this passes.

Following next is a roughly four way tie between BTU, NRP, HCLP, and ETP. There seems to be a theme today of energy names being punished a little worse than the indices. Then again, people have hated coal for years and half the energy sector has huge gains unrealized with ample volume to round about escape losses elsewhere, so maybe this makes perfect sense.

CCJ had a good earnings report, continuing to kick the uranium market doldrums by personally doing just fine. Their long term contracts persist in rewarding them with a price well above the dismal spot market, and sales volumes have increased. So the market has rewarded them by only selling off 1.5%.

(Actually, I need to be honest. I am concerned that CCJ has managed to perform this well in this environment. Particularly because despite the better sales and earnings, they continued to lose cash – the only thing that really matters – and in light of the recent revelations of overseas corporations acting to enable financial games with their taxes. I’m going to be sniffing around very closely here, because I will not become prey to some corporate Enron nonsense)

AEC and silver are my “best” positions, each down “only” less than 1%.

Okay, so the market is getting clubbed. What do we do about it?

Well, if you’re in my position – and if you’ve been following me, that is quite possible – up still over 15% for the year, then the answer is pretty clear. You do nothing.

I can afford to do nothing here, to see if this hard drop doesn’t stabilize quickly and lead us higher through August. We should hit a bottom pretty quick. I don’t yet see a good catalyst for a major drop, outside of the regular bank failings and global “World War” heckling that usually bogs us down. For the moment, that’s no excuse to panic.

China, Europe, and most the rest of the world haven’t exactly been doing awesome before now. This isn’t news.

So there’s no rush here. 13% YTD gains is my floor. When I hit that point, I go to cash fast, because my year will be at least +13%. 13% because I was stuck between 10% and 15%, so let’s take the black prime number in the middle (scientific, right?).

Strategy Session

My game plan at this point is to respect the concern of my peers and get defensive into the end of the summer. This shall be accomplished through an increased cash position through sales yet to be determined. This will not involve any hedging or exposure to instruments of financial destruction whatsoever, because that has been a stupid, money losing strategy that only benefits the issuing financial companies/thieves (see TVIX).

In a strange way, my success has insulated me and I am afraid that this may weaken me by extension. It is very difficult for me to believe in a market selloff right now, hanging out near all time highs, singing the praises of my ever-lifting positions day and night. I have a blind spot, and while that is fine in some ways (it’s hard to hate on success too much), I need to be wary in others.

To be specific: my own disregard for the technology investments has been a blessing in that the huge selloff this year has not impacted me. But that same disregard makes me disconnected from the realities of the rest of the system.

I have to imagine, somewhere, that this many positions getting cut in half does really matter. But it’s so far away from me.

So I have no choice but to try and outsource this element to people who are closer to it, whom I have confidence in.

Ergo, I shall be concerned, even while I am not concerned. This is the wise course of action. It respects what is a very real trauma to others, even while I, myself, have been more or less unaffected.

Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

Churning Nowhere

The 9th Floor has been quiet for a week. The lights were dim and inside, you espied flickering shadows cast from the hearth, fluttering across the drawn blinds. In the dim pale pressing into the night, you could make out…was it a figure?

For I was here all along. Watching you. Plotting…

By day, my machinations held my focus; secret efforts springing forth to physical being. The drawing of my pipe casting smoldering red over the papers scattered at my fingertips. The ash that chanced on the work below my only distraction.

A rare glance up from the work table showed me that my positions in the market were going nowhere cumulatively, though individually they are all over the map. Churn and chum would be a description for it. My high flyers pulled back. My losers and lollygaggers advanced.

And nothing happened.

My focus returned quickly from that sight, back to work.

I’m A Seller Into This Rally

The market is running and I have made much profit. My gains this year stand respectably north of 15% with the summer closing behind us.

HCLP is back to announcing omnipotent re-pricing and supply extensions. Natural gas continues to see robust expansion to the glory of BAS and ETP. CCJ defies the uranium market. AEC and MAA are riding a multifamily wave that almost no housing analysts foresaw. And the coal market is stealthily shoring up BUT and NRP, with fundamentals that will catch the mainstream opinion off guard. Even the silver market has held onto some pittance of gains this year.

To be sure, the past 18 months have been a glorious time to be alive.

But that will all end soon enough.

It is not just any specific prophesy of doom I’m latching onto here. For the most part, we’ve seen the ability of markets to price out specific events. But I have gone back through every stock market crash since the establishment of the Federal Reserve, and what I have seen (albeit with what little data is available) is a left skewed distribution of such frequency that makes me think the chances of our current state of affairs casually drifting past the 7 year mark without recidivism are…poor.

So I will raise cash going into Fall (as I have several times in the past). And knowing that if I am wrong, there will be plenty of time to make yet more money.

Friday’s Purchases Working Hard Today

The buys of CCJ, HCLP and BAS I made before leaving for the weekend are all working today, up markedly.

Everything else I have is also pacing, as we reached oversold levels last week that warranted a strong bounce.

I’ll give you a small hint: I’m personally terrible at these short term inflection points. My style is very much long term allocation to the right place at no particular time. It works; sure I have no complaints on my own performance.

But even though I have no personal trading skills, I’ve still made a killing trading the past few years. How, you ask yourselves?

Why with the help of The PPT, of course.

The quality work of The PPT has enabled focused investors like myself to become well rounded performers. Where before I would have been limited to strictly my own strategies, I can now diversify my tactics to a trading pattern around those strategies, multiplying my profit potential.

It is a community where each of us outsources our strengths to one another. And it is high time you get off the fence and add a subscription.

Down Over 2% Today

Well, the hubris post did it, and pointing out that when I crossed 20% YTD gains timed the top with almost cruel exactness. Just as we all knew it would.

BAS is taking the session the hardest for me, down almost 7%. They started a correction after earnings, and it looks to be picking up speed. My guess is a retest of the 200 day, putting them just over $20 a share, at which time I will be a buyer.

MAA is second worst, down over 5% on a disappointing…Core FFO number? FFO is very important in the real estate market, because it prices out depreciation of construction (which so long as your structure is sound is irrelevant). But they also just doubled their operation by acquiring my old position CLP, and seem to be continuing the spirit of development and expansion. They have sound debt levels making the process easier, with plenty of room to add leverage. And a strong wind at their backs in the form of a rising rent environment. I’m holding here because a 4% dividend and steady growth make MAA a sound enough investment once this passes.

Following next is a roughly four way tie between BTU, NRP, HCLP, and ETP. There seems to be a theme today of energy names being punished a little worse than the indices. Then again, people have hated coal for years and half the energy sector has huge gains unrealized with ample volume to round about escape losses elsewhere, so maybe this makes perfect sense.

CCJ had a good earnings report, continuing to kick the uranium market doldrums by personally doing just fine. Their long term contracts persist in rewarding them with a price well above the dismal spot market, and sales volumes have increased. So the market has rewarded them by only selling off 1.5%.

(Actually, I need to be honest. I am concerned that CCJ has managed to perform this well in this environment. Particularly because despite the better sales and earnings, they continued to lose cash – the only thing that really matters – and in light of the recent revelations of overseas corporations acting to enable financial games with their taxes. I’m going to be sniffing around very closely here, because I will not become prey to some corporate Enron nonsense)

AEC and silver are my “best” positions, each down “only” less than 1%.

Okay, so the market is getting clubbed. What do we do about it?

Well, if you’re in my position – and if you’ve been following me, that is quite possible – up still over 15% for the year, then the answer is pretty clear. You do nothing.

I can afford to do nothing here, to see if this hard drop doesn’t stabilize quickly and lead us higher through August. We should hit a bottom pretty quick. I don’t yet see a good catalyst for a major drop, outside of the regular bank failings and global “World War” heckling that usually bogs us down. For the moment, that’s no excuse to panic.

China, Europe, and most the rest of the world haven’t exactly been doing awesome before now. This isn’t news.

So there’s no rush here. 13% YTD gains is my floor. When I hit that point, I go to cash fast, because my year will be at least +13%. 13% because I was stuck between 10% and 15%, so let’s take the black prime number in the middle (scientific, right?).

Strategy Session

My game plan at this point is to respect the concern of my peers and get defensive into the end of the summer. This shall be accomplished through an increased cash position through sales yet to be determined. This will not involve any hedging or exposure to instruments of financial destruction whatsoever, because that has been a stupid, money losing strategy that only benefits the issuing financial companies/thieves (see TVIX).

In a strange way, my success has insulated me and I am afraid that this may weaken me by extension. It is very difficult for me to believe in a market selloff right now, hanging out near all time highs, singing the praises of my ever-lifting positions day and night. I have a blind spot, and while that is fine in some ways (it’s hard to hate on success too much), I need to be wary in others.

To be specific: my own disregard for the technology investments has been a blessing in that the huge selloff this year has not impacted me. But that same disregard makes me disconnected from the realities of the rest of the system.

I have to imagine, somewhere, that this many positions getting cut in half does really matter. But it’s so far away from me.

So I have no choice but to try and outsource this element to people who are closer to it, whom I have confidence in.

Ergo, I shall be concerned, even while I am not concerned. This is the wise course of action. It respects what is a very real trauma to others, even while I, myself, have been more or less unaffected.

Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

Previous Posts by Mr. Cain Thaler