Special circumstance investing – september update

Wow, one month without a post. Some bloggers have the decency of warning their readers beforehand, me, not so much …

What did I do

Well I rolled my Ahold Delhaize puts to november. Same strike price. I might still walk a way with a profit from this one. The market is really overreaction for this one. It just shows how tight the nerves are …

AB inbev is still doing fine and my leveraged construction can now take a 20% drop without me losing any profit on it! Despite all this great news I am still planning on further deleverage. No more new option writing and once the present leveraged construction is unwound no more leverage (except for the occasional day trading).

Day trading in September brought in 800 USD. Day trading in this case isn’t the correct word. I bought 100 CfD’s on Google on the first of September and then Google went down and kept going down. I have been there before and it is one of the reasons why I don’t trade when it is near an all time high. At 955,40 USD it was my conviction it would eventually go higher. High enough to recoup the financing fees and make a profit. I also had stuff to do in the evening like preparing a big bbq for the 9th September (and thus needing to clean up the garden), job hunting and preparing for my two week holiday in Lanzarote. It was nice to have a break from day trading in the evening en just do practical stuff. Time proved me right so while vacationing in Lanzarote I put in a sell order at 969 USD. When not filled I lowered it to 965,50 USD for the next day and while driving to the vulcano on Lanzarote on the 29th September the order got filled at a price of 966,017 USD. Google actually shot up a lot more that day so I could have made more money but hey, I was on a holiday. Actually, holding the position would have made me a lot more. But I just didn’t want another leveraged position during my holiday. Day trading is an extra for me so I will take what I can and try not to be bothered to much by the money I leave on the table.

Before going on holiday I also bought 10 puts on UVXY, expiration 01/2019 for 11,75 USD a piece. I have a nice profit on them and probably will sell them on Monday.

Add the nice rise of Berkshire Hathaway to the above and my net worth reached a new all time high. And that while I was vacationing and doing absolutely nothing productive with my time. Gentleman of leisure indeed!

The girlfriends portfolio

Here too I rolled her Ahold Delhaize puts (and in my parents portfolio).

Turns out I kinda miscalculated here free cash position last month and should not have done the UVXY puts in August so I didn’t enter a new trade in her account this time. Once the puts are gone I will move agressively into it.

Since Google dropped after I bought my CfD’s and I had a strong conviction they would go up I bought 100 CfD’s in the girlfriends portfolio to. Bought at 954,90 USD and sold at 968,99 USD (I never lowered her sell order as I did on mine). So she actually made more money on this trade then I did! After financing fees a cool 1 150 USD was added to her account.

I usually only day trade in my portfolio as switching between accounts is a bit of a bother. But on occasion I do enter a trade in the girlfriends portfolio also. It is so random and few I don’t even bother keeping score. But up to now, all have been profitable.

Why deleveraging and moving aggressively into UVXY puts

Three reasons

– prices are high for most stocks and in the case of a correction/crash even cheap or moderately priced stocks will drop in price

– I hate cash

– I suck in market timing

Prices are high, but that doesn’t mean they can not go higher. I also know that timing the market is a fools game. So I keep the stock I already have.

But I prefer to buy my shares when they are cheap and there isn’t a lot of cheap out there. Not buying stock and building up the cash should be the logical way then. But I hate cash, I want my money to work hard for me so I can be lazy! Enter UVXY puts. UVXY is a play on volatility so not linked to the high values of stock. And it should give me a minimum return of 10% a year.

So I am positioning myself that:

– if there is no crash I have the growth of Berkshire Hathaway and the return on my UVXY puts investments. My average return should still beat the market.

– if there is a crash: Buffett can finale deploy his 100 billion cash reserve, insuring further rise in Berkshire share price. I too have some nice cash standing at the sidelines, ready to buy good stock at cheap prices. Loses should be less then the market average and gains after the correction should be a lot bigger than the market average.

Heads I win, tails I also win.

The cost for this is the extra profit I could have made by some leveraged positions. But I no longer feel these extra profits justify the extra risk I am running. There is a time to be greedy and this isn’t the time.