Howard Marks in Saudi Arabia

The really nice thing about money and its pursuit is that even inveterate enemies can turn their nuclear tipped projectiles into rose petals at the feet of their otherwise erstwhile adversary.

This morning I was reminded of that incongruous scene a number of years ago when Sandy Weill, the ex-Chairman and CEO of Citigroup was secretly and then not so secretly in the middle of the desert, in Saudi Arabia, with camels in the background, meeting with Prince Al-Waleed.

Now, in Saudi Arabia, everyone is a prince, but Al-Waleed is a Prince among Princes and known for his investing acumen.

That acumen has often gone against the conventional wisdom.

At the time, Citigroup was in tremendous crisis, along with the rest of the financial sector, which in turned dragged the market down to its “666” level on the S&P 500 by March 2009.

In hindsight, I shouldn’t have been surprised to hear Prince Al-Waleed refer to Weill as “my good friend, Sandy Weil,” and cap that off by putting his arm around the Jewish New York banker.

Did I mention that Weill was Jewish?

Did I mention that Prince Al-Waleed had a very, very significant stake in Citigroup?

So this week, fast forward some 8 years and I saw this photo on CNBC this morning:

There was Howard Marks.

Founder of Oaktree Capital. An investor with his own acumen, A Nice Jewish boy from Ozone Park, Queens and most importantly, boyhood friend of Dr. Jack Dillenberg.

But Marks wasn’t the only prominent figure there having originally hailed from the 12 Tribes slightly to the north of Saudi Arabia. There were lots of familiar names and for those who believe in stereotyping, there was plenty to confirm those beliefs, but then again, those people in the habit of stereotyping don’t really need proof of anything.

Anyway, Howard Marks, along with others was there for the “Future Investment Initiative 2017.”

What is the “Future Investment Initiative 2017?”

Who better to explain than the ad campaign people for those seeking outside investment?

The Future Investment Initiative 2017 is “An initiative of the Public Investment Fund (PIF) of Saudi Arabia, FII is a pioneering new global investment event that will connect the world’s most powerful investors, business leaders, thought leaders and public officials with the path-breaking innovations that are defining the future.”

The Saudis want money to get them beyond their oil reserves and who better to get if from than their friends?

When I say “friends,” I mean “enemies,” but when money is at stake, those lines can become blurred.

That may be the actual point.

Ask Jack Dillenberg. Continue reading “Howard Marks in Saudi Arabia”

More Selling

 

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A few weeks ago, 2 weeks to be precise, as I don’t write very much anymore, I did something that I had never done before.

That was to sell positions in order to raise cash.

The positions that I sold, weren’t in my usual “covered option” portfolio. They were all uncovered index funds that I had held for quite a while and had some nice long-term profits on them, as they just went along for a long market ride.

2 weeks ago on a day that the DJIA went about 144 points higher, I sold 50% of those accumulated shares.

I did so because I saw nothing to warrant the belief that we were heading even higher, at least not for a basket of stocks kind of portfolio.

Individual names, maybe. A basket? Not so much.

But, I did so with the intention of going back in with the cash to buy once again, although not all at once if the S&P 500 had retraced a mere 3% or so.

In those 2 weeks, the portfolio that held those index funds outperformed the S&P 500 by 0.5%, partly because the S&P 500 fell about 0.1% in that time period.

Yesterday, on the heels of a 130 point gain in the DJIA, I sold the remaining 50% of those index fund shares. Continue reading “More Selling”

Someday Began Today

I’m a bit more rambling today than usual, but it was an unusual day after an eye opening weekend.

A few years ago, maybe about 5 years ago at this point, I wrote an article about a lower maintenance approach to hedging a portfolio.

It involved the use of a well diversified portfolio of about 10 names. They would, ideally, all be high and safe dividend paying companies.

The idea was to use LEAPS and try to stagger the expirations and then just sit back.

Sit back and collect dividends and add that income to the premiums from having sold the options.

For the LEAPS strategy I had also planned on using a strike price that would reflect a fair amount of capital; appreciation over the year or two. Say 7% a year? 10%? Continue reading “Someday Began Today”

Why Did You Do That?

 

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The June 2017 option cycle ends tomorrow and it was looking as if L Brands was going to get assigned.

At a time when I really do want to increase cash holdings, ordinarily, I would be pretty happy about seeing that position get closed.

After all, it had done pretty well.

In the event that it had been assigned tomorrow, the 3 month holding would have returned 11.7%.

That’s pretty good when you consider that for the comparable period the S&P 500 returned only 2.4% or, even you want to give benefit of the doubt and include dividends, maybe 2.8%.

But as I was looking at the coming month and wondering what exactly was I going to do with the money that I would have lying around, I looked at the risk – benefit proposition in front of me.

That risk – benefit proposition was this:

Continue reading “Why Did You Do That?”

What Did You Do?

Image result for what did you do?Sometimes it’s hard to explain what you did.

It’s bad enough explaining to yourself, but if you also have to explain it to other people after you had a hard time convincing yourself, then your work is really cut out for you.

Today I made one of those trades that takes some explaining.

The explanation probably can go all the way back to the original trade that sought to eke out some option premiums from a real non-performing position.

The was “The Gap.”

Actually, for 2017, I had made 9 trades on the position, in order to try and cut down the large paper loss that I’ve been sitting on for far too long. Continue reading “What Did You Do?”

I Forget

Image result for lululemonAs I’ve gotten older, I realize that there are lots of things that I forget and have forgotten.

For example, I don’t really remember if I used to enjoy looking at photos like this, or not.

If I did, I’m not certain that I remember why I liked it.

Looking at it, though, I do recall a few years ago when LuLuLemon had a little bit of a debacle with its sheer athletic yoga pants and that issue related to quality control took shares lower after an almost fairy tale kind of rise up until that point.

Again, looking at the picture, I don’t really recall if it demonstrates what was bad about the quality or what was good about the quality.

What I do, remember, however, is that as all of this was unfolding, the founder of LuLuLemon and its Chairman, at the time, made the unfortunate mistake of saying that not all people were meant to be wearing his company’s clothing. Continue reading “I Forget”

Taking Possession

Usually, when I sell puts, I’m not that enamored of the possibility of taking possession of shares.

Really, all I care about, whether buying shares or selling puts is just how much income I can generate from the position and how much risk is associated with the income production.

When selling puts, I especially like being able to roll them over, just like has been the case recently with Cliffs Natural Resources, where I have some puts that expire next week and that have been rolled over since mid-December, or so.

During that time there were more than a few occasions at which it was looking pretty bleak, but as with most stock positions, if you can wait long enough the good becomes bad and the bad becomes good.

Sometimes, though, it does make sense to take possession. Continue reading “Taking Possession”

Slim Pickings

After last Friday’s best gain for the year, the market is less than 0.5% from its all time high level.

When you get to those kinds of markets, one of three things is likely.

There’s plenty of evidence that shows that new highs beget new highs.

There’s also plenty of evidence that shows that new highs make traders nervous and they lead to profit taking.

It’s hard to go onto new highs if others are cashing in their chips.

Then, there’s always the possibility of treading water while most are just trying to see what the next guy is doing.

As all of this is unfolding, there’s reason to believe that the first possibility has already become true.

We tested and then surpassed the 20,000 level and on the way toppled record after record.

Lately, though, we’ve been treading water, but what we really haven’t seen is much in the way of profit taking.

If you were to listen to all of the talking heads, what we’re in store for right now is the Trump Correction that all expect to come after the Trump Rally.

I have no clue, but what I do know is that as I collect more cash, it’s getting harder and harder to find anything that seems worth buying. Continue reading “Slim Pickings”

Well, That Was Rare

At a tie that I really want to be conserving cash, I find myself doing odd things.

Saturday night and then again on Sunday, I actually thought about buying options.

In this case, that alone was pretty odd.

What wasn’t odd was that the thought was to buy S&P 500 puts.

They were really pretty inexpensive, reflecting the continuing belief that volatility was extinct and that the market was expecting to go higher and higher.

Well, long story short, I didn’t buy those options.

But I did spend money, even though that’s not so rare.

What was rare is that this morning, before the opening bell, I bought some shares of Under Armour, after it plunged on earnings and the news that its CFO was leaving.

What made that exceptionally rare was that by making that purchase before the opening bell, there was no opportunity to sell calls at the same time.

So that shares sat there naked. Continue reading “Well, That Was Rare”

Going to Cash

Well, for a minute, anyway.

I did close 2 positions today, one for a substantial loss.

That was Joy Global, which for the longest time has been ready to close on a deal to be bought out.

That has really been dead money, but I kept thinking that maybe someone or somebody else would come along and sweeten the offer, especially as the economy was eventually going to improve in China.

But suddenly, there has been a lot of selling of those shares by institutional holders, so I gave up and took the cash.

The same for that EMC spin-off after the buyout from Dell.

That one, at least had a decent profit. Continue reading “Going to Cash”