Trade Alert: Nibbling, covering and being cool when others panic

Well, we’d spent the last two or three weeks trimming, selling and hedging to try to prepare for the kind of sell-off the markets are now going through. I’m kicking myself for not having pulled more triggers on short ideas with China’s major trading partners, as I’d suggested we look to do as the COVID-19/Novel Coronavirus (seems like the media has gone back to calling it Coronavirus or even just Corona for short) started to spread. The South Korean Kospi stock market is down nearly 10% in the last week and Russia’s Moex stock market is down more than 5% since I’d suggested it as a short idea. So now what?

I’m not ready to say we shouldn’t be cautious any more, far from it. I remain hedged and cautious overall. On the other hand, names like Disney and Qualcomm have come down hard in the last week and I’m going to start nibbling here. I’m putting a little bit of money to work here, nibbling a handful of names and covering a tiny bit of the short hedges.

Here are the trades I’m doing here. And again, I’m putting just a tiny bit of capital, maybe 2-3% total, to work today, including buying back a little bit of the names we’d trimmed just recently at higher levels:

I’m buying some (AMD). I have been mostly bearish on this name over the years, but with their latest chips (built by Tawian Semiconductor, of course) being smaller, better and faster than Intel’s latest chips, I’m starting a small position here while it’s down today. More on this later.

I’m nibbling a little bit of Cisco (CSCO) call options dated out to March or later, 5-10% out of the money.

I nibbled (DIS) common stock and some DIS call options dated out from March through June, about 10% or more out of the money.

I’m buying some (FB) common.

I trimmed some (GLD).

I bought some (QCOM) common.

I bought some Sony (SNE) back (I’d mentioned recently that I was looking to do this if and when it pulled back. It pulled back.) Gaming and esports keeps getting bigger and I want to own this platform name (Sony Playstation) which we owned a few years ago for a great ride from $15 to $50, once again.

I covered about 5% or so of most of my index hedges, including the (DIA), (IGV), (IWM), (QQQ), (SPY) and (SMH).

I’m going to step out of the office to hit a golf ball over lunch, work on some other projects, do some more homework and make some calls — and not do any more trading today.

Be disciplined. Follow the playbook. Be cool when others panic.

Also, don’t forget that unicorns are real! See pic.