Trade Alert: Start hedging against the election
Last night as I was going to close my computer to take it upstairs with me to stay overnight with my medically-fragile (but less so than ever!) daughter, Amaris, I saw a Trump’s and Hilary’s picture on a headline on Scutify. My happiness about playing, feeding and trying to sleep with my daughter as I do on Thursday nights was momentarily suspended, as I felt myself stress out about this election once again. Long-time readers and old viewers of my show called Happy Hour that used to be on Fox Business, know that I’m committed to my stance against ever voting for anyone in the Republican Democrat Regime, but this post isn’t about politics. And the point of this intro is that I think it’s finally be time to hedge our portfolios for some election stress discounts coming into the markets.
Look, I’ve been writing about and prepared to profit from this ongoing Bubble-Blowing Bull Market for the last six years since I left TV and returned to trading. More recently, I’ve been outlining how negative interest rates around the world and how the US economic/monetary cycle plus corporate earnings and financial engineering have been very bullish for both stocks and gold. And those broader trends and cycles remain in tact.
But the markets — tech and my Revolution Investing stocks including Amazon, Facebook and Google specifically — have been on one heck of tear from the Brexit lows, when we had the opportunity to sneak in and buy some more of our favorite stocks at a temporary discount.
It’s not like I’m changing my stance, but the time to hedge is when you can and not when you have to. But that election looms and those who want Hilary or Trump, and think that their candidate will be best for the stock market, will become increasingly worried about the possibility that their candidate will lose.
I personally expect that Hillary will win and that she’ll basically keep the Bush/Obama/Republican-Democrat Regime status quo in tact with all the corruption, corporatism, Wall Street-controlled government that comes with it. That doesn’t mean smooth sailing for the stock market and the economy either. And the Republicans will claim they’re worried about socialism and the show will go on. If Trump wins, I’d expect we’ll see much of the same status quo with all the corruption, corporatism, Wall Street-controlled government that comes with it.
Which brings us back to the markets and the economy, of course. Obamacare, bank bailouts, reckless spending, infrastructure investment and anything else the US government wants to do is a lot easier to do and has a temporarily positive effect on the economy so long as the government can borrow money at close to 0%. And whatever Hillary or Trump spend our future generation’s money on by borrowing trillions will probably seem to work well at least while rates are this low.
Meanwhile, our lives, jobs, the Fed, the EU, the currency wars, energy, tech, innovation, and everything else that makes up these cycles, these economies, these societies we live in will go on.
We’ll have to continue to freshly analyze the economy, cycles and markets regardless.
But the market and the psychology that drives the stock market don’t always move in sync. And while the bears and many traders have been betting for the last few months that the markets would price in an election sell-off have been wrong. Maybe I’m early too. And maybe the markets won’t sell off at all, as the aforementioned bull forces continue to overpower election stress discounts.
At any rate, I am going to go ahead and hedge my overall portfolio a little bit here. I’m going to buy a first tranche of puts with expirations dated out into November and December. I’ll buy another tranche of these same puts if the stock markets rally another 2-3% in the next couple weeks. The puts I’ll be buying in this first tranche to start hedging my portfolio a bit more are:
December DIA with strike prices around $175-180
November QQQ with strike prices around $108-112
December IBB with strike prices around $250-270
I’ll still be net long overall in my portfolio as I have plenty of long Revolution Investment stocks that I want to hold steady. But I’d rather start hedging while our portfolios are through the roof especially given the current set-up for the stock market and the election.
PS. I am writing an article about Gary Johnson and the marijuana penny stock company of which he was the CEO. I’m trying to find out if he owned shares in the company, if he sold those shares, and if the company even has any meaningful business at all. Cannibas Sativa, the company he was in charge of that trades OTC under the symbol, CBDS, is down 80% since I warned everybody that it would crash, on the very day Johnson was named CEO as outlined here:
7/8/2014, @muziqmatrix I looked at $CBDS and I see it’s another hyped up crappy pot penny stock that’s up 1000% in the last 12 mos. Market cap is $100mm and they don’t seem to have but $0 revenues last year. This will be another one I will say I warned everybody about. Run from crappy pot penny stocks like $CBDS that are up 1000% on hype.
I’d be interested in hearing from any of you who know anything about this company, his role in it or if you were an investor who lost money on it.
