How I am going to navigate going forward.

music selection:   “The End Of Heartache” — Killswitch Engage

weigh-in:  207.0 (8.2) – two week change

Attentive Lizards noted I did not post last Monday.  I was little bit locked up emotionally.  I have had a lot of bad news lately.  A dear uncle died from lung cancer.  The markets savaged my retirement.  And the sexy lady Lizard in my life let me go.  I couldn’t cope for a few days.  I’m on the mend after licking my wounds however.

As far as trading, I’m still locked out until the 50k I’m transferring from the tIRA to the taxable account clears.  That should happen tomorrow or Wednesday.  My plans for immediate trading are as follows.  Stink bid the Tupperware bond (CUSIP: 899896AC8).  It is trading around 60 cents despite being money good (the company gushes free cash flow).  Secondly, I really like Annaly Capital Management (NLY) at current prices.  I’m tempted to buy a huge slug and restore my passive income that way.  I’m finding that the options premiums on it however are just about INSANE right now.  I’ll watch prices for a few days to make sure the panic selling is over.  I think with the Fed committing to “unlimited” MBS purchases, liquidity fears for the mREITS should be muted.  I will write 25,000 in exposure on 5 strike puts and 25,000 more on 4 strike puts.  Should those get assigned, I’ll be leveraged but my passive income needs should be met.

Finally, I’m waiting for a peak in COVID-19 cases AND a move in the S&P over the 200 day moving average.  That is my signal to start buying VXX long dated puts again.  The ^VIX should return to normalcy soon after the stressor is gone and I should make good money.

One last thing.  I’ve determined I’m probably still “retired” if I convert the rest of my tIRA to taxable. I’m waiting until next year to 1) see if it is necessary 2) do so tax efficiently.

All that said, I’m looking for work.  There are two approaches.  One is to work as a contractor and earn a higher wage.  The preferred method is to find something that meets my financial needs with a non-profit.  I want to be able to do something I’m proud of and possibly stay past the point the income is no longer needed.  The typical US millionaire has seven sources of income.  For the next phase of my life, I’d like to get up to at least three.  If I can do that while making a difference, life will be grand.

Devour your prey raptors!

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Game Plan

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4 thoughts on “Game Plan

  • March 30, 2020 at 7:42 pm
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    Will the govt’ be buying existing MBS, or just new ones? If new ones only, then NLY could get hit with a wave of defaults anyway. Too risky for my blood.

    I would also caution against deploying too much cash this early in the game. CAPE is still about 24, the outbreak is still growing exponentially, unemployment is shooting up, the financial impacts on banks are TBD, junk bond markets are locking up, and the energy sector is about to experience mass bankruptcies and defaults. We are in month 1 of a crisis that could last a year (like 2008-09), or three years (like 2000-2003), or several years (like 1929…). While working, why not let the bond prices come to you, per the original plan?

    Reply
  • March 31, 2020 at 5:19 am
    Permalink

    Very sorry to read about your bad luck FV. It sounds like your capital is down to $150k or so. On the bright side you have your house and car paid off and that will go a long way.

    I have a capital loss of around $100k which was roughly 20% of my taxable fire account. I never got into options, or margin directly. I just buy&hold and trade stocks, etfs, cefs, etc.

    There are still a lot of great bargains out there with very high yields. I think you could generate $10k-$15k for every $100k capital without too much difficulty or risk. I probably would not risk it on a single stock right now. I’d rather look at CEFs.

    Right now I am long a couple of monthly paying dividend focused etfs (DGRW, DHS, DTD, SPHD, PEY) and a Nasdaq 100 covered call etf QYLD which also pays monthly. All in roughly equal weights of around 16% each. The income generated is $21,188.22 based off of 2019 payouts and during normal times the income should grow by $1k or so a year.

    You might want to check out QYLD as it has a yield of 12.58% still according to SeekingAlpha. I think it is a pretty safe ETF and I think the income is reliable. When I purchased it last week it was around 15%. Some CEFs I like that I think are safe: HTD, UTF, FOF, DSL.

    Unfortunately a lot of the great deals are drying up quick. There were discounts of around 14% on these a week or so ago. There are still lots of high discounts in MLPS and other riskier areas. I’m going to stay away from the MLPs, BDCs, Mortgage REITs, CLOs, etc. Just too risky for me right now.

    I have no idea if this is going to be a quick recovery or something much worse. Even with all the bailouts I’m worried we have caused a lot of damage. I imagine its worse outside the US. Earnings are going to be wrecked. I’m guessing we will have dividend cuts which is why I may add more to covered call etfs/cefs for diversification.

    Reply
  • April 2, 2020 at 3:48 pm
    Permalink

    I wouldn’t be too quick to jump back in the VXX game.

    With the low oil prices shale producers will probably go bust. And they are sitting on a lotof debt, this might trigger a new financial crisis.

    Debt ratio’s in Europe are going to skyrocket, our government debt was never really sorted: Greece, Italy, Spain hell even France or my own country Belgium might be in for some choppy waters. Question is, if Italy goes under, will the euro survive –> another source of market turmoil

    Reply

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