It was another acceptable week for the Everyday Finance portfolio, besting the 0.8% return of the S&P with a return of 1.2%. With last week's 6.2% return vs. the S&P500 return of 5.5% (here), I'm actually not exceeding the market by the margin I should given the higher Beta holdings of late; the Gold ETF has been a primary culprit. Baidu.com (BIDU) turned in a nice 7% performance following earnings numbers that exceeded expectations and the typical analyst upgrades that ensued. Focus Media (FMCN) turned in a nice week with a 12% return, as prospects for a rebound in the Chinese equity markets became more believable. Gold has continued to decline, even as oil teeters on $120 due to the combination of a weak dollar, international events (including a US ship firing a warning shot at an Iranian ship), and global demand in spite of a slowdown in gas/oil consumption in the US. The 2X Gold ETF lost another 7.5% for the week. On the other hand, the 2X Financial sector ETF gained another 3.6%. This financial play was the easiest money I've made in months, actually. The sector was harshly punished in the past few quarters, as it should have been, but markets always overreact and in this case, it was so overdone, it was beginning to truly look foolish. The Fed has already demonstrated that it will not allow any of the "premier US institutions that cannot fail" to fail...so, the bottom was pretty easy to call. I will be holding my remaining 2/3 stake for another 20-30% rise at a minimum.
How's my position banking on a decline on oil going?
Well, it didn't start off pretty. I entered into a synthetic option play with oil at around $113 where I will start to get into the red at $120 oil. We're not there yet and hopefully, we don't have additional attacks in Nigeria and ships firing at each other in middle east this week. The full rationale and method of cash-neutral options leverage using synthetic options is here. If you think oil's headed to $150, the same rationale can be applied with long calls and short puts, as opposed to my trades last week.
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