Q: Jesse, Are you looking at Volkswagen? It could be a BP. Big exposure but will it put them out of business? Probably not. the miners cannot seem to get out of their way. Everytime I think to buy more they plunge. BIS and soxs look good.
Q: Just wondering if you are looking at Volkswagen trade – in a similar vein to the BP case you had laid out in the last two week’s market comment:
Q: Any thoughts on VW? After today’s news it is now down over 40% from highs.
J: I am looking at VW. Worried about the fraud aspect. Also have to think about consumer backlash. Very different than BP.
Q: Not sure if you saw the post below. It made me think of your last post. Maybe he was trying to put an alternate view out there.
I recently discovered Ray Dalio’s economic principles.org site. It has the economic machine video and a book on it that is fascinating.
J: I just don’t see the value in margin debt to market cap. I have not found any correlation between it and anything valuable like forward returns on any time frame. That said, I also haven’t looked very hard. Still, using high valuations to justify high valuations seems a bit circular 😉
Q: You are bullish on gold miners. What about miners of other precious metal miners? I ask because as someone who uses Vanguard, I was thinking of buying VGPMX to increase my exposure to miners. What do you think of VGPMX?
J: Sorry, I don’t know enough about the fund and its manager to be able to say one way or another.
Q: Haven’t heard you discuss REIT’s lately. What’s your current take on them now that they seam to be trending upwards? Can REIT’s in general continue upwards if the overall stock indexes trend downwards? Do you feel they have found their bottom? Are you sticking with NXRT and NLY for the dividend, or for growth?
J: As a sector, we still have a small position in the tactical ETF portfolio. I do like NXRT, NLY and KMI here for income but if stocks get hammered they will have a hard time avoiding the pain completely.
Q: I’ve been in GDX for a while, can’t figure out why it’s not moving since there’s so much chatter about China devaluing currency and their need to continue. Given the strong dollar and Yuan weakening, fed probably won’t raise yet, so gold should go up! WTH?
J: Last Thursday (Fed day) was just of hint of what I think we can expect from the miners going forward. Today, however, is pretty painful. Sentiment is just so negative it’s going to take some time to turn around. It’s a process.
Q: First of all, thank you for providing all of your wonderful insights. I thoroughly enjoy reading your commentaries and they have provided tinder for many constructive debates.
I am particularly interested in hearing your thoughts, technically speaking (I bet I am not the only one), on energy and other commodity related businesses. It appears that today, for the first time in a while they showed some relative strength. I Understand that one day doesn’t make a trend, but what are your expectations and how will you know it is time to commit capital to these areas.
J: Energy is interesting, for sure. I think there is still much more blood to come in the sector – by that I mean bankruptcies in the more highly-levered companies. For that reason I’m still just watching right now. As for the commodity, I just don’t see how it really rallies much with production still soaring. All in all, I just don’t see a whole lot of opportunity there… yet. Oh, as for the technicals, I think I’ve written the selling momentum in both USO and OIH looks to be slowing but I’m not at all confident they have even begun a real bottoming process yet.
Q: Great calls today. since you use stockcharts do you look at the pmo at all? does the fact that it is crossing or getting close to zero and rising with some of our miners bode well for a further run?
J: I look at it sometimes but it has been really noisy lately.
Q: Been with you for a while now. I like your analysis of the markets.
I liked it when you gave the percentage size of your portfolio you were taking in a position. Now I have no idea how much of your capital you have invested at any point in time when you started saying you’re taking a 1/4 position or 1/2 position or whatever. Can you explain how one determines what a 1/4 or 1/2 or full position is and tell us periodically what percentage of your trading capital is invested ?
Can you tell us periodically roughly what percentage of your portfolio is invested in your positions ?
J: I removed the percentages because I was concerned that some people were just mimicking the trade ideas and that’s not the purpose of the site. It’s really up to the individual to decide what constitutes a full position for them. I use the fractions to help show how I scale in and out of a position. Beyond that, I have said things like, “this is now my single largest position,” in many posts to help you guys understand a bit better how I’m positioned.
Sure – with the qualification that what I do is not at all appropriate for anyone else. As I said, back in January I had about 50% of my account in HLF. Today I have about that much in the miners.
Q: If I’m not mistaken, today is the first day where the stock market gets hammered, but gold stocks are rising.
Do you think there’s any significance? Sentiment shift?
J: Yes. The ratio between stocks (SPY) and miners (GDX) is starting to look positive – this is a good thing, for sure.
Q: Interesting moves this morning. I was loving the big gains lately in soxs and bis. When do you let the gains ride or press the shorts for it has only been a few days? with my mistakes in losing money I am happy to take a gain and of course still hold ½ positions in all of these. Any other good books besides Howard Marks on trading? Fun to watch our miners go up.
J: The Market Wizards series is fantastic. I refer back to the original all the time. Reminiscences of a Stock Operator is also terrific for a look into a very successful trading perspective.
Q: Do you anticipate adding 2 more short positions in bis soxs or others when the market starts to make a move lower ?
J: Not right now. I’ll just have to see how it unfolds.
Q: A question for you on short-term trading. I’ve invested in SOXS and its performance has been robust over the past 5 trading sessions, now ~7% ahead of its 5EMA. I’m tempted to take some short-term profits on a part of my investment given the prospect of a reversion to the trend line; is short-term assertive trading around a position a tactic you use?
Just got the alert…question answered!
J: I’m trying! 🙂