TIB: Today I Bought (and Sold) - An Investors Journal #127 - Russia, Japanese Government Bonds, Bitcoin Mining

40 years since Elvis died. What has that got to do with investing in Russia? Scared markets relaxed and the Yen weakened. I am figuring this will flow into Japanese Government Bonds. A small addition to Bitcoin mining - a way to diversify the way I grow Bitcoin holdings.

Bought

VanEck Vectors Russia ETF (RSX): With SPDR closing down the Emerging Europe ETF which included Russia, I added back a Russia investment. I used this US-based ETF on one account as I had US Dollars free.

ComStage MSCI Russia 30% Capped ETF (CBRUS.SW). In a separate account I used this Swiss-based ETF as I had Swiss Francs free. This ETF is a little different as it caps any particular holding to be no more than 30%

A quick reminder on my main thesis that lies behind these investments. The plan is to invest in markets that are relatively less valuable on a Price to Book Value ratio than others. From the table below (based on June 30, 2017 data), Russia is the most undervalued market.

http://www.starcapital.de/research/stockmarketvaluation

What is noticeable also is that Dividend Yield for Russian market at 5.1% is very high which is a bonus. The challenge with investing in Russia is that its economy is strongly bound to oil prices so it looks like an oil investment and the economy is having to shoulder the burden of US-led sanctions. The breakdown of the Comstage ETF shows the leaning - apologies it is in German. 67% oil and gas, 17% financials, 7% consumer, 6% telecom, 1% health care.

www.comstage.de/SiteContent/4/1/1/.../LU0392495536_DE.pdf

I did discover doing this write up that Van Eck have an ETF that tracks Russian Small Caps (RSXJ) which has very little exposure to energy - I will add that as well.

Now for a bit of fun to commemorate 40 years since Elvis Presley passed away - a Russian rendition of Unchained Melody - 2015 The Voice Russia Finale

I have starred the table of worst 20 relative market valuations - there are two markets that I am under-represented in - Spain and Portugal. I will explore those as well. I have found an ETF that tracks Spain, Italy and Portugal (Deutsche X-trackers MSCI Southern Europe Hedged Equity ETF - DBES). The Portugal exposure is small and I can add that specifically with a Portugal ETF.

Sold

Challenger Financial (CGF.AX): Australian Investment Mgt. I am not sure I had written the purchase of this stock up on July 14. Signal from the research house based on a price bounce. Here is the chart from then - disciplines were in place to make the chart. Well the price did bounce and then fell back after results announcement disappointed the market. Trade hit its stop loss and lost way more than the 17.5 cent dividend foregone - 9.9% loss in one month. I will not be doing any more trades based on research house recommendations after 5 losing consecutive trades and 7 losers out of last 10.

Shorts

Japanese Government 10 Year Bonds (JGB): Fear went out of the markets and the Yen weakened. The JGB price looked like it wanted to top out - time to add another short position. There appears to be a lag operating here as the Bank of Japan works to keep the yields on the 10 year at ZERO. Good luck with that when market has other ideas.

Westfield Corporation (WFD.AX). Westfield announced results today with a sizeable dividend. The disadvantage of being short using CFD's is one has to pay the dividend immediately and not when the stock goes ex-dividend. That wipes out profits to date on this trade - though the price will drop when the stock does go ex-dividend and I should get some back.

Say Co-CEOs, Peter and Steven Lowy

In a challenging retail environment, the performance for the first half was good and we remain confident on executing our strategy to transform our assets into the pre-eminent global shopping centre portfolio. We are creating great experiences for retailers, consumers and brands. We have evolved the composition of our portfolio through the addition of food, leisure and entertainment, and a broader mix of uses including many new concepts, emerging technologies and online brands

Westfield Corporation results announcement

Cryptocurency

Bitcoin (BTCUSD): I trailed the stop loss on my open position and it was hit at $4295 for a $250 per contract profit (6.18% for the day). I worked on a 1 hour chart looking for reversals. Basically what I do is wait for two bars and then put a pending order above the high of the previous bar. The idea is to keep that for an hour and review when the next bar opens. If the trade does not trigger, move the pending order lower above the new previous bar high. I got triggered for a half contract at $4265 as price did a small spike up and the spread took me in. Price continued to drop and I put another pending order which was triggered at $4045. There is a lesson in here for the day. Look at the one hour chart - it shows the two attempts at consolidating - that is where I entered.

Now look at a 4 hour chart - a patient trader waits for the reversal to test a prior level and then goes. Note: I am trading without stop losses as I have built a solid buffer.

You might be wondering why price behaved the way it did. Bitcoin is becoming mainstream.

It passed the market capitalisation of PayPal yesterday - that is a big deal as PayPal is the world's leading internet payments business. Financial advisers are telling their clients to add cryptocurrency to their portfolios. Interest drives prices up but markets never go up in straight lines - profit taking brings prices back to breathe for the next move.

http://www.marketwatch.com/story/bitcoins-rally-seems-closely-tied-to-something-you-may-do-every-day-2017-08-15

I did write the other day that I expected to see relative Bitcoin (BTC) and Bitcoin Cash (BCH) prices to move as and when exchanges released BCH for transfer. I now have BCH holdings in 4 different places - they have not yet been released. I can see that the BCH price which is holding a level around the $300 level - not a lot of BCH in hand to sell yet.

In other news, Van Eck Vectors which operates a number of specialist exchange traded funds filed with the SEC to register a Bitcoin ETF. It is not planning to hold Bitcoin but to invest in US exchange-traded bitcoin-linked derivative products. It is not clear what index the ETF intends to model and it looks like Bitcoin exposure will be around 25% of the fund. It is early days given the SEC has already rejected two Bitcoin ETF filings BUT it does tell me that Bitcoin is becoming mainstream

https://news.bitcoin.com/bitcoin-etf-filed-sec-leading-gold-fund-manager-vaneck/

Bitcoin EcoPod Mining: I decided to add a small amount to my Bitcoin mining activity from Bitcoin I purchased some time ago at a very different Bitcoin price. I will add to this once I transfer Bitcoin from my other Bitcoin mining operation which has just mined its 14th Bitcoin (in less than 2 years)

With a high Bitcoin price, mining looks a cheaper opportunity (as the expenses are paid in fiat currency (US Dollars in this case)). One of my mining ventures is running a new promotion with bonus hashing rates. My first pass calculation using online calculators and some bold assumptions about electricity usage that one year returns will be of the order of 20%. This is lower than I am achieving at USI-Tech but it is a diversified opportunity - You can check it out at http://mymark.mx/Galaxy

Currency Trades

Forex Robot did not close trades and is trading at a negative equity level of 7.6% (lower than prior day's 7.7%). You can follow the robot live at http://mymark.mx/LiveUSITech

Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas..

Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. Russia ETF image come from Comstage.de. Market valuation image comes from StarCapital.de. Van Eck image comes from News.Bitcoin.com. All other images are created using my various trading and
charting platforms. They are all my own work

Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers

Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices

Bitcoin: If you want a low cost way to enter Bitcoin, you can buy a package for as low as €50 (in Bitcoin) and earn Bitcoin at a rate way better than your bank could offer - think weeks instead of months. http://mymark.mx/USIBitcoin

August 15, 2017