I am selling Silver Wheaton (SLW) from my 401(k) account today. I originally bought it in anticipation of a pop in the price of silver when the “London Silver Fix” (aka “bankers rigging the commodities market”) ended this month. So far, no pop has occurred. When the condition passes for which you bought a stock, you sell the stock.

I will post an update when the sale goes through.

UPDATE: The order went through at $25.66 (including trading fees). The final line:

SLW: -0.45 this month, +3.46 overall to $25.66 (-1.72% this month, +15.59% overall, +15.98% overall with dividend)–bought at $22.20 on 5/30/2014

Although I still believe in the silver play for August, I jumped on it too soon. With ProShares Ultra Silver (AGQ) dropping below it’s best support level, silver may drop a lot more before August. Therefore, I decided to eat my losses on AGQ, and I sold it at $58.32 today.

Here is the final line on it:

AGQ: -0.26 today, -5.23 overall to $58.32 (-0.44% today, -8.23% overall)–bought at $63.55

Regarding my 401(k) position in Silver Wheaton (SLW), I am going to keep that until August at least. I may double it if it drops far enough.

Sometimes, markets overreact to silly things. For example, they hear “SEC investigation”, and a stock drops like a watermelon off the Empire State Building. However, sometimes the SEC is just telling a company, “You need to restate your financials to include your holding companies.” No fines, no courtrooms, nothing ominous (unless the restated financials are bad).

Such is the case with Prospect Capital Corporation (PSEC). From everything I have read, even if the SEC wins this battle (PSEC is appealing the SEC’s finding), PSEC will not be revealing anything Enron-esque, nor will it have a negative impact on PSEC’s dividend, which will yield about 13% this year (slightly above their 5 year average). With PSEC selling below book value now (book is $10.68, and today’s price is in the $9.90’s), now is the time to strike.

As for their business, the main thing to remember is “business development company”. They do just about every type of financing possible for small to mid-sized businesses.

I will be adding PSEC to my 401k, as I would like to keep it for quite awhile.

UPDATE: PSEC was added to my 401k at $9.96.

An important press release from the London Silver Market Fixing Ltd., otherwise known as “large banks that manipulate the price of silver for their own benefit”:

The London Silver Market Fixing Limited (the ‘Company’) announces that it will cease to administer the London Silver Fixing with effect from close of business on 14 August 2014.

In the past few decades, silver hasn’t moved much, aside from it’s recent run up into the $40’s. Now that the big banks will be stepping aside, we should see some serious movement in the silver market.

On top of this, the price of silver is already near it’s bottom, around the $19 area, but currently trading at $19.56. The technicals show silver with a multiple bottom, which is a bullish sign. In addition, both the MACD and the PPO show silver with bullish momentum, while the RSI is neutral (not overbought or oversold).

My recommendation: buy silver. For conservative investors, I recommend ETFS Physical Silver Shares (SIVR), an etf backed up with physical silver. For companies, I still would recommend Silver Wheaton (SLW), although their price can also be impacted by gold since they have started moving into that market too. For more daring players, there is ProShares Ultra Silver (AGQ), which is a double-leveraged etf.

Later, I will be adding SLW to my 401(k), and AGQ to my IRA. While silver can drop a little, I feel safe that the bottom is in.

UPDATE: I added AGQ to my IRA at $63.55.
UPDATE: I added SLW to my 401k at $22.20.

I am going against my own macro-economic, as well as market-related, views on this one: SeaDrill Limited (SDRL) is a strong buy at current price levels. At a little over $33/share, they are close to their 52 week low.

However, the offshore drillers have been knocked down so low that even in a bearish market, it is hard to see much downside here.

Even if a world recession were to happen, it is hard to imagine an economy so bad that people quit using oil (if it gets that bad, most stocks will be pretty worthless).

Looking at SeaDrill’s numbers, it is the definition of cheap:

Market Cap: $15 billion
Enterprise Value: $29 billion
Trailing P/E: 6.07
Forward P/E: 8.60
PEG Ratio: 0.50
Profit margin: 53%
Operating margin: 40%
Revenue: $5 billion
Operating cash flow: +$1.7 billion
Quarterly Revenue Growth (yoy, from December 2013): 24.5%
Dividend Payout Ratio: 51%
Dividend yield (annual, paid quarterly): 11.8%

Stocks don’t get cheap without a reason. Aside from issues with the entire offshore drilling sector, here are a few problems with SeaDrill’s financials:

Price/book: 2.11
Debt/equity ratio: 1.86
Levered free cash flow: -$1.5 billion

The dividend is what makes SDRL worth taking a chance on right now, even with the headwinds. I will be adding it to my long-term 401(k) portfolio today, and I will add an update when the order goes through.

UPDATE: Including trading fees, I added SDRL at $33.25.

I sold my position in ProShares Short MSCI Emerging Markets (EUM) today, after it dropped below $26, which I was hoping would offer support. No such luck.

While I still consider the emerging markets a bad play right now, I can’t say when they will be impacted.

The final line on EUM:

EUM: -0.30 today, -1.59 overall to $25.85 (-1.15% today, -5.79% overall)–bought at $27.44

I decided to break down and sell the “C”-class shares of Google (the ones with no voting rights) from my 401(k) today. My two reasons in this: First, I’m not optimistic (ok, I’m bearish) for the market’s potential over the next few months. Second, I wanted to cut back on my Google shares anyway, since it was far and away my largest holding.

I still love the company, and have no plans to sell my “A”-class shares (symbol: GOOGL). I might even add to them later if they pull back enough.

The final line on my “C” class shares, with prices adjusted for the split:

GOOG: -17.26 this month, +103.345 overall to $540.00 (-3.10% this month, +23.67% overall)–bought at $436.655

I decided to sell my iShares iBoxx High Yield Corporate Bond (HYG) etf in my 401k, mainly for safety reasons. It did ok for a place to park my cash for slightly over a month. The final line on it:

HYG: -0.02 in March, +0.01 overall to $94.44 (-0.02% in March, +0.01% overall, +0.50% with dividend)–bought at $94.43

I doubled my position in ProShares Short MSCI Emerging Markets (EUM) today at $27.34, lowering my dollar cost average to $27.44. However, I am also looking to get out of this position soon. Rather than shorting the emerging markets, I am looking more for strategic opportunities, while still maintaining a large cash position. The large cash position is key at this point in time.

I finally broke down and sold Banco Santander (SAN) from my 401k (long-term) portfolio. My problem is I just don’t feel good about the long-term prospects of Europe. Even though SAN has a well-diversified international portfolio, the majority of their exposure is European. While I love the company, I just see them as too risky for the long-term.

Here is the final (monthly) line on my SAN position, which I sold at $9.02 today.

SAN: -0.03 this month, +0.38 overall to $9.02 (-0.33% this month, +4.75% overall)–bought at $8.64

With the dividend and minus the trading fees, the total return for SAN was 5.09%.