WBI 156 Our stocks are all up a tick from the bottom but we are still down about 3% from our February peak. We have acquired all the stock we plan to acquire during this correction. We also have four years of near cash and a property in escrow. Assuming the sale closes, we will have more than a decade of spending money at austerity levels plus a cache of money that is earmarked for a crash. Our correction money has now been spent. "Austerity level" is pretty low for us, so the cash isn't as high as you might expect. Also, I've turned off about half of our DRIPs. I will reinvest manually, as I see fit, but some of it will be put into near-cash storage to weather a global financial storm. Every time we sell a property, our cash ratio changes noticeably. It's very helpful, at a time like this. I don't know what storm is rolling in but I'm retired so operating our portfolio very conservatively.
As omicron BA.5 rages, China is ramping up COVID lockdowns in Xian. Shanghai and Beijing will probably also be locked down very soon. The global supply chain shortage is going to continue to rage due to Chinese being dumb AF with regard to trying to control COVID and North America being dumb AF doing extreme little to create another supply chain source. I understand there have been announcements of several factories being built in America but a couple of those have been cancelled and I'm not aware of broken ground on any of them. Please mention it, if you are aware of work being done in this regard. It would be OK if the new sources were elsewhere in Asia but, other than one distribution warehouse move by OnSemi, I don't see that happening, either.
Just have to roll with the tide boss man. As long as the cows come home and there's fish in the lake life is good. The old Datsun still runs "zoom zoom".
WBI 155.8 So, our portfolio is now down just over 4% from it's February ATH. This seems to have crossed an emotional boundary. Most of our DRIPs are off and we have some very strong distributing companies. The 4% dip is after the dividend cash so the equities themselves are down a smidgen more. I have responded by starting a home redecoration effort. My wife is extremely patient but I will be dead soon so wouldn't mind knocking this one off the list...
Speaking of integrated circuits. Apparently, we now have a glut of surplus chip capacity. This, according to Reuters. Reuters cites a cessation of crypto mining demand and an end of IC hoarding which vacuumed up 100% of supply for the last two years. They also cite falling prices on all parts. The information in this article has started bouncing around the echo chamber of Internet news. I've seen the identical article on several sites, as well as articles which contain some of the same text and the same idea but are a minor variation. It seems nearly certain this all originates from a single information source so multiple articles is not corroberation. Gartner predicts IC shortages will continue into 2023 but Gartner do not have 100% track record, to say the least. https://www.insidetelecom.com/news/...per-hoarding-moment-as-shortage-turns-to-glut *** My view prior to this Bloomberg article As more 300mm fabs come online, some of the remaining 200mm fabs will probably be converted to 150mm fabs. Apparently, some sensors need lower feature density and on smaller wafers. Because of this, one or two new fabs will quickly change the global IC balance. As more production moves to 300mm wafers, 200mm wafer equipment will be converted and the shortage should be solved across the board. This is the theory. We will see.
Now Intel is indicating the chip shortage is likely to continue until 2024. This is also a single source picked up by many media outlets.
I've had several systems of telemetry for tracking stocks over the years. It became apparent over the years, a backup system is always needed. Any system will break, from time to time. The backup system I've come to rely on is simply using GoogleSheets and a spreadsheet with the GOOGLEFINANCE() function to fetch real time values. That spreadsheet can be cut and pasted (as text) locally to achieve near real time with extreme simplicity. Code: =GOOGLEFINANCE("AAPL", "price") Most probably know this and many likely use it but I'm sharing in case it helps someone to have a simple spreadsheet with near real time stock data. If you are comfortable with Google having a spreadsheet of your portfolio, you can just do everything on Google Sheets without any cut/paste and have a real time system. My primary system is built with C++/MariaDB. It does a lot of stuff, some of which is even needed. lol!
WBI 163.7 Now the recession is over, here is our situation. We never did spend our crash cash but we did spend most of our correction cash. I held back a bit of the correction cash for a specific purpose so that money is standing by. There is often a summer market slump. I don't know if we will have one this year. The market generally makes gains in September and October. The last few years, these vague patterns have gone completely out the window so who knows. If the market were to pull back 10% between now and October, I would buy very little. A Q4 dip would probably have me buy a little more. I'm worried about Chinese COVID lockdowns. China owns all of our supply chains. A lockdown in Shanghai or Shenzen will rock our world. I monitor Chinese COVID news and numbers daily. I believe these numbers were honest until May of this year when they seemed to detach from reality. At this point, Chinese news sources seem to be the best indicator of looming escalation of lockdowns. If China locks down an industrialized population area, I will not rush to pump money into affected companies. These lockdowns tend to go long and hard. People can die without the government bothering to back off in any way. So, for the foreseeable future, I intend to do absolutely nothing.
[RANT][SANCTIMONY] The previous 46 pages of this blog have all been about the same thing. Basically, it has been a display of my lack of ability to communicate. You know your brother/uncle/friend/guy you heard about who is couch surfing or living in the street that you gave information on companies looking for people? You know how he said, "F-that. Either give me money or tell me about scams, government handouts, charities, or places I can rob." That is exactly how I view people who gamble on crypto, FX, hot-tips, Wall Street Bets, etc. They are wasting time until one day they figure out they are going to have to work to earn a retirement. The last thing these people want is an honest company, working hard, and making a reasonable profit. They would rather strike out than get rich slowly. They will only consider schemes which will get them rich quickly and do not involve work. Guess what... every one of those bullshit schemes redistributes wealth that originally came from someone doing work. That's where money comes from... work. Work = primary source of money Gambling = secondary source of money Without work, there could be no gambling that everyone wants to do. Awkward pivot... We had an epic last 10 days to close the month way up. We are not back to our ATH of February 2022 but I am very comfortable with our current position. The reason I do not sell anything to jump on a get-rich-quick scheme is because these companies work hard and earn money. That makes them precious to me. I literally consider them partners. If they should fall on hard times, I will hang in there as long as they keep working to solve their problems and improve profitability. I believe in work. Everything else is a parasite infection. [/SANCTIMONY][/RANT]
I've come to the conclusion that China has no choice but to bail out their banking system. While they sit on their thumbs, they are damaging their economy but I believe they will eventually have to shore up their financial sector and move on. So, I do not consider chinas economic collapse to be existential.
Market timing. You folks have probably already considered this as much as I have but I will present a tale of two companies, from the perspective of market timing. 1) Tesla I bought Tesla in 2016. It doubled within a year (mid 2017), then it proceeded to shrink back to not all that much above where I bought it by 2019. Suffice to say, I made plenty of cash on Tesla but I could have just pounded it really hard in 2019 and done just as well. There are 3 years of opportunity cost tagged onto that gain. The gain can easily overcome the opportunity cost but the point is: if I had missed the window in 2016, I had a second opportunity in 2019 (at which point I tripled my holdings). Tesla is a stock that is not all that risky to wait for the bottom because it is volatile and is going to have a lot of bottoms. 2) Annaly This company distributes cash to the tune of 12.75%. Delaying an Annaly purchase today would mean you would have to wait for a discount of over 13% to break even after a year. 13% because it pays quarterly and compounds quarterly. The 12.75 is simple summed dividends per year divided by the unit cost but a DRIP will have NLY compound quarterly. If the discount does not happen within two years, you would need a 28~29% discount to break even on the wait gamble. By 5 years, 100% of the purchase is returned to the owner. Even if the company goes bankrupt and the shares become worthless, the break even has been passed. If NLY is the target, it should be purchased at cost immediately upon deciding to acquire shares in this company. Market timing NLY, or any high yielding company, is a fools errand. The point is, the odds of market timing being profitable for a volatile, non distributing, stock are far, far higher than the odds of a stable, distributing company. Orders of magnitude, I would say.
After yesterday's big gains, we are down a tick this morning. Here are a few thoughts: - Our companies are still near the top of their valuation windows. They cannot make big gains every day like they did for two years and sustain it. - The most sensible market outcome would be for it to hover around this valuation for a while. Of course, that does not mean that will happen. - Our cash ratio is going up extremely fast. - I have no specific idea when we will start putting new cash back into the market again. Current thoughts are to start looking at re-engaging the market next year as I see a chance for a market pull back at the end of this calendar year.
