November 2024 Report

This has been a difficult year as I’m currently underperforming the S&P 500 by ~ 10%, but November produced some nice gains with a rally in Apple, Visa and Mastercard. I was surprised that Visa had such a strong gain in the face of the antitrust lawsuit. I guess the market is pricing in a more market friendly administration towards the financial sector. Visa is literally a printing press and it’s hard to bet against this company. What I have learned is to never sell a great company and just let the gains compound over time.

With the new administration, it looks like the IPO window will swing wide open. The IPO market has been in a dry spell for the past few years. It'll be interesting to see if some of the unicorns will decide to go public next year.

We’re entering one of the most bullish times of the year and looking forward to the market close out on a strong note. I just have to be cautious with my options plays. I’ve been way over leverage at times and need to take step back. With selling naked options, you cannot make a mistake or else it will cost you quite a bit.

 
2024 Performance = + 18.83% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%
August + 2.52%
September + 2.11%
October – 1.76%
November +6.20%

October 2024 Report

I was on a small winning streak for a few months but gave some back in October. This was the start of the Q3 earnings report and many sold off on the results. The only change to the portfolio was Ginkgo Bioworks, which I sold to harvest the tax loss. I may jump back in as my original intention was to hold onto the position for a while. 

I continued the option selling game and dodged a couple of bullets. I almost jumped into the short puts for Capri Holdings as the premium looked attractive, while the market was anticipating a positive antitrust outcome. I was surprised that the judge blocked the deal and the stock plummeted, which would have destroyed me if I had entered the short puts. The other close call was the Tesla earnings report and was going to short the calls. I would not have expected Tesla to jump 20% on the earnings report, which would have hit me hard. Fortunately, I decided at the last minute to sell the Tesla puts. These are the dangers of selling naked options.

The market is rallying big time with the upcoming change in administration. With the fed cutting and a market friendly administration, it’s hard not to be bullish. I think it’s pretty much an all clear signal to put some cash into this market.

 
2024 Performance = + 11.90% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%
August + 2.52%
September + 2.11%
October – 1.76%

September 2024 Report

I’m still status quo and just continue to build up cash. I was able to crank out a return of 2.11% for September. Cash is still attractive for the time being with money markets yielding around ~ 4.6%. I’ve become much more conservative with my investment style as I get older. I remember in my younger days I would go on full margin with risk arb plays and on occasions even getting margin calls. Those days are long gone, and preservation of capital is an important strategy for me. You don’t want to make a wrong move and loose a fortune.

No changes were made to my portfolio as I continue to look for value plays, which I am unable to find. I was hoping Visa would decline more with the recent antitrust lawsuit so I can pick some more up. I really fine it annoying how this administration is filing antitrust lawsuits left and right. I hope they start losing some of these frivolous lawsuits such as Tapestry’s bid for Capri.

It looks like the IPO market is starting to thaw with some recent filings. I was trying to get my hands on Standard Aero but was not able to get an allocation. This company was priced very attractively as it was clearly underpriced to ensure a nice IPO pop. Looking for some top tier companies to come public such as Databricks, Stripe and of course SpaceX.

2024 Performance = + 13.90% with the running monthly returns as follows:
 
January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%
August + 2.52%
September + 2.11%

August 2024 Report

During the recent volatility, the best action for me was to do nothing. It’s really hard to pull the trigger as I did not see any real values during the sell off. The only action I took was to sell puts on several tech stocks during the sell off. There was fear out there so the option premiums were quite attractive. The market should be fine. with the anticipated September rate cut. As they say, “Don’t fight the fed”.
 
So, what did well in August? Apple, Visa and Mastercard… Apple continues to rally on the highly anticipated iPhone 16 launch. Do I buy this Apple AI upgrade cycle? Definitely, I actually purchased a new iPad Air to take advantage of the upcoming AI features. This will be nothing like the muted 5G upgrade cycle where the user did not really have any use cases. Visa and Mastercard are rallying based on the anticipated rate cut that will spur the economy. Visa and Mastercard are amazing companies, they do well in all types of economies.
 
I’ll continue to play it safe for the remainder of the year by maintaining a healthy cash position of ~9% and try not to do anything stupid. There will likely be some volatility as we head toward the elections.
 
 
2024 Performance = + 11.55% with the running monthly returns as follows:
 
January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%
August + 2.52%

July 2024 Report

Why you really can’t hold a stock forever. A clear example is Intel, which was a dominant player in the late 90s and has now come crashing down. Although Apple continues to be my top holding, I am mindful that technology can change rapidly, and Apple may one day follow the way of Intel. Right now, I continue to be bullish on Apple and have no intention of reducing my holding. In July, Apple generated a gain of ~5.4%, which helped push my portfolio into positive territory. I continue to build cash (~10% position) from the income generated from selling options.

I got a bit more aggressive selling options to generate income, which is a warning sign. When I get complacent and start going big with selling options, you can bet that the market is going to go down big. Fortunately, I was unscathed by the recent volatility, but need to be more cautious and put on hedges with the option plays. One wrong move when selling naked options and it could be over.

I am on the recession camp and the signs are popping up everywhere. The big question is how severe the downturn will be. There are some great companies with big stock declines, but now is not the time to bottom fish. I would rather wait for an uptrend to get started before getting into the stock.

Stay safe out there…

 
2024 Performance = + 8.80% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%

June 2024 Report

Once again, Apple pulls through with a very compelling presentation of Apple Intelligence, which in turn generated a nice gain in the stock. I was skeptical of Apple’s AI play and thought they would simply just integrate ChatGPT into their iOS. The presentation provided many uses cases for Apple Intelligence, which I can see myself using. Now, there’s no choice, but to upgrade to a new iPhone if you want to experience these features. Considering what this device can do, the cost of a new phone is really insignificant.
 
Not much with special situations other than a small play on the Talen Energy Dutch offering. Still continuing to sell Puts on tech plays to generate income. I’m selling way out of the money options so I’m pocketing small premiums, but they add up over time.
 
I find that optimizing one’s tax situation is as important as generating gains. I admit that I started late in adjusting my portfolio to minimize taxes. Things such as waiting to sell ESPP shares until they become a qualifying disposition to cash exercising employee stock options for long term capital gains. It’s only been these past two years that I’ve started to take action on these tax saving strategies. I guess these are good problems to have but should have started much earlier. If you have time, YouTube is a great resource and that’s where I learned many of these tax savings strategies. I just can’t bring myself to pay a financial planner charging ~ 1% of assets for this advice.
 
 
2024 Performance = + 6.23% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%

Talen Energy Dutch Tender Offer

If you’re not aware, there’s a Dutch tender offer for Talen Energy (Ticker: TLNE) for $116 to $122. The stock is currently trading around $111 to $112, which is a decent discount to the minimal range of $116 for the tender. The discount can be attributed to a possibility that they can withdraw and amend the deal based on the recent 10% decline condition of the Energy Share Basket. I see this as a low probability, but it can happen. The deadline for the early tender is June 12th. If you participate, make sure to purchase no more than 99 shares as there is an odd lot priority and go with “no bid” when tendering.