Happy New Year everyone! We're happy you're here. 2018 was a great first year for All Star Options. We pulled some profits out the market in both directions, we had some fun, and its been an incredibly rewarding challenge for me personally to share my experience with all of you and teach you some of the tricks of the trade I've learned in my 20 years tackling the markets.
We always welcome questions from the community about existing trades, questions about position management, and questions about our insight into various scenarios and trade ideas. And as such, I thought I'd take some time today, as we head into the new year, to lay out the way we think All Star Options subscribers can get the most out of their experience here and address some common requests we receive.
As we wrap up 2018, it's time to forget everything that happened this quarter and this year and start from scratch. It’s irrelevant. We’re moving forward with fresh eyes. This is our Q1 2019 Playbook.
Part 1 of our Q1 2019 Playbook discusses big-picture themes, while this part focuses on the individual stock setups with the best reward/risk scenarios heading into the new year.
It's been a great couple of months for Bond bulls. As unprepared investors worry about their portfolios and financial media outlets irresponsibly call this market "crazy", we've been happy to watch the destruction of stocks and new flow of money into safer, fixed income assets. Interest rates have gotten slammed with stocks and bonds ripped. One for the good guys!
So the question now becomes, how low can rates go?
This is one of my favorite things to do: Forget everything that happened this quarter and this year and start from scratch. It doesn't matter what we did or how we felt in 2018. It's irrelevant. We're moving forward. This is my Q1 2019 Playbook.
While we couldn't be happier that U.S. stocks got destroyed this quarter, let's not forget about all of the other markets out there. US Treasury Bonds have had a very nice rally during this stock market correction, which is another move we're ecstatic about. And Gold and Silver have started to make moves to the upside as well, which is something we haven't seen in what feels like forever.
But today, it's the US Dollar that I think stands out and the recent move lower could just be the beginning.
There are just a few days left in 2018 and it's tempting to make some last minute moves to improve your annual results in the old portfolio. But is it a good idea?
This is obviously not my first 'last few days of the year' experience as an active market participant. I know the feeling, trust me. I've made the mistakes. I've gotten cute. I've overextended myself in late December for absolutely no reason. It's those scars that I keep with me after all these years that remind me not to do it. It's like a kid with a hot stove. After he gets burned once, he won't ever make that mistake again!
The financial media loves to make you feel stupid for missing out on certain moves. Your friends and neighbors like to remind you about how well their portfolio is doing and all of their brilliant investments. It's easy to get caught up in this nonsense.
From a public markets perspective the Marijuana Industry is small, so small that it could go to zero tomorrow and nobody would notice. In late August we started covering the space after receiving a lot of reader requests, so as we close out 2018 I wanted to share one chart that perfectly summarizes the boom and bust it's witnessed over the last two quarters.
U.S. Stock Markets will only be open for a half day tomorrow Monday December 24th for Christmas Eve and closed on Christmas Day. And the following week will follow a similar pattern, being completely closed on Tuesday, January 1.
And the muck in between is no-man's land, especially given the market we're current in as best described by our pal Howard Lindzon: "This is one shitty market."
Unless you've got positions in distress that need defending in this sloppy, bearish tape, it's best to sit on the sidelines and wait until Wall Street gets back to work for real after New Year's Day. As such, we will not be adding any new positions to the All Star Options portfolio this week.
In this post I want to share two charts from the weekend update of our Market Internals workbook, both of which confirm the continued deterioration in breadth as US Stocks make new lows.
Somewhere along the way, a large majority of U.S. citizens convinced themselves that the market owes them something. They think that if they "invest" in the stock market, that they've somehow earned the right to make money over time. I'm not sure if it's the financial advisors feeding them self-serving garbage based on their tiny sample sizes. It could possibly be the financial media constantly making their viewers feel stupid for missing out on a trade or a long-term trend. These vultures use headlines like, "If you had invested $10,000 in X on this specific date you would have easily earned Y in that short period of time". They're proving to us how worthless they are. It's poison.
At what point do investors hold themselves accountable? It's never their fault for losing money. It's the Fed's fault, it's the Trump's fault, it's my neighbors fault who "made" me buy bitcoin.
It's YOUR fault if you lose money. We have no one to blame but ourselves if our "investment" account loses 10%, 20%, 50% or even much worse in the case of things like crypto currencies, precious metals or recent IPOs like Snapchat.
