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Martin Vlcek
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Martin Vlcek is a full-time investor and analyst who has been actively investing and managing money for more than 15 years. Martin has an Economics degree and he is currently a CFA program Level II candidate. His primary investment focus is on undervalued small-cap stocks with favorable... More
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  • Useful Investing Links

    Portfolio turnover concept:

    portfolio returns (ROA) is dependent on two drivers:

    • How much you make on each investment (profit margin)
    • How quickly you can turn over your assets (asset turnover)

    Keep reallocating capital from positions that already gained (now have worse risk/reward) to the best risk/reward opportunity (return on capital), limiting position size only by your portfolio rules.

    The more opportunities like this you can find and the faster they play out (clear catalyst), the higher your portfolio returns will be:

    Tags: SPY
    Mar 27 11:53 PM | Link | 2 Comments
  • My 2014 Growth Portfolio Performance

    Evaluation of my 2014 results versus the goals

    My paramount goal in 2014 after a stellar gain of +113% in 2013 was to be very cautious and protect most of these hard-earned 2013 gains.

    In this light, I am quite satisfied with the 2014 results, also given the lower volatility and max. drawdown of my portfolio in 2014 compared to 2013 and my focus on absolute returns and capital preservation, not any index benchmarks.

    My portfolio performance for the calendar year 2014 was negative 10.68% in U.S. dollar terms including all trading costs and other related fees as well as all currency hedging costs. Due to having loans in Euro, I have to use Euro as a base currency. In Euro terms, the portfolio gained roughly 4% in 2014 due to Euro's substantial devaluation against the U.S. dollar.

    While the -10.68% performance in USD and roughly +4% in Euro looks like a terrible performance given the solid S&P 500 and U.S. Treasury gains in 2014, my real benchmarks should really be the SVXY and the Russell small-cap index which both generated negative returns in 2014 as well.

    Analysis of gains and losses

    All of the portfolio gains in 2014 came from a very few strategies/positions. The vast amount of gains came from my mostly long trades in SVXY ETF (short volatility). Given the plain SVXY actually lost almost 10% for the year, my ~15% gain on SVXY trades is a great outperformance of this underlying. Other winning trades were long TLT (long 20+ yr. U.S. Treasuries) and a long a handful of single stocks from biotech (Gilead) and technology (Yahoo, Apple, Ebay), mixed with one value play Sears Holdings (boosted by covered calls).

    Almost all substantial losses came from several speculative small-cap trades. The Russell 2000 small-cap index performed poorly in 2014. My experimenting with shorting stocks didn't bring satisfactory results, with almost all positions losing so far due to gains in the general market. However, I used them with the additional benefit of a partial hedge of long positions.

    Another group of losses came from my initial installment of investments into the energy sector from a zero exposure following the OPEC non-cut of production quotas. I plan to average down later this year and build up my position from the current 25% of my full intended exposure by buying three more installments for a full intended exposure to the energy sector.

    Finally, thanks to my deliberate experimenting last year with many new concepts and strategies risking just a small amount of my overall portfolio, I raked up commissions amounting to 3.3% of my total account value! It also accounted for roughly a third of my 10.68% 2014 loss in U.S. dollars. While this is a large number, it was a deliberate educational expense in a strife to continue exploring many new ideas and strategies last year which will hopefully generate future winners, and further improving my trading and investing skills.

    USD/EUR currency hedge cost me ~5% of the account, however, the Euro devaluation delivered a stellar 9% net boost to my Euro-denominated performance, so the cost was well worth it. The question is if it will be worth it next year.

    In conclusion, I've learnt a lot, have lots of real trading data and further new experience which helped me generate several new strategies for 2015 and also weed out ineffective ideas.

    2015 goals

    I plan to be even more defensive in 2015 and focus on capital preservation again in the base Euro currency while trying to grow the portfolio again if the market conditions are favorable. I plan to decrease volatility and max. drawdown even further in 2015. I plan to cut my risk exposure further down and hedge most of my Euro/USD currency risk while adding more exposure to energy if the oil falls further. I will continue to look for more opportunities, however, experimental trading will be lower going forward due to plenty of data from last year.

    Jan 12 3:53 AM | Link | Comment!
  • Out-Of-The-Box Thinking On RadioShack

    This article, unlike my other articles, is meant to be for entertainment purposes only as it contains some crazy, out-of-the-box ideas and comments for RadioShack (NYSE:RSH)'s management which may offend some readers or bring no investing value to them.

    Let me offer some out-of-the-box ideas for the desperate RadioShack management that has been short on good turnaround ideas besides closing half of its stores, which goes against the current debt covenants. As my contrarian investor side was hungry to take a closer look at RadioShack and buy some RSH call options (my maximum loss is ~$700 if RSH goes bankrupt, and I consider the investment as a lottery ticket, a gambling and not investing), my former marketing side is hungry to give some advice to the struggling RSH marketing department.

    Some crazy, out-of-the-box ideas for RadioShack's management

    Please, just no more Super Bowl ads with the customer proposition so terrible, competitive edge close to zero and products commoditized. RadioShack has almost nothing to lose at this stage, so getting crazy might just be the thing that revives and repositions the brand and perhaps saves the company.

    On a bit ironic note, if nostalgia is what RSH is about, why not change it into a museum of old technology? RSH could even keep the current inventory. It will be obsolete within two years and become museum items. Add some education value, such as that people can dismantle the devices and see what's inside. RSH's new Fix It Here service of same-day mobile phone repair is a start, but doesn't give the power to users to play with the devices. I don't know who would pay for that, but it's an idea. But I like the next idea much more:

    Why repair it? Destroy it instead and buy a new one! Seriously, create a smashing corner - call it "SmashingShack" - where stressed out managers and general population can buy obsolete devices for pennies and smash them with a huge hammer, or destroy them whichever way they want, etc. You get the idea. Create some buzz and get free publicity instead of buying another Super Bowl ad. Give people helmets for protection, but with the GoPro (NASDAQ:GPRO) cameras attached (get some money from GoPro for this deal in the process). Let people post GoPro camera videos of themselves smashing things in your shops. GoPro is the new kid on the block that wants to show off, so it would be a win-win deal.

    People could even bring their own devices to destroy. That's what I call a true "Bring Your Own Device" (BYOD) policy. BYOD is a good buzzword, would look great in those PR messages. You actually just invented a brand new buzzword - Destroy Your Own Device (DYOD). Talk about being a trend-setter.

    And customers bringing in their own devices to destroy - that's what I call a real slashing of costs of goods sold (COGS) and great Just-In-Time management, or outright zero-inventory management. And while you are at it, change the company name to RadioShock from RadioShack. It would go well with the marketing changes I propose and communicating a real change. The ticker should be SHOCK, or SHCK.

    The billing model should be based on a pay-as-you-destroy basis, with paying for each device, or paying for time if you bring your own device. In addition, for power consumers, RadioShock should offer an all-you-can-destroy billing option, with a flat fee for 15 minutes with unlimited number of inventory destroyed.

    Again, I will point out that this article should be really considered for entertainment purposes only, but I stand behind my idea of the SmashingShack. The company should at least try it. They have nothing to lose, they need to make a splash and need to liquidate lots of inventory.

    Disclosure: The author is long RSH. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I own a small, speculative long position in RSH through long-dated options. My total loss if RSH went bankrupt would be $700.

    Tags: GPRO, RSH, long-ideas
    Aug 13 10:04 AM | Link | Comment!
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  • Also some liquidation of long $TLT U.S. Treasuries, partly flowing into U.S. stocks, mostly Russel 2000 $IWM but also S&P 500 $SPY.
    Jan 26, 2015
  • I see liquidations of short $EUR and GBP positions but the money seems to be flowing to short YEN and CHF, so no end to long $USD trade
    Jan 26, 2015
  • Futures up almost 1% after a surprise rate cut by India CB. China surprise rate cut came last year at the same level of S&P dipping below 2k
    Jan 15, 2015
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