Portfolio Update: Covering Shorts On Apple

Before I start I would like to clarify the following: trades are something I undertake with minimal capital for maximum return and tend to hold for a few months to a few quarters. Investments, on the other hand, are where I place the majority of my capital, with a long term time horizon. If done correctly, buy & hold investments in secular bull markets always make much more return than any trade ever can. I see myself as a long term investor and believe that constant trading is detrimental to one's own capital and account position.

Here is another Portfolio update, which I do from time to time. Regular readers should remember that I opened my Apple (AAPL) shorts all the way back in August of 2012 - it has been almost a year now (time flies when you are having fun). During the post titled "Is Apple The Biggest Mania Of Our Lifetime?" in September of 2012, I stated the following:

"The question I would like to discuss is whether or not you guys believe Apple is a real mania? To me, this whole thing is totally ludicrous. Absolutely absurd. Maybe it is just me, but when I view the way everyone has gone totally mad, with frenzy and euphoria, about these telephones... yes, that is all they are, just telephones (we haven't yet cured cancer or reached world peace)... I think that the obsession society currently has towards Apple, which is discussed daily on all news channels and hourly on finance news channels regarding where its share price trades, is similar to the obsession society once experienced back during the Tulip Bubble.

As a disclosure, I would like to inform all that I am short Apple stock with Out of Money (OTM) put options that are long dated quite a few quarters out from here. Majority of experts on financial networks like CNBC and Bloomberg have prices targets from $750 to $1650, so they clearly seems to think Apple is still amazingly cheap. After all, what do I know? I still own iPhone 4 and iPad 2..."

Yesterday I decided to close my put options on Apple. Let us observe the chart below:

Chart 1: Perma-bulls predicting Apple to go to $1000+ got slaughtered

The chart above shows Apple potentially basing around the $400 per share area. Maybe it will break down further towards $300 per share, but greed is not my motivation. Apple could be bottoming around these levels as we speak.

Quite a few wise fund managers have opted to start buying Apple under $400 per share. The decline from $700 towards $380 is more than a 45% fall in less than a year. This is maybe one of the best trades that I have done in recent times and it definitely comes very close to the shorts on Precious Metals and in particular in Silver that I executed in September 2011 (almost two years ago).

Update on other positions: so far I have covered shorts on the pound, loonie and Apple for a profit. I remain short Aussie dollar / long Japanese yen and currently the Aussie is very profitable and the yen is very unprofitable, giving me somewhat of a neutral return. I believe the yen is oversold and could rally somewhat higher (massive short build could be squeezed) while I also believe that Chinese problems could send the aussie a bit lower into 80s handle. Finally, I remain short US equity sectors, and in particular Tech, but these trades are currently underwater and have not yet performed at all. Long term investments remain Silver and Sugar. There are a few other trades around.