Alfidi Capital Headed In New Directions For 2015

New Year's Day brings the perfect excuse to announce business changes.  I have carefully reviewed my activities in 2014 and I am about to make my business even more compelling than ever.  

The first change is the discontinuation of the monthly Alpha-D portfolio updates I've published for several years.  They have increasingly become a waste of effort.  I've made very few portfolio changes in recent years other than writing covered options.  The financial markets remain impossible to evaluate fairly.  Central bank intervention has ruined price discovery.  I will continue writing about individual stocks, and I will always disclose whether I have a position in anything I cover.  I just don't plan on actually taking any new positions until central bank intervention ends.  I can only hedge my existing positions until some market breakdown provides me with bargain purchases.  

The next major change is a planned redesign to the Alfidi Capital main site.  I planned a new design in 2014 but I did not execute it because it had to be perfect.  I now have the perfect layout in mind.  I take my time because I have high standards.  Expect to see a snazzy cosmetic update soon enough.  The number of site pages will remain the same and the links to my previously published reports will remain active.  

Some things will never change.  I will be as sarcastic as ever.  I will keep hurling obnoxious insults at fools who deserve opprobrium.  I will keep writing haiku and limericks.  I will continue to max out whatever investment opportunities exist in these heavily manipulated markets.  In fact, I made the maximum annual IRA contribution for 2015 of $5500 today.  The money will grow until I am an old fogey, provided I can find worthwhile investments in this year.  I will of course remain irresistible to attractive women, who cannot help but throw themselves at me in public.  The new year 2015 brings new chances for yours truly to score big in so many ways.

Updating the Alpha-D for 09/22/14

I experienced an involuntary change in my portfolio holdings last week.  The cash-covered put position I had sold under GDX in my IRA was exercised against me when the market price declined past the strike price.  My holdings of GDX are now slightly larger than before, at a purchase price that is very low for this ETF's historical price.  This is no problem for me.  I knew the risk and I don't mind owning a little more of a cheap partial hard asset hedge against inflation.

My other option positions on FXA, FXC, and FXF expired unxercised.  I am still long those ETFs.  I have decided not to write any new covered option positions this month on any of my securities.  I may have pushed my luck enough already given the macroeconomic headwinds building against this very calm market.

I am still long a put position against FXE, as I believe the euro is doomed.  The G20 is getting increasingly concerned about Europe's potential for renewed growth.  I believe they know more than what they reveal in public.

I sit mostly in cash, awaiting something that breaks with a loud noise.  The list of other potential hard asset hedges I have considered for my own portfolio will have to wait until their prices are low enough for me to revisit them.

Nota bene:  I am seriously considering getting a lot more cryptic with these discussions of my own portfolio.  Talking about my money might be more fun for me if I take extra steps to discourage people from copying my actions.

Alpha-D Update for 08/18/14

Here's the latest and greatest Alfidi news.  All of my covered options from last month expired unexercised.  I renewed my covered calls and cash-covered puts around GDX; gold mining remains a useful hedge against US hyperinflation.  I renewed my covered calls on FXF; the Swiss franc remains stable in value and is useful to me as a US hyperinflationary hedge.

I renewed my covered calls on FXA and FXC; I believe the Australian and Canadian currencies provide additional hedges against US dollar hyperinflation.  I have been encouraged by a steady stream of news items from those two countries that indicate a disinclination to pursue extraordinary monetary stimulus.

I am still long a put position against FXE; I remain pessimistic on the euro's long-term survival prospects.

I continue to watch other potential inflation hedges with fascination.  I track timber REITs, public storage REITs, pipeline operators, and stocks in the mining and energy sectors.  They are all at incredibly high valuations.  I also occasionally check valuations of select stocks in my old favorite sectors - defense, logistics, and finance.  I don't see a single stock in any of those sectors that I would buy right now.

The Fed's perverse monetary policy has inflated the value of everything under the sun.  Masking the true cost of capital does a fundamental disservice to investors who seek value.  My own entry point is far below where US stock markets think equities are valued.  I am not throwing away my money.  Sit back and admire my genius, because that's all you can do with what I say.

Nota bene:  I've said it before, and I'll say it again.  None of this discussion constitutes personal financial advice.   I do not ever make securities recommendations to anyone; not on this blog, or in person. or any other way.  I declined to renew my securities licenses in 2006 after I was terminated as a financial adviser for failing to acquire clients.  

Alpha-D Portfolio Update for 07/21/14

Okay, it's just after an options expiration weekend and that means I had to reexamine my portfolio choices once again.  All of my covered options from last month expired unexercised.  I renewed my covered calls on GDX and FXF.  I sold a very small cash-covered put position under GDX, because i wouldn't mind picking up some at such a low valuation.

I am still long FXA and FXC, but I simply could not write any options around them this month.  The option chains for those ETFs just aren't very lucrative right now.  Only the stability of FXF, thanks to Swiss monetary policy, makes writing call options attractive.

I still own my long put position against FXE.  I continue to marvel at how the ECB and IMF keep the jerry-rigged euro together.  Spain isn't looking very healthy these days and Greece is still in debt up to its eyeballs.

My longtime readers know that I own these ETFs on gold miners and select foreign currencies as hedges against a potential hyperinflation in the US.  My basic thesis has not changed in a long time.  I believe positions in Swiss, Canadian, and Australian currencies will hedge my portfolio against the potential devaluation of the US dollar.  Owning a gold mining ETF like GDX is one more hard asset hedge among many possibilities.  I await the opportunity to own long positions in a timber REIT, public storage REIT, and other securities that will strengthen my portfolio against hyperinflation.  

Updating the Alpha-D Portfolio for 06/23/14

This weekend's options expiration made me get busier than usual in attending to my portfolio.  My long positions in GDX and FXC rose through the strike prices of the covered calls I wrote last month.  Those securities were called away and I repurchased them all in a wash sale, with no net change in the number of shares I own.  I wrote a new batch of covered calls on all of my holdings in GDX to expire next month, but I wrote no options on FXC.  I am pleased to note that the gold mining sector is beginning to recover from its doldrums and that Canada's rising inflation rate makes currency traders think Canada will raise interest rates.  Those are not the specific reasons why I own GDX and FXC but they do move those ETFs' share prices from time to time.

My covered calls on FXA and FXF expired unexercised.  I renewed the covered calls on FXF but I could not find a way to make any lucrative covered calls work on FXA.  I maintain those positions in the Australian and Swiss currencies against eventual US dollar hyperinflation.  That's also why I maintain my long positions in GDX and FXC.

One difference for me this month is the selection of additional options.  I wrote a cash covered put position under GDX, which I haven't done in a while.  I am risking the possibility that the economics of the gold mining sector are able to rebound.  If I am wrong, then I may at some point be forced to buy some more GDX at a very low price if shares are put to me.  I considered writing puts under FXA and FXC because I was looking for a way to make some extra cash, but it just didn't prove economical for me given this month's option chains.  I may regret not writing covered calls this month on FXA and FXC but the premiums were just too paltry to risk the shares being called away.

Oh yeah, I'm still long a put position against FXE, expiring next year.  If the euro cracks up I should make a small windfall, and if it doesn't then I will buy more long-dated puts.  I'm still sitting on a pile of cash.  That pile awaits a major market correction.  I note with satisfaction that public statements from the Fed and IMF indicate that crisis planning is in full swing.  The beginning of some market crisis will be a trigger for me to consider committing my cash to something.

Note bane:  This is not investment advice.  I have to repeat that admonition because there are still some idiots in the world who mistakenly tell me they think I'm an investment advisor, even though the home page of my Alfidi Capital website says I'm not.  People are idiots.  

Alpha-D Updates for 05/19/14

My covered calls on FXC were assigned to me over the weekend because the shares rose through the strike price.  I bought all of the shares back in a wash sale and renewed the covered calls.  I also renewed my covered calls on GDX, FXA, and FXF.  I remain long all of these currency and mining positions as hedges against US dollar devaluation.  Nothing the US government has done in 2014 will solve its long-term solvency crisis.  The Alfidi Capital thesis remains solidly in the hard asset hedge corner of a dark, lonely forest.

Oh yeah, I still hold a bearish put position against FXE.  I will sell off if it is in-the-money at expiration.  The Euro-folks have not cleaned up their act.  No one on the Continent has a clue how to run government finances.  Euro-leaders have dissembled for years about whether they will let the PIIGS exit.  Investors betting on a European resurgence are really betting on lies.

Those of you who are bored with my steady-state portfolio are free to roam elsewhere.  I have said before that I will not invest in a stock market where central bank intervention inflates assets prices and lowers the cost of capital.  That is unsustainable.  Any investment decision that assumes such conditions are sustainable ignores history.  Mean reversion will anger many investors who could have known better.

Updating the Alpha-D Portfolio for 04/21/14

This is the regular portfolio update I had planned to make, even though I made an unplanned update last week.  I did not do anything else today with FXA other than what I described last week.  My covered calls on FXC were assigned and the shares were sold away.  I bought them back in a wash sale and renewed the covered calls.  My covered calls on all of my GDX holdings expired unexercised, so I renewed those again.  My covered calls on FXF expired unexercised, and I renewed them.

Nothing else has changed.  I still have a pile of cash and a long put position against FXE.  I am still hedging for the possibility of hyperinflation.  It is a long, lonely wait and I couldn't care less.  There is no penalty for being early when the alternative is to ride a panic wave down with everyone else.  I would rather be long hard assets and stable currencies while other fools chase artificially pumped returns in conventional stocks and bonds.

I need to remind all of you idiots once again that none of this commentary constitutes financial advice.  I disclose my actions as a favor to the general public because you people should admire my genius.  I am not the least bit interested in what other people do with their own money.  

Unexpected Update to Alpha-D Portfolio for 04/16/14

I was surprised to see that my in-the-money covered calls on FXA were exercised this week, prior to their expiration date this month.  They were only slightly in-the-money, so whoever had their brokerage assign them must have been desperate for a tiny gain and unwilling to roll their hedge forward.

I repurchased the exact number of FXA shares that had been sold away, and renewed the covered calls on those shares for another month.  I remain committed to the Australian dollar as a hedge against US hyperinflation and I don't mind the tiny transaction cost of this wash sale.  The cash I've received from FXA's dividends and covered call premiums more than cover these rare costs.  This is just one of those things that happens to investors like me who use options in a hedging strategy.

Alpha-D Update for 03/24/14

It's time for another portfolio refresh.  All of my covered calls on GDX, FXA, FXC, and FXF expired unexercised last weekend.  I renewed all of those call options for another month.  It's nice to pocket a little bit of cash once in a while.  I have not changed my reasons for holding some exposure to gold mining and foreign currencies.  I am not confident that the Federal Reserve's experiments with the US dollar will end on a happy note.

I continue to hold a long put position against FXE.  I still do not think the euro will hold together in its present form over the long term.  I have several months until this position expires, so I will review it each month in anticipation of a sale prior to expiration.  I would rather pocket a gain then let it go to waste.

I have not initiated any other positions this month.  I remain interested in timber REITs and public storage REITs as additional hard asset hedges.  Frankly, I remain interested in several mining and energy plays as hard asset hedges but very little in the markets is attractively priced right now.  I never overpay for anything.  

Alpha-D Updates for 02/24/14

The first trading day after an options expiration weekend is my usual opportunity to make changes in my portfolio.  My covered calls on GDX and FXF were exercised against me when the share prices of those two securities rose through the strike prices.  I repurchased all of my previous holdings in those two securities and renewed the covered calls for another month, in both my taxable account and my IRA.

My covered calls on FXA and FXC in my taxable account expired unexercised.  I renewed them both and made no changes to my underlying holdings in those securities.  I remain long a put position on FXE, in anticipation of the euro's nonviability.  I still consider the currencies of Australia, Canada, and Switzerland to be suitable hedges to the US dollar for my purposes.  I have to live with GDX as a proxy for the gold mining sector, and I anticipate adding other hard assets as their valuations become attractive to me.

My regular readers may have caught the Venn diagram I recently published as a special report over on the Alfidi Capital main site.  My philosophy of hedging the broader markets with exposure to hard assets and currencies still holds.  The past few years of remaining mostly on the sidelines while central banks inflated stock and bond markets have been frustrating for value investors like me.  Lots of idiots now think they're geniuses by owning big swaths of assets that owe their valuations to cheap credit.  Anyone who is happy to ride the Federal Reserve's coattails through monetary stimulus had better be happy with the end result when it occurs.  I'll be happy to watch a bunch of idiots burn themselves running for the door.  

Alpha-D Update For 01/21/14

Alrighty, then.  My regular monthly portfolio review and alteration timeline was delayed by one day because yesterday was a federal holiday.  I believe the Reverend Dr. Martin Luther King would be proud of my financial self-reliance.  Whatever.  Today is the first trading day after an options expiration weekend, so I had to look at my money.

My covered calls on GDX in my IRA were exercised when the market price of GDX rose through the strike price.  This is good news, as I had been forced to buy a bunch of GDX late last year when I wrote some cash-covered puts under that security.  I repurchased a much smaller amount of GDX to maintain a more normal allocation.  The rest of what I didn't commit remained as a slightly higher pile of cash in my IRA.  I still consider gold mining stocks to be a hard asset hedge but they are not my ideal preference.  I may add other hard asset hedges as they become affordable.

My covered calls on FXF in my IRA expired unexercised.  I renewed them for next month.  I consider the Swiss franc to be a well-managed currency and I am impressed with the way that country's central bank has stabilized its value.

I remain long GDX, FXA, and FXC in my taxable account.  I consider the Australian and Canadian currencies to be hedges against US dollar hyperinflation.  I have noticed significant pressures on those currencies from the relative strength of the dollar and euro but I consider that condition to be temporary.  I have also noticed inflationary concerns rising in Australia and Canada but I remain convinced that those nations will not do foolish things to devalue their currencies.  They don't have any quantitative easers like Bernanke or Yellen running their central banks.

In a departure from my investing pattern through much of 2013, I have sold covered calls on my holdings of GDX, FXA, and FXC in my taxable account.  My opportunity cost of not writing these calls last year was high.  I do run the risk of seeing these holdings called away but that is a risk I can tolerate for the next month.  I wanted to get back in the habit of generating cash from an options strategy, which has absolutely done very well for my net worth over the last decade.  I actually enjoy seeking volatility and risk provided I have tools to manage my exposure.

I maintain a long put position against FXE.  I still think that common currency is toast.  I do not expect the euro to last forever, let alone become an alternative to the dollar as the world's reserve currency.

I'm still sitting on piles of uncommitted cash.    I'm not buying into an overpriced US stock market.  I await a deflationary asset market crash, followed by a hyperinflationary policy response.  I am not in the top 1% but I have enough to live comfortably.  I anticipate radical changes in economic conditions and asset prices that will transport me far ahead of many other people I know.  I consider equities (and their ETF equivalents) in public storage, timber, mining, energy, and agriculture to be appropriate for my cash, along with equities in logistics sectors that service those sectors.  I just want to see heavily discounted prices.

I'm going to say this one more time.  What I do with my own money is not ever supposed to be some kind of advice or guidance for what other people do with their money.  I do not give financial advice to investors and I do not care what anyone else does with their money.  My decisions are in accord with my own goals and risk tolerance, which might as well be in another universe separate from the rest of humanity.  The world may observe my genius and marvel at my magnanimity.  That is all for now.  Go back to work, people.

Alpha-D Updates for 12/23/13

I do have some changes to report this month.  Just remember that no one should manage money the way I do and I don't give advice.  I enjoy running my mouth.

My short puts options under GDX in my IRA were exercised when the share price declined through the exercise price, so I had to increase my GDX position.  I have long maintained that GDX is part of my hard asset hedge against US dollar inflation so I don't mind acquiring some at such a low price.  How low is that?  It trades at just over $20, a level it hasn't seen since November 2008.  I believe GDX is not by any means a perfect hard asset hedge because it only covers one commodity - gold.  I'd prefer to see it sold away at some point so I can add other hard asset hedges, but buying it at a five-year low price is a choice I can tolerate.  Like I said last month, my time horizon in my retirement account is far longer than the horizon for my taxable account, so I can tolerate more risk there.

I decided to write covered calls against that GDX position because I believe the price of gold is not going up in value anytime soon.  Mining companies are going through serious margin compression and even the big miners in GDX can't escape.  Selling pressure from hedge funds and retail investor outflows from gold ETFs are acting as strong headwinds against any recovery in the price of gold bullion.  I noted the yield I collected in those covered call premiums on GDX and it reminded me of my best years several years ago when covered calls provided most of my portfolio gains.  Sectors experiencing bear markets are funny that way.

My GDX position in my taxable account remains unchanged, with no option positions.  I'm not going to monkey with that allocation until the price increases.  GDX is volatile and is somewhat uncorrelated with the larger equity market.

My covered calls over FXF in my IRA expired unexercised.  I renewed them for another month.  The Swiss have done a bang-up job stabilizing their currency.  It's another inflation hedge for me.

I remain long FXA and FXC in my taxable account.  The declines in price do not bother me because neither Australia nor Canada are destroying their currencies with fiscal and monetary insanity.  Oh yeah, they also have lots of mining and energy exposure in their economies.  I like that kind of arrangement.

I still have a long put position against FXE in my taxable account because I doubt the ability of the euro to survive in its present form for the long term.  I bought it cheaply.  I reserve the right to add more long puts.  Europe has not solved its problems despite the headlines I've read about the Greek stock market's recovery and plans for a multilateral bank resolution mechanism.

I'm sitting on my cash pile, waiting for some sort of breakdown.  I'll see that crash at the same time the rest of the world sees it.  I intend to buy while hedge funds and mutual funds are selling.  That's all for now.

Alpha-D Update for 11/18/13

This month's portfolio update is pretty much like last month's update.  My covered calls on FXF expired unexercised.  I renewed them because I believe the Swiss franc has stabilized in value and I'm willing to extract some cash flow.  My cash-covered puts under GDX also expired unexercised.  I renewed them because I wouldn't mind picking up more cheap shares in the beaten-down gold mining sector.  Gold mining stocks are not a perfect hedge against high inflation.  I expect to eliminate them completely at some future date when inflation makes them desirable for the masses to buy.

I remain long FXA and FXC with no changes, because I am confident that the Canadian and Australian governments will not devalue their currencies in competition with a US dollar devaluation.  I maintain my long put position against FXE in the expectation that the euro experiment will unravel.  I still have plenty of cash, ready for . . . an event.  

Updating the Alpha-D for 10/21/13

It's the weekend after options expiration so that means it's time for me to review my liquid portfolio.  My covered calls expired on FXF and I renewed them for another month.  I also noticed that my GDX holdings are still trading near their 52-week low with a P/E of 13.  I want to get rid of them eventually but not at this price.  I took an unusual risk by selling cash-covered puts under the GDX holdings in my IRA.  I wanted to generate a little cash while accepting the risk that more GDX shares could be put to me in the event of a broad market correction.  I would not do this with the GDX I hold in my taxable account; my time horizon in my IRA is much longer and thus allows for a longer recovery time from a downturn.

I made no changes to my holdings of FXA and FXC.  I'm still holding my long put position against FXE.  The Canadian and Australian dollars are my hedges against US dollar devaluation, as is the Swiss franc.  The bet against FXE is a bet against the long-term viability of the euro.  The market thinks the euro will hold together.  I'm betting my own money that the market is wrong.  

I am hanging on to a lot of cash, much more than a conventional asset allocation would determine for someone of my age and risk tolerance.  These are not conventional market conditions.  Janet Yellen's Fed will keep the monetary stimulus flowing and lay more kindling under a hyperinflationary fire.  All that her woodpile needs is a spark to set it off.  I'm still watching the valuations of RYN, PSA, and other hard asset hedges.  

I feel like I have to remind my readers that what I do with my own money does not at all constitute advice or recommendations.  I just love showing off my intellect.  Other people can do whatever they like with their money and I couldn't care at all about their results.  

Alpha-D Update for 09/23/13

It's that time of the month again.  My covered calls on FXF expired unexercised and I renewed them for another month.  I remain long GDX, FXF, FXA, and FXC as hedges against US dollar hyperinflation.  I do not concern myself with recent wild fluctuations in currency values or the collapse of the gold mining sector.  Cheaper assets make more attractive purchases.

I am still long a put position against FXE.  The euro is toast and I don't need any dingbat currency traders from FX Invest West Coast to tell me it's poised for a comeback.  The treasurers of multinational corporations with European operations have hedged their euro positions and moved bill-paying cash to other currencies.  Hedge fund suckers who are long in euro holdings will eventually be left holding the bag.

I'm tempted to buy more GDX but I remember my sentiments from last year to wait until it eventually sold away.  Gold is not as effective for hedging against inflation as a broad basket of hard assets.  Given a choice between buying more GDX or conserving my cash to buy other hard assets, I'd rather sit and wait.  The hard asset REITs I evaluated recently, specifically PSA and RYN, are more appropriate for me than more gold.

I also need to reiterate that none of this constitutes investment advice.  I don't give investment advice and no one ever took my advice when I gave it anyway.  My blog articles are only about what I do with my own money.  

Alpha-D Update for 08/19/13

This month's update is just as simple as last month's update.  My covered calls on FXF expired unused so I wrote some new ones with an expiration date next month.  The Swiss franc appears to be stable.  I do not expect it to rise significantly until either the eurozone or the US go into high inflation.

I maintain a long position in GDX as a hard asset hedge against the US dollar.  I maintain a long position in FXA, FXC, and FXF as currency hedges against the US dollar.  I maintain a long put position against FXE as a bet that the euro will not be able to retain its present form or value.

I picked up a huge amount of information at this year's MoneyShow, just like last year.  It's going to take me a while to write it all up.  There may be some ways for me to deploy the cash I'm holding.

Alpha-D Updates for 07/22/13

I took only one action with my portfolio this month in the aftermath of options expiration weekend.  My covered calls on FXF expired unexercised and I renewed them.  I think the Swiss franc is stable now and the Swiss central bank won't be able to hold down its value indefinitely.

I am still long FXA and FXC (with no option positions) as currency hedges against the devaluation of the US dollar.  I'm also still long a small put position against FXE because I do not expect the euro to survive in its present form.  I'm still long GDX (with no option positions); I will keep holding it as a hard asset hedge against the onset of high inflation but its usefulness will diminish as high inflation turns into hyperinflation.

Future portfolio candidates are all overpriced or inappropriate.  I keep looking at REITs for a sign the housing market will cool off, with no such luck.  IYR is still valued at more than twice what I think its fair value should be based on its dividend stream.  My watchlist of stocks in mining, energy, agriculture, and logistics is similarly overpriced.  There will be very few opportunities to make money in the defense sector for many years.

I briefly considered the merits of non-US fixed income instruments but pickings are slim.  The only countries I'm willing to consider are the same as my currency strategy:  Australia, Canada, and Switzerland.  There are few ETFs devoted to the government debt of those countries and those ETFs are not optionable.

My cash pile remains silent.  The S&P 500 is hitting record highs today but I don't care.  I have no regrets about being largely absent from an equity market where corporate earnings are twice their historic averages.  I'll keep waiting for a dirt-cheap entry point.

Alpha-D Update for 06/24/13

I haven't made any changes to my portfolio in the past few months, until today.  I sold covered calls over FXF because I believe the Swiss franc has stabilized in value.  The Swiss can't hold down their currency's value forever and it is still useful to me as a hedge against both the dollar and euro.

I have not changed my other long positions in FXA, FXC, or GDX.  Those are my other hedges against the US dollar.  The gold mining sector has been absolutely hammered of late, which will be useful to me if I decide to add to my GDX position.  I still have a bearish put position on FXE because I think the euro is toast.

My cash horde awaits the right time to deploy into individual stocks I follow and hard asset sectors like mining, agriculture, and the like.  I love the plummeting stock market action of recent days and the sow rise in interest rates that will make investors flee bonds.  Cheap assets are lifelong buys.

Updating the Alpha-D for April 2013

I did not make any changes at all to my portfolio today.  This is the first trading day after an options expiration weekend, but I did not have any options expire last month.  My only option position is a long put against FXE because I remain confident that the euro will not survive in its present form.

I remain long GDX as a hedge against the onset of high inflation.  I am also long FXA, FXC, and FXF because I believe the currencies of Australia, Canada, and Switzerland will retain their value if inflation devalues the U.S. dollar.

My only concern with the Guggenheim CurrencyShares products is that their custodian in the UK is JPMorgan Chase.  The prospectuses for these ETFs make it clear that JPMorgan Chase is the depository for the currency accounts and that its potential insolvency would make the ETF an unsecured creditor.  That would not have been much of a concern for me before the Cyprus debacle.  Since then, I have become convinced that the bank resolution model the troika applied there is now the model that US and UK regulators will use for insolvent banks.  In other words, unsecured creditors of JPMorgan Chase cannot expect a bailout that will preserve its existing balance sheet.  We can instead expect to see unsecured creditors get nothing.

I reserve the right to alter my currency ETF holdings at any time if I believe JPMorgan Chase will ever be in danger of becoming a Lehman Brothers or Bear Stearns.  Its derivative exposure and freewheeling "London Whale" risk bets give me pause about whether currency ETFs custodied with JPMorgan Chase are useful to me over the long term.

Full disclosure:  No position in JPM at this time.

Alpha-D Update for 03/18/13

This is definitely one of the simplest portfolio updates I've ever published.  My covered calls and cash-covered puts on GDX expired unexercised.  I did not renew them.  I did not make any changes to my GDX holdings.  They remain useful as a hard asset hedge against high inflation.

I did not make any changes to my positions in FXA, FXC, or FXF.  They are currency hedges against the potential devaluation of the U.S. dollar.  I have no open options positions on those ETFs.

The only change I did make was to buy a long put against FXE, the CurrencyShares Euro Trust.  I did this because I believe the euro in its present form is doomed.  Read my articles yesterday on the EU/ECB/IMF extortion of bank deposit account holders in Cyprus.  No bank customer in any of the heavily indebted euro countries will feel safe holding cash in a European bank now that their confidence has been shattered.  My bet on a very long-dated FXE put is a bet that the euro will be much less valuable or even nonexistent in a few years.

Watch Cyprus this week.  Their government has two options.  Option one:  They can accept the European bailout and harm their depositors, accelerating a run on European banks.  Option two:  They can reject the bailout and force Cyprus' banks into bankruptcy, which will require Cyprus to immediately leave the eurozone.  Once one country leaves, other PIIGS will be tempted to follow.

Game theory predicts that the first defector from a sub-optimal regime is the winner.  All other subsequent defectors pay progressively larger penalties the longer they wait to defect.  I am sitting in cash that I will deploy at some appropriate point once the chaos is in full swing.