2018 was quite an interesting year for stocks, the
economy, and for me. Before we close the
book on this year, it’s also fitting to look back and reflect. This is bit of my spiritual side speaking but
for my financial folks it’s a moment to stop and balance your books. If you’ve
read my previous posts, I talk about the importance of goal setting. Now is the time to reflect on whether you hit
those targets across ALL of your Pillars. Did you grow your spirit, mental
fortitude, physical well-being, and finances?
When I take a moment to reflect, I see some small
strides I’ve made which I KNOW I will carry on into the New Year. My past year
was the year of the FITBIT, where I became physically healthier (even playing
basketball one a week) by challenging myself mentally to meet my daily health
goals and give up unneeded foods, sugars, etc. I even gave up drinking (with
the exception of a HS reunion event) and I was surprised I was up to that
challenge (considering Little Jon wrote the Patron song specifically for me). I concluded my financial challenge of renting,
for the last 1.5 years, a house that did not meet most of our needs BUT it
allowed us to SAVE and meet our new budget goals (2 paid off vehicles that are
over 14 years old). Again, an exercise
in mental toughness for those who struggle with sacrificing today for a bigger
picture. Next, I personally want to
thank my family for the changes they made this year to help us meet our family
financial budget. This is turning into an effortless exercise (NOTE: IT DID NOT
START THAT WAY) of developing a budget at the beginning of the year, then as a
family we have to log all of our actual expenses. We use only one joint family account
for family planning so there are NO SECRET EXPENSES that crop up (if we didn’t
budget for it don’t bring it up and it’s not an item we are buying). In
summary, we MET THE BUDGET FOR OUR HOME!!
Another goal met was buying our 2nd Home! This was
accomplished by those seeds we sowed a few years back…renting our first home,
budgeting and sacrificing for our new home which took a few years to save up
for the deposit needed.
Many will overlook that these activities crisscross
through a few of my Pillars; rarely does a challenge involve just one. Taking on these goals has made me mentally
stronger, a decent multi-tasker, better prioritizing and dealing with
RISK. I am equally proud of the last two
items which have fueled my growth the most this past year. # 1 – I took on the project of building out a
consulting practice after companies continued to approach me for my
skillset. I still work in Corporate
America but on my terms which has made me SIGNIFICANTLY less stressed (Pillar: Spiritual),
in better health (Pillar: Physical), make more money (Pillar: Financial), and
more technically skilled (Pillar: Mental/Education) then I have ever been. #2 – I explored options for the first time in
portfolio and it was a big reason for my investing success this year. I have been studying it for months, used a
fake portfolio of money to test trading strategies out, and implemented BASIC
trades that have complimented my LONG-TERM VALUE oriented approach. I repeat, I was afraid and had never traded an
option contract in my life. This year I’ve
executed over 80+ option contract trades in a way that I believe lowers my
investing risk, especially considering I’ve told people to be cautious because
we are in the 10th year of a stock market rally. In summary, always stay balanced, clear minded, and focused. Help others yet use common sense and be prudent. The survivors in "The Walking Dead" did not survive from being lazy...you always have options and choices in life. Stay blessed.
For my reflection, and those of you that come here
for the stocks my Financial YE Trading Review:
What Worked?
VALUE – By sticking with my value approach, I barely bought or sold ANY stocks
in the last year. I sold 3 stocks this year that I held for more than 1 year
because I felt the markets were reaching their tops.
Apple (AAPL) – I sold
my entire position of Apple @ $200. Remember when we bought under $100. So long old friend until we meet again.
PBF Energy (PBF) – I sold
energy which shot up earlier in the year. Now energy is back down to its lows.
We’ll have to scrape the bottom of the barrel and see if its value time to pick
shares back up. PBF was in the low $20s
and I sold $47. Funny at the time I thought I got out a little early.
Sirius Satellite (SIRI) – I owned this stock because I used to own XM
Satellite radio, yes since 2005. I watched
the charts hit highs of $6.62 and decided to part ways after 13 years. In a strange twist of irony, I recently
purchased Pandora…who is being acquired by SIRI. We may be reunited again J
OPTIONS – My experiment in options was helpful this year. When the market is up 10 years straight, the
only thing that is certain is VOLATILITY.
Volatility Index (VXX) – I traded the VXX over 5
times successfully for big gains. My only reflection was to bet bigger.
Options – I traded over 80+ options contracts. I needed to test my strategy
okay. We traded small amounts for high success. I might be above an 85% success rate. Time to ramp up
DISRUPTION – I traded options contracts 3 sectors that were
ripe for Mergers and had a handful of option contracts that did well when the
stocks were acquired by other companies:
KLX Inc. (KLXI)
Dell Technologies Inc. (DVMT)
Cronos Group Inc. (CRON) * I believe the deal is still pending,
but my options were sold
Red Hat, Inc. (RHT)
Time Warner Inc. (TWX)
What Kind of Worked?
Radisys Corporation (RSYS) – I held RSYS for years. Sold some during the
good times and closely followed the quarterly earnings. They were in the
process of turning the company around but had the RISK my small consulting
practice has. They were reliant on 1 or 2 big vendors. The biggest being
Verizon. When VZ abandoned their unlimited data strategy for a while it hurt
RSYS earnings. I felt vindicated when the acquisition was announced and I
believe Reliance Jio purchased this company early as 5G is now taking off a
major strategy for all telecom companies. So I feel vindicated they were
purchased and rebought before the acquisition. BUT I did take a loss on this
position.
What did Not
Work?
I have 3 simple lessons learned that all investors
must heed:
1)
If the Government is MAD at another Country, GET OUT of those option
contracts:
I had two Chinese stocks that got beat up once the Trump Administration decided
to impose tariffs on China:
NXP Semiconductors N.V. (NXPI) – I had a profitable
position, up huge. Trump Administration began their tariff stance and China
retaliated by NOT APPROVING the Qualcomm merger of NXP. Qualcomm needed
approval from 9 countries
JD.com, Inc. (JD) – Another contract that was positive, and you know the rest.
2)
Don’t trade options contracts into earnings season:
Match Group, Inc. (MTCH) – I got busy at work and should have exited this position before earning.
Went from being up big, to a small loss. Lesson learned
3)
Don’t hold option contracts when the market begins declining:
Teva Pharmaceutical Industries Limited (TEVA) – I was up by enough points
that I was going to simply let the contract expire profitable. I don’t think
you understand, Teva was at $23 or higher and I had a contract for $17. During
the market downturn, I saw the unbelievable happen in a matter of 2 weeks.
Again went from being up to taking a small loss.
Caesars Entertainment Corporation (CZR)
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