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Mark Bern, CFA  

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  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    FPA - I don't think that Tsipras or the Greek parliament has the guts to play hardball. I suspect that the new deal will either be accepted by the parliament with no intent whatsoever to implement it or to vote it down and call for a new government election. Either way, I think this is just one more effort to kick the can down the road a little further and prolong the inevitable.

    Even if I am wrong, the best possible outcome is that it takes longer before the can must be kicked again and the same inevitable outcome takes place further down the road with the EU members losing even more money and Greece exiting.

    Just how I see it eventually ending: not well.

    I just cannot understand why politicians keep spending so much more of their respective taxpayers' money just to brandish their own egos. It's as if they actually believe that they can fix things!
    Jul 13, 2015. 10:35 AM | 4 Likes Like |Link to Comment
  • Energy Sector Outlook - Part II [View article]
    Chewy790 - Good questions! I tend not to dwell too much on the short term stuff. I am a long-term investor looking for stocks of companies I want to own for at least 5 years or (preferably) much longer. However, I do watch supply/demand data from EIA and IEA as well as storage data and day rates for drill rigs (on-shore and off shore) and day rates for VLCC tankers. I watch for trends and attempt to identify reasons for support or resistance of prices, both technical and fundamental. It's kind of like a puzzle with a lot of pieces.

    I don't know if that helps, but it might shed a little light onto what I do.

    Thanks for asking.
    Jul 12, 2015. 08:29 PM | Likes Like |Link to Comment
  • Energy Sector Outlook - Part II [View article]
    Mr. Buckeye - To start off I should point out that I am originally a Cornhusker and remain one at heart.

    I don't day trade nor do I make many short-term (3-12 months) trades, except maybe off the bottoms with only a small amount of my money. We are not there yet, in my opinion, but I am getting my analysis done and will be publishing articles about my favorite companies in this sector over the next few weeks.

    Thanks for asking.
    Jul 12, 2015. 08:23 PM | Likes Like |Link to Comment
  • Energy Sector Outlook - Part II [View article]
    destan - Good points. Thanks for adding your perspective. I totally agree that Saudi Arabia supply enhancements are limited to technological advances in extraction. If we can recovery a higher % of reserves in the future, which has happened and I believe will continue, then they have more recoverable reserves. But the costs associated with additional recoveries beyond some point will raise the cost of extraction and will lessen their respective position, imho.

    That said, I doubt we will see that happen to a great degree over the next 5-10 years. But it will make a difference down the road.

    Oil/gas taxation around the world is the reason our gasoline is so much cheaper at the pump. It is also one of the primary reasons we, as a nation, consume more per capita than the rest of the world. Lower taxes in some of those nations and economic consumption could increase - maybe. Some cultures would probably not adapt.
    China, for one, wants increased domestic consumption but also wants to control everything. Natgas deal with Russian already on the books and probably more to follow. But this, too is a long term project as pipelines need to be build to make it happen. Of course, they will have a lot less problem with right-of-way issues than would be the case in the US. <sarc>

    Thanks for adding to the discussion.
    Jul 12, 2015. 08:18 PM | Likes Like |Link to Comment
  • Energy Sector Outlook - Part II [View article]
    Watermelon56 - "The future of energy for the next 10 years is the same as the past of energy: growing consumption of fossil fuels."

    Well, yes, that will happen. Of that I have little doubt. However, I believe that the mix will begin to change over that period and there could be fortunes made understanding this nuance. Of course, one needs a small fortune nowadays to have it turn into a large fortune. But there should be some very profitable opportunities for the rest of us, too.

    Thanks for adding your thoughts to the thread.
    Jul 12, 2015. 08:05 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    User - Could be someone just playing the odds. Probably someone using somebody else's money, though. Or someone with $8 million lying around that they don't need and an overwhelming urge to gamble!

    I am just way too conservative for those kinds of plays.

    Thanks for reminding us of that side of things, though.
    Jul 12, 2015. 04:50 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    WhitneyB - That seems very true. It would take someone with inside knowledge to feel that strongly. Or as User suggests below, maybe they are just playing the odds.

    Thanks for contributing to the thread. We'll see what happens come mid-August.
    Jul 12, 2015. 04:47 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    finrecruiters - Good post. Buy low, sell high in my mantra. But that requires patience, something so very lacking in today's culture.

    Momentum seems to be the focus of Wall Street today. But, of course, they need trading to keeping rising to boost earnings. Momentum may work for some, but I still like value investing and sticking to qualtity.

    Waiting until they give up on MU then buy it - good advice!
    Jul 12, 2015. 04:45 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    BenAround - Those are sage words. I also have strategies that I use to reduce my cost basis, but I use options to limit my loss potential. I like to define my risk that way.

    Thanks for explaining your methods. Everyone needs to take a systematic approach to investing and each of us needs to find techniques with which we are comfortable. There is no perfectly right way; there are just many good ways and many bad ways (the bad being the ones relying on luck).
    Jul 12, 2015. 04:40 PM | 2 Likes Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    Drejay - I was under water for a while on these puts, but it all worked out in the end; or at least so far. I tend to look at the cost per month of a contract over the holding period and also like to buy out of the money strikes to keep the costs of my hedge lower. I would not buy MU Jan 2017 puts at this time, though. My preference is wait until the underlying stock is near its high before I take a position. I would like to see the stock make another run higher before I consider adding a new position.

    Reminder: this is just part of a hedging strategy not a trading scheme.

    Thanks for adding your perspective.
    Jul 12, 2015. 04:35 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    Mace - I identified MU last year as being one of several companies that would suffer during a recession. I try to buy puts on these companies whenever the stock has hit a new 52-week high as part of my hedging strategy. It was not so much a play on the DRAM pricing as it was sticking to my hedge strategy rules. I am just trying to keep my assets protected because we are so deep into this bull market. I have no idea how much longer it will last, but I am just positioning my portfolio to be able to withstand whatever happens whenever it happens. This way I don't have to sell any of my long-term holdings and can keep collecting the dividends.

    Thanks for asking and I hope this will clarify why I bought the puts when I did.
    Jul 12, 2015. 04:29 PM | 3 Likes Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    User - Thanks for the comment and the interesting strategy to potentially squeeze a little more out of the position.
    Jul 12, 2015. 04:24 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    rogo79 - Thanks for sharing your expectations. I will share mine. I think you could be right, but just a tad early. Good luck!
    Jul 12, 2015. 04:22 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    topidea - You may be right, but I am not concerned with MU specifically as long as the economy stays out of recession. This is a hedge strategy, not a trading scheme.

    That said, from what I have gathered, there could very well be one more quarter of under performance by MU with EPS again coming in well below the same quarter EPS of 2014. After that, as long as the economy holds up, the prospects for MU look great!

    But in a recession, my money says MU will tank again as demand for its products fall off a cliff (only temporarily) for a while. At that point I would be very willing to go long MU. I think MU could easily be a 10-bagger off of the next bottom!

    Thanks for sharing your perspective!
    Jul 12, 2015. 04:21 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! Take 397%-878% Gains On July MU Puts [View article]
    DAMSF - Good question! Answer: NO!

    I buy only quality companies that have a long history of paying dividends and increasing those dividends regularly (or at least not cutting the dividends, even in the worst of times). I am retired and looking more for reliable, rising streams of income than trying to find the next big appreciation winner. It may be boring, but it works for me. I try to construct a portfolio that will fall less than the broad S&P 500 index during times of economic distress. That is part 1 of my strategy.

    Part 2:
    The companies I used for my hedging strategy are those that are very volatile and have a tendency to drop much faster and further than the broad market. I buy cheap long-duration, far out-of-the-money puts on these companies' stocks. Any one of the stocks I buy puts on has the potential to stumble temporarily and give me a nice gain (as in MU and TEX so far this cycle) and offset much of my hedging costs. I try to keep my total costs below 2% of my portfolio each year (in practice I have been able to hold initial costs below 1.5%). Gains from the likes of MU and TEX have been able to reduce my costs below 1% per year so far. Thus, I am giving up some of my income to protect the majority of my assets.

    When a recession (or market crash) hits the underlying stocks I buy puts on usually fall so much faster than the overall market that my hedge actually kicks in well before we hit the strike prices and just keeps gaining momentum as stocks continue to fall. To use this strategy I must be willing to accept smaller market corrections up to 15% (which I am) but with the idea that if it gets much worse than that I my capital will be preserved.

    I hope this helps!
    Jul 12, 2015. 04:16 PM | 2 Likes Like |Link to Comment
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