It was nice to end the week with a rally, which brought my portfolio back up for a 0% gain on the week. In order to have a shot at life-changing returns, you need to concentrate on a sector and take in some risk, so that is what I’ve been doing. Needless to say, that can lead to big drawdowns. My portfolio returns right now are:
- 0% on the week
- -14.5% on the month
- -42.7% on the quarter
- -37.7% on the year
Note that the above returns are corrected for deposits. If I deposit $1000 into my trading account, then I subtract it off the ending balance before dividing it by the balance the prior week and subtracting 1. I simply add the column of weekly returns to get my returns going back. Because of this, my total balance is simply near the low end of the range that it has been stuck in since I started recording it in 2019. Between my relatively low net worth and relatively high savings rate, my losses over time balance out.
What do I get for these regular losses? The chance to have a big win. My net worth was around zero when I bankrupted out of my LED Lighting venture in 2014, and it wasn’t until 2015 that I managed to land a job with that new-grad starting income again. I piled what savings I could into precious metals, then precious metals miners and hit that beautiful $100k savings mark for the first time ever in that amazing gold rally of 2019. I managed to stay well above that range ever since, and I’m patiently waiting for the next big breakout. It will happen, and when it does junior mining stocks can pack quite a punch.
Here’s a quick rundown of my performance in various sectors with charts.
Hedges: This is where I lose the bulk of my money. I bet on individual stocks going down (airlines, cruise lines, etc) in March and April 2020 after the lockdowns and they rallied like crazy. Then I abandoned that approach and bet on the S&P 500 going down with SPY puts and that rallied like crazy. In the fall I thought … okay, people are cramming into the top bunch of tech stocks so the S&P is untouchable, perhaps I should switch to IWM puts (the Russell 2000), and that rallied like crazy. Then I figured that going short anything wasn’t going to work, so I decided to hedge with TLT calls in March of 2021 and they have been dropping ever since. I’m still stubbornly sticking to this trade, thinking that TLT will rally in the big crash to come, and that I’m probably better off sticking to one hedge rather than rotating because my previous rotations were all just before major market moves against me. I like TLT calls better than straight TLT because whatever hedge I invest in needs to have some serious outsized punch if it actually works.
- April 28, 2020: 37% of my portfolio was jammed into long-dated call options on gold miners such as EQX and silver, using SLV.
- May 14, 2020: 35% of my portfolio was in the above calls as I was taking profits.
- May 30, 2020: 42.5% my portfolio was in gold mining stocks, almost all with covered calls sold on them.
- June 21, 2020: 50% of my portfolio was in gold mining stocks. All the covered calls expired worthless. I continued selling at-the-money covered calls on these relentlessly through Nov 6.
- Nov 7, 2020: 53.6% of my portfolio was in gold mining stocks and SLV. Some long calls, no covered calls.
- Nov 28, 2020: I piled into precious metals like crazy into the Thankgiving selloff. It was 81% of my portfolio, 26% was in long dated calls. I happily rode this through the december rally,
- Feb 5, 2021: After the SLV silversqueeze was a dud, I sold off all of my long dated calls and was down to 42.7% of my portfolio in mining stocks and SLV shares, most of which was in SLV shares which I was crammed into with 1-week covered calls sold at a hefty premium. I did lose money in the silversqueeze, basically giving back all the gains that I had from a short-term AMC play a couple weeks prior. A couple weeks later I was back to 35% portfolio in gold and silver miners, and I never messed with SLV as a trading vehicle again.
- March 1, 2021: I was down to 20.7% of my portfolio in precious metals miners, and was selling weekly covered calls on AG. By mid-March I was back up to 31% into precious metals miners with some long call positions. By the end of March, this was up to 38% of my portfolio. Early April it was 42%.
- August 2021: I pretty much waited on precious metals up through August, with a 42% allocation including a decent chunk of long-dated calls. I increased the allocation to 47% late August as I was buying into the dip. A lot of articles followed on the smackdown of gold miners, but I pretty much held there.
- Jan 8, 2022: Mining stocks were really getting hammered and I was adding into dips. I was at a 49% precious metals miner allocation with quite a bit more calls, including a big chunk of long-dated calls in AG. By Jan 22, this was up to 52%. I was starting to get nervous about building up margin.
- Feb 20,2022: I reduced my precious metals down to 44%, pushing my cash balance positive again. This was mainly by selling shares of AG which I was double-long as I bought a bunch of long dated calls in it to replace the shares, but was waiting for a rally to sell the shares into. I continued to reduce into the rally, going down to a 38.5% precious metals allocation by March 26.
- April 17, 2022: I got spooked on precious metals when they showed signs of topping, and I sold all of my long dated calls early in the week. Allocation ended up at 29.2% by the end of the week. In addition, a lot of the out-of-the-money covered calls I sold on Uranium miners had expired in the money and were called, so I was sitting on a 28% cash position. Over the next couple weeks, I was trying to be patient and wait for the big fed meeting before buying anything.
- May 7, 2022: I finally put my money back in, bringing my precious metals allocation up to 35.5%. The following week I got a bonus check and piled into more gold, silver & uranium miners while keeping my cash balance close to zero.
- June 2022: My discipline has been breaking down a bit this last month as my mining stocks continue to take a beating. I had a bunch of covered calls on Uranium miners expire out of the money on Fed hike week, and continued to add shares using margin. My cash balance went from -2.2% on June 11 to -6.6% on June 18.
As you can see above, my precious metals trading has gone through quite a ride. As for my other trades, I’ll go through a quick summary:
I had been following CCJ ever since Justin Hugn explained his thesis on Real Vision back in 2019, but I was reluctant to pile in figuring it needed a catalyst. I eased into the trade in 2020 with a small position in CCJ. By 2021, CCJ had broken out and I started getting more shares, selling 1-month at-the-money covered calls on them, then buying them back and repeating. I starting getting really bullish around Aug 2021 with the bullish wedge formation and got long a bunch of 1-month calls which made me a bit over $5k in following weeks. I found out after the fact about the Sprott Physical trust as a catalyst, then started really increasing my exposure to the sector and selling out-of-the-money 1-month covered calls on rallies. April was an amazing month for me as all of my crazy high out-of-the-money covered calls, like a $30.50 strike in CCJ, expired in-the-money and my exposure reduced from 22% of my portfolio to 11% after April 8th. I’ve been adding back as it fell, and the covered calls I sold into the last rally expired worthless on Friday June 17th.
I started getting interested in this sector when Tony Greer spoke about it in a Real Vision Daily Briefing around the summer of 2021. I put token amounts into 3 of the tickers he mentioned that I happened to catch without bothering to rewind, and just tracked the sector for a while. It was an intriguing story – the idea that big US investors can’t touch it until the federal government passes some kind of “safe banking” bill allowing them to access the US banking system and potentially list on the NYSE. For now they’re still limited to reaching out to private investors from the junior canadian exchange because Cannabis is still in the murky designation of being federally illegal yet legal in many states.
Anyway, the story was intriguing and I liked the idea of having something diversified from my mining portfolio, but the chart was a falling knife. I went from a 5.7% allocation to cannabis in Aug 28, 2021 to 8% in September, to 10% in October which fell back to 8.5% again in October. Then I started increasing allocation after it fell late November up to 11% on Nov 27 then 12.7% the following week, then 13.7% by Dec 24, then 16.5% in Jan 8th. I held the allocation fairly steady for a few weeks by purchasing more shares whenever the valuations dipped below a certain threshold, then I just stopped adding and let them float. That’s where I’m at with it today. I don’t think they’re going to zero, but I’m not planning to add further as they keep falling.
This sector was interesting as I had to figure out what to think about it and how to treat it. I still have physical gold and silver coins that I picked up between 2016-2018 and I don’t bother counting them with my portfolio because they sit in a safe and I don’t trade them. I initially thought of crypto this way, especially since I can’t trade it in my stock account, so I’d mainly been using coinbase. As a result, I never included them in my portfolio return calculations.
I really wasn’t interested in the sector until Rauol Pal got me interested with his narrative about institutional investors coming in and some really bullish looking charts in the summer of 2020. Before that, I had thought of the whole sector as a somewhat legalized scam where pump-and-dump operators ripped of retail traders. I had originally planned on easing into 2 full bitcoins on coinbase when it was trending between $9-$10k. I bought in incrementally and fully expected a buyable dip in the fall. I was close to 1 BTC before it broke out in October 2020, so I just chased into it to complete the 1. I never got the dip, so I eased into ETH getting 10 coins at around $450 each. I ended up dumping ETH entirely once it broke $1000. With BTC, I dumped 1/3 at the end of the year at $27,500 then decided to try trading it by selling into rallies and buying into dips to keep a roughly steady portfolio value of $20k. Once it hit $37,500 though I sold all the rest of it. Over the next few months I dabbled in some small coins, selling them for gains around 20% or so just prior to the big rally in March. Then I abandoned crypto entirely for a number of months.
A friend of mine kept bugging me to get into XRP. He’s really excited about it for a number of reasons, but the main one I found intriguing was that it was difficult to buy due to a court case which would determine how Crypto was regulated but not kill off the token. He found out how to buy it first, then showed me it held in a crypto wallet. I finally got my own crypto wallet and found out that I could buy Bitcoin in Coinbase, then transfer it to my wallet, then exchange it for XRP. I originally tried this with USDT, but settled on BTC because tether used the etherium network and the fees on moving anything linked to etherium are a total ripoff. Anyway, I made my first buy around $0.75 and added a bit at a few points, so I’m only down about 50% on the trade. Not a bad drawdown at all considering what I’m getting used to with the rest of my portfolio. I still don’t trust crypto much, but the sector has been a big winner for me, and it will remain a waxing and waning market force unless it is ever made illegal, which doesn’t seem likely.
I subscribe to a mining newsletter called Silver Chartist Report, and I slowly added into a few of these. I really started to get bullish on them more recently, getting it over a 10% allocation after they were gutted in May. It just seems to me like we’ve got a serious shortage of metals like Nickel and Copper, and I want a bit of exposure to this sector over the coming years. I’m actually amazed how well copper’s been holding up with the lockdowns in China and the year-long slowdown in their property sector, and every ESG politician wants to waste tremendous amounts of these critical metals in dubious projects. I’ll probably add significantly more in coming years, but it’s too early as short-term pain is most likely ahead here.
I tried a few things here and there, often moving on. This includes trading high yield dividend stocks and selling covered calls on them in early to mid 2020, playing around with meme stonks a bit when the options interest was high, buying OSTK when I could sell a 1-month covered call for a hefty return, and so on. I loaded up on 10 out-of-the-money XOM calls when it was at $65 and got a decent win, but had other calls that went to zero (looks like ATCO will do just that). I got a DOCN call after a RealVision interview making it sound like an amazing growth story, then sold it at a significant gain a month later, then bought 100 shares this year after it was cut to the low 50’s, figuring I could sell covered calls on it. Its good to try things a bit.
I managed to avoid trading for the most part this last week. Here’s where my portfolio eneded up:
- HEDGES (13.3%)
- 13.3% TLT Calls
- PRECIOUS METALS (36.8%)
- 4.5% AG
- 4.4% MTA
- 4.3% SILV
- 3.2% LGDTF
- 2.9% EQX
- 2.8% SLVRF
- 2.6% SAND
- 2.2% SSVFF
- 2.3% MGMLF
- 1.9% RSNVF
- 1.6% MMNGF
- 1.5% DSVSF
- 1.3% HAMRF
- 1.3% BKRRF
- URANIUM (24.2%)
- 4.7% CCJ
- 3.2% DNN shares & calls
- 3.5% UEC
- 3.2% UUUU
- 3.1% BQSSF
- 2.9% UROY
- 2.0% ENCUF
- 1.7% LTBR
- US CANNABIS (14.3%)
- 1.8% AYRWF
- 1.4% CCHWF
- 1.4% CRLBF
- 2.2% CURLF
- 1.5% GTBIF
- 2.3% TCNNF
- 1.3% TRSSF
- 2.4% VRNOF
- BATTERY METALS (12.0%)
- 5.8% NOVRF
- 4.5% SBSW
- 1.8% PGEZF
- CRYPTO (2.5%)
- 2.5% XRP
- OTHER (3.5%)
- 2.7% DOCN (w/ covered calls)
- 0.6% OGZPY
- 0.2% TWTR call
- 0.0% ATCO calls
- CASH (-6.6%)
I really hope that the mining stock rally we finally saw on Friday will carry on a bit. It won’t take much of a jump for me to start selling covered calls into because I’d like to get my cash balance back to positive in this high-risk part of the market cycle. My margin should be at zero when we hit the real liquidity crunch, I’m thinking this fall. I plan to be fully invested at the time though, as those minings stocks are absolute bargains in my opinion, and I wouldn’t mind adding into my Jan 2024 TLT calls again after the fed rate hike next month.
That’s all for today, good luck and happy trading!