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Weekly Results – Feb 10, 2018

Weekly Results

The last week was brutal to say it nicely. The market lost over 5% in that week and our portfolios followed.

The selloff however, provided a great opportunity to buy new shares of now once again cheap stocks. Last week we purchased the following shares:

Realty Income (NYSE: O) 11 shares at $47.84 a share
Coca Cola (NYSE: KO) 12 shares at $43.31 a share
Valero Energy Corporation (NYSE: VLO) 6 shares at $87.5 a share
Berkshire Hathaway (NYSE: BRK-B) 3 shares at $194.66 a share

I always wanted to buy Coca Cola and this was a great opportunity in my opinion. And if the stock drops more in coming weeks I will buy more shares.

This is an excellent opportunity! Look at our current watch list! Almost all stocks are in a correction mode and it is now difficult which stock to buy first!

Watch list


 · What happened last week with our accounts?


As you can see above our accounts got a large hit by the selloff last week. However, we had a nice income also. The losses are all related to increased volatility of our options positions and not by closing the positions at a loss.

TD account – we continued liquidating bad trades, thus our income was down and our net-liq dropped slightly. The larger drop was also caused by increased volatility and if the market stabilizes this drop should remain temporary

IRA account – we made nice income this week and for the month. However, the account is also down due to many trades being rolled down and away in time and increased volatility. If we see the market doing well again and volatility drops, the value should return back up to the original value.

ROTH IRA account – Very little change in income this week. Also, the account is down due to many trades being rolled down and away in time and increased volatility but not as much as other accounts due to less trading activity . If we see the market doing well again and volatility drops, the value should return back up to the original value.

TW60 account – Unfortunately, I was forced (maybe prematurely) to roll the position in this account for debit which cause a loss of income. Still positive for the year though. Also the net-liq loss is caused by a volatility rather than closing positions at a loss.

As Warren Buffett says” “the market selloff is good news

As of now I am not opening any new trading positions in any of the accounts, I will keep buying stocks however and managing the existing open trading positions (rolling or adjusting). Once the market gives a clear signal whether we want to go higher again or down, I will start opening new trades.


 · What’s the outlook?


This bull market is not dead by any means. I believe, we will see new all time highs again soon. The 200 DMA was touched, held as a support and stocks sparked up by the touch. The rally from 200 DMA on Friday was really crazy.

Historically, when the market rallied and made 4% gains in the past 2 months, made 1 new all time high in those two months, it then corrected and wiped out all those gains in 7 days. And that is exactly what happened this time too. History repeats itself.

We saw this in:

December 1950
October 1955
October 1979
September 1986
February 1993
January 2010
and the last week!

In fact, this is a very bullish setup for the markets!

We still see a large momentum in this bull market and economy (great earnings, increasing sales, consumer confidence, raising salary, etc.) and bulls do not die at rising momentum! Bulls die when the economy loses steam, inflation gets high, interest rates are high, etc. We see none of it. Interest rates are still way below normal, rising salary is also way below the average, inflation is also historically low and not increasing although many are scared of it.

Look at it this way, we had a decade of sluggish recovery, cheap money, low inflation, all stunningly below normal. Many were afraid of it and were predicting another disaster and economic collapse. And now, when the economy is finally improving and the rates, inflation, GPD, and salary is returning back to normal those same people are scared again! Scared of economy doing well! Scared that if we make too much money, too good earnings, too good sales, then we will collapse again!

What a bullshit!

Do not listen to those people. Keep following your plan, invest and stay in your comfort zone. All will be good in 1 to 2 weeks!

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