I bought 1600 Delcath (DCTH) for the Port this morning at $10.21. I turned around and sold 10 March 2011 $11 calls against them for $1 each. That leaves me 600 extra shares to sell calls later. I suspect once the FDA formally accepts their recent NDA the share price will tack on an extra $1 or two, and I will sell calls against those extra 600 shares at that time.
I still have $24,363.91 in cash so I'm still looking up and down the aisles right now. Although I have some stocks in mind nothing is terribly cheap in my mind right now, so I'll try to be patient.
Happy New Year!
Regards,
Trond
Thursday, December 30, 2010
Thursday, December 23, 2010
Port24 update and Happy Holidays!
December options expiration was last Friday, and based on the closing prices, I had ALTH and NBIX called away from me.
I now have something like $39K available to buy more stock – look for a post next week to utilize these funds.
Merry Christmas and happy holidays to all!
Regards,
Trond
I now have something like $39K available to buy more stock – look for a post next week to utilize these funds.
Merry Christmas and happy holidays to all!
Regards,
Trond
Tuesday, December 14, 2010
Macro thoughts - Denninger on profit margins
Karl Denninger writes a blog called the Market Ticker. He is quite a bear recently on the economy as-a-whole, as well as a believer in "The Bezzle" - a theory where he says the government is basically lying its butt off regarding how bad off things are, in order to 1) keep peace and 2) keep things the way they are. Without delving too much in the bezzle, I'll simply say he pulls in some good data to support his positions; he's a muckraker in the style of ZeroHedge.
This post quite convincingly argues that profit margins in Q4 will NOT be as good as projected.
http://market-ticker.org/akcs-www?post=174922
...
The two "gotchas" in here are gasoline, which has had gross sales down even though gas prices are up, and dining and drinking, which were down despite the holiday season during the Black Friday weekend when they should have been up due to all the people shopping.
The problem remains cost-push. I've noted that restaurants have been sneakily-increasing prices. They're pulling add-ons into ala-carte (e.g. sides that used to be included with the main course) and ratcheting up prices a bit. Gasoline has been on a tear comparatively, yet gross spend on gasoline is down. This strongly implies that we've reached the point where price influences behavior.
The PPI was also out this morning and confirmed:
The Producer Price Index for Finished Goods rose 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in both October and September. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in November, and the crude goods index moved up 0.6 percent.
Great. More than 9% annualized. But there is no inflation, right?
And where is it? Food and energy, as I've been talking about.
...[graph]
That's nice. Now extend that 1% monthly change in foods out a year. More-importantly, look at the prices in energy - straight up since August. That's all about The Fed and it's BS QE2 games.
Worse is the crude goods price change less food and energy - core:
...[graph]
These changes are ridiculous on a 12-month basis. Ex-food and energy they're even worse, as there have been some substantial negative numbers there. I have discussed the problem with these input costs extensively - there is no pricing power to pass them through the chain of production, as is shown by the much lower escalation in intermediate goods.
This means margin collapse folks.
Betting that it won't show up in final profit numbers is flat-out insane.
These costs have to show up somewhere. If you can't pass through costs to the consumer then you have to eat it, and ultimately this results in margin - and profit - collapse.
This post quite convincingly argues that profit margins in Q4 will NOT be as good as projected.
http://market-ticker.org/akcs-www?post=174922
...
The two "gotchas" in here are gasoline, which has had gross sales down even though gas prices are up, and dining and drinking, which were down despite the holiday season during the Black Friday weekend when they should have been up due to all the people shopping.
The problem remains cost-push. I've noted that restaurants have been sneakily-increasing prices. They're pulling add-ons into ala-carte (e.g. sides that used to be included with the main course) and ratcheting up prices a bit. Gasoline has been on a tear comparatively, yet gross spend on gasoline is down. This strongly implies that we've reached the point where price influences behavior.
The PPI was also out this morning and confirmed:
The Producer Price Index for Finished Goods rose 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in both October and September. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in November, and the crude goods index moved up 0.6 percent.
Great. More than 9% annualized. But there is no inflation, right?
And where is it? Food and energy, as I've been talking about.
...[graph]
That's nice. Now extend that 1% monthly change in foods out a year. More-importantly, look at the prices in energy - straight up since August. That's all about The Fed and it's BS QE2 games.
Worse is the crude goods price change less food and energy - core:
...[graph]
These changes are ridiculous on a 12-month basis. Ex-food and energy they're even worse, as there have been some substantial negative numbers there. I have discussed the problem with these input costs extensively - there is no pricing power to pass them through the chain of production, as is shown by the much lower escalation in intermediate goods.
This means margin collapse folks.
Betting that it won't show up in final profit numbers is flat-out insane.
These costs have to show up somewhere. If you can't pass through costs to the consumer then you have to eat it, and ultimately this results in margin - and profit - collapse.
Monday, December 13, 2010
Musical Chairs in your Portfolio
I think everyone should think long and hard about what they will do in their accounts if we do see a nasty market downturn. And keep in mind, it may not necessarily be "sell and wait it out" OR "hold everything and wait it out".
Remember that most of the stocks I'm into here are VERY high beta. That means whatever the "normal" market return is, my returns are at a higher multiple. If and when the markets are doing well, say a 1% return on the day, I may see a 1.5 to a 2% return. However, when the market goes down 15%, what is the Portfolio 24 going to do?
I personally have to really think about this because I do not have any new cash going into my accounts. When I want to buy something, I have to sell something else first. And when everything is "on sale" (i.e. going to crap) everything I want to sell has already gone down, too.
I am looking at the general market .... shrugging off everything from wars to state secret leaks, to Mastercard getting hacked and hedge funds liquidating, to tax breaks being maintained in the face of nearly unsurmountable deficits, to North Korea making waves, to Christmas spending being crazy in the light of our unemployment.... and ask "when the music is going to stop"?
Make sure you have a chair, is all I'm saying.
Regards,
Trond
Remember that most of the stocks I'm into here are VERY high beta. That means whatever the "normal" market return is, my returns are at a higher multiple. If and when the markets are doing well, say a 1% return on the day, I may see a 1.5 to a 2% return. However, when the market goes down 15%, what is the Portfolio 24 going to do?
I personally have to really think about this because I do not have any new cash going into my accounts. When I want to buy something, I have to sell something else first. And when everything is "on sale" (i.e. going to crap) everything I want to sell has already gone down, too.
I am looking at the general market .... shrugging off everything from wars to state secret leaks, to Mastercard getting hacked and hedge funds liquidating, to tax breaks being maintained in the face of nearly unsurmountable deficits, to North Korea making waves, to Christmas spending being crazy in the light of our unemployment.... and ask "when the music is going to stop"?
Make sure you have a chair, is all I'm saying.
Regards,
Trond
Monday, December 6, 2010
Port 24 overhaul
Well, just like you need to monitor a mutual fund for "style drift", I am looking at the Port 24 with a hard eye today.
Not only have I drifted from my intended methodology (buy and sell covered calls for income) but I have neglected the actual portfolio quite shockingly in the last two years. I still have nearly a 10% annualized return (vs.4.3% on the Nasdaq and -3.3% on the S&P) but that is nowhere near what I intend.
So, I have sold CLSN, VICL, PZG, and MNKD today at 2.70, 1.80, 1.80, and 6.55 respectively. Either they are too low for decent covered call premium (VICL), or are too close or too far from their PDUFA dates (MNKD, CLSN), or don't offer options (PZG).
I bought 600 CLDA at $17.78 and sold 6 Jan11 $17.50s for $2.10 each.
Also, 2500 ALTH at $4, selling the December $4s for $0.20.
Bought 7000 each of NNVC and LXRX at $1.34 and $1.39 respectively. This is slightly a style drift in that they do not offer options, but at these values I want some, akin to my PZG buy, which worked out quite nicely.
I also sold options on the following:
DNDN, 4 Jan11 $41s at $1.01
ELN, 16 Jan 11 $6 at $0.25
20 NBIX Dec10 $8s at $0.20
25 SGMO Jan11 $6s at $0.30
and 70 ONTY, Jan11 $4 at $0.25.
This leads me to the following Port (still with $13,761.42 in cash)
2000 NBIX (20)
1600 ELN (16)
400 DNDN (4)
2500 SGMO (25)
600 CLDA (6)
7000 NNVC (0)
7000 LXRX (0)
2500 ALTH (25)
7000 ONTY (70)
With the cash raised from the covered calls, this brings me to a 30.5% return, or 11.9% annualized.
Regards,
Trond
Not only have I drifted from my intended methodology (buy and sell covered calls for income) but I have neglected the actual portfolio quite shockingly in the last two years. I still have nearly a 10% annualized return (vs.4.3% on the Nasdaq and -3.3% on the S&P) but that is nowhere near what I intend.
So, I have sold CLSN, VICL, PZG, and MNKD today at 2.70, 1.80, 1.80, and 6.55 respectively. Either they are too low for decent covered call premium (VICL), or are too close or too far from their PDUFA dates (MNKD, CLSN), or don't offer options (PZG).
I bought 600 CLDA at $17.78 and sold 6 Jan11 $17.50s for $2.10 each.
Also, 2500 ALTH at $4, selling the December $4s for $0.20.
Bought 7000 each of NNVC and LXRX at $1.34 and $1.39 respectively. This is slightly a style drift in that they do not offer options, but at these values I want some, akin to my PZG buy, which worked out quite nicely.
I also sold options on the following:
DNDN, 4 Jan11 $41s at $1.01
ELN, 16 Jan 11 $6 at $0.25
20 NBIX Dec10 $8s at $0.20
25 SGMO Jan11 $6s at $0.30
and 70 ONTY, Jan11 $4 at $0.25.
This leads me to the following Port (still with $13,761.42 in cash)
2000 NBIX (20)
1600 ELN (16)
400 DNDN (4)
2500 SGMO (25)
600 CLDA (6)
7000 NNVC (0)
7000 LXRX (0)
2500 ALTH (25)
7000 ONTY (70)
With the cash raised from the covered calls, this brings me to a 30.5% return, or 11.9% annualized.
Regards,
Trond
Wednesday, October 27, 2010
Port update
Had a little more time this morning (finally) and was able to update the Port with the ARNA sell last week. It's all timing, sometimes... the one point I was able to log on to look at the actual price (something I do for every Port transaction - whatever time I look, that is the price I use at the bid or ask) ARNA was at just about it's lowest point of the day - $1.48. It was up more than 10% within an hour after that!
Today I sold 200 AMAG (getting tired of waiting for Feraheme sales and safety issues to die down) and 2000 AOB (China pharma hit the skids). I turned around and bought 6000 CLSN at $3.09.
Port now looks like:
2000 NBIX
1600 ELN
400 DNDN
6000 CLSN
2500 SGMO
7000 ONTY
3500 VICL
7000 PZG
2000 MNKD
It's worth just under $125K, which means I've reverted to the mean - I have about a 10% annual return in about 2.5 years. Now, the S&P has returned around -5% and the Nasdaq is 2.8% over that same period, so I can't be too sad but it's absolutely NOT where I want to be (neglecting the Port for 3-5 months at a time doesn't help)! I intend to be back to at least a 13-15% return by the end of the year.
Regards,
Trond
Today I sold 200 AMAG (getting tired of waiting for Feraheme sales and safety issues to die down) and 2000 AOB (China pharma hit the skids). I turned around and bought 6000 CLSN at $3.09.
Port now looks like:
2000 NBIX
1600 ELN
400 DNDN
6000 CLSN
2500 SGMO
7000 ONTY
3500 VICL
7000 PZG
2000 MNKD
It's worth just under $125K, which means I've reverted to the mean - I have about a 10% annual return in about 2.5 years. Now, the S&P has returned around -5% and the Nasdaq is 2.8% over that same period, so I can't be too sad but it's absolutely NOT where I want to be (neglecting the Port for 3-5 months at a time doesn't help)! I intend to be back to at least a 13-15% return by the end of the year.
Regards,
Trond
Friday, October 22, 2010
ARNA
I sold all the Port's ARNA this morning at $1.48. I am quite anoyed at myself for not correcting the Port immediately; I have meant to actually post this immediately after the Advisory Committee meeting and could have sold it for around $2 if I had not delayed.
Just a quick notification post; I expect the FDA to deliver a Conditional Response Letter later today.
Regards,
Trond
Just a quick notification post; I expect the FDA to deliver a Conditional Response Letter later today.
Regards,
Trond
Tuesday, July 13, 2010
ARNA and VVUS
Well, the day is nearly at hand for Vivus.
No, not the FDA PDUFA date, but the Advisory Committee meeting about its drug Qnexa. The briefing docs (http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/EndocrinologicandMetabolicDrugsAdvisoryCommittee/UCM218824.pdf) were released this morning in preparation for the meeting on Thursday. Investors were expecting an easy efficacy review and a searching safety evalaution. They got what they expected and therefore VVUS is up today. Arena is trailing along, up slightly in sympathy.
I do not know much about VVUS. I want to emphasize I've been following ARNA and not VVUS, so the data I know is imcomplete. However, being me, a couple comments are always in order.
I looked at the safety review summary on pages 3-6 and although it most headlines seem to indicate a relatively benign safety review, it looks bad. Suicidal thoughts, birth defect potential, and this (regarding topiramate, one of the two drugs Qnexa is comprised of):
"associated, in a dose-related manner, with an increased incidence of cognitive-associated adverse events including confusion, psychomotor slowing, difficulty with concentration/attention, and difficulty with memory, speech or language problems, particularly word-finding difficulties."
Hmmm, one less plate of pasta, or fumbling for the right word?
It will certainly be black-boxed for pregnant women, and have strong language for those who may become pregnant.
I think ARNA will get approval by itself, but this market seems to favor VVUS right now. I am considering buying puts on VVUS, as the AC meeting is right before options expiration. They carry quite a premium, so I have no specific strike price in mind - just something to think about.
Regards,
Trond
No, not the FDA PDUFA date, but the Advisory Committee meeting about its drug Qnexa. The briefing docs (http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/EndocrinologicandMetabolicDrugsAdvisoryCommittee/UCM218824.pdf) were released this morning in preparation for the meeting on Thursday. Investors were expecting an easy efficacy review and a searching safety evalaution. They got what they expected and therefore VVUS is up today. Arena is trailing along, up slightly in sympathy.
I do not know much about VVUS. I want to emphasize I've been following ARNA and not VVUS, so the data I know is imcomplete. However, being me, a couple comments are always in order.
I looked at the safety review summary on pages 3-6 and although it most headlines seem to indicate a relatively benign safety review, it looks bad. Suicidal thoughts, birth defect potential, and this (regarding topiramate, one of the two drugs Qnexa is comprised of):
"associated, in a dose-related manner, with an increased incidence of cognitive-associated adverse events including confusion, psychomotor slowing, difficulty with concentration/attention, and difficulty with memory, speech or language problems, particularly word-finding difficulties."
Hmmm, one less plate of pasta, or fumbling for the right word?
It will certainly be black-boxed for pregnant women, and have strong language for those who may become pregnant.
I think ARNA will get approval by itself, but this market seems to favor VVUS right now. I am considering buying puts on VVUS, as the AC meeting is right before options expiration. They carry quite a premium, so I have no specific strike price in mind - just something to think about.
Regards,
Trond
Thursday, May 6, 2010
Dendreon helped the Port24...
Well, the Port is "ta-da!" back where it should be. That is, back to 24% returns, annualized.
Dendreon was the prime mover, of course, and I yesterday sold 500 of the 900 shares the Port held. With the proceeds I bought 2,000 MannKind (MNKD) at $6.93 and sold 20 June $8 calls against them for $55 each.
I promised a brief writeup on MannKind but am lacking in time today. So suffice it to say MNKD is another stock I'm buying in my real-money IRA - selling some calls and holding most long through the summer.
Regards,
Trond
Dendreon was the prime mover, of course, and I yesterday sold 500 of the 900 shares the Port held. With the proceeds I bought 2,000 MannKind (MNKD) at $6.93 and sold 20 June $8 calls against them for $55 each.
I promised a brief writeup on MannKind but am lacking in time today. So suffice it to say MNKD is another stock I'm buying in my real-money IRA - selling some calls and holding most long through the summer.
Regards,
Trond
Tuesday, May 4, 2010
Greek Bailout - Mauldin letter
John Mauldin's latest letter (click on the header of my blog entry to access it) starts out in a very interesting way:
---
It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can't tell you how outraged that makes me.
What that means is that US (and Canadian and British, etc.) tax payers will be giving money to Greece who will use a lot of it to roll over old bonds, letting European banks and funds reduce their exposure to Greece while tax-payers all over the world who fund the IMF assume that risk. And does anyone really think that Greece will pay that debt back? IMF debt should be senior and no bank should be allowed to roll over debt and reduce their exposure to Greek debt on the back of foreign tax-payers.
---
Regardless of the seniority of the bonds, this is pretty outrageous. Anyone feel like contacting their Congressional delegates?
Regards,
Trond
---
It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can't tell you how outraged that makes me.
What that means is that US (and Canadian and British, etc.) tax payers will be giving money to Greece who will use a lot of it to roll over old bonds, letting European banks and funds reduce their exposure to Greece while tax-payers all over the world who fund the IMF assume that risk. And does anyone really think that Greece will pay that debt back? IMF debt should be senior and no bank should be allowed to roll over debt and reduce their exposure to Greek debt on the back of foreign tax-payers.
---
Regardless of the seniority of the bonds, this is pretty outrageous. Anyone feel like contacting their Congressional delegates?
Regards,
Trond
Monday, May 3, 2010
Watchlists
I recommend that everyone who is interested in individual stocks maintain one or more watchlists.
This is simply a list of companies that you are interested in. Most brokerages allow you to maintain a list, or Yahoo Finance! does quite nicely. If you get into the habit of checking in every day, you'll see a few benefits.
For one, you will hear news about your stocks very quickly. Of course, most people don't live and breathe the market, and conventional wisdom has it that one should not do this as it leads to that most evil practice of all - day trading. Ha!
Of course, conventional wisdom also counsels one to place your long term dollars in mutual funds and let the experts do their thing. As you are reading this, gentle reader, I assume you probably had an internal "Ha!" go off yourself.
It's usually not necessary to know news of a stock that is important to you immediately; very few things will be life and death to a corporation. Biotech may be the exception - trial news can kill or revive those very quickly, of course. But being aware of something at least gives you the power of choice. Here's an example: Oncothyreon (ONTY) received the unwelcome news a couple months ago that Stimuvax trials were being halted on safety concerns. It dropped immediately, of course, but kept dropping some more over the next few days. If this news spooked you, you at least had the chance the next day to sell at a higher price than the succeeding days would have allowed you.
Immersing yourself in the news also mean you are more in tune with your choices. You see earnings announcements, insider buys or sells, product information and the like; and hopefully you begin to understand the company somewhat better over time.
The other main benefit of a watchlist is that you begin to have an appreciation for the daily swings in price. I am not endorsing very active trading (although not disparaging it either) - but knowing that a stock you are strongly interested in is at a low point for the year, with no appreciable bad news or other information, may give you the slight extra nudge to become a shareholder. Entry price does matter - even in the long term, buying a stock at $9 instead of $10.50 will mean several extra percentage points of gain, or allow you to buy more shares than you could otherwise have done. And over the course of months, a swing of a couple dollars in price WILL happen.
I desperately need to update my blog watchlist: JAV is being bought out at $2.19 (a nice gain from my rec about 16 months ago at $1-ish), SGMO probably won't see sub $5 again, and Dendreon almost certainly will never be available at my latest upgrade of under $30.
My additions will include MannKind, Oncothyreon, Paramount Gold, Lexicon, and Opexa. I hope to talk of some of these soon in future posts. MannKind, Oncothyreon, and Paramount are probably the most timely buys; Arena and Elan would be next.
On a final note: I sold some small amounts of Dendreon over the last couple days but intend on holding the majority for the absolutely long haul. The guy who sold Microsoft for 3 or 4 times his stake looked really smart in the short term, but I believe this puppy has legs. :-)
Regards,
Trond
This is simply a list of companies that you are interested in. Most brokerages allow you to maintain a list, or Yahoo Finance! does quite nicely. If you get into the habit of checking in every day, you'll see a few benefits.
For one, you will hear news about your stocks very quickly. Of course, most people don't live and breathe the market, and conventional wisdom has it that one should not do this as it leads to that most evil practice of all - day trading. Ha!
Of course, conventional wisdom also counsels one to place your long term dollars in mutual funds and let the experts do their thing. As you are reading this, gentle reader, I assume you probably had an internal "Ha!" go off yourself.
It's usually not necessary to know news of a stock that is important to you immediately; very few things will be life and death to a corporation. Biotech may be the exception - trial news can kill or revive those very quickly, of course. But being aware of something at least gives you the power of choice. Here's an example: Oncothyreon (ONTY) received the unwelcome news a couple months ago that Stimuvax trials were being halted on safety concerns. It dropped immediately, of course, but kept dropping some more over the next few days. If this news spooked you, you at least had the chance the next day to sell at a higher price than the succeeding days would have allowed you.
Immersing yourself in the news also mean you are more in tune with your choices. You see earnings announcements, insider buys or sells, product information and the like; and hopefully you begin to understand the company somewhat better over time.
The other main benefit of a watchlist is that you begin to have an appreciation for the daily swings in price. I am not endorsing very active trading (although not disparaging it either) - but knowing that a stock you are strongly interested in is at a low point for the year, with no appreciable bad news or other information, may give you the slight extra nudge to become a shareholder. Entry price does matter - even in the long term, buying a stock at $9 instead of $10.50 will mean several extra percentage points of gain, or allow you to buy more shares than you could otherwise have done. And over the course of months, a swing of a couple dollars in price WILL happen.
I desperately need to update my blog watchlist: JAV is being bought out at $2.19 (a nice gain from my rec about 16 months ago at $1-ish), SGMO probably won't see sub $5 again, and Dendreon almost certainly will never be available at my latest upgrade of under $30.
My additions will include MannKind, Oncothyreon, Paramount Gold, Lexicon, and Opexa. I hope to talk of some of these soon in future posts. MannKind, Oncothyreon, and Paramount are probably the most timely buys; Arena and Elan would be next.
On a final note: I sold some small amounts of Dendreon over the last couple days but intend on holding the majority for the absolutely long haul. The guy who sold Microsoft for 3 or 4 times his stake looked really smart in the short term, but I believe this puppy has legs. :-)
Regards,
Trond
Friday, April 30, 2010
Dendreon's conference call
Yesterday at 11:30 PDT, Dendreon hosted a conference call to discuss Provenge's approval. You can access a replay at www.Dendreon.com, and I urge you to listen if you want to continue holding your shares long term, as I intend to do with a majority of mine.
Dendreon now has to morph from an R&D company to a commercial enterprise. They seem to have a good start and an extremely capable management staff. A few highlights frm the call:
Pricing: They announced an infusion will be $31,000. That means a standard regimen of treatment will be $93,000, to the high side of previously assumed guidance.
No Rest-Of-World partnership: they truly intend to go it alone. While this has the potential for pitfalls, in the long term if they avoid a buyout they truly could be the "next Amgen" of biotech.
People will probably comment on the 2,000 patients they said can treat i the next twelve months, but how many will have caught the very optimistic comment that following all three plants coming on line at 100%, they "can meet demand"?
All in all, a great call. Sell some if you must, but hold on to some. I think there are great things in store for this not-so-little company.
Regards,
Trond
Dendreon now has to morph from an R&D company to a commercial enterprise. They seem to have a good start and an extremely capable management staff. A few highlights frm the call:
Pricing: They announced an infusion will be $31,000. That means a standard regimen of treatment will be $93,000, to the high side of previously assumed guidance.
No Rest-Of-World partnership: they truly intend to go it alone. While this has the potential for pitfalls, in the long term if they avoid a buyout they truly could be the "next Amgen" of biotech.
People will probably comment on the 2,000 patients they said can treat i the next twelve months, but how many will have caught the very optimistic comment that following all three plants coming on line at 100%, they "can meet demand"?
All in all, a great call. Sell some if you must, but hold on to some. I think there are great things in store for this not-so-little company.
Regards,
Trond
Thursday, April 29, 2010
Provenge Approved!!!!
Trading halted - Reuters and CNBC saying approved.
What a long, long road.
Regards,
Trond
What a long, long road.
Regards,
Trond
Wednesday, April 21, 2010
William Black on Lehman Brother
This guy for Fed chief and Markopoulos for SEC Chair!
Unbelievable stuff....
Unbelievable stuff....
Tuesday, April 13, 2010
Port 24, ONTY, and ARNA
Well, Oncothyreon (ONTY) had a nice little run today, so I sold the August $5 calls in the Portfolio 24. All 3000 shares are now covered; 30 AUG $5 contracts sold for $0.60 per share.
I really should be selling Elan calls here, as they also have gone up quite nicely, recently, but I think it will hold $8 and the $9s do not have enough premium yet.
The Port now stands at $134,743, with $2,538 in cash. That gives me an annualized return of 18.1%.
I bought ARNA in both my IRA and my brokerage accounts today; the low $3s are a very good entry point. Honestly, the brokerage shares will probably be sold on any kind of bump, but the IRA shares are longer term; the FDA date is 10/22/10 and there should be some appreciation as that date gets closer.
Regards,
Trond
I really should be selling Elan calls here, as they also have gone up quite nicely, recently, but I think it will hold $8 and the $9s do not have enough premium yet.
The Port now stands at $134,743, with $2,538 in cash. That gives me an annualized return of 18.1%.
I bought ARNA in both my IRA and my brokerage accounts today; the low $3s are a very good entry point. Honestly, the brokerage shares will probably be sold on any kind of bump, but the IRA shares are longer term; the FDA date is 10/22/10 and there should be some appreciation as that date gets closer.
Regards,
Trond
Thursday, April 8, 2010
Port 24 update and other news
First some news ...
I have not decided exactly how or when, but I am going to switch out my Port24 (fake money, albeit serious thought) holdings for one of my real life IRAs. It is getting to be too much of a headache to actually manage another portfolio that does not immediately affect my new worth.
This is sad for one specific reason: this was the one portfolio where I tried to focus as exclusively on covered calls as possible. I see that as "safe", even with the priority on pre-earnings biotechs. On the plus side, you'll get to see exactly how I think and react on stocks I own and am thinking about. I do not think I will go to the lengths of posting every move before actually trading; it is my real money and sometimes I will want to make the trade ASAP. I will think more about this over a few weeks and let you know. Feedback is ALWAYS welcome.
Dendreon announced another BIG hiring this morning. Varun Nanda has joined the management team as SVP of Global Commercial Operations. Mr. Nanda comes from Roche/Genentech, where he brought Avastin into commercialization.
I do not see a Rest Of World partnership for Dendreon anymore... with Mr. Nanda and Hans Bishop on board they look ready to market Provenge themselves, worldwide. May 1, and probable Provenge approval, is less than a month away!
Port24:
A fair amount of movement this morning!
I sold 1500 ALTH ($$8.36) and 1000 MELA ($7.32), while buying 500 more Dendreon ($39.11), 7000 PZG ($1.44), and 3500 VICL ($3.45). I sold 29 $5 Jul calls against ARNA, and 5 Apr $40s against the DNDN.
Allos had a nice couple days this week, adding almost $1. It is time to take the gains. I *think* they will have great news in Q2, from an ongoing trial, but in biotech, you take some off the table when you get some gains. I had bought these at $6.68 in October 2009, and sold some calls against them, so I definitely had a winner here.
MELA is the opposite, although I sold so many calls that the loss is not as bad. The FDA delayed their application by 180 days recently, and it fell 20%. I may just get back in, later, but I see this as "dead money" for 3 months.
The 500 Dendreon is just a 8 day play for the almost 3% of option premium. I'd LOVE for Dendreon to close on 4/16 under $40 so I can keep the shares, though!
ARNA will have it's FDA PDUFA date on October 22. The July calls net me a little premium (6% for less than 4 months) while I wait. And heck, with the stock at $3.16, if I "lose" them at $5 I will not be crying!
The two new buys are VICL and PZG.
PZG (Paramount Mining) is a black sheep here, being neither a biotech, nor optionable. A gold exploration company, it is strictly a 2-5 month buy for straight-up capital appreciation. I will talk about this one more later, suffice it to say I have some in my real money IRA as well.
VICL (Vical) has a great pipeline and should have some news in the summer/fall that will allow me to sell some $5 or even $7.50 calls later in the year for some juicy premiums.
That makes the Port now worth $130,206, or a 30% return. Annualized, it is only 15.9%, well shy of my target. On the plus side, the S&P and Nasdaq indices have annualized returns over the same period of -6.75% and 9.5% respectively, so I am beating them. In a month and a week, the Port turns 2!
Regards,
Trond
I have not decided exactly how or when, but I am going to switch out my Port24 (fake money, albeit serious thought) holdings for one of my real life IRAs. It is getting to be too much of a headache to actually manage another portfolio that does not immediately affect my new worth.
This is sad for one specific reason: this was the one portfolio where I tried to focus as exclusively on covered calls as possible. I see that as "safe", even with the priority on pre-earnings biotechs. On the plus side, you'll get to see exactly how I think and react on stocks I own and am thinking about. I do not think I will go to the lengths of posting every move before actually trading; it is my real money and sometimes I will want to make the trade ASAP. I will think more about this over a few weeks and let you know. Feedback is ALWAYS welcome.
Dendreon announced another BIG hiring this morning. Varun Nanda has joined the management team as SVP of Global Commercial Operations. Mr. Nanda comes from Roche/Genentech, where he brought Avastin into commercialization.
I do not see a Rest Of World partnership for Dendreon anymore... with Mr. Nanda and Hans Bishop on board they look ready to market Provenge themselves, worldwide. May 1, and probable Provenge approval, is less than a month away!
Port24:
A fair amount of movement this morning!
I sold 1500 ALTH ($$8.36) and 1000 MELA ($7.32), while buying 500 more Dendreon ($39.11), 7000 PZG ($1.44), and 3500 VICL ($3.45). I sold 29 $5 Jul calls against ARNA, and 5 Apr $40s against the DNDN.
Allos had a nice couple days this week, adding almost $1. It is time to take the gains. I *think* they will have great news in Q2, from an ongoing trial, but in biotech, you take some off the table when you get some gains. I had bought these at $6.68 in October 2009, and sold some calls against them, so I definitely had a winner here.
MELA is the opposite, although I sold so many calls that the loss is not as bad. The FDA delayed their application by 180 days recently, and it fell 20%. I may just get back in, later, but I see this as "dead money" for 3 months.
The 500 Dendreon is just a 8 day play for the almost 3% of option premium. I'd LOVE for Dendreon to close on 4/16 under $40 so I can keep the shares, though!
ARNA will have it's FDA PDUFA date on October 22. The July calls net me a little premium (6% for less than 4 months) while I wait. And heck, with the stock at $3.16, if I "lose" them at $5 I will not be crying!
The two new buys are VICL and PZG.
PZG (Paramount Mining) is a black sheep here, being neither a biotech, nor optionable. A gold exploration company, it is strictly a 2-5 month buy for straight-up capital appreciation. I will talk about this one more later, suffice it to say I have some in my real money IRA as well.
VICL (Vical) has a great pipeline and should have some news in the summer/fall that will allow me to sell some $5 or even $7.50 calls later in the year for some juicy premiums.
That makes the Port now worth $130,206, or a 30% return. Annualized, it is only 15.9%, well shy of my target. On the plus side, the S&P and Nasdaq indices have annualized returns over the same period of -6.75% and 9.5% respectively, so I am beating them. In a month and a week, the Port turns 2!
Regards,
Trond
Tuesday, March 23, 2010
Port Update
Sold the 4000 GNVC, as planned yesterday, and at $2.88. It is higher today, and it killed me to do it, but I really do want stocks that can have calls sold against them, in the Port. I mostly want to make money here, so if I see something enticing enough, I will buy non-optionable stocks, but the ground rules are there for a reason!
I looked at the other holdings of the Port this morning and nothing appeals to me in terms of selling calls. I have a bunch of cash, and Oncothyreon (ONTY) happens to be a watchlist stock that had bad news this morning. I bought 3,000 shares at $3.41 (and 1k in my real-world IRA at $3.45, earlier) - I'll let the share price shake out a little and then sell calls against them.
So now the Port is comprised of
2000 AOB
2000 NBIX
1600 ELN
400 DNDN
4900 ARNA
2500 SGMO
1000 MELA
200 AMAG
1500 ALTH
3000 ONTY
with $21,585 of cash.
I'm at a 30.8% return in nearly two years, a 16.6% annualized rate. The S&P 500 over that time has returned -7.3% and the Nasdaq has returned 9.3%.
Regards,
Trond
I looked at the other holdings of the Port this morning and nothing appeals to me in terms of selling calls. I have a bunch of cash, and Oncothyreon (ONTY) happens to be a watchlist stock that had bad news this morning. I bought 3,000 shares at $3.41 (and 1k in my real-world IRA at $3.45, earlier) - I'll let the share price shake out a little and then sell calls against them.
So now the Port is comprised of
2000 AOB
2000 NBIX
1600 ELN
400 DNDN
4900 ARNA
2500 SGMO
1000 MELA
200 AMAG
1500 ALTH
3000 ONTY
with $21,585 of cash.
I'm at a 30.8% return in nearly two years, a 16.6% annualized rate. The S&P 500 over that time has returned -7.3% and the Nasdaq has returned 9.3%.
Regards,
Trond
Sunday, March 21, 2010
Port update - options expiration
Quick summary of the Port, along with GenVec update:
On Friday, the Port had all 2000 ProGenics (PGNX) called away at $5, and the Elan calls expired worthless, allowing me to keep the premium and the shares. We're back to above 17% annualized return, still well shy of the 24 I am aiming for. I still feel it is doable, if I just put some time back into this Port. I have only been selling calls on 1 to 3 holdings a month, where I should be turning 100% of the holdings. I'll be selling the Genvec this coming week, since it does not offer options and I'm up over 10% already, having been in it for only a month. Time to take that profit and buy something I can sell calls against!
GenVec should be announcing the interim PACT trial results within 4 weeks now. On January 15th they said 10 to 12 weeks, and Friday 3/19/10 was exactly 9 weeks. While they may announce this coming week, both their annual earnings call and the recent Roth presentation suggested it could spill over into April so I would put more faith into it happening right around the first week of April.
In my real money IRA, I have an insane amount tied up in both Dendreon and Genvec - something like 85% of the total value. It has served me well, as the majority of Dendreon was bought under $6 (now $35) and my Genvec average basis is around $1.25 (now $2.80). I am however, finally at the point where I'll be selling at least a third of my GNVC over the next week or so, and may even dent my DNDN by 10% or so. I am far more confident that Dendreon will get approval, but at this price (mid 30s) I just do not see the return that I saw at the mid $20s we were at only a couple months ago. Genvec, at a little below $3, is also a MUCH different creature risk/return wise, than it was at the $0.77 I started buying at. The upcoming data release is a short term make-or-break event; it could go down (I honestly don't see it going below $1.50) on so-so data, but it could spike as much as another $7-10 on statistically significant data. There is a "reasonable" chance of stat-sig results - say 20-30% - but I am not risking 40+% of my net worth on a 20-30% chance of a home run. Please note that everyone's personal sense of risk vs. reward is vastly different - I AM in effect saying I'm okay with risking ~25% of my net worth!
This is because I already have a two bagger on Genvec - the most likely worse case scenario brings me back to a only slight average gain. I contrast this to the results, if excellent, and it makes sense for me to hold about 2/3 of what I have now, through the data release. For someone buying in now, it would be a greatly different risk/reward calculation.
Please also note that IF GenVec does drop, it very likely could be because the market is disappointed in the data not being excellent, and NOT because the data is bad. At the 92nd event - the first interim look) the hazard ratio was already .753 - the lower from 1.0 the better. This would have been a very good result, but investors were spooked because at 24 months, there was no apparent drug benefit. Missed was the fact that only three patients were still alive and uncensored, and one of those was in the placebo arm. Thus the placebo curve matched the drug-arm curve. As this interim look, at 184 deaths, most of those censored patients will have died, which will "normalize" the placebo curve and probably lower the hazard ratio even further. ANYTHING that relieves the worry about the 24 month death rate and shows improving hazard ratio beyond the .753 already seen, will vastly increase the chances of statistical significance at the final trial calculation. If the data is like this, but Mr. Market is disappointed, this could be the buy of a lifetime - with only a 18-24 month holding period until fruition. Heck - I went through this with Dendreon already from 2007 - 2009, and was rewarded with a $4 stock going to $25 (and currently $35, with a probable $40-45 in May).
Next post: more buy candidates, with the cash I now have in hand!
Regards,
Trond
On Friday, the Port had all 2000 ProGenics (PGNX) called away at $5, and the Elan calls expired worthless, allowing me to keep the premium and the shares. We're back to above 17% annualized return, still well shy of the 24 I am aiming for. I still feel it is doable, if I just put some time back into this Port. I have only been selling calls on 1 to 3 holdings a month, where I should be turning 100% of the holdings. I'll be selling the Genvec this coming week, since it does not offer options and I'm up over 10% already, having been in it for only a month. Time to take that profit and buy something I can sell calls against!
GenVec should be announcing the interim PACT trial results within 4 weeks now. On January 15th they said 10 to 12 weeks, and Friday 3/19/10 was exactly 9 weeks. While they may announce this coming week, both their annual earnings call and the recent Roth presentation suggested it could spill over into April so I would put more faith into it happening right around the first week of April.
In my real money IRA, I have an insane amount tied up in both Dendreon and Genvec - something like 85% of the total value. It has served me well, as the majority of Dendreon was bought under $6 (now $35) and my Genvec average basis is around $1.25 (now $2.80). I am however, finally at the point where I'll be selling at least a third of my GNVC over the next week or so, and may even dent my DNDN by 10% or so. I am far more confident that Dendreon will get approval, but at this price (mid 30s) I just do not see the return that I saw at the mid $20s we were at only a couple months ago. Genvec, at a little below $3, is also a MUCH different creature risk/return wise, than it was at the $0.77 I started buying at. The upcoming data release is a short term make-or-break event; it could go down (I honestly don't see it going below $1.50) on so-so data, but it could spike as much as another $7-10 on statistically significant data. There is a "reasonable" chance of stat-sig results - say 20-30% - but I am not risking 40+% of my net worth on a 20-30% chance of a home run. Please note that everyone's personal sense of risk vs. reward is vastly different - I AM in effect saying I'm okay with risking ~25% of my net worth!
This is because I already have a two bagger on Genvec - the most likely worse case scenario brings me back to a only slight average gain. I contrast this to the results, if excellent, and it makes sense for me to hold about 2/3 of what I have now, through the data release. For someone buying in now, it would be a greatly different risk/reward calculation.
Please also note that IF GenVec does drop, it very likely could be because the market is disappointed in the data not being excellent, and NOT because the data is bad. At the 92nd event - the first interim look) the hazard ratio was already .753 - the lower from 1.0 the better. This would have been a very good result, but investors were spooked because at 24 months, there was no apparent drug benefit. Missed was the fact that only three patients were still alive and uncensored, and one of those was in the placebo arm. Thus the placebo curve matched the drug-arm curve. As this interim look, at 184 deaths, most of those censored patients will have died, which will "normalize" the placebo curve and probably lower the hazard ratio even further. ANYTHING that relieves the worry about the 24 month death rate and shows improving hazard ratio beyond the .753 already seen, will vastly increase the chances of statistical significance at the final trial calculation. If the data is like this, but Mr. Market is disappointed, this could be the buy of a lifetime - with only a 18-24 month holding period until fruition. Heck - I went through this with Dendreon already from 2007 - 2009, and was rewarded with a $4 stock going to $25 (and currently $35, with a probable $40-45 in May).
Next post: more buy candidates, with the cash I now have in hand!
Regards,
Trond
Tuesday, February 23, 2010
Port 24
Well, I'm back to my old bad habits, and only posting about the Port. I do have a writeup from the Dendreon conference call last night, that I will post tomorrow.
Portfolio 24
300 Dendreon and 1000 RMTI were called away from me last Friday. I bought 4000 GNVC today, at $2.42. Cash on hand now $10,058, and the Port is worth 125,144.
I am now as excited about GenVec as I was about Dendreon. In my real life IRA, I am about 50/50 in these two, with just a few others in small amounts. Both will have large events in the next 5 to 9 weeks.
GNVC may not, and probably will not, have a statistically significant result from the upcoming interim look. However, it should let us see how it will pan out. Having an entry even here in the $2s will look really good in 2 years, if you have that kind of a time horizon. I'm going to go out on a limb here and say that before results are announced, we'll see $3.25 or $3.50 in this stock, giving you a 33 to 50% return in a month. I bought 1000 shares in my Roth today, in fact, at $2.41, with such an aim in mind.
Regards,
Trond
Portfolio 24
300 Dendreon and 1000 RMTI were called away from me last Friday. I bought 4000 GNVC today, at $2.42. Cash on hand now $10,058, and the Port is worth 125,144.
I am now as excited about GenVec as I was about Dendreon. In my real life IRA, I am about 50/50 in these two, with just a few others in small amounts. Both will have large events in the next 5 to 9 weeks.
GNVC may not, and probably will not, have a statistically significant result from the upcoming interim look. However, it should let us see how it will pan out. Having an entry even here in the $2s will look really good in 2 years, if you have that kind of a time horizon. I'm going to go out on a limb here and say that before results are announced, we'll see $3.25 or $3.50 in this stock, giving you a 33 to 50% return in a month. I bought 1000 shares in my Roth today, in fact, at $2.41, with such an aim in mind.
Regards,
Trond
Tuesday, January 19, 2010
Port 24 and assorted biotech news
Port 24 update:
The only January options I had sold were 10 MELA $10 calls, and they were exercised, with the stock at $11.05 last Friday.
With that cash, I bought 300 more Dendreon shares today, and sold 3 Feb $32 calls against them for $0.89 per share.
I am living by my resolution to be a little more active in the Port! I also sold the following calls today:
16 ELN March $9s for $0.30
15 SGMO Feb $7.50s for $0.25
10 MELA Feb $12.50s for $0.20
2 AMAG Feb $55s for $0.50
I almost sold calls against ALTH - but I feel there is a little more room beneath the stock before selling calls. AOB needs to climb closer to $5 to make it worth selling calls, and NBIX at $2.50 is not satisfactory to sell the $2.50s, and the $5s are not worth anything yet.
The Port 24 thus has the following stocks (covered calls in parentheses)
1500 ALTH
200 AMAG (2)
2000 AOB
4900 ARNA (24)
700 DNDN (3)
1600 ELN (16)
1000 MELA (10)
2000 NBIX
2000 PGNX (20)
1000 RMTI (10)
2500 SGMO (15)
.. with cash of $2,680. This gives me a port value of about $132,500 and a 19.3% annualized return. I'm getting closer to my 24% return, again!
Stocks:
Genvec released a PR that they have licensed their hearing loss pre-clinical work to Novartis, for $5M plus milestones and royalties. They also hit the 184 death interim trigger in the PACT trial on Friday, and will have data in 10 to 12 weeks. I'm nearly as excited about Genvec as I was about Dendreon, but caution that the risk/reward is much slighter here at $2 than at $0.76 when I first mentioned it here a few months ago. I was still buying in my real-world IRA at $1.70, but am probably done for now.
Dendreon had an interview published in the Xconomy online magazine with the new COO Hans Bishop. It is a MUST READ, here: http://www.xconomy.com/seattle/2010/01/19/dendreons-new-operations-man-hans-bishop-aims-to-keep-provenge-trains-running-on-time/
Sangamo had good results (albeit from one patient, in a Phase I trial) here: http://finance.yahoo.com/news/Sangamo-BioSciences-Announces-prnews-1693198508.html?x=0&.v=1
Regards,
Trond
The only January options I had sold were 10 MELA $10 calls, and they were exercised, with the stock at $11.05 last Friday.
With that cash, I bought 300 more Dendreon shares today, and sold 3 Feb $32 calls against them for $0.89 per share.
I am living by my resolution to be a little more active in the Port! I also sold the following calls today:
16 ELN March $9s for $0.30
15 SGMO Feb $7.50s for $0.25
10 MELA Feb $12.50s for $0.20
2 AMAG Feb $55s for $0.50
I almost sold calls against ALTH - but I feel there is a little more room beneath the stock before selling calls. AOB needs to climb closer to $5 to make it worth selling calls, and NBIX at $2.50 is not satisfactory to sell the $2.50s, and the $5s are not worth anything yet.
The Port 24 thus has the following stocks (covered calls in parentheses)
1500 ALTH
200 AMAG (2)
2000 AOB
4900 ARNA (24)
700 DNDN (3)
1600 ELN (16)
1000 MELA (10)
2000 NBIX
2000 PGNX (20)
1000 RMTI (10)
2500 SGMO (15)
.. with cash of $2,680. This gives me a port value of about $132,500 and a 19.3% annualized return. I'm getting closer to my 24% return, again!
Stocks:
Genvec released a PR that they have licensed their hearing loss pre-clinical work to Novartis, for $5M plus milestones and royalties. They also hit the 184 death interim trigger in the PACT trial on Friday, and will have data in 10 to 12 weeks. I'm nearly as excited about Genvec as I was about Dendreon, but caution that the risk/reward is much slighter here at $2 than at $0.76 when I first mentioned it here a few months ago. I was still buying in my real-world IRA at $1.70, but am probably done for now.
Dendreon had an interview published in the Xconomy online magazine with the new COO Hans Bishop. It is a MUST READ, here: http://www.xconomy.com/seattle/2010/01/19/dendreons-new-operations-man-hans-bishop-aims-to-keep-provenge-trains-running-on-time/
Sangamo had good results (albeit from one patient, in a Phase I trial) here: http://finance.yahoo.com/news/Sangamo-BioSciences-Announces-prnews-1693198508.html?x=0&.v=1
Regards,
Trond
Thursday, January 7, 2010
Port 24 update, Dendreon, and GenVec
I neglected to mention yesterday that I bought 1000 shares of Rockwell Medical Technologies (RMTI) at $7.73 in the Port24. I turned and sold February $7.50 calls for $0.85 each.
I wanted to clarify in my end-of-year post that although my annualized rate of return in the Port24 is only 13%, the gross return was about 25% - we've gone from $100,000 to $125K in 19 months. I took the time to see what benchmarks might be like: the S&P in the same time frame had a -10.5% annualized return (including dividends) and the Nasdaq was 8.1%.
GenVec and Dendreon both received an opening nod and a "buy" recommendation from Roth Capital Partners this morning. Further upgrades will probably be coming shortly.
GenVec in particular is nice to see at $1.60+ this morning as it officially constitutes a double from my initial rec back in October ($0.76 was my first buy in my real-world IRA). For the record, I was still buying yesterday at $1.37. With the rise and my further buys, it is now actually my second largest holding (after Dendreon) and at this rate might be the largest in a couple days... :-)
Regards,
Trond
I wanted to clarify in my end-of-year post that although my annualized rate of return in the Port24 is only 13%, the gross return was about 25% - we've gone from $100,000 to $125K in 19 months. I took the time to see what benchmarks might be like: the S&P in the same time frame had a -10.5% annualized return (including dividends) and the Nasdaq was 8.1%.
GenVec and Dendreon both received an opening nod and a "buy" recommendation from Roth Capital Partners this morning. Further upgrades will probably be coming shortly.
GenVec in particular is nice to see at $1.60+ this morning as it officially constitutes a double from my initial rec back in October ($0.76 was my first buy in my real-world IRA). For the record, I was still buying yesterday at $1.37. With the rise and my further buys, it is now actually my second largest holding (after Dendreon) and at this rate might be the largest in a couple days... :-)
Regards,
Trond
Wednesday, January 6, 2010
Stock market vs. the economy
It used to be that if the economic climate was good, the stock market would do well also. Conversely, with the release of bad economic data, the market would have a "correction".
I believe that the correlation between the two is much weaker now. I think there are two main reasons why this is so.
More money
There is simply too much money sloshing around the system right now. The advent on 401(k) plans and discount brokerages in the last 20 years has meant an explosion in the amount of money being invested. Something like 40% of workers now have some sort of directed stake in the market - where it used to be around 6%. Add to that the burgeoning number of private and even sovereign equity funds...
That money has to find a home. With more money chasing stocks, the general price level will rise, even with no rise in the value of the underlying companies.
Trading mentality
I am not talking day trading here! But the automated rebalancing of 401(k) plans, ETFs that get moved around every day, a general populace that is more comfortable staying in stocks during "bad" times, and a growing number of individual investors who arewilling to buy dips in the market, all contribute to flattening out some of the more violent swings we have seen previously.
Are there any lessons here? Perhaps not - just a general reminder that over the last 10 months as the market has gone up, please understand that the economy itself may not follow suit immediately. Make sure you rebalance, if that is your choice, as your allocations have certainly swung dramatically from a year ago. Do you have an emergency fund? Are you pre-paying your mortgage? Paying more than the minimum on your credit cards?
I am not convinced that the "green shoots" will truly take root in 2010. Please make sure your family is living below your means, saving (and investing) money, and adequately insured.
Regards,
Trond
I believe that the correlation between the two is much weaker now. I think there are two main reasons why this is so.
More money
There is simply too much money sloshing around the system right now. The advent on 401(k) plans and discount brokerages in the last 20 years has meant an explosion in the amount of money being invested. Something like 40% of workers now have some sort of directed stake in the market - where it used to be around 6%. Add to that the burgeoning number of private and even sovereign equity funds...
That money has to find a home. With more money chasing stocks, the general price level will rise, even with no rise in the value of the underlying companies.
Trading mentality
I am not talking day trading here! But the automated rebalancing of 401(k) plans, ETFs that get moved around every day, a general populace that is more comfortable staying in stocks during "bad" times, and a growing number of individual investors who arewilling to buy dips in the market, all contribute to flattening out some of the more violent swings we have seen previously.
Are there any lessons here? Perhaps not - just a general reminder that over the last 10 months as the market has gone up, please understand that the economy itself may not follow suit immediately. Make sure you rebalance, if that is your choice, as your allocations have certainly swung dramatically from a year ago. Do you have an emergency fund? Are you pre-paying your mortgage? Paying more than the minimum on your credit cards?
I am not convinced that the "green shoots" will truly take root in 2010. Please make sure your family is living below your means, saving (and investing) money, and adequately insured.
Regards,
Trond
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