My Investments Of Late

I used to provide routine stock trading and general portfolio updates, but to be honest, I just haven’t been trading as much as I used to.  I don’t know if it’s a lack of opportunities in the market, a lack of time to adequately research and trade on certain themes, or perhaps just a shift more toward low-cost and low-maintenance ETFs.  Regardless, I have made a few moves in the past few months and some very recently so I thought I’d share what I’ve been up to, especially with some earnings announcements coming in from Apple, Netflix and others that are generating quite the stir in the financial media:

Stock Trading Portfolio (Active Account – Taxable)

• Movie Theaters Punished Unfairly – The most recent trade I made was yesterday (tweeted in real time of course) when I bought into Regal Cinemas (RGC).  Following the horrific events of last week, movie theater stocks sold off 5% or more on the news.  While the event was shocking and tragic, in my view, it will have absolutely no impact whatsoever on the industry.  People will still go to the movies at the same rate they did before the shooting.  We went to the theater Friday night for instance.  We didn’t think twice about it.  It was an isolated incident.  I view this as no different than buying airline stocks shortly after 9/11 or buying BP shortly after the liability of the Gulf incident became better understood.  I basically bought RGC at an artificial 5-6% discount from true value. I believe it will revert back within a few weeks. Not a huge gain, but easy money in my view.  Incidentally, it was up 1% today in a down market, so my thesis seems to be playing out so far.
• Core Holdings – Ironically, many of my best performers last year just got pummeled this earnings season.  But I still like them.  I have triple digit gains since entry on the likes of Apple, Chipotle, Baidu, Netflix and more.  They’ve all been crushed on earnings of late, but fortunately, I had sold off quite a bit over the past 2 years, incurring some capital gains along the way, but locking them in nonetheless.  With Apple for instance, I first bought 100 shares at 96 during the Financial Crash, and have since sold 90 of those shares.  So, it’s around 600 now and I took a lot of profits along the way, but it just got killed in after hours on earnings.  I hate Netflix now due to their idiotic management and have very few shares left.  I still like Chipotle, Amazon and I have other core holdings like some gold (GLD).  I’ve also continued to hold some short leveraged ETF positions which make money in any market.
• Options – I occasionally toy with a sold option here and there to generate some income.  I recently sold some options against my own company’s stock to offset some stock option grants I have (this is hedging, not insider trading).  I also sell a quarterly option on UGA, the gas ETF.  Why?  It hedges against gas price impact to our family’s finances.  It’s been working well, as gas prices have dropped slowly over the past year, but not so precipitously that I’ve lost money on them.  So, I’ve been collecting some option income here and there and smoothing out volatility in the market and in our personal finances.  The only trade that went against me there was selling options on TMF, the Treasury inverse ETF, because I figured there’s no way yields could drop further.  They did.  So, after seeing the option price running up, I finally just closed out the position and figure I’ll sit that one out.  If the Fed wants to continue to play games with operation twist, QE and whatever else they can throw at the problem, I’m not going to be on the other side of that trade.  As long as Europe implodes, there will be no other safe haven than the US, which will continue to inflate our currency and drive down yields.

529 Plans

• I’ve been putting money aside for the kids’ college accounts for years now and it’s been a roughly even split between the state credit pre-purchase plan and an aggressive stock portfolio plan.  There are some pros and cons to each.  I went with the Iowa plan for the stock purchase plan since they utilize the low cost (and best IMO) Vanguard funds and we all know that over time, fees matter.  I’m in the most aggressive portfolio since we have a long time horizon with kids at 8,6 and 3.  As they reach 13-14, I’ll back off a bit and shift some funds into the more conservative mix.  As far as the state credit plan, it’s nice to earn a guaranteed 6% or more each year given that’s what public university tuition rates have been at.  However, the risk is that virtually no state plans are actually keeping up with their promised obligations.  Why?  They can’t actually earn a return that keeps pace with the tuition inflation rate.  Very few states actually guarantee their plans, which is ironic, because the name of my state’s plan has the word “Guarantee” in it, even though it’s not guaranteed by the state legally.  Right now, Alabama is going through some sort of legal battle over what to pay their plan contributors since the plan is in the red.  I envision other states will follow suit.  Therefore, I only have some of my funds there and the rest in the market, which of course, is also prone to uncertainty.  Damned if you do, damned if you don’t.

401(k) Plan

• I have zero assets in my company stock.  I already get a paycheck from them.  Then, I get a bonus, stock options and future employment, so why engage in double and triple jeopardy and invest in your own company’s stock?  Many people think their company is the best in the world and keep throwing money at it.  Markets are pretty efficiency so most people are wrong and would do just the same in an index fund (without the volatility).  So, as far as what I actually AM invested in, it’s primarily US Small Cap Growth, S&P500 index, some international and a very small in Pimco’s Total Return Fund.  I do feel bonds have really had a great run and shouldn’t keep running like this, but it’s tough to fight the Fed.  The total return fund is a good one and provides a decent positive return each year with lower volatility.  But in general, I have a VERY long time horizon in my 401(k) and thus, remain heavily invested in stocks.

Roth IRA

• I have a Roth IRA with Vanguard due to their incredibly low costs and customer service (and ethics).  So, like my other long-term plans, it’s primarily in international and US equities.  No bonds, nothing fancy.  I try to keep the expenses low, don’t worry too much about day to day volatility and only check it every few months.

What are You Invested In?