Week of 2011 AU 26

SPY rose 4.7% this week, while my account fell 3.1% to its lowest level ever!  It seems the “counter­balancing” method does not work.  I buy SCHA when it is going up and sell when it is going down, so I am “buying high, selling low”.  The deleterious effects of these maneuvers were masked by the parabolic rise in IAU, but now that gold has gone into correction these losses have become visible.

		│	Daily % gain size owned												│	Max % loss		│	Results
Symbol	since	│	Fri		Mon		Tue		Wed		Thu		Fri		│	Beg	End	│
RWM	JL01	│	9.3	26 86	9.4	26 86	4.9	26 86	3.9	26 57	4.6	30 63	3.0	30 63	│			│
AUp30	JL01	│	-0.4	0 0	-0.4	0 0	-0.3	0 0	-0.3	0 0	-0.3	0 0	-0.3	0 0	│			│
SEp34	AU08	│	-2.1	0 0	-2.1	0 0	-1.9	0 0	-1.9	0 0	-1.7	0 0	-1.6	0 0	│			│
IAU	JL25	│	9.8	19	12.6	18	5.8	22	2.2	22	2.2	22	5.6	22	│	+3.8	+3.2	│	+2.6%
SEp17	AU11	│	-2.4	0.1	-3.0	0.1	-2.2	0.1	-2.1	0	-2.1	0	-2.2	0	│			│	−2.1%
RPRX	JL25	│	-31.8	2	-35.9	2	-33.0	2	-33.3	2	-32.3	2	-30.4	2	│	−7.7	−7.7	│
NOp7½	JL25	│	8.0	0.9	8.9	0.9	8.3	1.0	8.3	1.0	8.1	1.0	7.7	1.0	│			│
SCHA#2	AU15	│	-8.1	5	-8.2	5	-4.2	0							│			│	−4.2%
SCHA#3	AU15	│	-9.1	11	-9.2	11	-5.3	0							│			│	−5.3%
SCHA#4	AU16	│	-7.9	11	-8.0	11	-4.0	0							│			│	−4.0%
SCHA#5	AU18	│	-1.7	5	-1.8	5	2.5	5	4.2	5					│			│	−2.0%
SCHA#6	AU22	│			-2.9	20	1.3	20	3.0	20	0.6	0			│			│	−3.6%
SCHA#7	AU23	│					0.1	11	1.3	23 83	1.0	32 34	0.6	44 39	│		-3.6	│
SPY		│	0.0		0.1		3.4		4.8		3.2		4.7		│			│
me		│	0.0		-0.3		-2.4		-3.1		-3.2		-3.1		│			│

RWM: Doing okay, but I can’t decide how much of it I want to own.  Sold 9% of account on Wednesday, bought 4% on Thursday.  The news from Europe is still awful so I want to have a lot of RWM on hand for the next Big Drop.

IAU: On Tuesday I sold the put, bought more shares, and put them on a 5½% trailing stop to prepare for the ”blow-off top” that might be coming.  But on Wednesday the trailing stop was about to trigger so I turned it off and tried to sell manually for more money.  Bad move!  Lost virtually all the profits.
      What’s next for gold?  It will either do a ”dead-cat bounce” followed by a drop down to maybe $1600/oz, or it will do yet another ”head-fake correction” and immediately start upward again.

RPRX: I do not understand why the bid prices on the puts are so ridiculously low and have been all week.

SCHA#6: Bought a big block on Monday.  Then the price started going down, so I wanted to put it on a 3% trailing stop.  But somehow I miskeyed the order: instead of “3% below current price” it went in as ”3% below purchase price” and the sell order triggered immediately, losing 0.7% of my account balance in one bumbling move!  Then SCHA proceeded to go up a lot, adding insult to injury.

SCHA#7: More attempts to get my timing right, buying and selling all week.  Finally got it right on Friday: bought low, sold some at a higher price, kept the rest for the weekend.

DRETF: Had a very nice day on Tuesday.  Is now above its 50-day moving average.  Might consider buying it again.

Week of 2011 AU 19

My account gained 0.5% this week, while SPY fell 4.6%.  I’m just 0.5% away from beating SPY for year-to-date!

News: It looks like the “two-week rally” has been cancelled.  The news out of Europe is very bad.  Europeans liked the recent France+Germany conference on the national debts about as little as they liked the Republicans+Democrats on the US deficit.

		│	Daily % gain size owned												│	Max % loss		│	Results
Symbol	since	│	Fri		Mon		Tue		Wed		Thu		Fri		│	Beg	End	│
DRETF	MR30	│	-4.2	0	-3.7	0	-4.4	0							│			│	−4.0%
div.	—	│	1.5	0.1 25	1.5	0.1 25	1.5	0 0							│			│	+1.5%
FRED	MA31	│	-18.2	11	-17.0	11	-17.9	10	-20.0	0					│			│	−19.2%
AUp15	JN20	│	— AU09												│			│	+8.6%
AUp12½	JN20	│	— AU09												│			│	+2.9%
RWM	JL01	│	6.0	19 82	3.4	18 82	4.9	18 82	5.0	18 82	10.1	19 82	9.3	26 86	│			│
AUp30	JL01	│	-0.5	0 0	-0.4	0 0	-0.4	0 0	-0.4	0 0	-0.5	0 0	-0.4	0 0	│			│
SEp34	AU08	│	-1.3	0 0	-2.4	0 0	-2.5	0 0	-2.5	0 0	-2.7	0 0	-2.1	0 0	│			│
SCHA#0	JL14	│	-0.2	8 63	1.6	8 63	0.5	8 63	0.3	0 63					│			│	−0.2%
IAU	JL25	│	7.5	12	8.7	13	10.0	13	10.3	13	12.4	13	9.8	19	│	+3.0	+3.8	│
SEp17	AU11	│	-1.7	0.3	-2.1	0.3	-2.4	0.2	-3.0	0.2	-3.4	0.1	-2.4	0.1	│			│
RPRX	JL25	│	-26.0	2	-24.3	2	-26.7	2	-24.1	2	-29.1	2	-31.8	2	│	−7.7	−7.7	│
NOp7½	JL25	│	19.7	1.4	17.4	1.4	19.2	1.4	16.7	1.4	7.4	0.9	8.0	0.9	│			│
FXF	AU01	│	0.1	13 48	-0.4	6 48	-0.8	0 48							│			│	+1.3%
SCHA#1	AU15	│			1.7	6	0.0	6	-0.3	6	-6.7	5	-7.7	0	│	−1.0	+0.7	│	+0.1%
SCHA#2	AU15	│			1.3	6	-0.4	6	-0.7	6	-6.4	5	-8.1	5	│	−3.0	−1.7	│	-4.2%
SCHA#3	AU15	│			1.3	12	-1.5	11	-1.8	11	-7.5	11	-9.1	11	│	−4.8	−4.8	│	-5.3%
SCHA#4	AU16	│					-0.2	11	-0.5	11	-6.3	11	-7.9	11	│	−2.3	−2.3	│	-4.0%
SCHA#5	AU18	│									0.1	5	-1.7	5	│	−1.0	−1.0	│	-2.0%
SPY		│	0.0		2.1		1.2		1.3		-3.1		-4.6		│			│
me		│	0.0		-0.3		-0.2		-0.3		0.0		0.5		│			│

DRETF: Dividend arrived on Tuesday.  The next dividend will become payable on Friday AU26 or so, but the stock is not doing well so I don’t think I’ll buy it back yet.

FRED: Friday’s sale of the shares settled on Wednesday.  There doesn’t seem to be any point in showing daily values for the already-sold puts.

RWM: Doing great!  Increased my holdings on Friday to prepare for a possible crash next Monday; now it’s 26% of the account.
      Although the puts were sold some time ago, their daily values continue to fluctuate because they are addends to the daily percentage gain for the shares.  Math is hard!

IAU: Doing great!  Gold is confounding the pundits by continuing to climb.  Increased my holdings on Friday; now it’s 19% of the account.  The new shares have a 5% trailing stop (which is higher than the put strike price for the old shares) because gold almost never drops 5% from its peaks unless it’s going into a major correction.  The price of the puts seems ridiculously low; perhaps this is a side-effect of Options Expiration week?

RPRX: Continuing to do badly.  As with gold, the put-price seems ridiculous.  Hopefully it will pick up next week after Options Expiration week ends.  The max-loss value is less negative this week because I’m still trying to get the math right; the actual max-loss value (whatever it is) hasn’t changed.

FXF: ½ sold Wednesday settled on Monday; ½ sold Thursday settled on Tuesday.  Looks like the bull run is over for now.

SCHA: This week I decided to record each purchase of SCHA separately, since they have different max-loss values.  But in the end it didn’t matter because my “emergency stop — sell all SCHA!” order triggered at Thursday’s open.  Overall, the picture we see is similar to two weeks ago: unexpectedly low prices on Wednesday, mini-crash on Thursday, rout on Friday, leading to a crash(?) on Monday.  I am so ready!
      SCHA#0: Leftover shares from last week.  Settled on Wednesday.
      SCHA#1: 1% trailing stop.  Sold at gap-down on Tuesday, but still eked out a profit!  Settled on Friday.
      SCHA#2: 3% trailing stop.
      SCHA#3: Fixed-price stop at the ”emergency sell-all” level.
      SCHA#4: 3% trailing stop from a lower starting price.
      SCHA#5: 1% trailing stop, bought at 3:59PM in case the market gapped up on Friday—but it gapped down instead.

On the pie chart, the yellow strip for the IAU puts is nearly invisible.  It is much smaller than it should be because the last-sale price was too low.  Also, the brown strip for the RPRX puts is way too small.  I am not sure what this is trying to tell me.  Are RPRX speculators panicing and selling their puts for waaay below intrinsic value?  Is RPRX about to go out of business and I should exercise the options while I still can?  Hopefully things will clear up next week.

If there is a crash on Monday, I plan to spend all available cash buying SCHA near the close, to prevent lossage from a rebound on Tuesday.  But I won’t have enough settled cash to completely neutralize RWM until Tuesday when most of the already-sold SCHA shares settle.

Week of 2011 AU 12

My account gained 0.5% this week, while SPY fell 1.6%.  This ended up as an “OK” week, but on Monday it had seemed like it would be “best week ever”.  I am back to the same account balance as on June 10th.

Business news: Various reports are conspiring to create the impression that the double-dip recession might not be starting just yet.  I predict a “relief rally” that will last about two weeks.  Might not start until the week after next, though.

Daily progress table: The table below has been revamped.  I think the new format is less likely to coerce me into making bad trades, but it is still too complicated and needs further simplification.
      Shares, options, and dividends are now shown separately.  For options, the naming convention is “AUp7½”, which means an option that settles in AUgust, is a put (rather than call), and has a strike price of $7.50.
      Each daily-gain cell shows the day’s closing %gain-so-far as the main number.  For puts and dividends, the daily figure is shown as an addend for the share’s %gain (I *think* I’ve got the math right on this).  The upper-right number is the %account for this investment (minimum 0.1% for very small holdings).  The lower-right number shows the percentage of total purchase that I still own (or blank for 100%).  After part of the investment is sold, the daily gain varies less because the gain for the no-longer-owned part has become fixed.
      When an investment is completely sold, the main number becomes gray and the actual gain appears in the “Results” column.  (These gains can be very large for puts, but their %account is very small.)  For shares, the daily %account decreases three days later when the sale settles; for puts the sale settles the next day; for dividends it varies (the expected settlement date is shown in the “Results” column).  Settlement is shown by a red upper-right number, while a green number indicates a new purchase; the number can vary slightly while remaining black, as the investments in the account change size relative to each other.
      The “owned” percentage gets smaller when an investment is partially sold and gets larger when more is purchased.  When puts are completely sold, the owned amount goes to 0% and the daily figure stops changing (add this figure to the share-gain to find the overall gain).  When shares are completely sold, the owned amount does not decrease; instead, the daily gain continues to fluctuate to show whether I picked a good day to sell.  For dividends, the owned amount goes up when dividends are accrued and back down to 0% when they settle.
      When the daily price for a put is so low that the put-price plus the share-price is less than the strike-price, a red underline appears and the “me” daily account balance is adjusted upward to compensate.  The max-loss shows the minimum value that shares+puts must have, but Schwab doesn’t handle this properly.

		│	Daily % gain size owned												│	Max % loss		│	Results
Symbol	since	│	Fri		Mon		Tue		Wed		Thu		Fri		│	Beg	End	│
DRETF	MR30	│	-7.5	16	-9.6	16	-8.0	16	-8.0	0	-3.9	0	-4.9	0	│			│	−4.0%
div.	—	│	1.5	0.1 25	1.5	0.1 25	1.5	0.1 25	1.5	0.1 25	1.5	0.1 25	1.5	0.1 25	│			│	(AU 15)
TLT	MA25	│	6.2	13	9.6	13	9.9	13	13.2	0	7.5	0	9.6	0	│			│	+8.1%
div.	—	│	1.0	0.1 33	1.0	0 0	1.0	0 0	1.0	0 0	1.0	0 0	1.0	0 0	│			│
AUp97	JN20	│	-3.2	0 0	-3.2	0 0	-3.2	0 0	-3.2	0 0	-3.2	0 0	-3.2	0 0	│			│	−98%
FRED	MA31	│	-19.4	11	-22.4	10	-15.1	10	-22.2	10	-17.4	11	-18.2	11	│	−5.8	(none)	│	−19.2%
AUp15	JN20	│	8.2	1.8	9.3	1.9	8.6	1.9 0	8.6	0 0	8.6	0 0	8.6	0 0	│			│	+170%
AUp12½	JN20	│	4.2	0.6	5.3	0.8	2.9	0.8 0	2.9	0 0	2.9	0 0	2.9	0 0	│			│	+262%
RWM	JL01	│	5.7	19 82	13.1	20 82	5.1	20 82	11.2	20 82	6.5	19 82	6.0	19 82	│	+0.3	(none)	│
AUp30	JL01	│	-0.5	0 0	-0.5	0 0	-0.5	0 0	-0.5	0 0	-0.5	0 0	-0.5	0 0	│			│	−78%
SEp34	AU08	│			-0.1	0.6	-2.5	0.6 0	-2.5	0 0	-2.5	0 0	-2.5	0 0	│			│	−38%
SCHA	JL14	│	-9.5	8	-17.4	8	-12.0	8	-3.6	12 63	-0.6	13 63	-0.6	13 63	│			│	−0.2%
SBB	JL18	│	6.8	6 25	9.1	3 25	7.4	0 25	8.5	0 25	7.0	0 25	7.0	0 25	│			│	+5.6%
IAU	JL25	│	2.3	12	5.6	12	6.6	12	10.4	13	8.0	12	7.5	12	│	−4.3	+3.1	│
SEp97	AU11	│									-0.8	0.3	-1.7	0.3	│			│
RPRX	JL25	│	-21.8	2	-30.2	2	-29.6	2	-31.4	2	-27.8	2	-26.0	2	│	−9.7	−9.7	│
NOp7½	JL25	│	9.3	1.3	20.9	1.4	20.9	1.4	20.9	1.5	20.9	1.5	19.7	1.4	│			│
FXF	AU01	│	1.6	6	3.2	6	7.6	7	7.6	13 48	1.0	13 48	0.1	13 48	│	−0.4	+1.3	│	+1.3%
TZA	AU05	│	-1.3	4	24.6	4	-0.8	4	13.3	0	-3.2	0	-5.5	0	│			│	−0.2%
SPY		│	0.0		-6.5		-2.2		-6.5		-2.3		-1.6		│			│
me		│	0.0		2.1		1.0		1.2		1.0		0.5		│			│

DRETF: Sold last Friday; settled on Wednesday.  The fourth dividend payment is due August 15th.  DRETF has recovered some, but it’s still below its 200-day moving average.  I’m not buying it back yet.

TLT: Sold last Friday (although waiting would have been better); settled on Wednesday.  The third interest payment settled last Friday, but arrived after I wrote last week’s report so I’m noting it as having settled on Monday.  Final gain: 8.1% shares, 1.0% dividends, -3.2% puts, total 5.9%.  Since all %account values are now zero, the TLT investment is complete and will not appear in next week’s table.

FRED: Sold the puts on Tuesday, which turned out to be the worst day of the week for a put-sale because the stock price was at its maximum.  Sold the shares on Friday at midday, but then the price went up 1% after I sold.  Just overall bad timing.  Final result: -19.2% shares, 8.6% older puts, 2.9% newer puts, total 7.7% loss.  This is worse than the 5.8% loss I would have received by exercising the options.

RWM: Bought more last Friday, raising this invesment to 19% of account and 82% of it is still owned.  This thing basically performed as expected this week—it was everything else that reduced my profits!  Got rid of the trailing sell-stop on RWM and replaced it with buy-stops on SCHA, which is safer because SCHA has no transaction costs for Schwab customers.
      On Monday I bought puts because I had to take my wife to the emergency room and couldn’t watch the market.  Then I sold the puts on Tuesday, which turned out to be an especially bad day for put-sales.

SCHA: The shares sold last Friday settled on Wednesday—but on Wednesday I bought new shares, which were sold this Friday and will settle next Wednesday.  The new shares were sold at a profit, which reduced my overall loss on SCHA from 6.6% to only 0.2%.  I have orders on file to buy more shares on Monday, if the price rises; I am basically using SCHA as “ballast” to counteract RWM during periods when the market is rising.

SBB: Shares sold last Wednesday, Thursday, and Friday were settled this Monday, Tuesday, and Wednesday.  Should have waited and sold it later.  SBB is complete and will not appear in next week’s table (unless I buy more).

IAU: Looks like it peaked on Wednesday at $1805/oz, so I bought a put on Thursday, locking in my gains.  Some pundits think gold will drop to the 50-day average ($1600/oz) and then bounce back up; others think it will go to the 150-day average ($1500/oz) and bounce; some admit they don’t know whether gold will bounce any time soon.  If it doesn’t bounce by September 17th, I can exercise the option and get a +3.1% gain.

RPRX: Not going anywhere.  I said I would give it until September.

FXF: Fell 3% and triggered my stop on Wednesday, but then went back up so I bought replacement shares at the same price—which then gapped down 4% on Thursday!  I barely eked out a profit for the two sets of shares.

On the pie chart, you can see that my main investments are RWM (a bet that the Russell 2000 stock-average will go down) and IAU (which holds gold bars in a warehouse).  The thin yellow line is the put for IAU, green for the RPRX shares, brown is the put for RPRX.  All the remaining pie segments are already sold and will settle to cash on the dates indicated.  The DRETF dividend does not appear on this chart because Schwab does not include accrued dividends in account balances until they actually settle.

Week of 2011 AU 05

My account rose 0.3% this week, while SPY crashed 7.2%.  All in all, not a bad week.  I was nimble and quickly rearranged my portfolio on Friday when the market failed to bounce as expected on Thursday.

US politics: Republicans and Democrats came to agreement and passed a bill on Monday to increase the deficit ceiling.  Unfortunately, what they both agreed on was that the bill sucked (though they disagreed on which were the sucky parts).  Obama did not get the token tax increase on the rich, nor the right to ignore the issue for a whole year.  The government will reduce spending during a depression, which will of course crash the economy.  It’s June 1937 all over again!

Business news: Many companies reported good earnings this week, but no one believes anymore that future earnings will be as good as these.  The market is in full panic mode!

I didn’t feel like fixing the “daily progress” table this week, so it still has all the problems identified last week.

			│	Daily % gain						│	Max % loss		│	Put Date/ Real Gain
Symb	size	since	│	Fri	Mon	Tue	Wed	Thu	Fri	│	Beg	End	│
DRETF	22%	MR30	│	1.1	1.2	0.2	0.0	-2.0	-4.6	│			│	−2.4%
TLT	13%	MA25	│	0.5	1.0	3.6	3.7	7.4	4.2	│	−1.7	+4.9	│	+6.1%
FRED	13%	MA31	│	-2.6	-2.5	-6.0	-4.4	-7.0	-7.2	│	−5.8	−5.8	│	AU20
RWM	23%	JL01	│	-0.2	0.2	2.5	2.2	5.5	4.2	│		+0.3	│	(stop)
SCHA	8%	JL14	│	-2.6	-3.2	-6.3	-3.2	-7.8	-9.5	│			│	−3.1%
SBB	10%	JL18	│	2.2	3.0	5.3	5.0	6.3	6.7	│	−4.5	+3.9	│	+5.6%
IAU	12%	JL25	│	0.1	-0.3	2.1	2.1	1.6	2.3	│	−4.3	−4.3	│	(stop)
RPRX	4%	JL25	│	-6.5	-6.0	-8.1	-7.8	-10.6	-10.6	│	−9.7	−9.7	│	NO19
FXF	6%	AU01	│		-0.6	1.8	1.3	1.5	1.6	│	−4.3	−0.4	│	(stop)
TZA	4%	AU05	│						-1.2	│	−5.4	−0.2	│	−0.2%
SPY			│	0.0	-0.4	-3.0	-2.4	-7.0	-7.2	│			│
me			│	0.0	0.1	0.4	0.5	-0.1	0.3	│			│

DRETF: Abandon ship!  Things seemed to be going okay.  I bought more on Thursday (note the green bar is slightly shorter) because it looked cheap.  But then the market tanked and took DRETF with it, piercing the 200-day moving average.  Sold all at Friday’s open, which luckily was a 1% gap-up for the broad US market, but not for DRETF.

TLT: Dividend recognized on Monday.  Sold the puts on Thursday.  Got rid of it on Friday because it went down even though stocks were going down so bonds should have been going up.  I got more than the 5% profit I had been hoping for when I bought it!

FRED: I’ve lost interest in FRED.  The lovely chart pattern that induced me to buy it has been ruined by the market crash.  Didn’t sell it on Friday because its put is already maxed out (shown by red underline) and so it can’t hurt me anymore.  On Monday, the shares+puts were worth slightly more together (-2.1%) than apart (-2.5%), hence the red underline even though the daily gain is above the loss floor.  If I can catch the bottom, maybe sell the puts for a huge gain and then ride the stock back up for two weeks, selling for a small loss?

RWM: At purchase I had intended to sell half when the price increased by 6.5%, which happened on Tuesday.  Bought lots more on Friday to rebalance the portfolio towards bearishness, because of the ongoing crash.  After Friday’s close, decided to switch to a 4.5% trailing stop so my minimum gain will be positive even if next Monday goes against me.  If RWM goes up another 1% or so, it looks like I can afford to buy a two-week put without pushing my minimum gain into negative territory.  Puts are much nicer than stops!

SCHA: Wednesday looked like such a cute little bottom that I sort of wanted to spank it!  So I bought some SCHA.  Then Thursday was even lower so I bought some more.  Dumped it at Friday’s open because the market is crashing.  Buy it back at the real bottom.

SBB: 5.6% gain in three weeks!  Sold half on Tuesday because I sold RWM.  Sold another quarter on Wednesday because the market was even lower.  I shouldn't have sold the final quarter on Thursday because the market was crashing.

RPRX: Same as FRED.  Maybe sell puts at bottom and ride shares back up.

FXF: Doing great!  Am using a 3% trailing stop, because this thing hasn’t dropped even 3% from its peaks since May.  Tuesday was the last big uptick before the Swiss government intervened with some sales of newly-minted francs, trying to drive the price down.  And *still* it rises!

TZA: Tried to increase profits during the crash, but I bought this just before a mini-reversal.