Dreamer Corp - Port Update

Thanks a lot Oforfive. That was very helpful. Much appreciated!

Charlie

adding to my shorts here.
since I am always early, it seems, that probably means the BMR runs longer, but that is ok.

2 Likes

increased the SPY short to about 10% allocation.
Let’s see if the markets can get thru earnings season without throwing up in their mouth a bit.

enjoy the weekend all!
Dreamer

1 Like

and for reference, I am essentially flat YTD so far…maybe up .0x% or so, but nothing to write home about.

I like keeping the S in the port as a slight hedge, as when it pops it pops fairly hard, and it isn’t terribly far off the lows yet.

long-term goal continues to be:

  1. try not to lose too much money on market downturn and/or make a couple bucks on the way.
  2. hope to recognize good entry prices if/when they occur, and ride it back up.

I have no idea if a BMR is about to smack me across the head here or if my timing will wind up being good with increasing shorts.

I just feel that if the stocks/markets increase too much from here, they aren’t really bargains, which makes no sense in a high-rate, low-liquidity, ongoing-QT, possible-recessionary macro backdrop.

Stop looking at how far the stocks are off their ATH’s…they should have never been that high. What is reasonable given their growth and profitability and competition, etc etc… Odds are that “reasonable” does not equal 30 P/S ratios or higher.

Not a chartist, but if you draw a line visually on SPY chart, you can kind of see a consistent trend line on a 5yr that says maybe not too far off where things would be if the covid dip and the covid rip never occurred:

But I counter that with everything mentioned above.
You also see that SPY grew about 18.5% from Jan 2018 to Jan 2020 (pre-covid peak). This was during a bull market.
Then grew from that same pre-covid peak (not the covid low) almost 43% the next 2 years. Say what?? If growth had simply matched Jan 2018 to Jan 2020, then we would have been around 3931 on Jan 2022. Where are we on Jan 2023? 3999. So you can argue both that we are actually still higher than where Jan 2022 should have been, and you can argue "well…we also didn’t get that 9-10% market gain we were averaging every year.

True. But what changed?
Same things that happened with Dec 2018 crash and short-lived Covid crash…economy looked like crap or Fed had raised rates. Now we have Fed having raised rates dramatically more aggressively than in what caused Dec 2018 puke, and while things don’t seem as economically dire as the uncertainty at pandemic bottom, we have more a slow and steady erosion of savings, thanks to higher inflations, removal of QE for QT, and expected onslaught of weak/soft earnings and forecasts to start imminently.

Using the less aggressive rate increase effect in Dec 2018, from the prev high to prev low, the market fell about 17%.

If we take the more realistically true (in normal bull market conditions) of what Jan 2022 should have been at, aka 3931 and we say “ok, what is a 17% drop from there?” I get about 3260.

Now - if you think this rapid rate increase and the after-effects of elevated inflation should lead to a greater market collapse than Dec 2018, then you can revise your target lower.

In 2022 thru Friday the 13th of 2023, we haven’t yet gotten quite to 3263. We pretty much got in the mid-3500 range at the lows in 2022, or about 9-10% down. Does 9-10% down seem like a devastating move and obvious bottom?

Not to me.
But I am not modeling targets using highs that never should have printed in the first place.

Napkin math.
It is worth about as much as a napkin costs, and I am just a guy on the internet, but it tells you where my head is at.

Dreamer

6 Likes

I know everyone is finding it hard to focus on life because they are wondering why KC deleted his post. Well, put you mind at ease. KC had a multiparagraph post with table and insighful observations and… when the Reply icon was pressed, only the final, unusually inane sentence was there. Sigh. Cognative decline? At least suboptimal cognition. Sigh.

So let’s condense things. How ‘ya doin’ so far KC? Well, Up 4.9 for the week, up 3.6% YTD. If 'ya got it, flaunt it, 'cause these things don’t last. Taxable account up 7.1% YTD, riding an 88% position in OKE (energy up).

Options had good week, all 5 short puts and calls expired worthless so premiums added to the cash which is now about 48%.

It looked like a garbage pickup day Friday. I’m not redoing the table, but the biggest up moves were by these household names: VERI, 9.65%, STEM, 7.8$% BRZE 6.5%, ONDS 4.4%. All 5 “revert to the mean” stocks were up, two of them 3%. To me, a sure sign of a low quality, short term, risk-on, BMR.

KC

4 Likes

sold my remaining longs
now 25% short (indexes) and 75% cash.
S was nice enough to pop today, covering the (hopefully temporary) losses in my shorts.

realistically, I think the extremes, given these are index shorts, are that I either make 10% or I lose 10% on the trades. Which is roughly equivalent to about 2.5% of my port, so it won’t break me, but won’t make me rich either.

May look into some put options, but I lack experience in choosing the best ones. Should have spent the past few years paper-trading options, but just never have/had that kind of free time. (day job, dontcha know?!)

Dreamer

5 Likes

Me too: I sold S and GLBE for decent gains last Friday.
Today I sold Bill and CELH (which was down almost 10%) and I shorted UPST.
I didn´t have the guts to short GLBE, which might be a mistake.
My only long position is OXY (bought under 60$) hoping that oil will hit 120$ (or more) in the next months.

increased all the index shorts.
Because I am shorting indexes and not something like GME or TSLA, I don’t believe I will get too burned if it goes against me, nor will I make a fortune.

My thesis is simply that I expect further downside this year in equities, with a likely retest/break of the 2022 lows.

I just don’t know WHEN that will happen. But I lean more towards 1H2023 vs 2H2023. So I am ok if this goes against me…even if I am 10% wrong, at about 50% of port, it would equate to about 5% of port at risk.

I started day not quite up 1% YTD. Still then about 10% off my ATH.
My hope is to make close to 10% (eventually) on the Shorts, netting me about 5% port gain, and cutting the distance to the ATH in half, at which point I likely go long a number of my favorite stocks, if they have provided decent entry prices. Probably sticking to the rule that I won’t buy unless at/near 52 wk low. We will see.

2 Likes

I AM UP 1% YTD…GENIUS, YOU ARE, SAYS YODA TO ME!!!

WHOOOOOOOOOOOO!!!

2 Likes

Still up?

Crazy market.

Yesterday, some of my calls were in the money. THen at the open, reversal and some puts were in the money. One hour to go, all puts and calls are in the sweet spot and a 2% port loss has pivoted to a small gain. ???

I made 10 little purchases in the first hour which all look to be genius catagory–at the moment.

KC

2 Likes

I will have you know that I finished the day up an additional .01%!
But no longer up 1% YTD. Something like .6%. Blah.

Market is high on meth…will eventually trip on a rock and fall down the hill. I hope.

Dreamer

2 Likes

[Trumpets sounding in the background]
[Latina dancer “walking” past]

KC smirks, gives disdainful glance away, and announces that he is up 5.994% YTD, while secretly trying to quell shattered nerves which acknowledge that in 3 hours and 39 minutes that can all go to Hell.

But dang, Dreamer has crushed my portfolio performance from day one until the calendar provided a restart. A new season. What have you done for me lately, huh? And, I am up 37% over that hypergrowth portfolio since the 9/23/22 post. Take your victories when and where they are. They can be rare as hens’ teeth.

KC

1 Like

Um. Will take your word on that one.

Not to worry Longs…the mighty Tesla produced incredible ER that shall lift all stocks today!

Or at least that is the short-lived narrative for the day, or the hour…will see.
The back and forth Meh-Chop of this market is exhausting. it really is.

I think that is the point. Beat all longs and all shorts into submission, until we all give up, market crashes/capitulation, institutions pick up all the cheap shares, and then a new bull market finally resumes.

I may be on wrong side of BMR for an hour or a day or a week or a couple months…will see. My DOW short has never been negative, fyi…hasn’t ever made much, but just shows how sideways choppy things have been.

I will let myself lose up to 10% while I wait out these gyrations. Luckily I start today slightly up YTD. Let’s see what happens by close today. C’mon Mr. Powell…what say you?

Dreamer

2 Likes

and I am down a whopping .03% at moment!
(shakes fist virtually at the owner of Twitter)

Dow losses offsetting QQQ gains and SPY fairly flat.
How about that.

More Meh/Blah market chop hell. Yay.

Dreamer

1 Like

and now I am flat YTD.
That is what I get for taunting the rocketman.

If it goes against me longer here, the question eventually becomes, do I add on more shorts.

Catalyst potential ahead next week with Fed meetings. May just play it safe, in case further BMR upside happens post-Fed. Will see. Also keeping an eye on individual Short candidates. ENPH was a great one that I closed too soon. NVDA may be back on table. ULTA is out there. XOM anyone?

Dreamer

Blockquote

That is what I get for taunting the rocketman.

The taunt doth come home to roost. Which is why I am NOT hurling them in your direction. :sunglasses:

Nor am I lecturing or chastising. I am NOT. Just dusting off two old bromides. “The trend is your friend”, and “Cut your losses when a trade goes against you”. Now, the trend thing is not really useful, ‘cause which trend are we talking about? The last 4 hours? The last 2 days? The last week? The last month? Your friendly trend is the last year and last 5 months, (and last 3 after hours market). It is the last 4 weeks’ trend that is nibbling at your lunch. And that corresponds to your horizon because yours is a speculative trade. Hmmmm. The trade has gone against you. Thus, your conundrum, “do I add on more shorts?”.

Minimize your maximum regret. You bail out of the trade and next week QQQ is down 10%, or, you stay put or add on and next week ol’ QQQ is up 10%. Which of those, makes your tummy churn more?

Meanwhile, back in the ruins of KC’s portfolio, up 7.2% YTD versus hypergrowth up 2.0%. Incremental purchases of dips or underperforming stocks on almost daily basis. BILL and DDOG might get called away, but after hours action brought both positions back above break even. NASDQ futures down 0.5%. Fear greed index a bit frothy at 64. Week ago 54, month ago 38, year ago 19. Dreamer will get his reversal, but when and from what level? Yield curve increasingly inverted this month time period, but indexes goin up. Market sees recession nearer, or here, and is looking past it. Indexes vulnerable to good economic news (good is bad).

43% cash plus 2% very short term treasuries. 11% of portfolio tied up in options.

KC

3 Likes

my tummy has become made of sterner stuff. doing nothing, or doing less, and having a large cash allocation, has kept things under control since about June 2022. April, May, and June…take away those 3 months last year and I was up most of the time, or at least flat.

perhaps I taught myself some patience, maybe it is just me getting older, or maybe it is that I have beaten down the FOMO impulse a bit, so that I don’t fret when stocks or indexes run away from me. macro seems too warped for things not to come back down once more. if they never do, and it is now a bull market forever (BMF) then I guess I find something else to invest in. one benefit I received from covid crash in 2020 was that my preferred/exclusive focus largely on tech stocks was curbed and that pivot was rewarded with SPG doing what I thought it would. I also looked at a ton of other stocks at the time, from Halliburton when oil was toast (was told they were dead forever…ha) from restaurants (CAKE) and even cruise lines. Point is, every beaten down stock, that was oversold, came back. Sure, the growth tech stocks were incredible, especially 2016-2021 (minus Dec 2018 and covid dip, which both rebounded quickly anyway).

But I keep coming back to what made those successful?
It was:

  1. fairly under the radar, as defined by valuation/multiple
  2. lower mkt caps

TTD at a $2b valuation and an 8 P/S with all the streaming/programmatic trends as tailwinds was a no-brainer to me.

NVDA at a long-time flat mkt cap based on their PC-related business was undervalued bc their ramping DC-related business was receiving no love circe 2015/2016. That was a no-brainer to me.

It all stopped being a no-brainer when the interest I had in ZS pre-IPO dwindled a bit as they debuted with a then-record-high P/S (I think in the 30s). Then the hits kept coming with debuts like DDOG and the absurdity peaked with SNOW.

A whole bunch of folks seemed to forget #1-2 and just decided things always go up 3-4-5x, no matter the valuation. And guess what? They were right. For about 8-12 months, depending on the stock in question.

ZM anyone? What does “mission accomplished” look like for a SaaS stock? There is no firm answer, but evidence seems to point to a sliding scale of focus away from unprofitable P/S valuations towards profitable P/E, with a current pitstop at FCF.

What would people say if UPST went to $150? A 10-bagger from here practically. Yet over 50% down from ATH’s at that point. So why wasn’t it obvious that gains should have been taken and that “you won” if you rode the UPST rocket from IPO?

Greed? Naivete? Miscalculation? Or just simply blinded to valuation reality due to the lure of momentum and FOMO?

Everything is obvious in hindsight.
What will be obvious by the end of 2023?

Wish I knew now, what I will know then.

Dreamer

5 Likes

Friday was not kind to shorts or sellers of covered calls.

I had the opportunity BMO Friday to close those calls for a small profit. I did not. Cost me 0.4%. Doesn’t sound like much, but depends on the reference. It cost me 0.4% of my portfolio, but also 120% of my option erstwhile option income YTD. Trying to run this through my maximum regret lens. At first I was kicking myself due to the “cut losses on trades that have gone against you”. Could have added to the options income, and instead wiped it all out–sort of. No, the options income is intact. The loss is when/if I purchase those shares back and at what price.

macro seems too warped for things not to come back down once more

If I had covered those at a small loss and maintained a third or a half of the total put and call income, and if the market had closed down a bit, I would be criticizing myself. So, whatever, part of the strategy of selling the options. Going to take losses now and then.

With all of that, I am now up 8.8% YTD although I had a lot of head scratching to do to figure that out. I was ready to enter my new portfolio balance on my spreadsheet and the number didn’t make sense. It was less than the last entry and I was up 2.8% for the day. ??? I’m thinking I “over reported” in my last post. Major sin. Then I saw an alert from message center and it was notification that they had completed my RMD. Say what? I transfer from IRA to taxable account and then transfer to bank account. I made the transfer to bank account yesterday, or day before. So scramble through the message center messages. Last year when i requested RMD, they had a new requirement that I attach a photo ID, and I didn’t see that. So I had to submit twice, and I alerted them to the two RMD form submissions. “No problem”, they said (a little huffy maybe?) So this year, I sent in the request and they came back and said I hadn’t provided the reason for the distribution. Well, the check mark on RMD was a little faint, so I darkened it in and resubmitted, with only the comment that they hadn’t really looked too hard at the form. So they made the transfer on the 20th, and then todays little drama with a second distribution on 27th. :frowning_face: So now we shall see whether they can reverse the second distribution and get the withholding money back from Uncle Sam.

+8.8295%, folks. Trust me on that :slight_smile:

KC
.

4 Likes

Couple of items:

  1. When I check this thread, the posts now come up oldest at the top to newest at the bottom. I wasn’t always that way, was it? 158 messages. Have to scroll and scroll and scroll to get to the latest. Solution, anyone?

  2. What a “week”, if we can aggrandize 2 days to that degree. I went heavy on puts, no calls, because I am trying to get more invested. I have SNOW, BILL and DDOG puts. Then I noticed something that I thought strange with the BILL puts. My BILL shares were called away last week at $111 strike price. BILL went to $118. Sorrow. I sold a $111 strike price put. In case the price dropped to $111 this week, a could buy back for under $111. In fact, the premium was $7.80 so I would get back in at $103.20. But if it did not get that low… or if not, my breakeven would now be $118.80 next week. So I looked at higher strike price and saw $116 strike that I could sell for $10.00. Happy to have those shares at a net of $106. But then BILL was hanging above $116 a little bit, so I sold another at $117 strike price for $11.80, net of $105 when (?) they get put to me. I may be crazy, but these look like good deals.

  3. YTD +8.83%, cash 48% until I get shares put to me Friday.

  4. E*Trade reversed the second RMD, KC is happy/relieved.

  5. These market spasms are driving me nuts.

  6. VERI has new CEO with New Plan. Up another 8% Tuesday, my position now up 66%. Did sell 1/6 of the position after Friday’s 18% pop.

  7. SMG earnings out Wednesday. Up 9.4% Tuesday and another 1.1% after hours. Why do I think that gain is highly vulnerable??? That position is up 27% but I am not celebrating just yet.

KC

4 Likes
  • Click on the time/date just below the progress line to the right.
    • If you’re on mobile and only see a box image, then click on it to show the progress line.
  • Use the keyboard shortcut image (Shift + L).

YTD +8.39%. Cash 2.5% …a captain goes down with his ship.

1 Like