The market bounced a little on Friday, but is wasn’t very impressive. The volume was low and the internals were weak. The market is trying to put in a bottom. It’s tough because, for the most part, the earnings suck and the stock prices are coming down to catch up with the earnings. For the time being, the indexes are holding above recent lows.
There is no telling which way the market will go this week. But, I’m comfortable with our positions – for the moment.
I will be scouting around for another December position this week. I’m still being particularly (maybe overly) cautious about new positions. November is the first month of our seventh year tracking our portfolio and I want us to get off to a good (profitable) start and continue through December.
Although the VIX came down to close at 56.10 on Friday, it’s obvious that we’re going to have exaggerated volatility for months to come.
As you know, I’m still suggesting positions of 20 contracts. However, I urge you to be careful and adjust your positions to your account size and risk tolerance.
Warren Buffet Exposed
“Losses (for Berkshire Hathaway) from derivatives result in part from accounting rules related to bets Buffet made on four stock indexes, including the Standard & Poor’s 500. If the indexes fall below contractually agreed-upon levels at expiration dates beginning in 2019, Berkshire will lose the bets.
Berkshire has collected $4.85 billion on the contracts and can profit from investing the funds, the firm said.
The investment loss “doesn’t look great,” said Tom Russon, a partner at Gardner Russon & Gardner, which manages holdings including Berkshire shares. “But shareholders should rejoice that he was able to obtain that capital to invest on such attractive terms for years before the chance comes that he’ll have to pay anyone.”
Interesting. It appears that Warren may be selling uncovered long term puts. Can you imagine how many he must have sold to generate $4.85 billion? Plus, where is he finding strikes all the way out to 2019?
I would never dare to question Warren’s genius. He’s 78 years old and I hope he lives to 100. But I also hope that his successors know how to make adjustments if necessary. Those options expire in 2019. There’s a chance he won’t be around to pull the strings.
Scenario: A house was purchased and has a $150,000 mortgage. The current value is only $100,000.
That should substantially reduce the payments for the homeowners and allow them to participate 50% in the appreciation of the home. It would allow the homeowner to stay in their home. This is not a cure-all for all situations, but it’s a hell-of-a-lot better than what’s being done now. What’s being done now sure isn’t working.
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Here are just a few of the jokes going around regarding our less than beloved Lions on sports radio.
Michigan Law: The Michigan State Police are cracking down on speeders heading into Detroit. For the first offense, they give you two Detroit Lions tickets. If you get stopped a second time, they make you use them.
Q: What do you call 47 millionaires around a TV watching the Super Bowl?
Q: How do you keep the Detroit Lions out of your yard?
Q: What do the Detroit Lions and an opossum have in common?
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NOVEMBER PORTFOLIO POSITIONS
CPTI NOVEMBER Position #2 - RUT Bull Put Spread – 505.79
DECEMBER PORTFOLIO POSITION
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ONGOING STRATEGY - THE ZERO-PLUS Strategy
ZERO PLUS POSITION – RUT Bull Put Spread – 495.84
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