Dad’s Investment Journal

ca. 2002 --- Wall Street Sign --- Image by © Matthias Kulka/zefa/Corbis

Overview

This is my stock investment journal with ongoing trades and commentary as both a reflective and an educational tool. We will focus on the thoughts that went into our trades and reflect upon what went right and what went wrong in our investments (both strategy and execution) with the hopes of not repeating our mistakes with our future investments. I’ve laid it out in reverse chronological order so it’s easy to go back and understand the evolution of our investing.

Investment goals:  I plan to maintain a core portfolio (~90%) consisting of safer and more stable investments (my “forever” stocks), as well as a small portfolio (~10%) designed to achieve higher returns on riskier shorter-term investments and trades. The long-term goal of our investment is to fund our retirement. Having over 20 years for our core portfolio grow, we’re using an aggressive asset allocation profile that is 50% US large cap equity, 25% international equity, 20% small cap equities, and 5% cash. The kids also have small investment portfolios and we’ll talk about them too.

Highlighted Stories

Investment Journal


2016


 

September 1, 2016 (LANDS END INC): Lands’ End released their earnings and they looked pretty ugly, but the stock jumped up. Go figure. In their earnings call, they did announce that they will be selling some of their Lands’ end Canvas and Sport product lines through Amazon. This is positive news for my position that Amazon would be the perfect acquiror for Lands’ End. I’ll be looking for signs that the Lands’ End/Amazon relationship is working and expanding (e.g., higher sales, positive news releases, expansion of products with Amazon, etc.) and looking for opportune times to add to my long position. See my post Stranger Things in Store for Lands’ End and the Man in the High Castle.

August 31-September 1, 2016 (SCHWAB INTERNATIONAL EQUITY ETF and SCHWAB FUNDAMENTAL INL LARGE COM ETF): I sold some of my international index funds SCHF at $28.39 and FNDF at $24.92 to increase my cash position in case of a market correction. I had a small gain from this so it doesn’t really affect my taxes. I chose to sell my international index because most of my other holdings are my forever stocks that have big gains. I know that portfolio is now under-weighted in international exposure, but I know I will rebalance in the near future. In addition, the Schwab index funds are commission free, so I can go in and out of them at no cost.

August 31, 2016 (NETFLIX INC): I sold my NFLX position at $97.69/share and broke even. Getting a little jittery about a market correction, I have been going through my portfolio looking for positions to cut to turn into cash and NFLX is one of them. I think NFLX could go higher, but it will be a bumpy ride. I also think that NFLX faces a lot of challenges with big competitors forcing it to spend billions on original content, which is a huge cash drain on its business. Since NFLX is not one of my core forever stocks, I chose to cut bait on it in order to have some cash in reserve.

August 31, 2016 (PUT LANDS END INC $15 EXP 03/17/17): I sold LE March 2017 $15 puts for $1.15/share in my account when LE was trading around $17.75, a day before they were due to release their earnings. I did this to position myself to either collect some options premiums or to allow myself to buy more at a lower stock price. It was a riskier-type trade to do before earnings, but that is also when the premiums for the options would also be higher. Since I was going to be the seller of options, that worked in my favor. I was considering buying OTM $20 calls as well since the net cost between them would have been a few cents per share. This would have been a more aggressive play and one that makes sense to me because having the calls provides me with the upside in case Lands’ End shoots up. But I don’t fully trust Lands’ End to perform yet, so I didn’t want to take that risk on buying calls. Anyways, I took the safer bet by just writing puts and collecting some premiums for now. I think it will be choppy, so I can be patient and watch the stock for additional dips.

August 29-30, 2016 (OMEGA HLTHCARE INVTS REIT): Sold OHI to divest some from our REIT holdings due to potential interest rate hike by the Fed to move into more of a cash position in case of a market correction. If rate go up, then REITs will get hit. We sold our OHI position and saved out Welltower position because I believe Welltower is safer (has higher REIT cashflow FFO and is less dependent on Medicare). These were in Grandpa’s IRAs. We needed to do a RMD (required minimum distribution) by the end of the year, so this also seemed like a good time to lock in gains and sell the position to make that RMD.

August 24, 2016 (SHLD) Part b: Sears has been coming down off its temporary blip up to the high $17’s. I was thinking about how I should have made a bigger investment in this position. A larger short position would help me better hedge my overall stock portfolio with respect to a market correction when the Fed raises interest rates this fall. So I still feel like a wuss for not having greater conviction in my SHLD trades. I will look to add more to my put positions if SHLD comes back up towards $18. I expect this to be a bumpy ride, so hopefully I will get another few bites at the apple.

August 24, 2016 (SHLD) Part a: Sears dropped down to $14.70, so I considered closing out of my September 16, 2016 $18-$15 put spread ahead of earnings because my upside was capped by the $15 puts I sold–I could only make $3/share ($18.00 – $15.00) max. However, when I looked at the option prices, the spread was only $2.40/share versus the $3.00/share I expected. Looking at it more closely, my far ITM $18 puts are valued almost entirely on their intrinsic value ($18.00 – $14.70 = $3.30) with only a small portion for its time value ($0.27), whereas my near ITM $15 puts are mostly time value ($1.12) with a small intrinsic value ($0.30). What that means is that I have to take a lower return now to lock it up, or wait until it gets closer to expiration where most of the time value is lost, or for the stock price to drop even further where the $15 puts are also way in the money (and, hence, will have a small time value). So I will wait it out because I think SHLD will drop given time and especially after the dismal earnings they will release.

August 19, 2016 (PUT WINGSTOP INC $25 EXP 08/19/16): WING closed at $31.01 so my put options expired worthless (I lost $0.50/share). In hindsight, I did this as a flier bet because I had just made a big profit on my GE hedge. I think Wingstop is overvalued and the chicken wing concept doesn’t have any legs, but what I did was just gambling. Don’t do this again.

August 15, 2016 (CISCO SYSTEMS INC): I initiated a position in CSCO at $31.19/share into my parents’ account. We like this as a strong dividend growth stock with some growth potential as a tech company. We had also been considering Apple and Qualcomm as they both had good dividends that were growing in the high double digits over the past couple years. CSCO generates over $13 billion in operating cashflow and only has $1 billion capex (net $12 billion). It paid out only $4.75 billion in dividends last year, which means that it has plenty of room in its $12 billion cashflow to grow the dividend. CSCO started distributing dividends five years ago in 2011 at $0.06/share/quarter and is now 4.3x higher at $0.26/share/quarter. CSCO jumped up its dividends by 23% and in the prior years it increased them by over 10% per year. We expect CSCO to increase its dividend by high single-digits over the next several years. We also like the stock appreciation potential from CSCO’s position to reap the benefits from the industrial internet and internet of things trend.

August 15, 2016 (PUT IPATH COFFEE ETN $20 EXP 09/16/16): I sold some short-term September 16, 2016 $20 put options for $0.45/share. The underlying price of JO was $20.41 and the Coffee C price was $1.46. This was a lower risk play where I wouldn’t mind buying and holding JO for the longer-term at $20/share.

August 12, 2016 (PUT SEARS HOLDINGS CORP $18 EXP 09/16/16 and PUT SEARS HOLDINGS CORP $15 EXP 09/16/16, PUT SEARS HOLDINGS CORP $18 EXP 09/16/16, and PUT SEARS HOLDINGS CORP $13 EXP 01/19/18): Sears continued climbing to $17.59, so I added to my short position. I bought a short duration September 16, 2016 put spread: I bought $18 puts at $1.72/share and sold $15 puts at $0.47/share for a net debit of $1.25/share. I bought these shorter-term puts because I’m looking for SHLD to drop after they release earnings on August 25. While the put spread limits my profit potential, I wanted to reduce my costs/risk because of the short duration of the options (the puts would only have three weeks to come into the money after the earnings release). I also added to a longer-term short position by buying January 2018 $13 puts at $3.60/share. To me, the long duration was, in itself, a risk mitigator, so I did not offset it by selling lower strike put options. I want to retain as much of the upside as possible. I also bought short duration September 16, 2016 $17 puts at $1.12/share in my IRA account. I could not offset the risk because I currently cannot sell options from my IRA account even though it is part of a spread. But I was comfortable with the risk-reward based on my investment thesis.

August 9, 2016 (PUT SEARS HOLDINGS CORP $10 EXP 01/19/18): Sears continued climbing to $16.79, so I added to my short position by buying long duration January 2018 $10 puts at $2.29/share.

August 8, 2016: As a way to help automate my stuff, I updated my Google Calendar with recurring reminders of the earnings release dates and ex-dividend dates for my investments. These are some “known events” where major movement of the stocks can take place, so we want to do some prep and evaluation leading up to those dates. The exact earnings dates get announced as the quarter close nears, but I just set them to recur every three months to give me an idea of when they will come out. I will adjust later when exact dates are announced.

August 5, 2016 (PUT GENERAL ELECTRIC CO $32.5 EXP 08/26/16): I closed out of my GE options hedge at $1.25/share. I wanted to take some real profits and not get too greedy, so I closed out of my puts after the positive news from the Fed caused GE to go up after several down days. I still believe in the upside to GE which is why I still hold the $30 GE call options expiring January 2017. But this was a hedge in case market reacted negatively to their earnings, which they did. So I made a money profit on these puts, while my long calls lost some of their paper profits. My long calls have more than 5 months remaining and I expect GE to rise during that time.

August 3, 2016 (PUT WINGSTOP INC $25 EXP 08/19/16): I bought puts for WING at $0.50/share. This was part of my neutral strategy (long SBUX restaurant, short WING), but I just did a short of WING without adding to SBUX, so it wasn’t really a neutral bet. This was just a bet that WING would fall on earnings–don’t do it this way again. I expected them to have poor same store sales. I don’t think this restaurant concept has real legs. Keep an eye to short in future after more in-depth analysis. WING popped up $3 so now my options are worthless. I’m looking to liquidate my position if stock comes down.

July 29, 2016 (LANDS END INC): I thought about adding to our position when the stock dropped into the$14’s. While I thought the stock would go back up, I decided not to buy more because I wanted to save some of my ammo for another day. Lands’ End is not a forever stock in my mind. With a mature company, I really look hard at the cashflow from operations. I want a company that consistently churns out loads of cash every year (a la Warren Buffet). Lands’ End does not fit this bill. But I do like Lands’ End as an undervalued stock with the potential for a big upside premium as an acquisition target. So I look at Lands’ End as a short to medium term trade (1-2 year time frame). In addition, my current mindset is also being tempered by the fact that I think the market is a bit frothy and would not be surprised if we see a market correction in the next few months. So I’m not that eager to load up on more speculative long positions. In fact, I’m trying to find some short positions to hedge the potential market correction–like loading up on Sears puts when the price pops up into a favorable short-range for me. So, for Lands’ End, I’m not just loading up on it even though I feel like it might be a good price to get some more of it (as I would with one of my forever stocks). In hindsight, this was near the bottom so it would have made a great short-term buy and then sell when it popped up to $19 giving you a quick 30+% profit.

July 26, 2016 (CALL STARBUCKS CORP $56.5 EXP 08/26/16): I sold my quick trade on SBUX for a profit. The underlying closing price of SBUX was $58.31. I bought the call options for $1.66/share and sold them for $2.32/share for a profit of $0.66/share.

July 22, 2016 (CALL IPATH COFFEE ETN $25 EXP 09/16/16): I believe coffee is at a bottom of commodity cycle and prices will rise significantly over the coming months/years. There is much more upside to higher prices ($1.45? Up to $2.00+) than downside ($1.45? Down to $1.20), so I wanted to close out the OTM call I sold which would limit my upside. I bought back the calls at $0.40/share and made a small profit ($0.54 – $0.40 = $$0.14/share), but maybe should have waited for bigger correction (or let time deteriorate the value of the short call).

July 22, 2016 (BARCLAYS BK IPATH BLOOM COFFEE ETN): Grandma/pa’s account. We added more JO at $21.45. The Coffee C price was $144/lb.

July 21, 2016 (PUT GENERAL ELECTRIC CO $32.5 EXP 08/26/16): I purchased GE puts at $0.52/share as a hedge to my in-the-money (ITM) long calls that I purchased after the August 2015 correction. This is a pure hedge (1:1) that I made the day before earnings release in case the market reacted negatively to earnings. My plan was to close the short position if GE went up or hold it for a bit if it went down. I bought short-term puts (only 4 weeks out) instead of longer duration because this was a hedge on the earnings announcement–I still believe in the long thesis that GE is going up.

July 21, 2016 (PUT SEARS HOLDINGS CORP $13 EXP 01/19/18 and PUT SEARS HOLDINGS CORP $5 EXP 01/19/18): After trading in the $12-$15 range for a while, Sears finally popped up around $15.50, which was my target to initiate a short position with long duration January 2018 puts (I think Sears will go BK by then). I did a put spread to reduce my costs (bought $13 for $4.58/share and sold $5 calls for $0.92/share = net cost of $3.66/share). I will look to buy more puts as well as close out the $5 puts if SHLD goes up to $18. Buying back the $5 puts will then remove the profit limit for my initial put position. See my full analysis–Sears Is Taking It in the Shorts.

July 19, 2016 (PAYPAL HOLDINGS): Sold my PayPal shares for $39.32 to reallocate to other investments in which I have more conviction. Sold PYPL before one year, so this is a short-term gain. But I have some carry-forward losses that can absorb the gains. I try to look at the taxes, but my decisions should be driven more by the stock rather than the taxes.

July 19, 2016 (buy CALL IPATH COFFEE ETN $22 EXP 03/17/17): I purchased calls for JO for $2.80/share. I bought these calls because coffee spiked up over the past couple months to one-year highs and I didn’t want to miss coffee going to $2+/lb. price range. I probably too prematurely near the highs of the current trading on the first pullback from the highs. I should have waited for the correction to play out. Or more so, I should have placed a bigger initial bet when I did my analysis and initiated my opening position. I’m not sure when the prices will rise from commodity cycle bottom, so I want longer durations. I’m researching trading in futures options so I can 1) purchase longer term options (buy options for specific futures contracts that can go years out), and 2) to see if there is a way to get greater leverage than buying options on JO ETN.

July 19, 2016 (buy CALL IPATH COFFEE ETN $22 EXP 09/16/16 and sell CALL IPATH COFFEE ETN $25 EXP 09/16/16): I purchased a call spread for JO (bought calls for $1.47 and sold calls for $0.54 for a net cost of $0.93/share). This is an example of getting spooked. I wanted to make sure to be in a long position and not miss out on the run up if it happened. I think there was an unexpected frost so I wanted to get in a long position just in case it blew up. I am looking to exit this short duration position if there is a run up again. Short duration so I need to cut losses before they expire worthless.

July 19, 2016 (CALL IPATH COFFEE ETN $22 EXP 03/17/17 and BARCLAYS BK IPATH BLOOM COFFEE ETN): I added to my long position on coffee buy buying $22 calls for $2.75/share. The Coffee C price was trading around $1.48/lb. The risks in buying options is that these are not that far out. I am looking into buying options on futures and that way I can go over a year out with my options. For Grandma/pa’s account, we went with the safer play (but less payoff), and added more shares in JO at $22.64.

July 19, 2016 (STARBUCKS CORP and CALL STARBUCKS CORP $56.5 EXP 08/26/16): I swapped out SBUX shares at $56.65/share with SBUX options and to fund my purchase of JO options for my IRA account. With an IRA account, I can’t just add more money or buy shares on margin, so I had to sell a portion of my existing position to reinvest in something else. I bought some SBUX calls at $1.66/share before they released earnings. This was sort of a quick bet, but I think SBUX has been depressed over the past year even though it just keeps hitting its numbers. I thought it would beat expectations because it had announced positive things for the next quarter like raising prices, raising wages, etc. My thinking was if SBUX can afford to raise wages ahead of other restaurants, then it must have had a good quarter. I did this from my IRA account so I don’t have to worry about short-term gains and taxes. By swapping out shares in SBUX with options in SBUX, this was kind of my way of doubling down with less money but with more risk (it had to go up because the options expire in one month). My plan was to sell within a week or two for a profit or to limit the loss.

July 15, 2016 (CALL IPATH COFFEE ETN $30 EXP 12/16/16): I bought back the JO calls for $0.60/share. I sold because I didn’t want my upside limited by these OTM calls. I should have been more firm in my strategy from the start that I expect coffee to go to over $2/lb, and thus I want the upside. I should have waited for a better price from a correction to close this out. In addition to playing both sides, the more time that expires, the lower the value of the calls I sold, so it naturally helps my position to let the value deteriorate with time.

July 14, 2016 (LANDS END INC): Grandma/pa’s account. We initiated a position in LE at $16.38. I will add more if it drops significantly ($10 or below). But my thesis is that it is a brand with direct sales to the consumer and a great candidate for acquisition by AMZN or similar retailer. See my full analysis–Can Lands’ End Right Its Ship?.

July 12, 2016 (CALL IPATH COFFEE ETN $30 EXP 12/16/16): Sold the $30 JO calls for $0.55/share to replace lower strike price $23 and $24 calls that I sold to provide me with more room for upside. Lost money on the trade as the price of coffee continued to go up. Should have waited for correction. Or just taken my profits with my ITM calls I purchased. But my thesis is that I want to be long and add to my long positions. However, these are options that may not have long enough duration. But want leverage instead of just buying JO which gets me no leverage.

July 12, 2016 (CALL IPATH COFFEE ETN $23 EXP 12/16/16 and CALL IPATH COFFEE ETN $24 EXP 12/16/16): Bought to close out these JO calls for $1.84 and $1.61/share. These sold calls would limit my upside, so I closed out of them and replaced with more OTM $30 calls, which would provide me with more of the upside if coffee prices shot through the roof. I was worried that coffee was going to make a run much higher and I didn’t want my upside to be capped (a risky play). In hindsight, I should have bought more long calls and held onto the short call position to be sold later if prices turned back down. That way I could play both sides (win when prices go up and win when prices go down) since I was playing for a longer-term thesis.

July 11, 2016 (PLUG POWER INC and HYDROGENICS CORP F): Grandma/pa’s account. We liquidated our positions and took a small loss on this. We bought a few alternative energy stocks last year as a bet on alternative energy. We shouldn’t have made this bet and should have just stuck with our forever stocks.

July 7, 2016 (CALL IPATH COFFEE ETN $21 EXP 12/16/16 and CALL IPATH COFFEE ETN $24 EXP 12/16/16): Bought this call spread to add to my long position in JO coffee (bought $21 calls at $2.27 and sold $24 calls at $1.24 for a net cost of $1.03/share).

July 7, 2016 (CALL IPATH COFFEE ETN $21 EXP 12/16/16 and CALL IPATH COFFEE ETN $23 EXP 12/16/16): Bought this call spread to add to my long position in JO coffee (bought $21 calls at $2.29 and sold $23 calls at $1.52 for a net cost of $0.77/share). Sold the $23’s to make it cheaper for me. However, selling the $23 calls also capped out my upside to $1.23/share ($2.00 – $0.77 net premium).

July 7, 2016 (BARCLAYS BK IPATH BLOOM COFFEE ETN): Grandma/pa’s account. We initiated a position in JO at $21.41 based on my coffee commodity thesis. The Coffee C price was $141/lb. It adds diversification to their portfolio too. I read in Schwab’s newsletter about allocating 5% of your portfolio to commodities. I think coffee is in its low cycle and expect it to pop up in the coming months/years. In hindsight, I should have initiated this when I did it for my portfolio.

June 22, 2016 (PUT STARBUCKS CORP $47.5 EXP 01/20/17 and PUT STARBUCKS CORP $50 EXP 10/21/16): Starbucks went down to a low recent price of $55.61, so I sold some $47.50 puts for $1.42/share and $50 puts for $1.05/share. SBUX is my one of forever stocks, so I don’t mind buying more of it at a lower price of $47.50. It’s a way for me to buy more at a lower price, so this does not have the theoretical unlimited risk for a trade to me. If it does not reach these strike prices, then I just keep the premiums as income. I wrote different expiration date from the other sold puts so I can spread out short-term capital requirements just in case SBUX price did drop below the strike prices.

June 15, 2016 (CALL GENERAL ELECTRIC CO$30 EXP 06/17/16): I closed out of my GE calls at $0.81/share. I should have sold out earlier when spiked. I was lucky that GE rebounded within the last 2 weeks before expiration, so I was able to make a small profit. However, I missed out on bigger paper profits earlier in the year when GE hit a new high. I held out because this was one of my home run plays where I was looking for big profits (I still have the bigger position with longer duration). But I should have considered rolling it into a longer duration option when GE hit its new highs. Or I just need to be disciplined with “profit” target rather than a “price” target when it comes to options.

June 21, 2016 (ALPHABET INC. CLASS C): Grandma/pa’s account. We added more to our forever stock GOOG at $696/share.

June 8, 2016 (MAGELLAN MIDSTREAM P LP): Grandma/pa’s account. We initiated a position in MMP at $72.96. Magellan Midstream is an oil pipeline–they are toll collectors for the oil and gas industry. MMP is formed as a limited partnership so it pays out a big dividend, but this dividend is treated mainly as a return in capital (it’s good in a taxable account; not good for an IRA). What this means is that most of the dividend goes to lower your cost basis and only a small amount is considered income. It also works for my parents account because if they hold it and pass it on to us, the cost basis gets stepped back up to market price, so it is very tax efficient. I think the oil & gas crisis is ripe for some investment opportunity, similar to the post mortgage crisis situation. So I’m also looking for other ways to invest in it, but I have to do more research first.

May 20, 2106 (PUT IPATH COFFEE ETN $17 EXP 12/16/16): I sold puts for $0.95/share to add to my bullish position when prices dropped to $18.80. I wouldn’t mind owing JO at $17. If it doesn’t hit $17, then I just pocket the premium as income. A few days later I tried to do a limit trade, but missed out on it because the limit did not hit. I missed out on another one of these selling puts for $1,000. Next time, don’t be too greedy on the trade. If it’s a good price, suck up some of the bid-ask spread costs. Better to get your position than to miss out. In hindsight, I should have added more aggressively to my JO position (additional shares or call options). Selling puts was a safe play and only gives me the option premiums without providing any of the upside to much higher coffee prices, which is the crux of my thesis (i.e., Best case for selling puts would be +$950, but if I had 10 calls (rights to buy 1,000 shares) and the price jumped up $5 above my strike, I would make $5,000; even more if price went higher.).

May 18, 2016 (CALL EURONET WORLDWIDE $85 EXP 11/18/16): Sold covered calls for EEFT at $3/share to generate some income when EEFT was trading at $76. I’m conflicted on EEFT. I don’t really want to sell because it will be a big tax gain. But, at the same time, I do want to reduce my position in EEFT and reallocate the money elsewhere because it has appreciated a lot and is now a bigger piece of my portfolio than it should be. EEFT is not one of my forever stocks, but I do still like its fundamentals and think that it could become an acquisition target for a bigger fintech player like PYPL or VISA. So in the meantime, I will be happy to collect some extra income if it does not reach the strike price.

May 16, 2106 (PUT IPATH COFFEE ETN $18 EXP 12/16/16): I added to my bullish position when prices dropped to $20.36 by selling some puts at $1.05/share. I wouldn’t mind owing JO at $18. If it doesn’t hit $18, then I just pocket the premium as income.

May 12, 2016 (PUT WALT DISNEY CO $90 EXP 01/20/17):  Disney went down to a low recent price of $101.71, so I sold some puts at $3.34/share. DIS is my one of forever stocks, so I don’t mind buying more of it at a lower price of $90. It’s a way for me to buy more at a lower price, so this does not have the theoretical unlimited risk for a trade to me. If it does not reach $90, then I just keep the premium as income.

May 10, 2016 (BARCLAYS BK IPATH BLOOM COFF ETN IV): Coffee prices started a move up so I added more to my JO position at $19.53/share with the remaining cash I had available in my IRA. The Coffee C price was trading around $1.27/lb.

May 5, 2016 (BARCLAYS BK IPATH BLOOM COFF ETN IV): I initiated a long position in JO at $18.37/share for my coffee commodities play (see my Trading Places post). I bought this in my IRA because I know I will be selling at some point if coffee prices spike up. I just don’t know when, so I wanted to avoid having to pay taxes on short-term gains in my taxable account. The Coffee C price was trading around $1.22/lb. In hindsight, I should have made a more aggressive bet here based on all of the fundamentals, research and analysis. The trade I made was sizable only for the account I was using, but not for the total investment I was prepared to make. It was also a safer trade buying JO rather than the riskier call options on JO I made later as coffee prices started to climb. I read somewhere that you make your largest bet first and then pyramid in smaller amounts following the trend. I need to have more conviction in the trades I make.

April 28, 2016 (TESLA MOTORS INC and ALPHABET INC. CLASS C): Grandma/pa’s account. We sold their TSLA position at $249.08. We made a small profit, but could have been a little more if we sold when I sold mine. I was trying to hold out for the one year point so it could be long-term cap gains, but in hindsight, I should not have let taxes drive my decision. Especially in this case where my parents are retired and their LT and ST rates are not that different. We used the funds to add more to our GOOG position at $690.20/share.

April 28, 2016 (ILLUMINA INC): Grandma/pa’s account. We added more to our position in ILMN at $136.59/share after its stock got punished by slower Q1 sales. Its position in the market and cashflow fundamentals have not changed. Buying opportunity.

April 27, 2016 (MAXWELL TECHNOLOGIES): Grandma/pa’s account. We liquidated our position and took a small profit on this. We bought a few alternative energy stocks last year as a bet on alternative energy. While we made a small profit, we shouldn’t have made this bet and should have just stuck with our forever stocks.

April 26, 2016 (TESLA MOTORS INC): I sold my position in TSLA at $265.18/share. I bought shares at $231.18/share so I made a profit of $34/share. I sold out of TSLA because it was really just a short-term momentum play. TSLA is a company that is going to need a ton of cash to make it to mass production goals, so I don’t really see it as a long-term play. Thus, I exited my position to fund my new thesis on coffee commodity prices in one of my IRA accounts.

March 31, 2016 (SQUARE INC CLASS A): Grandma/pa’s account. We sold our SQ position at $15.42. While we made a profit of $2.40/share, in hindsight, this was a flier we shouldn’t have invested in. It was not a forever stock, but really just a potential flyer.

March 17-18, 2016 (SCHWAB INTERNATIONAL EQUITY ETF): Sold SCHF to capture some investment losses. I did this in anticipation of potential gains for the year (I was way up on my GE bet and a few others). I reallocated the funds to other international funds with slightly different profiles (can’t do same exact funds we sold, otherwise losses are a wash): FNDF, SCHE, SCHC, and EPI. The former three are broad international funds but focused on emerging, small cap and large cap. I added EPI to add some India to my portfolio.  If India can become another China, then I want to have some part of it.

March 1, 2016 (SCHWAB US SMALL CAP ETF and SCHWAB US LARGE CAP ETF): I reallocated some large cap funds to small cap funds to maintain my asset allocation guidance. I like using the Schwab index funds because they are commission free so I can easily reallocate amongst them at no cost.

February 19-23, 2016 (WELLTOWER INC): Grandma/pa’s account. We added more to our HCN position at $59.39-$60.68/share with a yield of 5.5-6%. Healthcare REITs were getting whacked in recent months making this a buying opportunity. HCN dropped to $52.80 a 52 week low, but started to come back up and we bought. We wanted to buy more REITs for Grandma/pa as a substitute for bonds. So we wanted to invest in a strong REIT that has a strong history and future prospects of increasing FFO (REIT’s cashflow). After reflecting on this for a while, I realized that, since we are looking to hold these long-term, the way we should look at these REITs is to focus on our purchase price and use that as our basis for our current and future yield. We expect dividends to grow, so our yield will also grow. We are less concerned about fluctuations in stock price as long as we buy in at a good price with a good base yield from which to grow.

February 19, 2016 (OMEGA HLTHCARE INVTS REIT): Grandma/pa’s account. OHI dropped to $26.96 a 52 week low, but started to come back up so we added more at $30.56/share at a yield of over 7.3%.

February 17, 2016 (PUT WALT DISNEY CO $95 EXP 02/19/16): I closed out my DIS puts at $0.54/share, two days prior to expiration, to lock in a profit. I wanted to avoid a situation that it went above $95 and stayed there at expiration, which would then make my profits disappear.  The stock was trading around $94 during the day, but later closed at $95.50.

January 28, 2016 (VANGUARD REIT ETF and OMEGA HLTHCARE INVTS REIT): Grandma/pa’s account. We sold VNQ at $76.20 with a yield of 4% and replaced it with a purchase of OHI at $32.03/share with a yield of 6.8%. We swapped out of VNQ, a general REIT index ETF, into a specific healthcare REIT OHI. Same asset class, but single company exposure.

January 21, 2016 (WALT DISNEY CO): Grandma/pa’s account. We initiated a position in DIS at $94.38/share as a forever stock after the stock got hammered for losing ESPN subscribers.

January 21, 2016 (FACEBOOK INC CLASS A): Added to my position during the market correction at $94.59/share. FB is one of my forever stocks.

January 21, 2016 (CALL BANK OF AMERICA COR $17 EXP 11/18/16): I bought some BAC calls at $0.38/share. BAC fell from a 52 week high of over $18 to $13.56. I had <$500 to invest, so I used that tiny amount as a flyer on BAC.

January 12, 2016 (ILLUMINA INC): Grandma/pa’s account. We initiated a position in ILMN at $165.47/share. As the dominant leader in genetic sequencing equipment (90% market share), ILMN is our bet on personalized medicine. ILMN also has strong positive cashflow (net $400M of cashflow = $500M operating cashflow with only -$100M of capex). The stock was down off its highs of over $240/share.

January 11, 2016 (MERCADOLIBRE INC and ALPHABET INC. CLASS C): Stock markets went thru another mini-correction, so I added to some of my positions: MELI at $99.12/share, GOOG at $716.35/share.


2015


December 17, 2015 (BANK OF AMERICA CORP): I made donations of appreciated stock at $17.75/share to some charities and non-profits at the end of the year. I bought BAC after the mortgage crisis, so the stock has significant paper gains. By donating the stock, I don’t have to pay the taxes on the capital gains and get to write off the market value for my income tax deductions. It’s one of the classic tax tips–donate appreciated stocks in lieu of cash.

December 11, 2015 (PUT WALT DISNEY CO $95 EXP 02/19/16): DIS is one of my forever stocks and I would initiate a position at this lower price, so I sold some puts at $1.65/share for income and potential to own here instead of buying at the current higher price of $108. If it doesn’t fall down to $95, then I will keep the premiums as income.

December 11, 2015 (MERCADOLIBRE INC): Added to my MELI position at $114.40/share.

November 20, 2015 (PUT WALT DISNEY CO $90 EXP 11/20/15): I let this DIS put expire to zero because it was way out of the money and closed at $120 that day. I made a small profit on the premiums I collected.

November 19, 2015 (SQUARE INC CLASS A): Grandma/pa’s account. We bought SQ at $13.02/share after IPO. We wanted the chance to get into a high-growth company at its early stages near its IPO price. My thesis was that Square had potential to expand its offerings to its small business customers. I thought it had a nice moat within its customers because of the pain to switch systems especially for a small business that likely only has one card reader. I also thought that Square had the potential to be acquired for its customers and its data in the future by a larger player like PYPL.

November 4, 2015 (MERCADOLIBRE INC): After watching it for a couple of months, I initiated a new position in MELI, my eBay/PayPal of Latin America. I bought MELI at $107.03/share as a play on both international/LATAM and technology exposure. MELI is the dominant player in LATAM and has been around since early internet days. Instead of owning an ETF made of whole bucket of LATAM stocks, I would rather have a concentrated position in MELI because they have proven to last and to be the leader in their market. I should have bought in $90’s before run up. I didn’t because my DCF anaylsis showed that they were overvalued. But, alas, sometimes traditional markers cannot be used with tech stocks. Hence, my decision to buy MELI. Note: I started following MELI after I read about it on The Motley Fool, one of my regular reads.

November 4, 2015 (FACEBOOK INC CLASS A): I finally added FB at $104.02/share as one of my forever stocks. Along with Google, it’s a dominant player in the online advertising space and it generates a ton of operating cashflow (one of the top indicators I look for in a bigger, more mature company).

November 4, 2015 (MOBILEYE NV F): I sold out of position in MBLY at $48.55/share. In retrospect, I should not have bought this stock as one of my core holdings. This was a spec play on autonomous driving. MBLY has sky-high valuation, but auto industry is a low multiple business. Took a small loss at the end of the day.

October 13, 2015 (CALL GENERAL ELECTRIC CO$30 EXP 06/17/16): I added to my GE position with a shorter duration because it was a cheaper premium at $0.76/share. By then, GE had risen from $24 to $27.87. GE was my home run high risk plays from the August 2015 market correction (I had a price target $35+). I should have manned up when I purchased the initial calls, but I wussed out with a small bet. In retrospect, I should have had conviction and bought a ton at the cheap price before GE made its big moves upward. By tiptoeing in, I gave up a lot of upside. I added the shorter duration in my taxable account and added longer duration in my IRA. In restrospect, I should have done the reverse. The longer duration would be held for more than one year so it would have qualified as a long-term gain.

October 2, 2015 (CALL WALT DISNEY CO $105 EXP 01/20/17): I initiated long calls on DIS at $10/share, one of my forever stocks. DIS came down to $103 during the August correction, so I expect Disney to reclaim its past highs of over $120. Options let me have bigger leverage if correct. I placed part of trade in taxable account and part in IRA account. In case my bet is wrong, I will be able to claim part of the loss in my taxable account.

October 13, 2015 (CALL GENERAL ELECTRIC CO$30 EXP 01/20/17): I added to my GE call option position at $1.17/share. GE stock price closed at $27.87 that day. I’m kicking myself because I should have had more guts and invested with conviction when I first bought GE calls. It would have been at a fraction of the price at only $0.27/share. I would have ended up owning a lot more share at a much lower investment level. Then it would have had true home run potential. I’m such a wuss.

October 13, 2015 (WELLTOWER INC): I sold some of my HCN shares at $68.85/share at a profit to fund my new investments in GE and DIS. Again, this is from my IRA account, so I could not add more money or buy on margin.

September 30, 2015 (CALL BANK OF AMERICA COR$20 EXP 01/20/17): I purchased BAC calls for $0.50/share when the underlying price dropped to $15.58 from 52-week highs of over $18. This was after the August correction. Again, I’m using one of my IRA accounts to try to make higher returns with higher risks.

September 22, 2015 (PUT WALT DISNEY CO $90 EXP 11/20/15): DIS is one of my forever stocks and I would initiate a position at this lower price, so I sold some puts at $1.15/share for income and potential to own here instead of buying at the current higher price of $102.49. If it doesn’t fall down to $90, then I will keep the premiums as income.

September 17, 2015 (PACIFIC BIOSCIENCES): I bought PACB for $4.43 after looking at genetic sequencing stocks like Illumina (ILMN). PACB was a high risk stock, but it had a different tech (full length reads versus ILMN’s partial gene reads) and it was being funded by Thermo Fischer (TMO), which could ultimately be a buyer. This was a high risk speculative bet on the genetic testing and personalized medicine trend.

September 17, 2015 (PAYPAL HOLDINGS): I bought PayPal at $33.49 as my play into fintech. PYPL is an epayments leader and has a strong user base and user base growth. It is profitable and has strong positive cashflow.

September 9, 2015 (MOBILEYE NV F): I bought MBLY for $49.74. MBLY is a leader in autonomous driving cameras and this was a high risk speculative play on autonomous driving trend. I was looking to buy into investments after the August correction and this was one area I was looking at.

September 1, 2015 (CALL GENERAL ELECTRIC CO$30 EXP 01/20/17): I placed my first bet on GE by purchasing calls for only $0.27/share. The calls were way OTM with a strike of $30 when GE was trading at $23.88. This was right after the August correction. My thesis is that GE is transforming itself from a financial to a pure industrial and this transformation would bring a lot of volatility to the stock. This would be good for me with options. I also believed that the next year would be more about execution and big news bites (eg, getting rid of SIFI in the future) rather than pure earnings because GE was going through a transformation. GE was executing and I trusted that they would continue to execute. I did not see any downside to the stock after the correction as GE is one of the biggest companies in the world and it is well diversified. So this was my home run play. In hindsight, I wussed out and did not buy with enough conviction (I should have bought a much larger stake). I bought this in my IRA account so I would not have to worry about gains and taxes if my thesis proved to be correct.

September 1, 2015 (STARBUCKS CORP): I sold SBUX at $53.41/share at a profit (I bought SBUX in its 30’s) to fund my GE purchase in my IRA account.

August 24, 2015 (GOOGLE INC CLASS C): I added more GOOG for $599.03 after the August correction. GOOG is one of my forever stocks. I will continue to add during market corrections and dips.

August 24, 2015 (AMAZON COM INC): I added some more to my AMZN position at $469.92/share after the August correction.

August 24, 2015 (STARBUCKS CORP and GOOGLE INC CLASS C): Natalie and Matthew’s accounts. The market had a big correction on August 24, so we used this as an opportunity to make our next investments. I told the kids you can’t time the market, but big corrections are buying opportunities. To reinforce the message that picking stocks requires research and analysis, I told the kids to choose a stock from my pre-researched list of forever stocks that we would buy and hold for a long, long time. Natalie and all of her friends love Starbucks, so we purchased SBUX at $50.20/share. Matthew always uses Google and is a huge fan of YouTube, so we purchased GOOG at $585.33/share.

August 11, 2015 (SCHX, SCHA, SCHF): Natalie and Matthew’s accounts. We talked about how they are still very young and have years and years for their investments to grow. So we decided that we wanted to invest with an aggressive asset allocation profile that is 50% US large cap equity, 25% international equity, 20% small cap equities, and 5% cash. To teach them how to diversify, I told them that we would invest most of their money into index funds and some portion in individual stocks. So we first bought large cap, small cap and international index funds to start out their portfolios. We chose these Schwab index funds because they are commission free and have low expenses. We wanted to invest the money over a few months, like dollar-cost averaging, so we invested about half of the funds and reserved the other half to be invested over the following months.

July 23, 2015 (AMAZON COM INC): I started a long position in AMZN at $476.33/share. This was a good point to get in to a forever-type stock. I’m a little worried that AMZN will not be able to expand its margins in the future when it’s done growing, but my brother Andy says AMZN has a lot of high margin businesses that will soon open up.

July 23, 2015 (SOLARCITY CORP): I sold SCTY for $53.49/share. I bought it for $60.01/share so I lost $6.52/share. I realized margins are too thin for solar and there is no upside for a solar installment. It’s just thin margin to fund a capital project. So I soured on it and sold it to buy AMZN.

April 27, 2015 (TESLA MOTORS INC): I bought TSLA at $231.18/share as more of a shorter trade and hoping to capitalize on some big moves in the stock. I thought big moves would come about by positive news and vehicle launches over earnings.

April 24, 2015 (SOLARCITY CORP): I bought SCTY at $60.01 because it had been down from its highs. I belive in the trend for solar. Maybe this was emotional purchase because, back in 2011, I had done a lot of research on solar trying to figure out an angle for a business, and then seeing lots of those events come to fruition.

May 6, 2015 (GOOGLE INC CLASS C): I bought GOOG at $525.03 for my Roth IRA account. GOOG is one of my forever stocks. I had made some bad trades in the past with this account trying to get some winners, but made some of it back with my SBUX calls. So this time around I wanted to invest in a safer forever stock to build up my tax-free Roth account and grow it the “right way” for the future. Years ago I had bought Google and sold for what I thought was a nice profit. In hindsight, that was a huge mistake because Google had gone up multiple times. I did the same thing with Starbucks, which was an even bigger mistake. Note to self, when you find a forever stock, buy and hold forever.

January 16, 2015 (CALL STARBUCKS CORP$72.50 EXP 01/17/15): I sold my SBUX calls at $7.58/share (pre-split). I more than doubled my investment of $3.13/share and made a profit of $4.45/share. The underlying SBUX shares were trading at $39.79 pre-split ($79.58 pre-split).

January 8, 2015 (CALL STARBUCKS CORP$75 EXP 01/17/15): I sold my SBUX calls at $7.00/share (pre-split). I got 2.5x my investment of $2.02/share and made a profit of $4.98/share. The underlying SBUX shares were trading at $41.24 pre-split ($82.48 pre-split).


2014


October 15, 2014 (CALL STARBUCKS CORP$72.50 EXP 01/17/15): I bought SBUX calls at $3.13/share (pre-split). The underlying price of SBUX was $36.19 ($72.38 pre-split). SBUX is one of my forever stocks. I purchased these options to try to get investment leverage on my returns. I use one of my tax-deferred/free accounts (IRAs and Roths) for short-term trading to defer capital gains taxes.

October 15, 2014 (CALL STARBUCKS CORP$75 EXP 01/17/15): I bought OTM SBUX calls at $2.02/share (pre-split). The underlying price of SBUX was $36.19 ($72.38 pre-split). SBUX is one of my forever stocks. I purchased these options to try to get investment leverage on my returns. I use one of my tax-deferred/free accounts (IRAs and Roths) for short-term trading to defer capital gains taxes.

 

 

 

 

 

 

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