Year-end trade ideas percolating...
Portfolio: What I am planning to do in the markets and with my portfolio
A few weeks ago, we started this discussion with an understanding of why I believe that we are in a window of opportunity to take advantage of heightened uncertainty to boost our portfolio returns through year-end.
We reviewed all my current holdings to identify which ones I plan to add to, others I plan to perhaps trim and the rest that I plan to hold as is.
We, then, took a closer look at a handful of stocks that are on my high-priority, active watch list for a possible addition to my portfolio.
Well, today in the final part in this series, we will explore some year-end, short term trade ideas that are percolating on my desk.
Now, while I have been writing and you have been reading these posts, the Beachman portfolio has not remained static. Of course not. Markets don’t wait for us to complete all our calculations, to make all our decisions at our own pace. I have continued to make tweaks, buys, trims, trades etc. as per my plans.
If you have not read the previous three posts linked above, I recommend you do so in the order they were published. That is the best way for you to follow along with my thought process and my action plan.
Let’s dive in…
Table of contents
Beachman’s trading approach
My top 6 year-end trade ideas
Side notes
Conclusion
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Beachman’s trading approach
While the Beachman portfolio is a longer term, growth, tech and AI portfolio, I use my cash balance to execute short term trades to take advantage of market conditions. I keep these trades to a 1-2% max size. If I am more confident of the trend, I go up to a 5% trade size as I recently did with a Nasdaq short.
I am typically looking for a +10% gain on the trade and I try to stick to a -10% stop loss. I often enter the trade in 2-3 tranches and I tend to exit the trade in 1-2 tranches, when profitable.
I must confess that I have been lax with adhering to my stop loss rules and this has got me in trouble a few times this year. An important trading lesson that I must improve upon going forward.
I try to have no more than 3-5 trades in progress at any given time. This prevents me from spending too much time and capital trying to monitor and manage those trades. Trading is after all a secondary consideration in my investing process. A side-gig for earning some extra scotch money.
Now let’s get into the meat of my top six trade ideas…
My top 6 year-end trade ideas
INTC
Intel is showing signs of bottoming as seen on the chart above. Price is holding its current range as trading volume trends lower (selling exhaustion?). Most of the bad news is been priced into the stock. Markets have punched it lower several times and it keeps bouncing back to the $21-23 range until the next gut punch comes along.
Now, INTC remains a risky stock with no strong business catalyst to push it higher other than a possible mean reversion. Their products are well behind competitors like AMD and NVDA in terms of cutting edge capabilities and customer demand. Construction on their new foundries in the US are progressing slowly, while government subsidies are pending completion of certain milestones.
Therefore, putting money into INTC, today, needs to be done carefully, for the right reasons and strictly managed: smaller allocations, strict stop losses and nimble entries and exits.
When INTC stock drops closer to $20, I would buy in-the-money (ITM) CALLs for a $20 strike for a Jan 2025 expiration. I would be looking for these CALLs to become profitable as markets rally into early Jan. One could decide to own the shares outright since they are so “cheap” in nominal terms versus the cost of the options.
INTC has a strong lobbyist practice courting both political parties and either Presidential candidate will be supportive of this company in order to grow US-based semiconductor manufacturing.