Thursday, December 17, 2015

2015: Another humbling year

This was the year I waited for the market to crash or get volatile. I had been on the SPY puts trade from more than a year and finally when the time arrived in August I had lost my nerve and sold out early. That was close to $8000 that I left on the table in trade that I had and let go because of my unwillingness to lose any more money on this trade. When the volatility began I once again thought that it was a head fake and that if I did not get out of the trade I would lose my gains (as had happened a couple of times earlier). So I traded $1000 in gains and gave up 8 times that amount in lost opportunity.

The adage "The market can stay irrational longer than you can stay liquid" rings true in my mind once again. The two disastrous trades of the year have been the call options on DDD and the long position in MT that I have been adding on. DDD was a speculative trade and I make no apologies for the moonshot. It was always going to be a risky bet and could be a hit or a miss. The part that I dislike about that play is the fact that I added on to the speculative trade hoping for things to turn and it didn't. I am still long DDD till 2017, but I wish my cost basis was a lot lower.

The thing that busts by chops though is the MT position. The degradation of the underlying commodity has literally destroyed this stock to an extent that I never thought possible. This is where my thesis is keeping me grounded in the value of a globally diversified vertically integrated steel company in a globalized world economy that is always looking for growth and infrastructure build out. But the market is testing my ability to stay liquid in that trade and I have to admit I am holding on to all my confidence to stay in.

The trades that worked were:

- A put position in VMW before it disappointed in earnings
- A call position in MSFT before they surprised to the upside last quarter.
- GE finally played out back to levels last seen before crisis and my cost basis now looks very attractive
- MSFT once again had a pretty good year. My best investment to-date.

Oh well! Another year goes by with new lessons learnt.

Tuesday, February 17, 2015

A take on Tesla

Carefully treading the high beta TSLA