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My Portfolio: 23Q1

Updated: Oct 26

This issue of My Portfolio is a summary of my financial situation for the 2023 Q1. The other posts (previous quarters) can be found at links at the bottom of the webpage, under Continue Reading. If there is anything you want to know feel free to ask in the comments.


Recap

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. "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. As the world adjusted to a new normal post-Covid, we must prepare for a worsening recession by (at least) mid-2023, with more than 1 million Americans expected to lose their jobs. Now is the time to: deleverage, pay down debts, invest in dividend stocks, rebuild emergency fund, and buy real assets.


Portfolio/ Investments

Buy, Sell, Watch

22Q4: 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.

23Q1: I sold shares in AGM, SYF & AAPL; and added, USDC, ETH, T, DTEGY, ALLY, LAZ, OHI, STWD, VICI, & GOLD. Stocks on my watchlist: ALLY, BN, EMLC, VZ, STWD, DTEGY, GOLD, IBN, SCCO, AFL, AXP, DPGSY, USB, PNGAY & JPM.

US households are pivoting away from stocks as the Federal Reserve continues to hike interest rates, and the shift could result in a $750 billion sell-off in equities this year, according to Goldman Sachs strategists. After more than a decade of low interest rates, investors are now looking towards fixed income and yield-bearing assets while the Fed continues to fight high inflation. American households still held 38% of the total US equity market. In the absence of household equity buying, foreign investors and corporations will be net buyers of $550 billion and $350 billion US equities, respectively. This Quarter's total: $159.32. Previous Quarter: $149.01. This quarter's results: Jan. $65.15 Feb. $40.95 March $53.22. Follow me on Twitter for tweet threads involving stocks.


Top 10 Allstars

22Q4: SCCO, CGW, MRK, TOLZ, AXP, EADSY, VZ, KO, UL, & DPSGY

23Q1: SCCO, CGW, TOLZ, MRK, AXP, EADSY, DPSGY, VZ, UL, & KO.

MRK has really been on a run lately. DPSGY gives me the impression Germany is sorting their fuel/ energy issues out. KO & UL are both strong consumer brands, so it's only obvious they have a presence. They all are also great dividend payers.


Small Bets

22Q4 Tickers: RTX, WBD, & BYFC

23Q1 Tickers: SYF, RTX, & BYFC

This list is comprised of my smallest positions. I am selling my SYF position and focusing on ALLY, as the markets tighten. Nothing has changed with the old bets.


Top Performers

22Q4 Tickers: MRK, VICI, & AFL

23Q1 Tickers: AXP, VICI, & MRK

Credit, gaming/ sports betting, and pharmaceuticals is where the money is apparently. AFL dropped around 10% the quarter, insurance companies were also hurt by the banking collapse.


Worst Performers

22Q4 Tickers: HOOD, VZ, SOFI, GOLD, & ALLY.

23Q1 Tickers: HOOD, VZ, SOFI, ALLY, & T.

I'd buy more of every stock except HOOD & SOFI. I would especially increase my position in ALLY, I would slowly add to VZ (and even T) for the dividend payout, but the main focus in that sector is DTEGY (T-Mobile).


W.E.S. Rose & Shield

At the current time, WES:RS has 9 holdings. Estimated current market value (CMV) is $7,177.92. WES:RT market price is $365. Portfolio up +2.44% (+$170.66). The portfolio ended the quarter in good shape considering all that already took place in the markets this quarter. Most of the value remains liquid (30.96% cash) to ensure distribution payments to ticket holders. Adjusted dividend yields, resulting in -0.01% shift, thanks to Law of Large Numbers all the shifts cancelled each other out. The main objective this year is to prepare for deepening recession (possible Depression), and hedge to protect distribution payments and grow portfolio income.

Silk BRICS Road

All roads lead to BRICS. As documented in previous posts, gas is a huge expense that affects so many other areas. It is only right to know why that expense increased so much. The media and government are putting the blame on Russia, I blame gas and oil corporations, government incompetence, and foreign powers (specifically BRICS).


Follow the Pipeline

Gas prices in California are back on the rise. We're around $4.49 a gallon (outside of Costco). Government has completely mismanaged our gas and oil capacity and consumption. According to IRS reporting, California has about 24 of the active 130 refineries in the US, but prices here are among the highest in the country. California Energy Commission listed 16, with Marathon Petroleum producing 20.7% of crude oil capacity. Also, according to CEC we get 58.9% of our oil from foreign sources, which I'd say started around 2000 when it reached 25%. This current administration has attempted to ease prices by sanctioning the foreign sources, taxing corporate profits, buying oil from allies of the sanctioned sources, and releasing from the Strategic Petroleum Reserve (SPR). SPR is essentially our first immediate line of defense against price hikes and supply issues, and the DOE is having trouble refilling it. President Biden asked OPEC+ to increase production and fill gaps created by his sanctions on Russia, and they said NAH, fearing oversupply would endanger their revenues, which then probably encouraged the administration to ease sanctions on Venezuela and green light Chevron to reopen and ship all the oil back to the states. I'll add, this is the same Chevron that told the Administration it did not think it was wise to refill the SPR around $70 a barrel, instead, he suggested the SPR should be refilled on a steady basis. It appears he was right and got his way. On the east coast, New York has increased purchasing of Indian oil. In pursuit of cheaper oil/ fuel, we need to be aware of the many obstacles, and double/ self-serving agents. We should be aware that Iran and Venezuela deepen their relationship through “clandestine" networks. We should especially be aware India is reportedly getting oil from Russia at a significant discount ($60 per barrel), entirely in non-US currencies (including dirham). That would be less of an issue if they weren't selling it to New York and the EU at a premium. Honestly, that's capitalism unfiltered.


As we follow the pipeline, we quickly move abroad. In my opinion, that's the reason for the high prices. One pipeline stops off in Venezuela, on a direct return route. Another goes to India, where we see them buying discounted oil from a sanctioned country and selling it to the western countries for profit. India provides the best vantage point; from there we see Russia's influence much closer. We can see the pipeline still flows to Europe through layovers and detours. Most importantly, India leads us to BRICS. India remains guided by a principle of strategic autonomy; the country avoids commitments like formal alliances and maintains partnerships based on issues rather than on a particular ideology. America accepts that, hoping that India is a counterbalance to China, which is why the US ignores that a majority of India's military equipment is of Russian or Soviet origin. From India, we can see the US sanction and delist Chinese companies, pass legislation such as Holding Foreign Company Accountable Act and Protect America strategic Petroleum Reserves from China Act; to prohibit the sell and export of crude oil from the reserve to any entity under CCP control along with Russia, Iran, North Korea, and any other sanctioned countries. In return, Russia removed Exxon from the Sakholm-1 oil project (but kept Japan). Western companies have pulled back from shipping, trading, and insuring Russian oil, resulting in newcomers emerging based in Hong Kong and Dubai to continue to move oil to China, India, North African countries, and around the world. Since the invasion started, Russia has made more than $315 billion in revenue, with $149 billion coming from EU nations. They should really translate that to yuan, rupee, or ruble.


Follow the Yuan

The US has been requesting OPEC+ to increase supply, to no luck. OPEC+ reason given was it did not want to hurt the members’ revenues. Typically, an increase in supply would result in an increase in revenues due to the obvious demand, so what's the real reason? The Saudi riyal has been pegged to the US dollar (petrodollar) since the 1970’s; however, Saudi Arabia is willing to deepen its strategic partnership in oil trade with China, the world's largest crude oil importer. China's an expert at importing oil/energy and exporting goods, labor, and financing. The country serves more as a counterbalance to America and western institutions. China is uniting countries under the yuan to supply itself with oil and other products, such as the China-Iran Strategic Partnership Plan (CISPP), which would see $400 billion invested in Iran’s economy over a 25-year, or with Uzbekistan who inked a $1 billion deal to increase bilateral trade with Pakistan to rebuild the economy. Pakistan received $700 million from China Development Bank. China has also signed yuan clearing deals with Brazil, Pakistan, Kazakhstan, and Laos. It's safe to say that the yuan is the currency of BRICS, with China making up 70% of the group's economy (followed by India with 13%). The organization established a policy bank (New Development Bank ‘NDB’), to provide alternative funding methods from the IMF and World Bank. The NDB shares are held equally by each of the five members. Brazil, Russia, India, China, and South Africa account for over 40% of the world's population; news is also circulating that Iran, Argentina, Saudi Arabia, Turkey, and Egypt filed their official applications to join BRICS. The 10 countries mentioned represent major oil exporters and emerging economies, hedging themselves from western (US-centric) political and economic restrictions. There's an economic war taking place in which a wall is being built to box the west in. I am assuming that the next wave of inflation will be blamed on China. Many of the articles I read have blamed China's reopening for the increase in oil, coal, and now copper. All three instruments are important regarding inflation worldwide and future EVs and technology.


Follow The Reserves

The Fed and Treasury are focused on oil prices and protecting our reserve currency status, while pushing back against half the world, in regard to BRICS and OPEC+. While inflation deteriorates the dollar and the wealth gap fans the flames of dissatisfaction among the people, the recession is present. US banking giants report lower profits, while stockpiling rainy day funds, an expected $5.7 billion in reserves to prepare for soured loans. Some banking groups have called for congressional authority for temporary universal guarantees on all U.S. bank deposits, but the conservative Republican House Freedom Caucus opposes expanding deposit guarantees beyond the FDIC's current $250,000 limit, a major roadblock to swift action to stem a deeper crisis. The central bank, including the Bank of Japan, Bank of Canada, Swiss National Bank and the European Central Bank, said it would increase the cadence of seven-day maturity to daily from weekly operations. Such measures are invoked during periods of market stress to ease access to dollars by international trading partners. JPM is the bank in the spotlight that is pretty much tasked with protecting the economy from collapse, the company has been hoarding cash for at least 2 years and is now using it to save regional banks and in talks to establish a fund to rebuild Ukraine.


As we follow the money, we see inflation crushing the working class, not just in America, but all around the world. Poor money management has resulted in losses across the financial sector and economy as a whole. Swiss National Bank reported a loss of 132 billion Swiss francs ($143 billion) for the 2022 fiscal year. The loss represents the largest loss in the central bank's 116-year history, now in the first quarter of 2023, UBS bought Credit Suisse to prevent further market panic. Gold is considered a hedge against inflation and weakening currency. There has been a significant increase in demand from central banks to replace dollars with gold. Central Bank's closed out 2022 with reported net purchases of 28 tons of gold. China officially started buying gold again in November and made another large purchase of 30 tons in December. That raised China's total gold reserves to over 2,000 tons. Barracks CEO Bristow expects gold to rise about 6% this year to $2,000 an ounce, with copper also climbing. While the average market price for gold in Q4 was $1,726/ oz and the average price for copper was $3.63/ lb. I assume that all the federal spending will act as a floor and a buffer for this oncoming recession. The Fed blames wage growth for inflation, so they intend to tighten the money supply to force Wall Street to lower prices by cutting payroll expenses. Although futures markets now expect Fed policy rates to peak below 5% by mid-year and jump up to half a point between then and the year's end, two Fed policy makers still saw rates moving above 5% and likely staying there for all of 2023. The Federal reserve should focus tracking: rents/ mortgage, utilities, food, transportation (gas/ car prices), and labor wages. Instead of the Fed saying they are going to raise rates to squash inflation, Chairman Powell should be saying to the companies that until they lower prices, and not just offer people credit and Buy Now Pay Later (BNPL)/ other payment plans, they will not get to borrow from taxpayers at the low rates.


All Except the De-

We quickly jumped into inflation, a rise in prices. As a result, there’s: Shrinkflation, which is the practice of reducing the size or quantity of a product while the price of the product remains the same or slightly increases; and Skimpflation, the situation where firms (in response to higher costs) reduce the quality of a good/service. All while being told to fear Stagflation, an economic cycle characterized by slow growth and a high unemployment rate accompanied by inflation. In reality I’m experiencing what I call Transflation, where they temporarily transfer the price increase from one area like the gas pump to another like the grocery store. After all that, we will probably never experience Deflation, a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. Due to a currency war, bad economics, and a rising counter power to the West, we’ll experience all the -flation except the De-flation. According to the 2023 Bankrate survey, just 43% of Americans would be able to cover a $1,000 emergency expense with their savings. Even fewer would be able to cover their full living expenses for at least one month if they unexpectedly lost their primary source of income. What can the average person do to better protect themselves from inflation? The same "experts” who said that cash is trash, turn around and talk about buying these money-markets or the short-term bonds. I personally can’t trust a person that says things like, “cash is trash”. A recent study suggests that the consumption of Black and Hispanic households is 45% and 20% more sensitive, respectively, to income shocks than the consumption of white households and that these differences can be completely explained statistically by differences in liquid assets. The typical household already spent $371 more on goods and services in December than a year ago, according to Moody’s Analytics. Around this time last year, I-bonds were giving a yield of 9%, now it seems I-bonds are done. You can get a decent yield from CDs and short-term treasuries (TIPS). That way it keeps it somewhat liquid; but unfortunately, it puts it at the mercy of these banks and their regulations, restrictions, and fees. Other hedges against inflation such as gold, are going up, some suspect because Federal reserves around the world have been building a stockpile to hedge against the dollar and fed rate hikes. Investors have added about $135 billion to global money market funds. Treasury Sec. Yellen said that the U.S. banking system was stabilizing, and steps taken to guarantee deposits in those institutions showed a "resolute commitment" to ensure depositors' savings in banks remain safe. She added that the situation was "very different" from the 2008-2009 global financial crisis, when subprime mortgage assets put many banks under stress, and that the financial system is "significantly stronger than it was 15 years ago." I would disagree, it's similar to me: People strapped with assets, dependent on interest rates during a raise, and inflationary pressure on households, causing many to fall behind or give up on payments; causing further defaults up the payment ladder. The difference is the banks at risk aren't the major ones that are connected to the Fed and Congress.

In Conclusion

All that to say, it's going to be hard trying to keep up with inflation given that we're not in immediate control of our income. Not to mention the weakening dollar, economic war with China, and physical war in Europe. Honestly, none of these would be actual issues if individuals in government had common sense, empathy, and the ability of forethought we wouldn't have most of these problems. So, the everyday person will need to make more money (somehow) and begin to hedge. Right now, CD's and TIPs are still in favor, but as stated above, the currency is about to get rocked, but those are the only options many have. Continue to pay down debts, credit is tight right now with rates rising and defaults happening hand over fist. If you're paying your bank a fee, find a better bank, preferably a credit union. Diversify and start getting attentive of your funds and use them to multiply. Expect government to drain as much money as possible from you in order to float its currency, but I don't see that working until oil/ energy costs are placed under control. We've been in a recession since mid-2022, I'm worried about how deep, difficult, and long it's going to be. Even after the media and the commentators have accepted the Biden-Harris Administration's redefining of "recession", they are back to sounding the alarms. Going forward, attacking debts and allocating funds to high yielding assets are the main objectives.


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.

23Q1 Report
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