Hi Again,
Nathan Rothschild, a 19th-century British financier and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets." That time is getting closer!!!!
My put options on the bond market (TLT, HYG), Stock Market (SPY, QQQ, ARKK) have been doing well. ETF QQQ that tracks NASDAQ, has been down significantly as those stocks do not do well when interest rates go up. On 4/4/22 I bought the put option QQQ with a strike price of $180 and that expire in December 2022; on the 4/29/22 close, this option was up by 89.67% in just 25 days! It is too early to sell. I also have puts with strike price $160 so when the time is right, I will keep one and sell the other. ARKK ETF managed by Cathie Woods who is heavy in to NASDAQ high flyers were expected to fall significantly in a rising interest rate environment. ARKK puts expiring January 2023 with a strike price of $30, I sold on 4/27/22 after 30 days for a 118% gain. Since I had QQQ (NASDAQ) puts on September 2022 and December 2022, I sold the Sept 2022 puts on 4/26/22 morning when NASDAQ was down 100 points but I should have waited for the close when NASDAQ was about 500 points down. That is investing and trading! Cannot wait to maximize profits! My TLT (bonds) puts with a strike price of 110 and expiring January 2023 (bought 2/14/22) was up by 151.91% on 4/29/22, in 74 days! -too early to sell. Bought some TLT puts expiring January 2024. This is a no brainer as interest rates go up, TLT (bonds) will go down and my put options will go up. Most people in the market do not expect interest rates to rise that much but I do not agree as the Feds will keep raising rates to ‘drain the swamp” and cure the inflation problem. Just because there is supply side constraints, it does not mean that we should neglect the demand side which is fully under the control of the Federal Reserve. As I have been saying for a long time, a Fed Reserve President said that if markets do not fall significantly, they will keep increasing rates. This is just the beginning but the markets do not go up in a straight line and markets do not go down that way either.
On 4/29/22, we added Netflix to our portfolio. It will show up on the scorecard from June 2022.
Our purchase price was $190.36. I expect the price to drop over the next 12 months giving us an opportunity to purchase more and reduce our average cost. Let us assume that we bring down the average cost to $100. On 10/25/21, Netflix hit an all-time high of $690. If you look at the chart, it is clear that Netflix made a clear double top on 10/25/21 and on 11/8/21. As I started today, "the time to buy is when there's blood in the streets." . Just imagine Netflix going to $700 in 3 to 5 years- that is a 7 fold increase!
I decided to sell our RIOT holdings with a 49% loss during April 2022. RIOT used to reflect the price of bitcoin but no more. If that did not happen, puts on RIOT ciuld have been very lucrative. As I have been saying for years, now that the Federal Reserve is increasing interest rates, BITCOIN will not be attractive to fools who thought that it is a hedge against central banks increasing the money supply and contributing to inflation. Statistics show that young people have 75% of their assets in Bitcoins or Cryptos. What does it say about diversification? I am confident that one day we will see a 66% to 90% drop in the price of BITCOINS. Now companies are opening IRA and 401K accounts to BITCOINS and Cryptos. People who lost money in the 1929 crash, never forgot that lesson!
Have a great month!
Fernando