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.
This website keeps the content of the book fresh and the advice and strategies up to date. If you’ve purchased the book, you’ve earned a one-year free subscription. Use the Coupon Code in the book to start your one-year FREE SUBSCRIPTION when you Subscribe on this website.
I run two other investing websites, Jubak Picks and Jubak Asset Management. So how does Juggling With Knives fit in that group? With a subscription at $79 a year you get everything that appears on my free JubakPicks.com website (1 to 2 posts a day plus buys/sells/updates on three portfolios) plus an additional 1 or 2 posts a day, including a special post on volatility on most days, plus access to my new Volatility Portfolio. My premium site, Jubak Asset Management, JubakAM.com to its friends, offers for $199 a year everything on Jubak Picks, plus everything on Juggling With Knives, plus exclusive posts that include Sector Monday, Friday Trick or Trend, Saturday Night Quarterback, and my daily Notes You Can Use Mini Blog. Oh, and videos where my smiling face explains the markets. If you’d like to step up to a JubakAm.com subscription click here. (You’ll get full credit for what you paid to subscribe to Juggling With Knives.)
Back on March 10 I bought Put Options, a bet that a stock will fall, on Nvidia (NVDA). I sold those Puts on March 17 for a gain of 106%. When I bought the Puts Nvidia traded at $261.08 a share. When I sold those Puts Nvidia traded at $219.7 a share. The shares have rebounded to trade at $259.88 today, March 25, at 2:30 p.m. on the rumor and then the news of a $2 trillion coronavirus rescue package. I think the huge bear market/short-covering rally of the last two days won’t hold once enthusiasm over that $2 trillion runs into the realities of how long and how deep the coronavirus recession is likely to be. Economists are already talking about the need for another rescue package since that $1200 per adult check isn’t going to last until we turn the corner on the coronavirus recession. So it’s time to buy those Nvidia puts again.
In a bear market panic, it’s really, really hard to figure which way stocks will jump on any particular day
Yesterday, I sold my Put options on Nvidia (NVDA) and Apple (AAPL) with gains of around 100% in each since I added them to my Volatility Portfolio on March 10. I’d bought those Puts in order to make some money from the falling prices of those stocks and the market in general. As I read the market tea leaves yesterday morning, stocks were likely to rally in the days ahead as the Senate passed the House of Representatives’ first coronavirus relief bill and took up a much bigger $1.2 trillion bill that included such things as a $1,000 or $2,000 check to each American and $300 billion in aid for small businesses. I didn’t want to hold those negative bets on a further decline in Apple and Nvidia shares in the face of that “good” news. But instead today, March 18, I got a huge sell off in U.S. stocks. The Dow Jones Industrial Average opened down 1,300 some points. The Standard & Poor’s 500 index was down by as much as 9.78% as of 2:30 p.m. New York time before rallying at the end of the trading session to a closing loss of “just” 5.18%. So my sells on those Puts yesterday wound up leaving money on the table. I’m okay with that.
Today, on the wave of optimism in the markets over Washington talks about a $850 billion coronavirus stimulus package, I’m going to sell the two put options–Apple and Nvidia–that I bought on March 10. I don’t want to give back my gains. And I look to rebuy these bets on falling stock prices when reality bites optimism in the behind in a few weeks.
Earlier today I sold shares of Nvidia (NVDA) out of my Jubak Picks portfolio out of worry that we are looking at a further market dip that’s likely to be especially hard on technology momentum stocks. Now I’m adding put options on Nvidia in my Volatility Portfolio
One reason I decided to wait yesterday to put on those Apple (AAPL) September 18 puts (AAPL200918P00250000) in my Volatility Portfolio until today was a hope that the extremely wide bid/ask spread of Monday would narrow so that the put options wouldn’t be as expensive.
But just in case the today’s panic ushers in more panic tomorrow, and just in case that the already negative news on so many fronts turns more negative, I’d also like to put on a hedge to give me a little more upside in case markets continue to fall. (I’ve already got a full complement of Treasury ETFs in my portfolios plus gold and some exposure to the Japanese yen. The iShares 7-10 Year Treasury Bond ETF (IEF), for example, is up 6.94% in the last month. The Invesco Currency Shares Japanese Yen (FXY) is up 4.19% in the last month. Of course, you could hedge using the S&P 500 itself but my preference is to spend less money on a contract and get more leverage by going with a put on a single widely owned and heavily represented in the indexes stock, such as well Apple (AAPL.)
What now for Treasuries and their ETFs? Should you be buying even at record low yields? I’m adding shares of Vanguard’s 1-3 year Treasury ETF
I’d wager that almost nobody today is buying U.S. Treasuries for their yield. The yield on the 10-year Treasury broke below 1% to 0.9043% for the first time EVER. The 10-year finished the day with a yield of 1.01%. The yield on the 2-year Treasury fell to a low of 0.6223% before closing at 0.71%. But traders and investors are buying.
Shares of AbbVie (ABBV) tacked on another 1.32% today to a close at $96 continuing a run that began back on January 31 at $81.02. The trend picked up momentum on February 7 after the company reported fourth quarter earnings with better than expected sales for its blockbuster Humira drug that has picked up competition from biosimilar in Europe. The stock climbed 5.9% that day. Now the shares are getting an added boost from better than expected quarterly numbers from Allergan (AGN). AbbVie is in the process of acquiring the Botox-maker.
I was going to wait until just before Cirrus Logic (CRUS) reported earnings on January 29 before deciding to sell. But with the market trending down on fears of the coronavirus outbreak in China (and increasingly globally), I don’t see the upside in waiting. Also on a pure earnings story and the gains the stock has posted recently I have to wonder if Cirrus Logic isn’t trading on earnings expectations that the company just won’t be able to meet.
I was going to wait until just before Xilinx (XLNX) reported earnings on January 28 before deciding to sell. But with the market trending down on fears of the coronavirus outbreak in China (and increasingly globally), I don’t see the upside in waiting.