This Week in Barrons – 12-29-2013
“When I was 35 – It was a very good year…” Frank Sinatra
We're about to close the doors on another calendar year, and what a year it was. In 2013 we learned:
- President Obama imposed a healthcare plan that doesn't have a snowball's chance of ever working the way it was sold. FYI - I’m not sure that that’s bad.
- The Fukashima, Japan disaster is considerably worse than we were told.
- The people of Cyprus are amazing. Their banks stole a portion every citizen’s investment funds, went bankrupt and kept operating by stealing a portion of every citizen’s deposits.
- Detroit can legally declare bankruptcy.
- Poison gas was used in the Middle East, and we apparently (by all accounts) came quite close to WW III.
- Lance Armstrong doped his way to glory, and finally admitted it in front of Oprah.
- Bill Gates (with $72 B) is once again the richest man in the world.
- With the help of Fed money – our stock market gained 28% in one year.
- Gold and silver (on paper) can sink to yearly lows – while physical demand for the precious metals has never been higher.
- China said publically that the Dollar stinks.
- And the IMF (International Monetary Fund) told the world that a new reserve currency is probable.
2 quotes I remember from 2013:
1. “Just ask for all of your money back every two years to make sure the firm is legitimate. If people had done that with me, I would have been caught sooner.” …Bernard Madoff in an interview on June 5, 2013.
2. “I responded in what I thought was the most truthful, or least untruthful manner, by saying no.” …Director of National Intelligence – Mr. James Clapper – on NBC News when asked about a March 12th hearing. A hearing where he denied (lied) that the National Security Agency was collecting data on hundreds of millions of Americans!
As I think about New Year’s ‘Financial’ Resolutions – here are some that come to mind:
- Reduce my Cable TV bill. 54.8 million households currently pay for cable TV, down 3.3% from 2012. ‘Cutting the cord’ (transitioning from traditional cable TV to low-cost services such as Amazon, Hulu and Netflix) is a movement which is truly taking hold. I’m going to use my Internet connection more – to stream movies, and blocks of shows directly to my TV.
- Reduce my Landline phone service: 40% of U.S. homes had ONLY wireless phones during the first half of 2013. Ditching the landline allows households to shed a monthly bill, but doesn’t restrict them to just cellphones. Using Wi-Fi, I will still have Skype and FaceTime – both of which are free.
- Eliminate my DVD and Blu-ray Players: Sales of DVD and Blu-ray players totaled 21.3 million in 2012, down 20.1% from a year prior. Streaming shows and movies from Internet-based subscription services like Amazon, Hulu and Netflix is clearly the solution of choice.
- Reduce my Hotel bills: The average daily rate at a U.S. hotel is up 4.1% this year to: $110.59/night. Services such as ‘Airbnb’ and ‘Vacation Rentals by Owner’ allow consumers to choose from an assortment of homes and apartments to stay in (when the owner is out of town) – at far reduced rates, and offer more space for the money.
- Eliminate 2-year phone contracts: The issue with any phone contract is how it handles the swapping of physical devices without incurring a fee. Mobile users are beginning to: just purchase the phone ‘outright’ through Wal-Mart, Best Buy, or on-line, and then decide on their monthly service plan separately.
- Eliminate the Digital camera: 11.5 million digital cameras were sold this year in the U.S., down 44% from 2012. Consumers who want high-quality photos are opting for the larger, DSLR (digital single-lens reflex) camera. Others understand that it’s the timing of the photo – often more than the quality – and are sticking to one device (their smartphone), which also takes pretty good pictures.
I’d like to express my sincere thanks to all of my friends that contribute and help me write this weekly blog. My only goal is to attempt to separate reality from fantasy, and to hopefully get all of us thinking about things differently. Have a Happy New Years holiday, and I'll talk to you again in 2014.
With only two trading days left in the year, the market has held up nicely into year-end. It has been a big year for the market as it has pushed higher in the face of fairly lack luster economic performance. It is hard to ignore the fact that just 7 trading sessions ago (on Dec 18), the DOW put in a ‘low of the day’ of 15,808. On Friday, December 27th, we ended with the DOW at 16,478. That is virtually 7 – 100-point days strung together. That is a pretty hefty end-of-year run.
That said, the market is looking tired. With the 10-year Bond now flirting above 3%, we could see a pause before ringing in the New Year. For all the bravado about how ‘interest rates rise in a good economy’, I think the last thing we really need to see right now are higher interest rates.
January brings with it a couple of issues that we'll need to consider. While ‘animal spirits’ want to push things even higher, there's no doubt that some amount of ‘profit taking’ will take place after the first of the year.
In next week’s edition – we will include our ‘Tax Loss Selling / Profit Taking’ picks for all to review. I’ll be releasing them via Twitter (on a daily basis) as well. Hopefully we can make even more money in the New Year and together we can learn how to keep more of what we’ve got.
Happy New Year!
- UNG: This week I sold out of the remainder of my UNG position – including the April calls – for an additional 40+% profit. The underlying ‘natural gas’ commodity had turned decidedly bearish; therefore, it was time to exit.
- USO and UCO (oil ETF): Oil remains strong – and USO (the oil ETF), and UCO (a leveraged oil ETF) still look very strong. Look at the March and April (in the money) CALL contracts as a place to invest.
- FXY (Japanese currency ETF): The Japanese stock market continues to rise and along with that comes the Japanese Yen continuing to fall. March and April FXY – PUT contracts continue to do well.
- XHB (the housing sector ETF) continues to do well – up over 40% for the month.
- The entire 3D printing sector is continuing to run well. Not only the name players of DDD and SSYS, but look at XONE (a Pittsburgh based company) that is just beginning to do well.
My current short-term holds are:
- USO – April 2014 $37 Calls – in at $0.74 (currently $0.75) – room to run,
- FXY – March 2014 $97 Puts – in at $3.76 (currently $4.70) – room to run,
- XHB – Mar 2014 $33 Calls – in at $0.85 (currently $1.31) – room to run,
- AKAM – in at 47.08 (currently 47.10) – stop at entry,
- DDD – in at 82.60 (currently 90.76) – stop at 89.25,
- SIL – in at 24.51 (currently 11.15) – no stop,
- GLD (ETF for Gold) – in at 158.28, (currently 117.15) – no stop ($1,212 per physical ounce), AND
- SLV (ETF for Silver) – in at 28.3 (currently 19.29) – no stop ($20.01 per physical ounce).
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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