Portfolio Changes. Microsoft & Gabriel Resources

April 9th, 2012 | Posted by octafinance in Portfolio | Stocks | Trades - (4 Comments)

I just sold my Microsoft position in full. As you know, Microsoft was 4% of my trading account and I bought it on August 24 2011, at $24.78 USD. I sold it today at $31.32 USD, for a profit of 26.4%. BP is still hold as it has not appreciate much and I still believe it is extremely undervalued.

You can refer to this page: http://octafinance.com/2011/microsoft-and-bp-value-investments/ for valuation of Microsoft and BP.

As you can see, Microsoft has 11.3 PE right now and has forward P/E 10.4. I bought it at P/E 8.1 and forward 7.66.

Today, I also increased my position in Gabriel Resources Ltd. I increased my position by 100%, so Gabriel Resources is now almost 1.7% of my portfolio. The company’s market cap is $1.15 billion CAD today and its price has collapsed about 66% from the high in 2011. The stock has dropped 45% just in the last 2 trading sessions, so now could prove to be the best time to buy.

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Cocoa Futures Sold at $2,375 USD/ton

January 10th, 2012 | Posted by octafinance in Commodities | Trades - (Comments Off)

Today, I sold my Cocoa at $2,375 USD/ton. That is a 16.2% return on the invested capital. I still believe that it will continue going up but I prefer to take profits at this point. If Cocoa go down again, I will probably re-enter the position.

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Cocoa Futures Bought at $2,044 USD/ton

December 12th, 2011 | Posted by octafinance in Commodities | Trades - (Comments Off)

Today, December 12 2011, I bought Cocoa Futures at $2,044 USD a metric ton. Please keep in mind that I’m extremely pessimistic about the resolution of the European debt crisis. I still think that commodities will go down next year due to BRICS slowdown, countries in Europe going under and more bankruptcies. This position, is not in my portfolio but in my trading account, so it’s just a speculative play. I don’t have a stop or take profit yet. I believe the time to buy Cocoa is now but I might be early as usual. I might add more Cocoa if the price continue going down.

Please take a look at the chart below:
Buy Cocoa

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Japan’s debt crisis comes after Europe. Buy some long-term OTM Yen Puts

November 28th, 2011 | Posted by octafinance in Bonds | Currencies | Japan | Options | Trades - (2 Comments)

The chess and investing are similar processes. In order to be successful investors, we must foresee the coming, many moves before it happens and we must position ourselves for it.  I’m sharing this analysis with you so you can position yourself for the coming. I know that most of you are interested more of what is happening in Europe and it’s obvious as you are Europeans. But still I think that the best trade and most profitable trade from a risk/reward perspective is related to Japan. When we talk about Japan, I’m talking you about what will happen within the next 5 years as I believe that I’m many moves before the markets which are focused on Europe’s debt crisis.

In this analysis I will answer the following important questions:

1. Why Japan’s crisis will shake the world in few years?

2. Why for many years hedge fund managers betting against Japan lost money and why they were wrong?

3. How can I profit from what is coming? Why position now?

4. Why Japan’s debt and economy are not safe? Most people think Japan is save because: 

-  Japan is net creditor and have huge reserves.

- Japan has trade surplus so it gets more money than spends from outside.

- Japanese government bonds are locally hold so it’s not a target for sudden yield spikes or attacks from foreign bond holders.

I will prove you are wrong! And of course my final prove will come when you see Japan all over the news within the next 5 years at maximum. (more…)

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Gold put option sold for a 205% profit

September 23rd, 2011 | Posted by octafinance in Commodities | Gold | Options | Precious Metals | Trades - (Comments Off)

Today I sold my Gold put option that I bought for 49,66 USD/oz on August 23 2011. I sold it for 151,43 USD/oz, or a profit of 205% on my invested capital.

The gold put option was a position in my trading account. A speculative play that I make with less than 10% of my total trading account size. I use put options when I detect a parabolic rise of an asset. The options limit the possible loss if I’m wrong, but they also offer me opportunity to leverage my trade. I always buy out of-the-money options, so I pay cheap premium for the option. As after parabolic rise, I do expect huge correction, I prefer to buy cheap out-of-the options and risk less capital for a high return, if I’m right. I also buy the options for a short period of time. Usually I buy options for few months, so they are cheap. In this case my option was bought until November 15 2011.

Summary: Gold put option bought on August 23 2011, for 49,66/oz, with gold price strike 1770 USD/oz, and expiration date 15 October 2011. The gold option was sold on 23 September 2011, for 151,43 USD/oz or a 205% ROIC.

Please see my previous parabolic bets on Silver and Swiss franc and how they ended with huge profits.

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Microsoft and BP are good value investments

August 24th, 2011 | Posted by octafinance in Stocks | Trades - (Comments Off)

Microsoft is a very cheap stock at these prices.

Net Cash, Equity and Other Investments Per Share: $5.76

TTM Earnings: $2.50

Historically Cheap Multiple: 8.1x trailing, 7.6x 2011 estimated earnings of $2.66, net of cash

Microsoft is A Key Player in Emerging Themes

- Cloud Computing/Virtualization
- Mobile
- Search

The company has a shareholder friendly capital allocation. In last three quarters, Microsoft has paid out $3.8 billion in dividends (2.4% yield) and repurchased $10.3 billion in stock, which reduced the share count by 4.1% over the past year. The dividend yield is now increased to 3% and the payout ratio is 23.00%, which means that this dividend yield is absolutely secure.

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Fair value of Gold. Gold as an insurance.

August 24th, 2011 | Posted by octafinance in Commodities | Gold | Precious Metals | Trades - (Comments Off)

By writing this post, I’m sure that I will provoke disaffection in some readers and investors.  It’s really tricky to measure the fair value of gold but still I believe that some gold models offer a fair measure of the value.

Before I start with the fair value of gold I want to say that anyone who doesn’t have gold as a part of it’s portfolio, should add 3-7% on a price weakness. Gold is still the best insurance against currency collapses, hyperinflation and uncertain times. But that’s all. I view gold as an insurance more than as investment. I will buy personally gold as an investment only after and if the gold price goes near or below it’s fair value.

I use two models that measure the fair value of gold:

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Gold put option bought due to parabolic move

August 23rd, 2011 | Posted by octafinance in Commodities | Gold | Options | Precious Metals | Trades - (Comments Off)

Today, August 23 2011, I bought gold put option at 49,66 USD/oz with a strike 1770 USD/oz and expiration date November 15 2011. The put option on gold is for 1.1% of my trading account. The rationale behind this trade is the parabolic move that I detected. To be honest, I’m extremely optimistic that gold and silver will rise long-term and I plan to buy more of these precious metals after they go down big. No matter how much I love some assets, now we must face reality and the fact that gold has risen in parabolic move due to public fear and buying of retail traders. Gold has been up 10 years in a row, which is very unusual in any asset class. I believe that gold is overdue for a deep correction. We have a huge standard deviation parabolic event, which could correct at least a few hundred dollars. When I detect a parabolic move, no matter what the asset is, I usually risk a small amount of my trading account to buy put options while try to be as precise with the timing as possible.

Parabolic moves always end badly. They form because super high optimism about an asset, many factors supporting it, and it goes much higher than 200 DMA. There is also another red flag that might help destroy the parabola and it’s “margin hikes”. (more…)

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USDCHF call option sold for a 187% profit

August 11th, 2011 | Posted by octafinance in Currencies | Options | Trades - (Comments Off)

Today I sold my USDCHF call option that I bought for 0,0146 on August 9 2011. I sold it for 0,042, or a profit of 187% on my invested capital. In fact, it has been only 3 days since I bought this option, but the SNB did an intervention and I believe that this move is enough for me to take profit. Interventions are usually ineffective and the safe-heaven status of the swiss franc will probably be tested again.

The USDCHF put option was a position in my trading account. A speculative play that I make with less than 10% of my total trading account size. I use put options when I detect a parabolic rise of an asset. The options limit the possible loss if I’m wrong, but they also offer me opportunity to leverage my trade. I always buy out-of-the money options, so I pay cheap premium for the option. As after parabolic rise, I do expect huge correction, I prefer to buy cheap out-of-the options and risk less capital for a high return, if I’m right. I also buy the options for a short period of time. Usually I buy options for few months, so they are cheap. In this case my option was bought until August 31 2011.

Summary: USDCHF put option bought on August 9 2011, for 0,0146 USD/oz, with strike 0,737, and expiration date August 31 2011. The USDCHF option was sold on August 11 2011, for 0,042 or a 187% ROIC.

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Swiss franc parabola

August 9th, 2011 | Posted by octafinance in Currencies | Options | Trades - (Comments Off)

Currencies rarely go parabolic. Guess how big the problems are. I’m sure that the swiss franc is appreciating because everyone in Europe is transferring money from unstable banks to Switzerland and many people expect the EUR to weaken. All these factors have contributed to a strong currency going parabolic. Today, August 9 2011, I bought USDCHF call option at 0,0146 with a strike 0,737 USDCHF and expiration date August 31 2011. The option is for 1.65% of my trading account. I’m not only bearish on the swiss franc due to extreme overvaluation, but I’m also optimistic on the USD appreciating this year, and even next year depending on whether the USA give tax incentives to companies to repatriate USD back to USA or not. The main rationale behind this trade is the parabolic move that I detected.

The swiss franc has risen in a super parabolic move due. The Swiss franc has appreciated 60% from the low in 2010. That’s unbelievable. Just in the last month CHF has risen 20% to the USD. I think that the swiss franc will soon crash due to actions by the SNB. Parabolic moves always end badly. They form because super high optimism about an asset, many factors supporting it, and it goes much higher than 200 DMA. The siwss franc is 20%+ higher than the 200 DMA.

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