Wednesday, July 20, 2011
Updating The Alpha-D For July 2011
Wow, how about that gold action. Gold's price strength propelled my GDX holdings past the strike price of the call options I had on them. I bought back some of that pile in a wash sale (and sold more covered calls)but I let the rest go as a capital gain. It is very difficult to tell right now whether we're headed for hyperinflation (good for gold, at least initially) or a renewed depression (probably bad for gold). My GDX holdings have done their job so far, protecting me from the mild price inflation the U.S. has experienced in 2011.
I also renewed my covered calls on FXI; none of that pile of equities was sold off at options expiration this month. China's economy is slowing down and inflation over there is heating up, but the country's central bank is in a much stronger position compared to the Fed. They're able to keep the ship afloat.
I used my growing cash pile to buy more State of California general obligation bonds and an out-of-state bank CD (short-term). This is just to get a little bit more yield. I believe my state government in Sacramento will take all necessary measures to cut its budget deficit and protect bondholder payments.
Individual equities still look too pricey given the broad market's overvaluation. No way am I re-entering TDW. Their financial statements are a huge disappointment.
That's it for this month. This is too easy.