Moving Day

Its moving weekend for me, so I’m pretty busy right now. My mother is selling her house, basically cashing in on the enormous housing boom and we are moving to rent. We’re moving closer to family, east over the mountains so only about 30 miles as the crow flies, but 73 miles as the car drives.

I’ve heard plenty of warnings of a coming housing crash from people in the financial sector – unsustainable price gains fueled by short supplies and people who are recently freed by remote working to abandon their unaffordable cities, mortgage rates skyrocketing from 2.8% to 4.8% in record time, etc

So far though, we’ve seen nothing but a crazy tight market on the ground. A house down the street from ours sold above asking after one open house 2 weeks ago. Ours goes up early April. On the rental side, my mother was getting frustrated as 3 different houses she was interested in and applied for rented out in days. We went down to see a place 2 weeks ago on Saturday, and she was prepared with deposit checks on the spot after completing all the application paperwork before we went to see it. I don’t know how long it will last, but the market is still crazy tight. Perhaps a combination of people trying to lock in rates before they go up further while there is still unusually low supply on the market.

Anyway, I’m glad we’re doing this. In my opinion, its great to own a home, but price always matters. If it’s cheaper per month to rent, then it’s not worth the risk of surprisingly high maintenance costs, market crashes, job changes, and so on. Renting should always cost more, it takes away most of the risk and leaves you flexible for whatever comes. But we’re in a crazy world where 15 years of low interest rates have pushed large pools of investor money out the risk curve to find anything that can match their targets. During this era Calpers started using leverage for the first time, hedge funds have been buying homes for rent, passive funds have boomed as another way to scrap due diligence and ride the wave, and asset prices have soared. Who knows where, when, or how this ends, but a fed hiking cycle is typically a good time to reduce risk.

  • HEDGES (8.1%)
    • 8.0% TLT Calls
    • 0.1% SPY Puts
  • PRECIOUS METALS (38.5%)
    • 6.9% AG (Silver), calls
    • 4.5% EQX (Gold), calls
    • 2.3% EQX (Gold)
    • 4.3% SILV (Silver)
    • 4.0% SILVRF (Silver)
    • 3.5% LGDTF (Gold)
    • 3.2% MTA (Gold & Silver)
    • 3.0% MGMLF (Gold)
    • 1.8% RSNVF (Silver)
    • 2.2% SSVFF (Silver)
    • 2.2% HAMRF (Gold)
    • 0.8% DSVSF (Silver)
  • URANIUM (19.5%)
    • 7.3% CCJ, shares w/ covered calls
    • 3.4% UUUU, shares w/ covered calls
    • 3.8% UEC, shares w/ covered calls
    • 1.9% BQSSF
    • 1.8% DNN
    • 1.4% ENCUF
  • US CANNABIS (14.4%)
    • 1.8% AYRWF
    • 1.7% CCHWF
    • 1.7% CRLBF
    • 2.0% CURLF
    • 1.8% GTBIF
    • 1.7% TCNNF
    • 1.9% TRSSF
    • 1.7% VRNOF
  • BATTERY METALS (1.9%)
    • 1.4% NOVRF
    • 0.5% PGEZF
  • CRYPTO (1.1%)
    • 1.1% XRP
  • OTHER (0.5%)
    • 0.4% OGZPY
    • 0.1% ATCO calls
  • CASH (16.0%)

I reduced risk a lot this week, selling off all of my SAND calls and CCJ calls and more covered calls in uranium miners. The news is definitely bullish for gold, silver and uranium, but I also feel the need to take profits after any big move.

I bought some TLT calls this week, but I’m trying to stay patient so that I don’t get too long too early like last year. The Federal Reserve hasn’t been this fired up on hiking rates since 2018, as this article shows:

https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm?msclkid=3e2eb784acd111ec928d94906e85e55a

Basically, this article is explaining how the federal reserve is well aware of the inverted yield curve at various durations, and they don’t think it’s a problem. My prediction is they do a 1/4 point rate hike per month for the next few months, then reverse somewhere around Q4. That means I really need to be careful about getting too deep into TLT calls too early, because each hike will reduce its value while inverting the yield curve further until some levered fund thats big enough to cause systemic damage blows up.

I haven’t heard about Deutsche Bank for a long time, but they’ve gotta be struggling with high inflation across Eastern Europe and Turkey, the rapid rise in government bond yields throughout the Eurozone, and the strong US Dollar. I’m sure there are plenty of other banks that are struggling now with the commodity shocks, geopolitical risks, and rising rates – it’s only a matter of time till something breaks.

Anyway, patience is very important right now. I have to picture myself in January 2020 after the inverted yield curve and the first lockdowns in China … these markets will wear you down while meaningless narratives are spun to justify their every move. Turbulence lies ahead, but for now markets are as likely to soar to new highs as to re-test the lows. There are plenty of investors who can be squeezed out of bearish positions, and the market is more likely to go up until forced sales hit from somewhere.

That’s all for now. Good luck!

About johnonstocks

I've been trading stocks since 2003, active on Motley Fool's discussion boards and using first Hidden Gems, then Global Gains. I no longer have the newsletters, but I keep up on the WSJ and read David Rosenberg everyday at gluskinsheff.com. Education: CFA level 2 candidate MBA-focus in Finance, Marshall, University of Southern California - expected Dec 2010. BS Mechanical Engineering, UC San Diego, June 2002
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