Brook Reef

Selling 1/2 of TLT @ $138.80 Realized loss of $7.75 (5.29%) 5% position remains Selling 1/2 of EDV @ $128.55 Realized loss of $0.00 (0.00%) 5% position remains I've been "wrong" on this idea and doubled down with EDV after TLT was smoked. I'll take the recent rally as an opportunity to avoid the large loss I was bearing. I still think I could be "right", but don't have the confidence given the turmoil in the world. I'm now 10% long of Treasuries vs. 10% short of Junk Bonds. A bet that credit spreads will continue to grow. This is a much more palatable position given where things stand today. It's ok to take losses and be wrong - just be flexible and know it's ok to cut bait.

Shorting QQQ @ $344.01 5% position When the market rallies on war, it's an opportunity to short. This trade ends my wild day! I started out about 50% long of equities and 70% long overall with zero shorts. And will end the day with 4 shorts, 18% net long, 28% gross long, and 78% gross exposed.  I'm not morphing this blog back into a day-trader's diary - but it's important to understand that volatility is how the market measures time. Higher volatility means you have to become more nimble - and with the VIX around 30 this week, the market clock has been moving fast! When the VIX gets below 20, we can act a bit slower. So don't get bogged down in using clock time or calendar days when the market's clock doesn't move like a grandfather clock. Note that I'm also not taking a major bet right now. I'm still net long of stocks and bonds and am on the hunt for US domestic, interest rate sensitive stocks like utilities and REITs to buy. It's time to build

Shorting EEM @ $47.08 5% position Like KBA, shorting EEM on war drum rallies.

Shorting KBA @ $40.49 5% position Shorting China, Russia's neighbor, on war drums.

Shorting JNK @ $104.15 10% position I have 2 positions long of bonds totalling 20% - so this is just a hedge. I think spreads stay elevated but rates fall - how can the Fed tighten into a slowdown AND war?

Selling BGS @ $30.64 Realized loss of $2.62 (7.88%) This one hurts. BGS is cheap and has a great dividend. But I don't need to be the champion of this industry - I'd rather own utilities! The gain from CAG offsets this loss, so no harm done. 

Selling CAG @ $35.24 Realized gain of $1.94 (5.83%) Dumping this as my 2nd to last sale of the day. CAG and the packaged foods industry trades pretty cheaply - but I made my money and can get out unscathed  - accounting for the loss on BGS coming in the next post...

Selling EVGO @ $9.52 Realized loss of $0.53 (5.27%) Just like STEM, I don't need to own speculative stocks right now. It helps that I sold half of this position for a 54% gain ;) EVGO is a really interesting company doing a great thing - but the future of EV charging still facing a lot of questions. I'll take my ~25% gain and feel good.

Selling NWL @ $24.11 Realized gain of $1.46 (6.45%) Fun fact: I've never sold NWL for a gain! I'll cut this position too (for a gain) knowing I might be able to get it back at my initial price. If not, no sweat! NWL has a surprising level of exposure to emerging markets - and that's not the exposure we want with Russia looking for war.

Selling STEM @ $8.91 Realized loss of $14.77 (62.37%) I took a bet on this name and got burned. It could very well turn out to be a great stock, but we might get another shot at it after the war drums stop beating. Owning a speculative stock down so much hurts -- and this shows once again that I should stick to the companies I know.

Selling NWE @ $60.09 Realized gain of $2.77 (4.83%) Stock market rally while Russia invades Ukraine as step 1 to reassembling the USSR? Yeah, sell that news! I'm taking some chips off of the table and will be adjusting my book today.

Buying MMM @ $149.57 2% position Why is MMM at a 52-week low? Why does it trade at less than 15x P/E and yield 4.0%? Most other similar companies trade at 20+ P/Es and yield below 3%.  Good enough for me to start a position! This impending weakness is a chance to buy healthy companies at reasonable valuations. If the Fed tightens too hard, it will be a mistake. The economy seems to be healthy, but isn't resilient - in my view. That said, I think the Fed knows this and won't need to tighten too hard to quash the inflation problem.  Don't forget, we have a massive debt problem and higher rates (and lower inflation) hurts paying it back!

Buying CCI @ $164.20 Adding 2% 4% position CCI has been crushed since I initiated my position - nothing has changed fundamentally, so that's a good reason to buy more.  CCI, like all tower owners, makes great margins! They charge for cell providers adding more equipment to their towers. With the rollout of home internet via cell signals, more equipment will surely be needed. That's good news for CCI!

Buying DUK @ $100.00 2% position It's no secret that I have some disdain for Duke. But they made some great announcements today - more to unpack - but wanted to share I'm buying here down 5% on the day.

Buying EDV @ $128.55 10% position Buying long-dated Treasuries before Powell raises rates. Seems crazy, right? But historically, when rate hikes come, bonds rally. Buy the rumor, sell the news. Also, if we get an inflation print lower than expected then perhaps they won't raise rates in March!

Selling SPY $435, 2/4 puts for $0.40 Realized gain of $0.20 (100.0%) A dirty day-trader can't ignore making 100% on on a quick trade that is highly likely to be worth ZERO tomorrow by the close. Odds of a crash might be higher than a week ago, but still not guaranteed. And taking the double here GUARANTEEs that I make money. I just added 20bps to my account value. It doesn't offset the ~150bps I "lost" today, but it helps!

Buying SPY $435 puts expiring 2/4 for $0.20 0.2% position (cost), 400% position if executed I'm a little late to shorting SPY - but am buying crash protection for tomorrow if this selloff accelerates. If SPY is down another ~3% tomorrow, I'll make some big money. If it manages not to crash, then I'm not out too much.  The great thing about trading out-of-the-money options is you can get some massive leverage for extremely cheap. This position really cranks up my short exposure if a crash happens. And avoiding big losses is an increasingly important job for a money manager.

I've been reading about the AT&T spin-off of their Warner Media business -- which is set to merge with Discovery. T owners will get 0.24 shares of the new "Warner Media Group" for each share of T. I believe the new company will be priced based on DISCA - which closed at $27.69 yesterday. If true, then the value of remaining AT&T is this: Price Dividend Yield T today 24.55 2.05 8.4% 0.24 DISCA shares 6.65 0.00 0.0% T - new 17.90 1.11 6.2% But what if new AT&T traded at the same dividend yield as Verizon, the closest comparison? Verizon has a 4.76% yield today. And not to give too much value to Warner/Discovery - so reducing that value by 20%. By these two somewhat offsetting adjustments, T is worth $28.64 today! A really enticing 16.6% upside!  Price Dividend Yield T - new 23.32 1.11 4.8% DISCA @ 80% 5.32 0.00 0.0% T today 28.64 2.05 7.2% Upside 16.6%

Selling KMI @ $17.44 Realized gain of $1.41 (8.80%) I struggle with wanting my investments to align with my values and view of the future of the world. Kinder Morgan's system of pipelines and processing facilities played a huge role in getting us to where we are today. But each year, we will become less and less reliant on fossil fuels. That means Kinder Morgan and other pipeline operators have a limited future. The company isn't investing like their future has an end date...and the stock isn't priced like a cigar butt with a final puff left - in the way that tobacco stocks are. I'm not against extracting the value of the contracts from KMI - but the ESG-theme that I got excited about in their investor presentation isn't quite so rosy after I've reflected on it and learned a bit more about the system. I don't need to own fossil assets with no transition future. It also doesn't hurt that this was a profitable experience ;)

Selling final 2/5 of SPY @ $454.04 Realized gain of $25.28 (5.90%) Taking my profits a bit early on the final portion of this SPY trade. Despite only profiting on 1/3 big, broad market trade attempts - my account balance is up thanks to the win being larger than the 2 losses combined. I got a little aggressive moving the stop up this morning. I had targeted $460 for an exit on SPY. Getting out a few dollars early "feels" right with GOOG up 10% on a stock split and an otherwise choppy backdrop. I'm thinking about shorting oil...

Buying T @ $24.40 Adding 2% 4% position T is down 5% today, though still above my initial purchase price. They gave some details on their dividend policy going forward and debt metrics. Dividend to be $1.11 post-spin. That's a 4.5% yield at this purchase price. But the spun-off shares will have some value - estimates I've seen range from $3-9/share of T. Let's call it $5, for argument's sake. So T will pay a dividend of $1.11 on shares worth $19.40 - that's a 5.7% yield. Which is about where T shares have traded in recent years on a yield basis and a higher yield than VZ...and a better balance sheet than T has had in that same period. I'm a buyer of T on any weakness until the spin. I also plan to sell any spun-off shares - I don't need exposure to the streaming media segment.