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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As of 1 p.m. New York time today Meituan Dianping (MPNGF) shares were up 17.52% after the company reported better than forecast sales of 16.8 billion yuan ($2.4 billion) for the quarter that ended on Mach 31. The company reported a lower than projected loss of 1.58 billion yuan ($221 million.) Year over year revenue fell by just 13% in the period.
People’s Bank says it will resort to “more powerful” policies to stimulate China’s economy but leaves details vague
Think of it as a first step toward a policy move and not as an actual plan for action. In its quarterly monetary policy report released Sunday, the People’s Bank of China said it will resort to “more powerful” policies to counter unprecedented economic challenges from the coronavirus pandemic. The central bank will “work to offset the virus impact with more powerful policies,” paying more attention to economic growth and jobs while it balances multiple policy targets. One key absence in the report: The bank dropped its earlier promise to “avoid excess liquidity flooding the economy” from the fourth quarter of 2019.
I still love Twilio (TWLO) for the long term. It’s positioning in the forefront of providing aps and a developer platform for linking multi-device input and replies into a single network makes this a stock that I want in my portfolio for the next five years (a long-time in technology stocks) or longer. But today Twilio also ran into one of my strictest rules–When I stock goes parabolic, I go horizontal–as in out the door.
How did Wall Street analysts get Disney (DIS) earnings today so wrong? Analysts had been projecting earnings of 86 cents a share. The company reported earnings of just 60 cents for the company’s second quarter. The bigger-than-Disney takeaway here is “Wonder if it would be prudent to suspect analysts are still way high on earnings for a lot of companies? I mean Disney isn’t exactly an obscure underfollowed stock.”
I’d expect some Wall Street analysts quickly to lower estimates for Shake Shack on today’s drop in sales for the first quarter because the second quarter will be worse for the economy as a whole. And I think the stock is vulnerable to a pull back after picking up more than $20 a share off the $32.50 low in a month. Tomorrow, I’ll be adding the September 18 Put Options with a strike price of $50 (SHAK200918P00050000) to my Volatility Portfolio as yet another hedge on another step down in this bear. We haven’t seen the bottom yet, in my opinion.
If you’re still looking for signs that these aren’t normal times–especially in the credit markets, you don’t need to look further than this. On Thursday, Wells Fargo (WFC) said on it will temporarily stop accepting applications for home equity loans given the economic uncertainty fueled by the coronavirus pandemic. JPMorgan Chase (JPM) stopped taking new applications for home equity lines of credit on April 17.
I’m neither as stupid as Wednesday made me feel nor as smart as Friday suggested. This is what a volatile market–unsure of its own direction and driven by rumors (and occasionally news)–feels like. If you want to attribute volition to the stock market, then you’d have to conclude that like a bucking bull it is determined to shake you off with a twist and a turn and a plunge and then step on your hopes. I think approaching the current market with a dose of humility is a good idea
Brazil ETF falls 8% today on double blows of political scandal and coronavirus response (or lack thereof)
As of the close on April 24, the iShares MSCI Brazil Capped ETF (EWZ) was down 7.71% today to $22.15. Brazil is facing an intertwined crisis as a president who has called the coronavirus pandemic a “fantasy” also struggles with a political crisis that threatens his ability to govern. And perhaps even to stay in office.
You know that Disney (DIS) is really serious about the likelihood of continued social distancing measures disrupting movie going for months when it delays the release date of Black Widow, once intended as the tentpole of its summer schedule. Black Widow has been pushed back to November 6–a compromise in my opinion that still gives the studio room for more delay before the holiday movie season. With Black Widow delayed all other Disney/Marvel dominoes have tumbled.
Buying Puts on Brazil ETF on today’s emerging market rally and worsening coronavirus recession in Brazil.
I understand why U.S. and European stocks are up so strongly today on news that the rate of new infections is dropping in Spain and Italy and that New York looks to be on a similar path with a possible peak in coronavirus cases sometime in the next week to 10 days. But what I can’t understand is why emerging markets are up so heavily on the news. Okay, I can understand why the iShares MSCI Emerging Markets ETF is up so much.