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Tim Ayles
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We strive to build highly disciplined, sensible client portfolios. Portfolios that are focused on investing in businesses with solid free cash flows and solid dividend payouts. We buy businesses, not stocks. Tim is a Registered Investment Advisor.
My company:
Napa Wealth Management, Incorporated
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  • Fed and banks buying stocks....... the plot thickens
    Dec 31 1:48 PM | Link | 2 Comments
  • Taking profits on SLV trade........ looking to get long volatility
    Today we are looking at what Doug Kass calls the animal spirits of the market, and beginning to agree with him.

    We are taking profits in SLV for a 8%+ gain in a short period of time, and also taking some profits in our longer term positions in the virtual banks - HTS, NLY, and AGNC.

    We are looking for spots to re-enter our long thesis on the dollar for a decent sized trade. We will be putting our toe back into UUP and also looking to get long the VIX via VXX or calls on the VIX.

    With the markets in froth mode, we are once again about to make the hard trade.

    From the long side, we added some MO, and PFE recently based on free cash flow valuations. Those are core longs we plan to hold for some time.

    As an alternative to cash - we are taking down a lot of ORH preferred B shares lately. It is only a $50 million issue, and ORH has been bought by FFH - Canada's most profitable company last year and run by one of the world's best investors.

    The preferred shares are trading near a 20% discount to redemption price. The key here is that the interest rate is variable. It is 3.25% plus the 3 month libor. WIth the LIBOR near 0 - the rate can't get much lower. If rates take off - the income will go up.

    The risk is that FFH goes out of business. I give that about the same chance as Warren Buffet going under since they are in the same lines of business and the FFH CEO seems to be a bit more conservative and hedges his longs. I will be writing an article about this soon.

    Dec 01 12:58 PM | Link | Comment!
  • Preparing for Stagflation
    Just going to write some very random thoughts going through my mind about the market just for documenting......

    I have been in the deflation camp for months now after writing in March that the bottom for 2009 was in and that we would see 9000+ on the Dow. When we wrote that, our own clients mocked us. Now that we are in our target range of 9100-10650, we are telling clients the next big move in the market is towards 5000 on the dow over the next year.

    The caveat to this is the governments bent on destroying the value of our currency. We bought UUP and sold for a .5% profit when it started to go against us, and will be looking to add UUP again in the future. In the meantime, our portfolios are very bond centered and filled alternative investments. We did add GIS and SLV to the portfolios along with selected corporate fixed income. Because of inflated asset prices, we have moved from slightly net short to back to nuetral after the NFP report did not hammer stocks lower. We will become net short again soon by adding to long positions in SH and PSQ.

    Stagflation is becoming a larger concern to us. In stagflation, there is nowhere to hide. Prices to live go up, and asset prices plummet - both stocks and bonds. Commodities might hold their purchasing power, but for retired folks who own gold per se, they have to sell their purchasing power to live, thus giving them a lower and lower capital base. Wall Street is not prepared for stagflation.

    We still believe another panic is on the near horizon though, one in which cash will outperform all other assets for a strong but short period of time. Once this next panic is nearing the end, we plan to get long inflation as we feel the government will throw the kitchen sink at the problem. If printing money fixed all problems, why would we ever need to worry? Bottom line, printing money does nothing, and this recent rally is but a facade. Foreclosures are hitting record highs, and banks are contracting lending still. debt destruction is still stronger than the printing the government is doing. This next panic will make the fed put nitrous oxide tanks on the printing press, thus hurling America into a deeper depression than the 1930's. If you want a glimpse of what that could look like, just do some research on Argentina and Iceland. Rising prices for living, while asset prices collapse. It's not fun to be a doom and gloomer, but this administration and Fed leaders should be arrested for what they are doing to enrich the crooks who got us into this mess, while leaving main street to fend for itself. Get ready for a second American revolution.

    Long GIS, SH, SLV, PSQ in selected client accounts
    Tags: UUP, GLD, SH, SPY, SLV, GIS
    Oct 16 11:30 PM | Link | 8 Comments
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