Juggling With Knives: Profits, protection and planning for volatility in stocks, bonds, real estate, and real life.
This website is based on my book, Juggling with Knives. Both the book and website are about volatility in everything from stocks and bonds to real estate, and real life topics such as jobs and education.
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Huge surge in volatility this morning. It’s as if everybody woke up and said, “Hey, you know there are risky trends in the world.” As of 12:30 p.m. New York time today, Monday, September 20, the CBOE S&P 500 Volatility Index is up 29.51% to $26.08. I think there’s more volatility ahead so today I’m going to sell the VIX November 17 Call Options with a strike price of 18 in my Volatility Portfolio and buy some more time with a purchase of the VIX December 22 Call Options with a strike price of 19.
The CBOE S&P 500 Volatility Index (VIX) closed at 20.69 today, up another 10.7%. That took the “fear index” above the 200-day moving average at 19.98. The VIX had previously moved above the 50-day moving average at 17.86. I’d be surprised if we don’t see more market nerves driving more buying of S&P hedges to send the VIX higher next week.
I found myself humming “I scare myself” this morning as the market continued its September selling. The Dan Hicks and the Hot Licks song pretty much sums up the market action this morning. We all know that stocks go down in September so we’re sending stocks downward. And we all know that September 17 is the Big Bad Day in the month so it’s unreasonable to expect a turn in sentiment before that date. But so far, I’d note, the selling seems “orderly” with the usual candidates bucking the trend and showing up in the green. It’s when those still in the green stocks start tumbling that I’ll really start to worry.
Back on September 4 I posted a video on YouTube and this site “September and October 2021 Worse Than Usual for Investors?” that argued that September, the worst performing month for the Standard & Poor’s 500 from 1950 through 2020, and October, historically the home of the biggest one-day or one-week stock market crashes, stood a good change of being even worse than usual this year. I cited factors such as the Fed’s September 22 monetary policy meeting, a potential stalemate over the raising the debt ceiling, and economic uncertainty created by the Delta Variant (see last weeks weak jobs report as evidence on that front) as reasons for thinking that we could see a repeat of the historical weakness and volatility this September and October–but with a bit of supercharging. I don’t want to revisit all the reasons I gave in that video–Hey, just watch it, ya know?–but let me add a couple of points that I didn’t mention in the video. Like the effects of the continued shortage of chips on car manufacturers and hence car sales. Like the run-off in federal Pandemic economic help that’s now scheduled for this fall. Like signs of weakness in consumer sentiment and business confidence. Instead of more on “the problem” lets talk about potential solutions- the “what should I do stuff.”
I’m starting up my videos on again–this time using YouTube as a platform. My forty-sixth YouTube video “September and October 2021 Worse Than Usual for Investors?” went up today. The “solutions” post will go up Sunday.
The Apple September 17 Call Options with a strike of $150 in my Volatility Portfolio climbed another 23.3% today. The options looks to be moving up as traders position themselves for a bump in Apple after the company’s next new product day–speculation has the date for the announcement of a nee iPhone as September 14 with pre-orders to start on September 17. The announcement is likely to be big news and will probably drive the stock higher. For the September 17 Call Options, however, the date is something of a double-edged sword since a September 14 announcement–a big positive–runs right into the time decay of the options since them expire on September 17.
Today Microsoft (MSFT) closed up 2.08%. The NASDAQ 100 was ahead just 0.51% and the Standard & Poor’s 500 gained only 0.13%. The gains took Microsoft shares to a record intraday high of $297.35. Why the extra pop in Microsoft shares? Because today Microsoft raised the price of its Microsoft 365 productivity suite (Word, Excel, PowerPoint, Teams, Outlook and Enterprise Mobility) by as much s 20%, effective March 1. The price increase is the first since the launch of Office 365 ten years ago.
Today the CBOE S&P 500 Volatility Index (VIX) dropped another 2.24% to 15.70. That puts the “fear index” back in the “complacency zone” where I’ve been looking to buy Call Options on the VIX in anticipation of a bounce back to the top of the current zone at 20 on the next “bad news” day. (Whatever the bad news might be.)
Today President Joe Biden unveiled a plan that would speed up the transition to electric vehicles in the United States. Included was an executive order (in this case a goal) calling for half of new passenger car sales to be of electric vehicles powered by batteries and fuel cells or plug-in electric hybrids by the end of the decade. And new proposed regulations from the Environmental Protection Agency and the Transportation Department on greenhouse gas emissions and fuel efficiency for cars, SUVs and pickup trucks through model year 2026. The proposed regulations would reverse a Trump administration freeze on fuel-deficiency standards that was itself a reversal of the Obama administration regulations that would have ramped up average fuel economy to 54.5 miles per gallon by model year 2025.
Last Wednesday, July 28, Chinese financial regulators told big investors–banks and investment groups heavily exposed to China’s stock market–not to worry. China’s financial markets were sound and despite the fears engendered by the government’s crackdown on the country’s private, for-profit, education companies, the government was not looking to reverse decades of growth by companies in China’s private sector. The meeting worked. Stocks of companies like Meituan (MPNGF), China’s dominant food delivery company (with ambitions to become a full-range e-shopping competitor) rose to $30.07 on the day from $26.00 the day before. But the reassurance worked for only a few days. Today, August 3, for example, Meituan was back in the red, falling 4.48% to $26.95 to erase almost all of its “re-assurance” bounce. Today, I’m selling Meitun and Naspers (NPSNY), a South African company with a huge position in China’s Tencent Holding (TCEHY) out of my Volatility and Jubak Picks Portfolios, respectively.