TIB: Today I Bought (and Sold) - An Investors Journal #128 - Russia, Spain, Italy, Portugal, Japan, Fiat, Bitcoin Mining

Europe has under-performed USA by 84% since 2008. Italy, Spain and Portugal are the laggards in Europe. Makes them perfect candidates as Europe recovers. A little deeper into Russia too. Profits from diesel emissions scandal in the bank. And Japan Small Caps do nicely too

Sold

Yesterday I said I would be looking a little deeper into Russia excluding energy and into Southern Europe (especially Spain, Portugal and Italy). I have listed the sales first because I used the proceeds to fund the purchases rather than committing more capital

Fiat Chrysler Automotive (FCA.MI): Automotive Manufacturer. I bought Fiat Chrysler shares when the emissions scandal broke for them in January 2017. My premise was that the market had over-reacted to the news and it would eventually go back to valuing the business based on performance. The emissions story is still playing out but the market did recover what it lost. Sold for 16.9% and 18% profit since January 2017. (See TIB14 for the rationale and the overview of the automotive USA structure)

Wisdom Tree Japan Small Cap ETF (DFJ): I wrote about Japan in TIB2 right at the beginning. Japan (represented by iShares Japan ETF (EWJ - black bars)) has underperformed the S&P500 (red line) by 72 percentage points since the pre-GFC highs. The premise is that it will close at least half the gap. Interestingly Japan Small Cap stocks (orange line) have only under-performed the S&P 500 by 14 percentage points - which shows that starting to invest in Small Caps in mid 2012 was a good move.

Partial position closed for 70% profit since August 2012 (14% per year)

Comstage DJ EuroSTOXX 50 ETF (ETF050.SW). Eurostoxx 50 (black bars) has under-performed the S&P 500 (orange line) by 84% since the pre-GFC highs and in fact has not returned to the pre-GFC highs. [Note: there is a currency effect in the chart - ETX50 in Euros and SPX in US Dollars]

The story of the Eurostoxx 50 is a story of thirds - two thirds is doing well (France and Germany and Netherlands) and the other third is doing less well.

http://etfdb.com/etf/FEZ/

I reduced my holding in this portfolio to focus in on the under-performing third for a 39% profit since July 2011 (6.5% per year). Note: there remains opportunity in Europe at this top level - all it has to do is close half the gap to S&P500. You can see this with the buy:sell chart between S&P 500 and the SPDR Eurostoxx 50 ETF (FEZ). Europe has turned over and is now out-performing US [Note: both are in US Dollars]

VanEck Vectors Russia ETF (RSX): Reduced my holdings in the top level Russia ETF to reduce oil exposure in favour of small caps exposure. 5% profit on average price on purchase made in December 2016 and June 2017. Nice to see the latest purchase in June yield a 9.5% profit - shows the value of scaling in at a lower entry price. See TIB98 and TIB99 for my thinking on Russia and Emerging Markets from June 2017. A buy:sell chart of S&P 500 vs Russia shows that Russia did under-perform from 2012 and has tried several times in 2016 and 2016 and now to out-perform. There remains opportunity here

[Means: Buy the first named stock (S&P500) and sell the second named stock (Russia). if the chart goes up the first named stock is outperforming. If the chart goes down the second name stock is outperforming]

Bought

I presented this table yesterday showing under-valued markets on a Price to Book Value Ratio. Today's work was about plugging some of the gaps - Russia, Spain, Portugal and Italy. I will work through this with buy:sell charts comparing each sub-market to Eurstoxx 50 represented by the SPDR ETF (FEZ)

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

iShares MSCI Spain Capped ETF (EWP): Spain started out-performing Europe in 1st quarter of 2017

iShares MSCI Italy Capped ETF (EWI): Italy started out-performing Europe in late 2016 with a hiccup in 1st quarter of 2017. It has done better than Spain. I have some investment in Italy already through banks and insurance companies and options on the Milan index (see TIB106)

Global X MSCI Portugal ETF (PGAL): Portugal started out-performing Europe in 1st quarter of 2016 and again in 2016. it looks the furthest behind.

VanEck Vectors Russia Small-Cap ETF (RSXJ): I wanted to reduce exposure in Russia to the oil stocks. The Van Eck Vectors Russia Small Caps ETF helps me to do that with only 6% of its holdings related to energy. My thinking is as the Russian economy recovers, the things that people do will recover (bank and eat and use the mobile phone). The buy:sell chart compared to the S&P500 shows that Russian Small Caps have started out-performing in early 2016 and have stuttered a bit in 2017.

The chart I wish I had created when I first started talking about Russia compares the overall market to the small caps. Small Caps have shown dramatic out-performance since 2016. The relative to S&P500 works for me though as an investing idea.

This chart does reinforce the bigger Russia opportunity especially if oil prices hold current levels or improve. Remember too that 5.1% dividend yield I mentioned yesterday.

Cryptocurency

Bitcoin (BTCUSD): Bitcoin price appears to be consolidating above the gap level (above $3800) and is testing the week's highs.

I have considered trailing stop losses but have decided not to - the last ring low on a 4 hour chart is below the entry point for one of my trades. News remains positive.

I did have a read of the Forbes contribution and the author does ask some valid questions and expresses some strongish opinions. These are his questions.

- What is the price based on? - What benchmarks can it be compared to? - Why do you want to invest in Bitcoin? - Cryptocurrencies may not be a hedge. - Do you know the downside of Bitcoin?

I have left out the sub-text for each question - I felt they contained a lot of unsubstantiated opinion and was totally bereft of any data. Read the article and make up your own mind. The good news: it is mainstream journal exposure.

https://www.forbes.com/sites/johnwasik/2017/08/16/why-bitcoin-cryptos-arent-gold/

Bitcoin EcoPod Mining: Transfer of Bitcoin from my other Bitcoin mining operation was completed and I added a 2nd share in the new pool - at a slightly lower price than yesterday. I have purchased $2000 worth for 12,640 G/Hs of power which will come on line in 60 days - the equipment is purchased new and deployed to a new mining facility in US

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 7.3% (lower than prior day's 7.6%). 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. FEZ breakdown comes from etfdb.com. News headlines come from Google Search. 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 16, 2017