This issue of Peek Into My Portfolio is a summary of my financial situation for the 2022 Q4. If there is anything you want to know feel free to ask in the comments.
22Q1 had dead cats bouncing through the quarter. 22Q2 Appears to be the beginning of the rebound for me, or at least discovered the resistance. In 22Q3, it's reassuring how markets are finding solutions and getting what they can done. That being said, things are breaking and I'm not sure if they're fixing fast or substantial enough. Experts claim liquidity is high, but they're all going for real assets (land) at the same time the housing market is overpriced for working people and unstable. Overall, there's also a lot of bailout funds out there: Infrastructure Bill, Inflation Reduction Bill, Chips Act along with others. Corporations will be back in the black, while main street America is left out on the streets.
Buy, Sell, Watch
Last quarter: I sold shares in F, CBON, USDC, & SPXS; and added, ARCC, USDC, SPXS, MRK, ETH, ADDYY, & ALLY. Stocks on my watchlist: ACI, MRK, KBWD, EMLC, VZ, KO, STWD, DG, ADDYY, TOLZ, GOLD, ALLY, GM, IBN, HDB & JPM.
This quarter: I sold shares in USDC, BYFC, and exited SPXS & ABNB; and added, BAM, BN, USDC, SPXS, MRK, ETH, ADDYY, ALLY, AXP, VZ, CMF, GWRS, XLU, SPGM, AGM, CBON, CMCSA, & BYFC. Stocks on my watchlist: ACI, BAM, BN, MRK, KBWD, EMLC, VZ, STWD, DG, ADDYY, TOLZ, GOLD, ALLY, GM, IBN, HDB & JPM.
Kroger is trying to buy Albertson's. Brookfield spun off its asset manager, creating two holdings. I didn't appreciate what Adidas did to Kanye, stealing designs are wrong. Gold does not want to drop, so hopefully that means progress. Starwood gives a great dividend, but the stock is tanking, and I thought the massive land grab by corporations would rally the stock price. The main thing many of these stocks have in common is they all pay a dividend. This year's total: $528.85. Previous year: $378.91. This year results: 218 payments and increased dividend income by about 39.57% compared to 2021. Q1 (&Q3) continues to be the weakest quarter, Q2 (&Q4) appears to be strongest. Follow me on Twitter for tweet threads involving stocks.
Top 10 Allstars
Q3: CMF, AXP, MRK, TOLZ, CGW, AGM, SPGM, GOLD, SCCO, & CBON.
Q4: CMF, AGM, SCCO, CGW, SPGM, MRK, GOLD, TOLZ, CBON, & XLU
Revised Q4: SCCO, CGW, MRK, TOLZ, AXP, EADSY, VZ, KO, UL, & DPSGY
As previously mentioned last post, I changed some tracking methods. I separated my general portfolio from W.E.S. Rose. There's a whole new lineup in town, all companies that have been on my watchlist at some point during the last year. MRK would be number 1 if it didn't take off so beautifully, triggering a sell order. I'm glad SCCO and CGW has made their way back into the spotlight, they both took a real beating since I added them to my portfolio. That stop loss I placed on AXP took it out of my Top Performers and knocked it off completely to 5th in my Top 10 (on the revised list). VZ made both Allstars and Worst Performers.
Q4 Tickers: RTX, WBD, & BYFC
This list is comprised of my smallest positions. RTX has really taken off triggering a sell order to take profits. WBD was given as part of the spinoff/ merger and have been tanking ever since. If the stock gave a dividend, I'd probably be more in. Last, we have BYFC, which has not been flowing in its usual manner, it has become harder to trade since the pandemic.
Q3 Tickers: VICI, AXP, MSFT
Q4 Tickers: MRK, VICI, & AFL
MRK has been on an uptrend for a while now causing it to take the top spot, and AFL removed AXP from the list for the first time since tracking. MSFT lost its spot and dropped to 6th, behind AXP & KO.
Q3 Tickers: HOOD, SCCO, GOLD, DPSGY, & T.
Q4 Tickers: HOOD, VZ, SOFI, GOLD, & ALLY.
The 5 laggers are interesting because VZ (one of my top dividend payers) came in second. Telecom is being taken by T-Mobile unfortunately. Maybe that makes this a deal, or maybe it's still a falling knife. ALLY is another stock that surprised me, they have a clever scheme to attract deposits; offering cash back on "new money" deposited into saving, money market, and CD accounts by Nov, held until end of Jan, with the money being credited at the end of Feb. They also provide the highest rate compared to peers. GOLD is putting up a fight, but I have no problem building a position at $12-$14 range, if I have to. I actually would buy more in every stock on the list except HOOD & SOFI.
W.E.S. Rose & Shield
At the current time, WES:RS has 9 holdings. Current market value (CMV) is $8,025.79. WES:RT market value is $340.65. Portfolio down -0.874% (-$70.74). The portfolio ended the year in good shape considering all that took place in the markets this year, the portfolio bottomed at 4% in Q3 before rallying towards the end of Q4. Most of the value is liquid (38.75% cash) to ensure distribution payments to ticket holders, which have benefited from that cash positioning by avoiding much of the year's: market volatility, recession, and market breakdowns. The main objective going into 2023 is to prepare for deepening recession (possible Depression), and hedge to protect distribution payments and grow portfolio income.
Inflation, Recession, Stagflation!!! Oh My!!!
The world is interconnected and learning about inflation firsthand. It's only fair and only right to look at everything that can affect and has effect on the economy, and (in effect) my personal finances. Oil/ gas, OPEC, international relations, politics, and corporate involvement all affect inflation down to the individual level.
Powers in the East Let's start with macro. And begin with what many are claiming to be the main culprit of all of our present hardships. Vladimir Putin and Russia. The Russian invasion of Ukraine had highlighted a handful of countries and companies onto my newsfeed. The main being China. Recap: China is going world reserve currency status, growing as a U.S. counter power, and has plenty of allies around the round. China has used the Yuan to quickly grab power. China’s main stock exchanges said this quarter they would allow more types of bond exchange-traded funds (ETFs) to be used as collateral for borrowing, in a bid to promote ETF development, and meet investment needs. The Shenzhen Stock Exchange said in a separate statement that ETFs based on treasuries, local government bonds and policy bank bonds would be eligible in such financing activities. Telling me that they have learned a lot of financial wizardry from the U.S. After news about China willing to buy El Salvador's distressed foreign debt, news surfaced El Salvador bitcoin holdings are now down 60% on, from $105 billion to $41 billion. India was the other major country highlighted. Recap: India is a part of BRICS (counter to NATO), gaining in population, weapons, and tech. India had received $89.4 billion in remittances in 2021, according to the World Bank, making it the top recipient globally last year. Despite being poised to reach the record figure, India's remittance flows are expected to account for only 3% of its GDP in 2022, it said. Globally, remittances to low and middle income nations are expected to grow an estimated 5% to $626 billion this year, it added. Oil will tell us a lot about their relationship, just follow along. I say that because of the apparent importance of oil used as a pawn by countries. Oil the exemplification and representation of transportation and energy. In 2021, the U.S. consumed an average of about 19.89 million barrels of petroleum per day, or a total of about 7.26 billion barrels of petroleum. Out of that, about 8.47 million barrels per day (b/d) of petroleum from 73 countries was imported. We import our oil from OPEC and Persian Gulf countries, most don't like us (even hate us). Looking domestic, petroleum refineries in the U.S. produce about 19 to 20 gallons of motor gasoline and 11 to 12 gallons of ultra-low sulfur distillate fuel oil (diesel fuel/ heating oil) from one 42-gallon barrel of crude oil. After releasing barrels of oil from the emergency reserve in an attempt to lower gas prices at the pump, the administration has a new plan. The Energy Department is seeking to cancel or delay sales from the Strategic Petroleum Reserve mandated by Congress in fiscal years 2024 through 2027 so that it can move forward with a White House plan to refill the emergency oil reserve when crude prices reach around $70 a barrel, an agency official told a Senate committee, a move that could impact the release of 147 million barrels of crude oil. Such a plan, which would require congressional approval, could be attached to a must-pass government funding bill that could come together this quarter. Chevron Corp. CEO Mike Wirth said the Biden administration’s plan to refill the SPR at those levels is “not necessarily a wise move.” Instead, Wirth said, the SPR should be refilled on a steady basis, to maintain stockpiles at appropriate levels while limiting price risks. The SPR, which has a capacity of around 700 million barrels, is currently at about half capacity. At first, I was confused by the change of heart but then more news came out. The U.S. has joined the European Union, the G7, Poland, and Australia to cap the price of Russian oil at $60 a barrel. “The price cap will encourage the flow of discounted Russian oil onto global markets and is designed to help protect consumers and businesses from global supply disruptions,” Treasury Secretary Janet Yellen said in a statement. The following week, the so-called price cap coalition will ban a broad range of services — including maritime insurance and trade finance — related to transport of Russian crude oil unless purchasers buy the oil at or below $60 per barrel, a key part of the effectiveness of the price cap. Most Russian oil uses Western shipping and insurance out of the U.K. The price cap is set high enough to maintain an economic incentive for Russia to continue selling oil on global markets. The price is set based on the price Russia has historically sold oil for and is above its cost of production. The IMF estimates the full-cost breakeven price for production of Russian oil is close to $30 to $40 per barrel. The price cap coalition will revisit the price cap periodically — every couple of weeks, taking into account economic and market conditions but would remain "at least 5% below the average market price. Then towards the end of the quarter, it was announced, the U.K. and U.S. are forming a new energy partnership focused on boosting energy security and reducing prices. The U.K.-U.S. Energy Security and Affordability Partnership, as it's known. Among other things, the group will undertake efforts to make sure the market ramps up supplies of liquefied natural gas from the U.S. to the U.K. "As part of this, the US will strive to export at least 9-10 billion cubic meters of LNG over the next year via UK terminals, more than doubling the level exported in 2021 and capitalizing on the UK's leading import infrastructure," the announcement said. While countries like India, China, and Turkey are not part of the oil price coalition, they are top purchasers of Russian oil, a senior Treasury official says those countries will use the price cap to negotiate the best possible deal and that negotiations in India and Turkey are not being made at a country level but largely by company executives. In late November, the U.S. released detailed guidelines on how to legally participate in trading or financing Russian oil to make it as seamless as possible for purchasers. But Mr. Zelensky called the price cap "a weak position" and not "serious" enough to damage the Russian economy. The Russian Embassy in Washington criticized the price limit as "reshaping the basic principles of the functioning of free markets." A post on the embassy's Telegram channel predicted the per-barrel cap would lead to "a widespread increase in uncertainty and higher costs for consumers of raw materials." Russia would likely try to evade the cap by organizing its own insurance and using the world's shadowy fleet of off-the-books tankers, as Iran and Venezuela have done, but that would be costly and cumbersome, analysts say. Putin told the world he'll stop the flow, China told the world they're not changing their buy orders, India is looking out for India, OPEC is reshaping the global economy, and the U.S. is clueless to it all. House on Fire? I can't really blame the U.S. for the cluelessness, we have so much here at home to focus on. The Holiday Rally boosted the markets. Black Friday sales raked in a record $9.12 billion from online shoppers this year despite concerns of inflation and higher prices, according to estimates. The $9.12 billion figure is up from $8.92 billion in 2021 and $9.03 billion the previous year, according to Adobe Analytics. Inflation accounts for some of the increase this year, with people paying more to buy less. In unrelated news, Robinhood extended trading hours, letting me know the rules can easily change when the market puppeteers deem fit. The market puppeteers would want the retail investor (aka "dumb money") to use this market crash to dollar cost average down their positions, while money managers buy real assets and short the market. These mouthpieces will tell you to "stay in the market", "cash is trash", and "historically the market in the long term will rebound", "always bet on the American market", but also give the disclosure that past performance, where given, is not necessarily a guide to future performance. Our financial markets are in shambles, even though it seems to be calming and leveling off, many predict recession by mid-2023. Credit is tightening. Many of my credit account balances were lowered (personal & business). Investors pulled $5.8 billion from the $380 billion SPDR S&P 500 ETF Trust (ticker SPY), marking the largest withdrawal since September. Meanwhile, the $162 billion Invesco QQQ Trust Series 1 (QQQ) saw an outflow of $2.1 billion, the biggest since July. U.S. life insurers paid more than $90 billion to beneficiaries in 2020, a 15.4% increase in payments compared to 2019- the largest year- over-year jump since the 1918 influenza epidemic, according to data from the American Council of Life Insurers. US life insurers paid out a record $100 billion in benefits in 2021, according to new data released late Nov. by the American Council of Life Insurers. Telling me that many lives were affected (if not lost). The purchase of life insurance coverage in 2021 also rose, with nearly 46 million policies sold, a 6.1% increase over 2020, although the total dollar coverage of those newly purchased policies dropped by 1.3% to $3.3 trillion. The average size of a new individual policy purchased last year was $189,830, according to ACLI data. Separately, ACLI data also showed that in 2021 annuity payments, which most typically go to retirees, hit an all-time high, with insurers paying out $97.7 billion to annuity holders. I have concerns when it comes to life insurance, annuities, pensions and the like, losing money. Many pensions are in trouble and have been in trouble since the beginning of the pandemic, plus they've placed bad bets. Now there's a shift and they're going for whatever cash grab they can get. Large investors such as Pimco, Blackstone Inc. and Apollo Global Management Inc. have entered or increased their exposure to the market, viewing music copyrights as similar to bonds because they generate consistent cash flows. Behold JP. Dimon!!! JPM had over $3 trillion in assets in April 2020. Regulatory capital minimum requirements have JPMorgan Chase setting aside more than $200 billion in capital, which is in addition to loan loss reserves ($1 billion). He urged our nation’s leaders to be thoughtful about the effect of arbitrary increases in capital requirements and its cumulative impact on lending, market liquidity and other economic activity. The European Systemic Risk Board found that changes in capital requirements impact corporate investment policy. “Faced with a reduction in their ability to borrow, firms shrink their assets, and partly but not fully compensate for this by reducing their lending to suppliers”. Back in July 2021 "If you look at our balance sheet, we have $500 billion in cash, we've actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates," Dimon said. "I do expect to see higher rates and more inflation, and we're prepared for that." JPMorgan halted its buyback program in July 2022, the suspension also came after the largest US bank failed the Federal Reserve's stress test, sending it scrambling to generate more capital. Mr. Dimon told reporters that without the new regulatory requirements, the bank would “probably” still be buying back stock. Jamie Dimon (in Oct.) expects recession in 6-9 months, markets to remain volatile for the foreseeable future, and that the S&P 500 could easily fall another 20%-30% as the Federal Reserve continues to raise interest rates. His “gut” tells him that the Fed funds rate will probably have to rise higher than the 4% to 4.5% level many economists are predicting, as inflation persists. The likely place you might see more of a crack or a little bit more of a panic is in credit markets. And it might be ETFs, it might be a country, it might be something you don’t suspect. Higher capital requirements do not reflect “actual risk” in the system, Dimon wrote. If anything, they exacerbate risk by eroding “banks’ ability to meet customer needs”. As of October 2022, JPMorgan Chase has a market cap of $326.07 Billion. This makes JPMorgan Chase the world's 14th most valuable company by market cap according to our data. Dimon says investors should expect more blowups after a crash in U.K. government bonds earlier this quarter nearly caused the collapse of hundreds of that country's pension funds. Our pension funds had at least 2 bailouts since Covid started. Chase & Co. has avoided most of 2022’s so-called hung deals that have cost competitors billions of dollars in paper losses. Whether by luck or by design, the biggest U.S. bank didn’t make loans backing takeovers of companies such as Twitter Inc., Citrix Systems Inc. and Nielsen Holdings PLC, which fell in value as markets turned choppy. JPMorgan’s average rank over the past 10 years is seventh, compared with its average of third place during the prior decade. JPMorgan in Dec. cut its 2023 earnings forecast for S&P 500 (.SPX) companies, citing weaker demand and pricing power, margin compression, and limited buybacks. They also flagged that the S&P 500 index could "re-test" this year's low of 3,491.58 in the first six months of 2023, as the U.S. Federal Reserve's monetary policy tightening weakens fundamentals. "This sell-off combined with disinflation, rising unemployment, and declining corporate sentiment should be enough for the Fed to start signaling a pivot, subsequently driving an asset recovery," they said, adding that the index could claw back up to 4,200 by year-end, to reflect a near 3% upside from current levels. JPMorgan economists Michael Feroli and Daniel Silver wrote that they see the U.S. in a "mild recession" in the second half 2023 as the Fed looks to complete its mission to flatten inflation. Battered 60/40 portfolios will roar back to life and provide investors with solid returns after the worst performance in nearly 15 years, according to J.P. Morgan Asset Management. JPMorgan will join HSBC in storing bullion for the world's biggest gold-backed ETF (SPDR Gold Trust, aka GLD), the fund's operator (World Gold Council aka WGC) said on early Dec. ending its rival's sole guardianship of the $52-billion stash of gold. The change, which begun on Dec. 6, is a boon for JPM, which could rake in millions of dollars of storage fees. Typical fees for large clients like GLD are around 0.03-0.04% of the value of the gold stored, a market source said. That means equal division of the fund's 910 tonnes would see JPMorgan take revenue of around $8-10 million a year from HSBC. JPM is a big beast with a lot of talking heads, but the message is clear from all that, I'm getting buckle down and prepare are turbulence. Also, make smart deals that will bring either real assets or cashflow/yield.
The underground economy, also known as the informal economy (everything done outside of Uncle Sam's eyes and tax reach), may be the key to the Great Reset. The market oligarchs raise prices, initiating another wealth transfer through gas, food, and rent, from the underground economy into the main street economy through inflation. As of November, 63% of Americans were living paycheck to paycheck, according to a monthly LendingClub report — up from 60% the previous month and near the 64% historic high hit in March. "Americans are cash-strapped and their everyday spending continues to outpace their income, which is impacting their ability to save and plan," said Anuj Nayar, LendingClub's financial health officer. Sectors: insurance, medical, agriculture, consumer goods, and utilities are proving to be recession/ inflation resistant. As the world adjusted to a new normal post-Covid, we must prepare for a worsening recession by (at least) mid-2023. Fed officials expect growth to slow to a crawl of 0.5% next year, while unemployment rises almost a percentage point to 4.6% — which likely means more than 1 million Americans would lose their jobs. Even with this pain, inflation proves surprisingly sticky, only gradually slowing back to 2% by 2025. I doubt I'll ever see gas under $3 /gallon ever again but has seen from the tracking, gas prices decreased throughout Q4. Market movers, experts, and whales believe hard times are coming; credit markets have tightened, those (like myself) that thought they could rely on leverage to provide a buffer against inflation was caught off guard by the contraction of credit limits in some accounts. Now is the time to: deleverage, pay down debts, invest in dividend stocks, rebuild emergency fund, and buy real assets.
It’s crazy that I have to say this but: none of this is investing advice and you should do your own research and never take the word of someone else without doing so. All investing involves risk, and only you can decide what to risk and is worth risking for. And you look stupid trying to sue someone because you followed blindly.