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Smile Just Got A Bit Wider

758) Thanos snap.jpg

Thanos snaps his fingers and half the multiverse population disappears.

TTI snaps his fingers and US ROI doubles.


Yea, if u haven’t figured it out, TTI is a fan of Thanos.

Avengers? Bleh. I don’t understand why is Thanos the villain. I know I’m the odd one out cos when I discussed my views, none of my friends agree.

Yet, why exactly, is he the villain? He just wants to balance the universe. He’s not doing it for personal gain, he doesn’t gain anything. The glove’s destroyed after he used it btw. Yes, it looks like population genocide, but hey, the guys just… disappear. They don’t writhe in pain and explode or something like that. I mean…. he’s thinking at a higher order. And he had to sacrifice his own daughter. And he was REALLY genuinely mourning. It hurts. Yet, he did what he had to do.

I really don’t see why he’s the bad guy. BTW, the movie probably didn’t emphasize this enough but Thanos is a super genius too. So… yea.

Go Thanos!


My last post was barely a week ago:

FY18Q2 -“Fun Isn’t Something One Considers When Balancing TTI’s Portfolio. But This…(heh heh heh heh) Does Put A Smile On My Face.”

Then, the global/US portfolio ROI year to date looked like this:

754) YTD

What a difference a week makes, esp when my options are spot on.

Cos after just a week, at the halftime mark of 2018, US options portfolio YTD ROI looks like this:

756) ROI

Money Weight Returns almost DOUBLED from 1 week ago. (not quite, but almost)

11.16%. I’d be happy if the entire portfolio ROI ended 2018 with this.

Here’s the kicker though:

Overall portfolio ROI didn’t change much. (Yes, I double and triple checked). All thanks to a corresponding drop in the SG portfolio.

Ah well.

It still broadens the smile on my face a bit as it reaffirms my thoughts and strategies. Now I just need to double down on my strengths and competitive edges.


Since my last post, I got a few emails from folks who now wanna get on the volatility train.

Let me be absolutely clear here:

The returns are NOT because of my volatility bets. Not solely anyway.

I repeat, NOT VOLATILITY.

I take no responsibility if anyone’s portfolio blows up cos u decide to jump onto something that gives supposed out sized returns.

As the saying goes… the ______ does at the end, what the ______ does at the start.

Fill in the blanks with the words “fool” and “genius”

I utilize volatility derivatives as a hedge. It took me some time to figure things out, but I think I now get the erm…. nature of it. Not sure if I’m describing it accurately. The feel of it.

Underlying my positions is my belief that, and I’ve stated this numerous times, that I don’t think we’re going to get new highs for this year.

TTI’s Short Hedges

Unless the Fed goes crazy and reverses course and starts pumping liquidity again. That’s a scenario that’s akin to Saudi Arabia winning the world cup. (Gosh, did u see them play in the 1st game?! I thought they were Geylang United with their green jerseys!)

I read somewhere that 7 out of the last 9 rate tightening cycles led to recessions. That’s pretty good odds. So… structure your thoughts around that.

Instead, the bulk of the returns come from equity positions. Either direct equity holdings, or positions held in the form of options, both on the long and short side of it.

So here’s a quick breakdown of stuff I own or am looking at. Some positions are big, some are really puny. Things are very liquid though, and the overall nett effect is that I can switch from a nett long to a nett short position and vice versa very rapidly.

Valeant – I own zero shares currently, having taken profit fully at it’s recent high. Swung to selling put options as I still think the company’s undervalued. Debt problems are temporarily contained all the way till after 2020, giving Joe Papa adequate wiggle room to figure out how to grow it’s cashflow yet further to pay down debt. It’s a classic turnaround play. I sold out via selling call options as the share price was going ballistic, and even though I’m optimistic about the company… well, unless they figured out a way to cure all cancers permanently…. nothing goes up in a single straight line. Ever.

Chesapeake Energy – Again, took profit from the massive rise recently, with the recovery in oil. My view is that oil prices are not going to stay elevated. OK, I won’t act like I’m an expert who did intense DD on this. My view is shaped by my interactions and discussions with some oil executives. I think they know exactly how the industry is headed. A Syrian patient turned buddy told me some years back how the market is going to turn, and thus far, he’s been spot on. He should know what he’s talking about, his entire family across 3 generations is in the oil industry. His family owns oil assets and even then, he’s highly pessimistic. And yes, he predicted this recent upturn in oil prices. In his view, things are going to turn rosy, before it turns south again sometime in 2020 or so, and after that, it’s not coming back. Oil is really going the way of the dinosaurs.

Disney – What can I say. Fantastic franchises. Great brand, and ever lasting moat. Will Mickey Mouse ever be replaced? My young kids are crazy about Mickey, and I’d be spending some $$$ in their theme park in Paris in 2 months.

The company does has it’s challenges though. The take over of Fox seems to be proceeding smoothly, but Fox’s share price is at a premium to Disney’s new improved offer, indicating that the market is expecting a bidding war to continue. Disney has the upper hand now over Comcast, as they have regulatory approval, and they certainly have the financial firepower to nuke it out. I don’t like it though, cos it means Disney may end up over paying. Yup, that’s the effect bidding wars have. Yet, there isn’t any other assets out there that’s as complementary to Disney in it’s bid to go into streaming and challenge Netflix.

VIX/VXX – Like I said, they have been very effective hedges such that over the past week, when indices are green, my US portfolio NAV increased. When indices are red, the NAV increased even more! It’s really not quite as straightforward as going long volatility and leaving it there though. I’ve done that previously and it was suicidal. The contango kills u. So I’ve tweaked my strategy a bit to make it a mixture, depending on when I think there’s pricing misallocation. And… you’d be surprised. It does happen quite often.

Diebold Nixdorf – The chink in my armor. The weakest link. Of all my US positions, this has been the most unexpected. I say unexpected, not the poorest. I don’t mind if a company does poorly… as long as I can expect it. Cos if I analyze the company and I can expect it’d do poorly, I’d do very well (aka I can short it in a variety of ways, depending on conviction levels). Perhaps it’s the integration after the merger. That adds a huge chunk of assumption and many uncertainties that I cannot understand. Diebold is also not suitable for an options strategy as the IV is relatively low, and there are only monthly options, so my hands are tied.

Visa – Small, indirect, long position. Don’t really want to write too much about my DD here for now.

Centurylink – Another star performer. My dividend yield at 1 point was around 14%! Obviously the markets are expecting a dividend cut. The share price has since recovered strongly. This has been the easiest to construct an option strategy. It’s pretty much common sense really. I postulated that if the yield is that high (it really was 14% at 1 point!), then when it comes to XD, obviously you’d expect the share price to drop, at least somewhat. The reverse is true: if it’s CD, you’d expect some stability in the share price, cos… well, how much higher can the yield go? 15%? 18%? And the thing with an options strategy is that I don’t need to get it precisely right. I just need to be approximately right.

SPY/IVV – The lowest IV of the lot, and that means, option premiums are quite pathetic. Yet, they provide a very nice “counterweight” to my volatility derivatives, so I deem them to be a necessity. If one wants to choose an ETF for a direct equity position to match the global markets, I’d say IVV is much better than SPY, cos fees are lower. Over time, if you’re holding it, the fees do add up and impact on performance. Using options though, SPY is much better because of the narrower spreads, and higher liquidity.

LIT – An extension of my previous DD that I’ve done when taking up a position in Alliance Minerals (AMAL). Not a large exposure as the LIT ETF actually includes many lithium related companies that are NOT producers. In fact, they are actually users. Like Tesla. It’s like they can’t find enough lithium producers with significant size and liquidity, and yet die die wanna create an ETF, so they had to rope in anything that has a faint link to lithium. Weird ETF. (I still own some via options as they have exposure to lithium assets that I can’t get direct exposure to. Plus the option premiums give me a very nice safety net)


Lastly, this is the what transpired on Friday:

757) expiry.jpg

The premiums for the options that have expired in the past week add up to a grand total of US$ 4,182.32. Thats $4k USD every week, which is pretty much consistent as per my previously documented options activities, I think.

Options Records In Oct & Nov 2017

TTI’s Options Strategy – Results Thus Far In 2017

Bonus From Flyke (!!!) + Results From Enhanced Options Strategy

I also sold options on GE (oh wait! I forgot to mention GE above!).

GE’s way oversold IMO. Yet, the turnaround will be long and tough. I have had a front seat view with my experience in Valeant. Turnarounds aka U-turns can be short and sharp, it can be a wide U, aka long and tedious.

In my experience, if it involves cutting/managing excessive debt taken on previously, the turn around is the latter. A looooooong, wide and fat “U”.

So I’ve been careful with my GE stake. Put options are only sold after a series of many “red” days, and are a bit further OTM. Thus far, while GE has been burning other stake holders, my GE stake has been green pretty much since day 1 of owning it, thanks to nice premiums collected.

FYI, Valeant took something like 2.5 years or so to show signs of a turnaround so yea. No kidding about the big fat U.

Every position I initiate, plays a role in overall portfolio management (in US at least)

For example, the sale of GE put options above is obviously a long position. On paper at least. It means I think the share price will go up or stay the same. (In reality, I wouldn’t mind if it drops cos I want to buy more GE at $13, and I’m paid $0.23 in the meantime)

The sale of VIX put options though, is a short position. That provides some balance to my positions. And if my conviction level in any position goes high enough, I double down by adding some nice calls. I do own some VIX and VXX calls currently, amongst other calls. Conversely, I’m also not immune to selling naked positions. Prior to the recent market mini correction, I actually sold several naked SPY calls. Most have expired, and I still own some naked positions, but they’re so far out of the money that I can cover those positions right now for 1 bip. Yup. That’d cost like errr US$5 or something. LOL. So I consider those effectively expired.


Alright. That it. I’m on a flight out so that’s all. Short, sweet and sharp.

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FY18Q2 -“Fun Isn’t Something One Considers When Balancing TTI’s Portfolio. But This…(heh heh heh heh) Does Put A Smile On My Face.”

What do these have in common?

749) Thanos.jpg

750) Tesseract.jpg

TTTI LOGO_final.jpg

751) Thor.png

Answer: Thanos, Tesseract, TTI, Thor are some of the most powerful characters/relics around…….

oh, oh, and also, all of them belong to the Marvel Cinematic Universe, the rights of which are owned by The Walt Disney Company since 2009, and of which TTI is a newly minted shareholder. (And still increasing my position gradually via options). Infinity Wars has also garnered $2bil in ticket sales worldwide… and counting.

The company garners $8bil in FCF every year, and what’s even better is that instead of distributing that in the form of dividends, the management has opted to increase shareholder value in the form of share buybacks. Dividend yield is thus low, at ard 1.5%.

Fellow investors with experience in US markets would know that we poor SG investors suffer a 30% witholding tax on dividends, so having a “high yield” dividend strategy in US markets is suicidal.

Share buybacks to return value would suit me just fine. There’s also a whole bunch of other DD stuff, such as their acquisition of Fox, ESPN+ turnaround, challenge to Netflix, relatively low PE, both comparing to peers and comparing to historical values and much  more. But that’s for another day.


I’m doing the half year portfolio review 1.5 weeks earlier, as I foresee I won’t have time to do it then.

It’s been exactly 1 month since my last post (on the 19th May 2018):

TTI’s Short Hedges

In that post, I described how I’ve started hedging via shorting S&P and going long volatility, in a variety of ways. Since then, the markets have continued trending upwards, so it hasn’t been great for my hedges.

But rebalance my portfolio, I must.

As mentioned in the comments section of that post though, I’ve managed to keep the costs of hedging in check, by selling far out of the money options on both the long and short sides. I’ve also continued adding to my short hedges in the past month gradually, and I can tell you that that is an incredibly tough thing to do in that sorta environment.

Now. It’s pay back time.

This really does put a smile on my face.

I’d let the reports from Interactive Brokers do the talking.

752) 7 days.jpg

In the last 2 days, the US portfolio portion (Excluding SG) shot up substantially on the back of Trump’s tariff talk, returning 1.71% in the past 7 days. Looks like I owe Trump a big Thank You.

And that’s as of yesterday. Right now, as I am typing this, volatility has shot up (VIX is up 15% tonight), indices have gone down like a rock (SPY is down 0.93%), so when the reports come in tomorrow, I’d expect the NAV to grow substantially.

Obviously, my US portfolio is net short right now.

The 1 month report may be a bit more illuminating:

753) 1 month.jpg

In the past month since the last post, I’ve at times, struggled to fight against the cost of hedging. Since the last post, with numerous testing and back testing, I’ve sorta figured out the best way (for me, at least) to hedge with volatility, is by selling far out of the money call options on VXX, and buying call options on VIX itself.

I won’t go into specifics, but essentially VIX is not a fund or a note, so the problem I find is that you always gotta get the time frame pretty much accurately. Being too early or too late is no different from being wrong. It’s kinda like a 1 shot bazooka.

So, instead of buying my bazooka bullets myself, I fund the bazooka by selling VXX calls. Some are covered, but yea, some are naked calls. My bet is that it’s unlikely for VXX to go into the crazy high territory that we saw in Feb of >50. That only happened cos nobody was expecting it to go that high for a prolonged period of time. It’s kinda like nerve cells. There’s a refractory period whereby they can’t be stimulated again after a previous stimulation.

In this way, I didn’t have to really pay too much for my hedges. Oh and also, I sold several call options on indices such as SPY, whilst buying some put options.

The net summation of all that kept the NAV fairly constant, despite the running cost of hedging. OK, it was helped by positions in CTL, CHK and VRX, all of which have run up double digits this year. I’ve since sold out VRX completely, and CHK, mostly.

754) YTD.jpg

YTD, my US options activities have been pretty stellar.

6.28% doesn’t sound like much…. but considering S&P ETF has returned 1.94% YTD, I’m pretty happy. Plus again, indices are deeply red tonight while my hedges are going ballistic, so the divergence is going to be greater tomorrow. (The IB reports are delayed by a day)

755) S&P ROI.jpg

Now, all this is just the US Options part though.

Long time readers would know that I’ve been testing and backtesting and modifying and implementing my options strategy for… 2 years now. Some of the previous posts regarding options are here:

Options Records In Oct & Nov 2017

TTI’s Options Strategy – Results Thus Far In 2017

There are more, but I didn’t categorize them so it’s all over the place somewhere ard here.

I think it’s time for me to shift more assets into international markets, particularly in US and HK, and especially since I’d prefer to put more firepower into my Options machinery. I think it’s very likely that SG will eventually be a negligible part of my portfolio. (Equities-wise that is)

YTD returns for SG portfolio hasn’t been great though, and although I don’t split them up to analyze per say, common sense tells me it has been poorer than the options portfolio and probably even negative, since the portfolio total returns is much lower than 6.28%.


Total Portfolio Returns

YTD, STI ETF’s XIRR looks like this:

756) STI ETF 1H 2018.jpg

Inclusive of the dividends distributed in Feb, the ETF has been negative thus far YTD, returning -2.33%.

TTI’s portfolio returned 4.12% inclusive of dividends.

AUM increased substantially from around $1.4mil as of Q2, to $1,664,654.08 in SGD terms.

The increase comes mostly from cashflows from US options activities, the strengthening of the USD against SGD in Q2, a capital infusion, dividends collected and the addition of some bonds, offset by the drop in the NAV of the SG portfolio.

Overall, can’t say I’m too disappointed with the results thus far. It’s not eye popping, but it’d do for now.


Going forward, updates here are going to be rarer than the dodo bird cos I’ve recently accepted a new consultancy role.

Healthcare in the region must be doing very well, cos I received 2 unsolicited and separate offers to do consultancy work for 2 unrelated SMEs in neighboring, developing countries. What a coincidence.

I’d only talk about 1 cos the other 1 is not really finalized.

The problem for them though, is that, healthcare is a very specialized business. It’s not like F&B, or manufacturing. You can’t just jump in with capital, without know-how. You wouldn’t even know how to start.

Look at our local healthcare companies. It’s not a coincidence that the top honchos, management, founders etc are all Drs. RMG, SMG, Q&M, Singapore O&G etc. You can’t just throw capital in and hope to grow a whole new healthcare arm.

The thing is, I’m not very interested to be involved tbh. The role would require quite a fair bit of travel, albeit short trips, to a certain neighboring country. As it stands, time is a premium commodity for me. I don’t really wanna do anything that involves travelling for work. (Travelling for fun is a separate class on it’s own and has been granted political immunity from persecution)

Sides, I don’t speak their language, and they don’t speak English either. Having an interpreter around 24/7 isn’t fun. There’s no privacy and it’s a bit irritating to have to pause at every sentence.

But I’m no good at dishing out rejections outright, so I did the next best thing.

I quoted a crazy fee. Or so I thought.

It has to be crazy to justify taking time off my own current work, wasting precious waking hours planning, and the hassle of travelling on weekends. And yes, it is a developing country, so we’re not talking about some glam, luxurious destination. Plus I’ve previously agreed with my wife that weekends are “Family Days”. They’re untouchable. Now, I’m touching 2 of them every month when there’s only 4 to go around.

Yet, they accepted, albeit with a bit of negotiation here and there.

The funny thing is, now that I’m given this new task, I’ve taken time to sit down seriously and look into it. It’s really quite similar to doing DD for an investment.

You sit down and dig out as much information as you can about the local industry, about its prospects, the regulations, the competitors and what they’re doing etc. Then you formulate a plan for the business.

Find out the target market segment for the business, what’s the unique selling point for the business, plan how to market for them etc. Ultimately, the owners aka shareholders, just want to see an acceptable return on their investment.

Obviously, I know what the shareholders would expect, seeing that I’ve a ton of experience on both sides of the fence – management vs shareholders.

The thing is, after spending a few weeks doing the DD, I’ve figured that……… it just can’t be done. Not in this current state anyway.

It’s a developing country, and costs there are literally a fraction of that in SG. The same staff, doing the same role over there, costs 1/10th to employ there vs here in SG. No exaggeration. It’s really 1/10th.

That’s good news right? But it cuts both ways.

Relatively low costs also means that the cost of services there is low. Expected revenue is also a fraction of that in SG. Yet the business would be saddled with high consultancy fees payable to yours truly. And that’s in SGD terms. So revenue is going to be in their local currency, whereas the “staff costs” would have 1 big fat item in SGD, and that’s going to eat up… more than half of their entire revenue every month. Maybe more.

The business is just not going to be competitive enough to turn a profit anytime soon… ironically, cos of me.

Every new venture has start up costs. But the costs here (again, due to me) would easily eat up profits for the next several years, so I don’t know what’s left in it for the shareholders. I don’t want overly optimistic guys eagerly expecting me to perform magic. I wouldn’t want to be the asshole who pockets other people’s investing dollar knowing fully that there’s nothing on the table for them for many many years to come either.

So after looking into the numbers, despite having the contract all done and dusted, I went back to the guys and offered voluntarily, to lower my consultancy fees. It still can’t be too much lower, cos then it’d be unfair to me.

Anyhow, those guys must be very impressed, cos now they’ve offered to increase the duration of the contract with the lower fees, such that the net quantum remains the same. I’m not sure if that’s a good thing for me.

Or maybe, I’m thinking too much. In reality, privately, they think this Singaporean guy is really dumb.


And if you haven’t figured it out yet (man, where have you been?!), the title is a paraphrase from Thanos.