Optimum Capital Strategies, LLC.

05/04/2026

Life's journey is to be enjoyed. A little planning and small changes can make a big difference over time.

11/10/2022

When the market was at 3600 we told our investors to get in heavy as you can see from our previous posts. Now the market has rallied to 3950 and we believe the markets are properly valued. We believe the S&P500 may rise a bit more so we are not selling yet. However, we are writing covered calls that are between 10-15% away.
A covered call has many of the characteristics of a limit order on expiration. However, there are some differences. Still, we are writing covered calls for several non-core positions we believe will become vulnerable to a significant rise in the market.
If the market rises to 4200 in the next month or two, we will begin selling non-core positions.

09/27/2022

As the rates moved up from 3.87 to 3.97 today the market went from positive to negative. The market is extremely oversold and we believe the current ten-year is nearing its limit at just around 4.00%.

We've long held that 3600 for the S&P500 was a floor at which we would buy aggressively. While the focus seems to be interest rates, we are focusing on the earnings of the S&P500. According to them, we should be around 3950.
Warren Buffett likes to say to be greedy when others are fearful and be fearful when others are greedy. We agree. While we could experience and expect more turbulence, buying leading companies at these prices will prove to be a wise move over the next few years.

We are not buying companies that are hoping to eventually turn profitable, we are buying companies that have a track record of winning and are number one or number two in their industries.

We believe long term investors should put money to work on select names.

Companies that are well positioned to continue to expand their market share simply because they are executing better than the competition.

04/28/2021

While we've enjoyed the market recovery we have reached a point of diminishing returns. Although we believe some type of infrastructure plan will eventually pass this year and agree that it will further stimulate the economy, we also believe that growth will decelerate. With valuations this high we believe that limits the upside for the overall market.

Further, it is possible that some of the high flyer stocks that have doubled in the last year will come up against reality and while still growing they will find it more and more difficult to justify their current valuations.

Lastly, we have matched CV-19 and with the benefit of the various vaccines, we believe we will beat it in the U.S. but the virus is raging in certain parts of the world and we believe that will drag on the recovery.

Buy and hold has served people well since 2009. But, the average returns of the past decade will prove unsustainable in the next decade in our view.

The amount of debt we used to get out of the most dramatic and painful economic shutdown of our lives did what it was intended to do. But, as that stimulus runs through the system, we believe the debt will start dragging on growth. With the likelihood of corporate taxes going back up and a more moderate growth rate, we believe the market is vulnerable.

Great companies will do well over time but we expect better entry points as reality sets in.

02/26/2021

Yesterday, the stock market took a big drop. It is widely believed that it was due to the ten year bond rising to 1.55. Why would that upset the markets?
We believe the rationale is is that the rapid rise in yields from the 1.40s to the 1.50's is a precursor to inflation and the FED rising rates.
If that is the case, we believe this logic is flawed. While we agree with Morningstar that the market is about 7% overvalued, we don't see the the ten year rate being an issue. Here are the reasons for that:

1. The rate is still well below where it was prior to the pandemic. While we are still in the thick of battle against the Corona Virus, the vaccine distribution is robust enough to be a game changer. While we are not out of the woods, we are getting there. So, the rates going back to where they were should not be surprising. It should be a sign that things are coming back to normal.

2. The FED stated, just this week, that they are nowhere near to raising rates. With unemployment still being historically very high at 6.3% and with many challenges ahead, the FED will be supportive for a while longer. Yes, of course, at some point in the future the FED will raise rates but that is unlikely to happen this year and then only gradually.

3. While things are getting back to normal, most of the stimulus will simply plug a hole left by the pandemic. Many American's don't see the problem as their businesses have done well. Corporate America has fared well and several businesses have actually done better not worse. But, many small businesses have been crushed by the pandemic and many won't be coming back for a while, if at all.

After having experienced March of 2020, many investors seem 'gun shy' about another massive market drop. But we believe that massive drop is not coming.
We believe it is reasonable for this market to come down single digits, especially in certain sectors where investors are fooling themselves about expected returns. There are sectors that are in a bubble but not the overall market. It is only slightly overvalued in our view.

Conclusion: As far as the 10-year rate going up to 1.50, stay invested and carry on.

At OCS our Value portfolio is at 75% invested with 25% in cash. We deployed funds to purchase securities via selling puts yesterday and our cash position is getting mid-single digit returns. We believe opportunities to buy at lower prices may come but we don't see a crash on the horizon, unless the stimulus does not pass but that is unlikely.

12/03/2020

On November 15th, China, Japan, New Zealand, Australia, the ten member nation association of South-East Asian Nations, Canada, Chile, Peru and Mexico signed the Regional Comprehensive Economic Partnership (RCEP) which is a free trade agreement.

This is largely the Trans-Pacific Partnership the U.S. was leading. But, in a disappointing short sighted step, the U.S. did not follow through and to add insult to injury, China stepped into the vacuum left by the U.S. withdrawal.

We believe this strengthens China at the expense of the U.S. The impact will be a stronger supply chain centered in Asia. It will be more difficult for the U.S. to exert its trade pressure on other nations in the economic block.

As investors, we believe the Asian economies will experience faster economic growth than the U.S. The RCEP will only accelerate this reality.

There are several ETF's that allow U.S. investors to participate in the Asia-Pacific region. We have diversified some assets away from the U.S. and into Asia and Europe. We believe America is still on the lead in global economic clout but Asia is growing faster in general and China in particular is on pace to overtake the U.S.

11/24/2020

The markets were up after a third company announced successful trails for their vaccine then started losing steam. But, after the market learned Janet Yellen would be Treasury Secretary it shot right back up.
It is becoming clear that President-Elect Biden is forming at team of moderate and capable people, which reflects his own disposition.

The markets like moderate and predictable government. This is a good sign, but the challenges facing the incoming administration are tremendous. All of them solvable to be sure, but tough.

Our belief is that continued delays in responding to the pandemic and failure to coordinate the response between the outgoing and incoming administrations is only making the chances of a bad economic outcome more likely.

Despite the welcome news of a moderate Biden administration, we believe the market will have to face sobering economic challenges. Even the FED is losing some capabilities as the Treasury Secretary begins unwinding them.

We often agree with Goldman Sachs but our outlook is far less rosy than theirs about 2021. We believe if everything goes well (and it seldom does) the best outcome is a flat market. But, regardless of where we end up, we expect volatility to return in spades.

We believe the chances of a 'lost decade' like Japan experienced are greater than another leg up or a complete meltdown.

10/29/2020

A positive 33.1% GDP growth could lead someone to believe everything is glorious and things are great. However, when you look at the previous two reports you may think, well, actually we are slightly down. The previous two quarters were -31.4% and -5%.

What is missing in this report is the economic damage and the enormous stimulus, much larger than the financial rescue of 2008-2009 and the finances of the states and the federal government.

While we agree that the massive stimulus was the lesser of two evils (the other was allowing the country to go into a great depressions). There are and will be consequences.

Being essentially close to break even on GDP is not telling the story you need to know regarding the future of investments.

We believe we are heading for a lost decade scenario in the markets. Which is not great considering the near zero rates are hurting savers and having a negative impact on social security.

But, instead of a decade, it is possible with the right fiscal and economic policies that it is only half that long although we expect volatility to remain.
If we continue the policy of denial and fail to look at facts, we are simply going to make matters worse.

The drop in income and sales tax revenue has created a historic crisis for states, with a total shortfall expected in the hundreds of billions of dollars. The projected gaps are greater than 2019’s K-12 education budget for every state combined, or more than twice the amount spent that year on sta...

10/07/2020

This morning we saw an opportunity on Boeing (BA). Boeing has fallen from $350.00 before the pandemic to $164.68 this morning. While we believe there are headwinds to the industry in general and Boeing in particular. This is an opportunity to 'work' the cash position in our accounts.
For details, take a look at our blog.

​​Optimum Capital Strategies is identified by the Central Registration Depository ("CRD") number 148483.  Entering CRD #148483 on the SEC's investment adviser public disclosure information page at www.advisorinfo.sec.gov will allow you to search for additional information on our company and por...

09/26/2020

The market is in constant flux. Going up and coming down. Through it all, a buy and hold core is the best way to build long term wealth but that leaves a great deal of money on the table.
At OCS we have core buy and hold positions but we also work the remainder of the account. Every day we scan the market for opportunities. When stocks on our watch list reach a certain price, we take action.

Today we took action on DEM. It is an emerging market ETF. Take a look at our website for details.

​​Optimum Capital Strategies is identified by the Central Registration Depository ("CRD") number 148483.  Entering CRD #148483 on the SEC's investment adviser public disclosure information page at www.advisorinfo.sec.gov will allow you to search for additional information on our company and por...