Let’s Assess The Damage

The market is ugly right now, but if we’re to be honest with ourselves, we’ve been overdue a selloff for going on 15 straight months now. Actually, we don’t even know that we’re getting a real one yet. I suspect we are, but that’s sort of the great mystery here isn’t it.

I have 25% cash still, a far cry from the 50% I had just back in January (and admittedly visually bad timing), but why should I panic just yet? I’m (was) +14% for the year. And if I had been more defensive, can you really argue I’d have been better off?

Check out BAS, up a whopping 61% so far this year, then tell me I should really have been holding more cash. As it was, I sold off exactly the right assets while holding onto what needed to be held – via pure dumb luck of course.

And because this timing is just luck, if I panic and raise cash back to 50%, as far as I’m concerned I’m more likely to miss out on the next big move in my assets. If there’s anything that BAS or HCLP has taught me, it’s that my research is solid and my hand is hot right now; and those fruits can come to bear at any moment, with or without me.

So I’m inclined to sit back, be patient, and hold the position that the real cautious move on my part is to be afraid of missing out on the upside, not of participating in the draw downs.

In the meantime, I’m going to watch PGJ get battered to ribbons, clutching my put option lottery tickets like an addicted gambler.

Most of my portfolio is now solidly shrugging off Yellen’s slip of the tongue. Our good bankster friends over at JPMorgan said it best – Yellen is fresh and inexperienced, and she still needs to learn how to speak without actually saying anything.

It will come. It will come.

Despite my state of shock at watching Yellen crack the market like an egg yesterday, I didn’t react. I want to watch a few more days before I make a move, even if they should lose me money. With a +14% year going, I have buffer room.

Now, the good word here is that CCJ and BAS are both moving higher. I suspect HCLP will join in soon as well (that position can be rewarded a little breather, it’s come a long way). The energy themes are solid and intact.

The bad side of the coin is that fear/reality of higher interest rates is going to just ravish the REIT and associated housing space. Check out VNQ over a five day period, and you can almost sink the cracking point up with Yellen’s comments. My current position AEC is breaking down again this morning, and an old position MAA is following.

This has to be treaded carefully. If you’re juggling garbage like NLY, I’d say you’re one four day panic away from another round of 30% losses.

I’ve said well before today, back when I never imagined Yellen would spook interest rates higher, that I was interested in rebuying MAA. This is sort of a blessing in that regards. I’d venture a guess that long term damage to multifamily REITs from higher interest rates will hover somewhere between “negligible” and “not damaging, actually positive”.

But well before that point, there will probably be a lot of indiscriminate selling from emotionally driven fund managers. The climax of that, if it should materialize, is the buying opportunity.

Between then and now, it’s important to keep a wary eye on reform efforts to Fannie and Freddie. There’s been some “bipartisan chatter”. Mortgage origination is >70% dominated by the government backed mortgage giants, and the entire housing market is totally dependent on them. A poorly thought out reform effort could rain chaos. But there’s no sense even having a discussion about that just yet. First things first, interest rates.

Just when I was getting sick and tired of making all this money, too. Yellen had the fortitude to go right ahead and sink this awesome stock market rally we’ve been having.

I absolutely hate making gains hand over fist; this is just terrific.

Did we all know this day would come? Yeah, I think that’s fair. But seeing it here makes me sick to my stomach. The good life was getting very good, and there’s something about watching a +15% unrealized gain inside the first 3 months reverse that reminds you just how boring the stock market used to be…

Back before the man with the silk beard came and made life grand.

Those of you who are new to the stock market are going to look back on the days of Ben as the stuff of legend. You lot, right now, are just so brazen – cocksure of yourselves. Well I have some news for you little bambino’s; greater than 80% of you are about to lose more money than you made over the last five years, long bullshit like TW at 40 EPS, or TSLA at 200+ EPS…half the time, you have no fucking clue what these companies even do, much less what goes in to making money in their stocks.

You’re gonna lose your asses with comments about “the new economy” still forming on your lips; perhaps a Warren Buffet quote framing in the back of your mind, in futility, before BAM!

No more account.

Get ready for some life lessons on risk management and self-discipline, suckers, taught the good old-fashioned way – through bare fist boxing.

CCJ is up another 1.3%. BAS is fighting for a +3% on the day. HCLP wants to hit that $41.00 mark, currently up 1.67%. NRP (my only loser so far this year, down 20% from my purchase price) is up 3.3%, back above $16.00. AEC is racing +1.1%. UEC (small position) is up 2.4% (but that thing swings around $1.70 +/- 20%, so let’s just call it flat…).

Really, silver is the only thing I own that’s down. And my emergency put positions are essentially all worth $0.00 – so I took about another 2-3% loss this year from those.

I am looking to re-enter MAA at some point.

And YTD my account is soaring, well above +14% for 2014.

Look, these daily posts, reminding you of how much money I’m making; I get that they’re a little boring.

What do you want from me?

I’m not going to be spending my time researching new positions when I really just want to hang on to what I already have.

My advice to you is to hold on to the things you should have been buying when I was doing research. That’s the high reward play right now – to sit back and reap the fruits of our labors. This has been due for a few years now.

That and to fling manure at enemy politicians who are watching their public ratings getting sucked into a vortex.

BAS is up 5%, just soaring on the natural gas cycle revving back up. HCLP is up 2%, above $40, working to make new highs and keep the epic wins coming.

CCJ is up 2.5%, recovering from Friday’s slump and trying to push back to new highs again (and it will).

The market has cast its judgment, and that judgment is a message of “Pro-Putin” elation. Communism is back, my friends. The good Soviet’s are here to show us capitalist dogs the way forward, and we are just ravenous for the message. The Ukraine wasn’t really a place anyway – maybe a whopping 15% of Americans could have pointed to it on a map before Russia decided to take it off of them.

And since American geography skills ultimately determine global policy, I’d say that makes the Ukraine “not a place.”

Other places that “aren’t really places” now include Algeria, Myanmar, Kyrgyzstan, Turkmenistan, any other country that ends in a “-stan” (besides one’s we routinely bomb, of course), Nepal, and Chile.

Please also make record that Bangladesh is now a part of India, Iraq and Kuwait are being combined, and the Korea’s are one place. We’re simplifying that whole arrangement.

But, as a trade off, Vietnam is now two countries – North Vietnam and South Vietnam.

American geography skills have spoken. Update those while you’re busy adding land mass to Russia.

In conclusion, I’m rather surprised by how well a grain operation like BG is taking Russian special forces nationalizing land all around them. But then again, maybe it’s shareholders are just clueless what Bunge actually does?

Here I was thinking CCJ would go on an epic run, and instead it decided to reverse 4.6% on a lazy Friday afternoon.

On the plus side, it and my other main positions (BAS, AEC, HCLP) all seem to be resting just above the higher moving averages. I’m going to pretend like I care about TA for a minute and assume that means paved glory in my future, next week.

China sucks and I’m sitting around just praying PGJ gets assaulted. The BRIC thing is just really a load of garbage. They’ve been shoveling this shit to private retail money for twenty continuous years now; meanwhile, to this day, three of the above four letters in said acronym don’t even have primitive shareholder legal protections in place worth a damn.

Pathetic.

Putin is bringing down US drones and generally showing off now, as if the inability to feed and cloth his own people (or other such humiliating realities of that Russian Exceptionalism lifetstyle) were somehow forgettable next to the nostalgic grandeur of a grey haired, 62 year old man suffocating on his own bullshit.

Suffice to say, if Bush were still in office, Putin wouldn’t have the balls to be trying any of this. I know you Obama apologists will be leaping around like faggots now, whining at me for being “unfair”. What’s unfair is us living in this day and age and still needing to explain how incentives and behavior work to you stupid assholes. Choke on some humility coming off the trio of failures that are Obamacare, Foreign Policy, and the DOJ before you open your mouths in my comments section. Unless I’m mistaken, outcomes still matter more than pathetic excuses and “intent”.

The only one of the BRIC’s I would even look at is Brazil. Even there though, no need to get tangled up in the state owned populism. I’m content to just sit back, crack a beer, and watch Venezuela and Argentina burn to cinders.

I’m 25% cash, a little less cocky from this week, and certainly not up 14.5% anymore (though doing quite well).