Sunday, July 24, 2022

Sold Swire Properties, bought Woodside. And Dreaming of the next bull.

Sold my 5% position in Swire Properties, I no longer want to hold HK/China stocks due to geopolitical risk.  I can trade them, but it makes no sense holding for a measly 5% dividend, when they can all go to zero in an instant if one man decides to invade Taiwan.  Don't think it will happen, but even a 1 in 5 risk is too much.

I was expecting a cyclical China/HK rally, which started as China recoverd from its slowdown before the rest of the world and Chinese people spend after being locked up.  But seems to have been cut short.  Dunno why, maybe by new Covid variants.  Given up waiting.

Added a 2.5% to my Woodside position, bringing it to 5%.  Its exposed to China through LNG, but won't go to zero.

Still got another 4-5% position in Fortune REIT to dispose of.  I want to buy Singapore banks later, in the depths of the bear market.  Also sold my 4-5% position in Fortune REIT.

The S&P 500 is either consolidating or in a bear market rally: up 10% since mid-June:

I've added another 2% short (COPX) last week.  Now I'm:

  • 89% invested, 11% cash
  • 47% short (based on my shorting price, ~45% short based on Friday's closing).  Cash from the short positions is separate from the 11% cash above.
The market could easily rally another 10% over the next month and my short positions turn into a loss.   I'm holding and betting that its temporary - that the bear market continues for another 3-9 months.  I can't see how the bear ends until we:
  1. Work through the slowdown (hangover) from withdrawal of last year's stimulus (till around the end of the year), and...
  2. Until the Fed changes course (maybe with lower inflation and higher unemployment figures).

In my dreams, I short the market to its lows, make a pile of money, then turn around and go long to ride the next inflationary boom.  I want to buy Singapore banks, commodity producers (oil/aluminium/copper/tin), some cyclical beneficiaries of de-globalisation.  And a little of bit of "stuff that can't be valued but has a cool story and can fly in a bull market" (chainlink, bitcoin, MercadoLibre).

Tuesday, June 28, 2022

Getting shorter

Shorted another 4% on Monday night's opening rally and 4% on last night's.  Now 45% short vs 96% long.  Aim to short one more time, if I get a chance.

Everyone's expecting the market to rally into the end of the month, before falling again.  Dunno what it will do: it can go up, down or sideways.

Friday, June 24, 2022

Sold Petrobras and Getting Shorter

Sold by Petrobras 1% position at a 20% loss, too much political risk.  We've had Biden question why Exxon is making 'more money than God', the UK apply a North Sea tax, and Queensland apply a coal tax.  There's a risk of a diesel shortage in Brazil in the coming weeks/months, and energy companies are a good scapegoat.  Sell it while its worth something.

Now 96% invested.  Most of the new cash is from dividends and salary.

Increased my short position like a broken record, now 37% short.

I think the market bounces here into the start of July.  The same as its done every other month:

Chart from: The Market Dog.  Its actually Q's not SPY, but close enough.

A 'normal' bear market rally can be 20% - we haven't had one yet.  'SPY is almost up 5% from previous lows last night, I'll add 4% to my shorts next week if it reaches that (3817).  Then another 4% again if it goes up 5% more (3999).  And again (4181).  Then stop.  If it follows the past pattern, the market rallies into Independence Day, before selling off again. Its as good a guess as any.

Thursday, June 16, 2022

Getting shorter

I missed the 9% rally from mid-May to early-June.  Because I was expecting it to go higher, and was taking a break from the market every night.  Trading while holding a job is hard.

Was hoping to short on last nights weak rally, but it already dead.  Shorting more now on market open.  Another 1% Q's, 1% Russell, 1% EWP, 1% EWI.  Now 37% short (based on selling price - its ~33% on current market price).

Its a bad time to short, everything is a little oversold.  But I need to get shorter to balance my portfolio.

No way to tell when we get a 20% bear market rally.  Just have to take my chances.  The important thing is to be short in a bear market.

Friday, June 3, 2022

Bought Woodside Energy

Bought half my position (2.5%) in Woodside Energy yesterday.  Long term dividend play.


  • I can't see how Europe manages to replace their gas from Gazprom.  Only the US can grow supply now, but they are constrained by pipeline and export capacity.  We need to wait till 2025-2028 to see substantial increase: "global capacity looks set to soar from around 450 mtpa today to 550 mtpa by 2028".  But even that extra 100 mtpa only equals ~13 bcf/day, less that the ~18 bcf Europe imports from Russia.
  • After Woodside completed the merger on June 1st, their shares jumped on massive volume.  I don't know why, I was expecting the grind down to continue  Maybe index funds were buying the enlarged energy company.

  • From 2021 earnings they paid a 5% dividend (after WHT).  Thats 80% of NPAT, with an LNG ASP of USD 58.1/boe (slide 6) - roughly USD 10.5/btu.  2022 prices are a lot higher than 2021's.  The chart below shows US prices - European and Asian prices follow the same pattern (at a much higher price level).

Why did I only buy half?

We are in a bear market. Right now we're in a bear market rally.  But it will stop, and we'll later move back to where the VIX is in the 30's and the market drops weeks or months at a time.  By then, Fundamental Analysis, Valuations, or Technical Analysis won't matter: stocks will just drop like rocks.  Most likely, energy stocks eventually get pulled into the vortex.

The fundamental risks to this play are recession, Putin dying, or China invading Taiwan.

Tuesday, May 31, 2022

Quick Updates on shorts

A violent bear market rally started 3 days ago, just after I built a comfortable short position.  The S&P 500 is now up 11% from its lows.  Although my shorts are getting hammered, my longs are doing OK, so I don't feel much pain.

I still think its a bear market.  It is going to take more than a quarter to work off the stimulus excesses of 2021.  The rally's job now is to convince as many people as possible that its a bull market.

Bear market rallies of 20% are historically common.  I'm currently 33% short.  Aim to go up to 37% if we get a 20% rally in the S&P 500 (to 4572), and 40% if we get a 40% rally (very unlikely).  I don't think the duration or height of the rally can be predicted, so just guess based on history.

Saturday, May 21, 2022

Quick Updates: shorts and gold

Sold all my gold at a small loss.

Overall, now I am 29.5% short vs 98% long.  The shorts are: 

  • Low beta stuff, HYG and JNK.  Easy to hold, they usually just drip down.  
  • Some higher beta stuff: Q's and IWM.  I've been lucky.
  • Some Europe ETFs bought recently.  This position is currently at a loss.
  • Plus small positions in Korea and copper miner ETFs.

Comfortable with these short positions, they partially offsets declines on down days.  I could increase it a bit, but no longer feel pressure to.  My portfolio should be OK, no matter which way the winds blow.