Q2 Update: Here’s Our 2016 Track Record So Far

So far, my calls have been pretty accurate this year. (700% VRX winners, I’m looking at you.)

In December 2015, I turned in a bearish market forecast that was at direct odds with most Wall Street analysts. I pointed out that none of the factors pressuring markets are going away and that a big sell-off across the board – followed by a multi-year bear market – is likely. Then I got into specifics, including my year-end S&P 500 target (which I later revised even lower), the U.S. GDP, and even the presidential election winner.

Full disclosure: I was wrong about the presidential election winner. The candidate I picked is already out of the race.

But my stock recommendations, for the most part, have been spot on.

As I write this, a couple of our long plays are up over 50%, and we’ve also got one spectacular short that’s down 50% since the beginning of the year. (It’s not even DB – that stinker is down a mere 36%.)

Here’s the full report…

Our Long Plays

As you can see, I only have two long recommendations that are pure stocks. The rest are gold-related, volatility-related, or mortgage REITs. Not surprisingly, the gold-related stocks are doing the best – and I’m happy to see that my willingness to take a chance on the gold miners (GLDX and GDXJ) is paying dividends. I don’t typically recommend the miners, but when I made these calls last year, I reasoned that these gold miners are a very leveraged bet on a recovery in gold and are so out of favor that they are worth a shot. Further, I recommended the ETFs rather than individual stocks to mitigate the individual operating issues associated with individual companies. So far these picks have worked out well and I continue to recommend them.

Gold-related investments are long-term picks that can easily take more than one year to work out because gold is a generational play. But after the first three months of the year, they’re already turning in quite an impressive performance.  If you bought them, I’m happy for you. My full list of gold recommendations, of course, is here.

Note – I have seen some confusion lately in the comments about how well we are doing. Red simply means the stock is going down, and green means it is going up. In the shorts column, a lot of red is a good thing!

Going Up (Long) Symbol Price 12/29/2015 Price 4/11/2016
Alcoa Inc. AA $10.13 $9.38 – Down 7.40%
Annaly Capital Management Inc. NLY $9.40 $10.40 – Up 10.64%
Central Fund of Canada Ltd. CEF $10.04 $12.13 – Up 20.82%
Chimera Investment Corp. CIM $13.88 $13.53 – Down 2.52%
CBOE Market Volatility Index VIX $16.10 $15.36 – Down 4.6%
Global X Gold Explorers ETF GLDX $16.79 $25.31 – Up 50.74%
Market Vectors Junior Gold Miners ETF GDXJ $19.64 $30.33 – Up 54.43%
Navient Corp. NAVI $11.49 $11.82 – Up 2.87%
ProShares Short S&P ETF SH $20.54 $20.51 – Down 0.15%
Sprott Physical Gold Trust PHYS $8.76 $10.21  – Up 16.55%

Our Short Plays

I also like to recommend stocks that are going down. The clear winner (or is it loser?) here is FitBit – which I pointed out is a fad (and is getting its lunch eaten by the Apple iWatch, which has its own problems). DB, of course, continues to implode. (I’m recommending some new puts on that – see below.) I’m not a fan of overpriced social media and technology stocks, which are in a bubble, and you can see several of them collapsing before your very eyes on this list.

Going Down (Short) Symbol Price 12/29/2015 Price 4/11/2016
Alphabet Inc. GOOG $776.60 $739.15 – Down 4.82%
Amazon.com Inc. AMZN $693.97 $594.60 – Down 14.32%
Chipotle Mexican Grill Inc. CMG $489.94 $451.26 – Down 7.89%
Deutsche Bank DB $24.87 $15.88 – Down 36.15%
Facebook Inc. FB $107.26 $110.63 – Up 3.14%
Fitbit Inc. FIT $29.35 $14.49 – Down 50.63%
iShares Nasdaq Biotechnology ETF IBB $343.00 $277.35 – Down 19.14%
Netflix Inc. NFLX $119.12 $103.81 – Down 12.85%
SPDR S&P 500 ETF SPY $207.40 $204.48 – Down 1.41%
Standard Chartered plc STAN.L 581p $449.30 – Down 22.67%
Starbucks Corp. SBUX $61.13 $61.04 – Down 0.15%
Tesla Motors Inc. TSLA $237.19 $250.07 – Up 5.43%

How to Play the Deutsche Bank Collapse – Updated 4/11/2016

As always, I prefer puts as a less risky way to play the short side.  I’m looking at a couple of puts that are attractive based on current prices. The first has an expiration date in October, the second in January. It’s up to you how to play this based on your expectations. In my view both are good bets:

  • BUY DB October 21, 2016 $11 puts (DB161021P00011000)
  • BUY DB January 20, 2017 $10 puts (DB170120P00010000)

Since the beginning of the year, DB has lost over 33%. If it loses another 33% in the next six months (definitely in the cards), the DB October 21, 2016 $11 puts (which as of this writing are trading around $0.75), would be both a cheap way to short and very profitable.

For nine months, the puts go down to $10 (the DB January 20, 2017 $10 puts are currently trading at around $0.80) which is an extremely cheap way to play this stock.

Sincerely,

Michael

30 Responses to “Q2 Update: Here’s Our 2016 Track Record So Far”

  1. Laurens van den Steenhoven

    I like your set up and Report which I see now for the first time.
    I did allready DB may 2015.5 put bd, and may 20 DB 16 call sold, as a synthetic stock looks OK now. But I follow your last advise also.
    Thanks and best regards
    Laurens

  2. I am looking at the DB puts presently, when did you first publish this idea as the prices on the October and January current listed prices are quite a bit higher and appear to have been for a while. I just want to make sure I am not missing something.

  3. Christopher M Smith

    I like your DB puts idea and have just checked the prices (12th April) and find the Oct $11 puts are at $0.69 (not $0.2 as you suggest) and the Jan 17 $10 puts are $0.80 (as oposed to $0.05 you mention). I am not a nitpicker but these differences are huge.
    Is there an error somewhere ?

  4. Duh, more losers than winners? I think you’re misreading the results. On the short plays, red means the stock went down which is a winner. I am quite impressed, although I am interested now in the positions suggested as the market has staged a massive recovery (so far).

  5. Re: more losers than winners, I think you’re misreading the short plays – red means the stock went down and is a winner. I’m quite impressed – however, Michael I’m wondering how you view the positions now that the market has made a ‘market recovery’ so to speak. Still see the same economic weaknesses, correct?

  6. hina ghazanfar

    I am a new subscriber. Like everyone I am trying to make some money. For the last couple of months I have been reading your recommendations and my gut feel is that most of them seem very logical. I want to trade the DB puts but I have never done them before. Is there any specific instruction that can help me. Will put in the trades tomorrow.

  7. Shorting is totally unpredictable as shown by your losses in the short portfolio. I realize if the market tanks those losses will recover but how long must one wait for the super long correction to take place? Would it not be better to wait for the correction to begin before shorting and to pick an ETF to short versus a bunch of individual stocks or to just short the market as a whole. I.E. SDS, SQQQ etc.

  8. Shorting is a problem and not easy to do. Would it just be best to wait for the correction to begin rather than short a bunch of stocks in anticipation for the super overdue correction to begin? I.E. SH, SDS, SQQQ etc. Yes your short plays will rise when and if this crazy market ever goes down but we have been waiting 7 years for this long overdue correction to happen. With the FED controlling the markets and killing the shorts at every opportunity, shorting does not seem to work until the market decides to go down.

  9. Readers beware. His past recommendation of an April 16 $11 put just expired worthless. See any mention of that anywhere in this list? It’s great to read about the great track record of recommendations isn’t it. Until you realize that not all of the information is disclosed. Keep in mind an honest person would disclose everything, good and bad. Full transparency. That is not the case here. What does it say about this guy’s honesty and integrity? Ask yourself that before you consider one of his recommendations.

  10. chris richardson

    MICHAEL LEWITT I really emjoy reading your material. Everything you have said has been pretty spoton and since you are bearish with the market at this time I was wondering if I could have your opinion about inverse ETF’s. I bought in the SPXS at 20.00 as insurance against a crash and since the market keeps going up its now down to 15.00. Im a patient person so Im not worried because it will still serve its purpose as insurance against the coming super crash but wish I had bought in at 15 instead of 23. Do you think this trend of DOW higher for no good reason or explanation will continue to sink the inverse ETF’s like SPXS ?

  11. Mackke Monroe III

    If you are going to trade Mike’s recs, you must stay on top of it.
    Best if many of you stay out of this business. Gotta be nimble.
    Go play Mario Bro.s . This game is too fast for you…
    Just sayin’

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