Column

I was on FB the other day and made a comment about binging on Magnum P I.  I received a comment from someone I didn’t know, saying, “What?” There’s nothing like a reminder about how old you’re getting. 

We lost one of our “greats” a few days ago. Sean Connery has passed at the age of ninety. While saddened, it made me remember how many hours of pure enjoyment this one man gave me. While having never actually met him (my sister in law saw him walking down the sidewalk in Palm Springs once) having graced the big screen for decades, I almost felt like I knew him. 

You never really knew what genre of movie he would show up in next.  He was the first movie “007”.  In my opinion, Sir Thomas Sean Connery was the perfect James Bond.  Born in Edinburgh, Scotland in 1930, to very humble beginnings, at the age of thirty-two he was cast as the first actor to play James Bond and went on to portray the fictional British secret agent from 1962 to 1983 in seven films.

But Sean’s early life was anything but glamorous. A depression-era baby, it’s said that he slept in a dresser drawer.  He started working at age nine to help support the family, delivering milk and assisting the butcher. He left school at thirteen. He joined the British Royal Navy in 1946 and served for three years. 

In 1953 Sean won third place in the Mr. Universe competition.  He then heard about and audition for the musical South Pacific. He decided to try out, so he took a class in dancing and singing and was cast for a role in the chorus. He must have looked really good because the opinion on the street was that he couldn’t sing very well! 

At this point Connery was looking for a new career and was trying to decide between acting and being a professional soccer player.  On some sage advice, he chose acting.  His first television role was in Requiem for a Heavyweight.  This brought him some attention and some B movie roles until he met Terence Young, the future director of the James Bond films. Dr. No was his first but not his last. 

Of all the Bonds thru the years, Sean Connery was my favorite.  We all see things through different lenses, but for me, he was the perfect blend of masculinity and sophistication.  I won’t name names, because it, after all, is just an opinion but I feel like some were, well, too masculine, while others were way too sophisticated. Connery was perfection.

Mr. Connery was also very versatile.  Anytime you can go from Darby O’Gill and the Little People to James Bond, you’ve got talent.  After the Bond movies Connery focused on movie roles he found interesting. He would also do films if he felt his help was needed.  He was also an Executive Producer of many movies.

After Never Say Never Again Connery starting acting in more movies; so many more I can’t begin to name them all.  I do have a favorite though—I loved him in Indiana Jones and the Last Crusade. Joining Harrison Ford as his father, Henry Jones Sr., they were the perfect duo for an epic adventure.

He won an Oscar and three Golden Globes as well as so many more, once again, too many to name. On July 5, 2000, Queen Elizabeth II knighted him Sir Thomas Sean Connery. 

What a life, from sleeping in the bottom drawer, to butcher’s assistant, to school dropout, to Knight in shining armor. And of course, also, Bond. James Bond.  

The more stock market volatility increases – like now – the more stock options benefit investors.  Especially those selling stock options.  Market volatility spikes cause certain stock option values to rise, which makes their selling price richer.  Here’s a brief overview of stock options, then back to why they are timely to sell now.

There are two types of stock options: puts and calls.  A call option is essentially the right to buy a stock.  Oppositely, a put option is the right to sell a stock.  You can buy or sell the right to buy or sell. I often use stock options as a strategic way to enter (buy) or exit (sell) stocks.  Again, this approach to stock portfolio management is especially effective as market volatility is high.  For this month’s column, I will focus on “calls”.

There are critical variables that are necessary to consider with stock options:  direction, amount, strike price, and time.  First, time.  All stock options have a finite “life”, that’s the time they exist until they expire.  An option’s life could be one day or over a year.  The stated “expiration date” determines the life of a stock option.  Direction is just which way the underlying stock goes – either up or down.  Now, “strike price”.  A stock option’s strike price is the price the underlying stock must reach to cause an option to be “in the money”, and potentially be “exercised” or “assigned”.    The amount variable in a stock option refers to the difference between the current market price of a stock and the option strike price chosen.  For example, here’s a hypothetical call stock option for Apple stock.  A “December 18 140″ would be a December 18 expiration with a 140 strike price.  Let’s say at that same time Apple stock is $131.50.  In this example, the option is “$8.50 out of the money”; the difference between the stock price per share and the option’s strike price. 

One major differentiator between buying and selling stock options is risk.  To help explain this key point about option risk, I’ll use call options.   Remember, “calls” are the right to buy a stock.  Basically, the buyers of calls are risk-takers.  They are speculating that a stock will not only go up, but also by a specific amount and in a usually short time frame.  They have to be right on direction, amount and time.  All three must occur for the call option buyer to have a winning bet.  I use the word ‘bet’ to emphasize what buyers of options do.  Sellers of stock call options do not take any risk.  They are just selling the right to buy their stock.  Here’s more on that.  Again, a call is the right to buy a stock. You could profit from selling the right to buy.  If you already own a certain stock, you can sell the right to buy your stock – and you get paid for that.  Say, back to the Apple example, you own 500 shares.  You might consider selling your Apple stock at a higher price in the near future.   In the example, Apple is priced at $131.50.  Suppose you decide you would be happy to sell it at $140 by December 18.  Let’s say at this time an Apple December 18 $140 call is $2.00.  So, you could sell 5 contracts (each representing 100 shares) for $1,000.  Since option prices are quoted on a per share basis, each contract is $2 times 100, valued at $200.  What you would have done in this example is collected $1,000 while creating an obligation to selling your Apple at $140 in the next month or so.  This does three things at once:  increases cashflow from your stock (in addition to dividends), reduces risk, and limits your gain to the strike price ($140 per share). 

I stressed the point earlier that increased market volatility can cause stock option values to rise, making them richer and more beneficial for option sellers.  As stocks soared from the March market bottom, demand for buying calls – bets on stocks going up – has also soared.  As the gambler’s demand for buying calls has jumped, so have the prices of call options.  This is good for sellers of those call options.   The conservative stock owner can sell rich calls as the speculators make bullish bets.  Though I said earlier that call options sellers don’t take any risk, understand that if a stock that you sold a call against should rise above the option strike price, you do not get those gains in your stock.  That is called “opportunity cost”.  Sticking with the Apple December 18 140 call option sell example, if Apple climbed to $200 by expiration date, you would have it “called away” (sold) at $140.  There is a way to undo this, but this is noted to say there is opportunity cost in selling calls. 

I first wrote about stock options in my Investor’s Edge column in October of 2018.  I made an important point then; I want to reiterate it now.  Stock options are not suitable for all investors and they are not ideal for all stocks.  Remember the old adage, “There’s no free lunch”.  Even now with increased market volatility and rich call options prices benefitting sellers, call and put options require a thorough understanding of their unique variables and potential opportunity costs. 

Put and Call options are a proven way to profit from stocks even as the market falls.  They work for me and can work for you.  Let me know if you have any questions.

Q. My raspberries are not producing any berries. They get lots of stems and leaves but no fruit. They get afternoon sun, plenty of water, and I feed them in the spring. Each October, I prune them back to about six inches off the ground. So, what am I doing wrong?                                                                     

A. The simple answer is, you’re pruning them wrong. Raspberries plants produce berries on the second-year growth or canes. Once these canes produce, they never produce again, and they’re cut off usually at the ground. The raspberries should be growing on some type of trellis structure but not a fence as they intrude into the neighboring property. The new growth develops at the bottom or base of the plant(s). After you harvest the berries, the old fruiting canes are removed. The new growth or canes replaces them on the trellis. Now, I’m assuming the original plants came from cuttings and not seeds. Raspberries are unpredictable from started from seed. A twist on this is that of everbearing raspberries. Everbearing raspberries (Rubus Idaeus) produce fruit in the spring and again in fall. Unlike summer-bearing varieties, which may have purple or black fruit, most everbearing varieties produce red berries. What you should do now is nothing. This year’s canes will fruit next year, and you prune off then. If you already have pruned, then you’ll need to wait two growing seasons for berries.

Q. When my backyard shade trees lose their leaves, I’ve noticed green patches on the branches near the top. I’ve been told that it’s Mistletoe, and it is harmful. How do I go about getting rid of it?

A. Yes, Mistletoe is harmful to trees; however, the decline occurs slowly. Mistletoe is a parasitic plant that lives off other plants or host to survive. For many years, Mistletoe was limited to the foothills around the Central Valley, but today it is commonly found throughout the Bay Area growing in the canopies of mature, shade trees. Birds are the primary means of spreading Mistletoe as they feed on the clusters. The white Mistletoe berries contain many sticky seeds. The birds carry the seeds from tree to tree on their feet, beaks, and in their droppings, as the seeds aren’t digestible. It’s found growing high in the tree where the birds nest or perched. There are two methods of controlling this problem. They’re both a bit problematical because Mistletoe is hard to get to because they’re so high off the ground. The obvious solution is to prune it out. You’ll need to remove a portion of the branch where it’s growing; otherwise, it grows back from the roots that are still attached. You’ll need a long ladder. Also, Mistletoe may reestablish itself depending on the bird activity, so you’ll have to repeat the process. The second method is to spray the clusters with Florel Fruit Eliminator. Florel is the only product registered for controlling Mistletoe. Florel is a plant growth regulator, so it has no insecticidal, fungicidal, or herbicidal properties. It’s best applied in November or February through April when the temperatures are above sixty degrees. The entire tree doesn’t need to be sprayed, just saturate the Mistletoe clusters. In five to seven days, the Mistletoe should begin to shed its leaves and branches. A second application is only necessary if Mistletoe is still present after three weeks. After spraying the tree, hose off any of the spray residue on the plants that are under the trees. You’ll need a sprayer that will reach the growth. The Mistletoe will grow back, so repeat applications are recommended every three to four years.

Q. We planted a small fig tree from a nursery several years ago. It had three figs about three years ago and has since stopped. It’s tall and sparse. A gardener told me to top it so it would fill out more and start producing, but that didn’t work. What would you suggest to make it fruit again?

A. Typically, Figs fail to fruit because they’re too young or overfed. But, I don’t believe that’s the reason in your case. Instead, I’d look at water stress as the cause. Water stress could be too much or not enough or a little of both during the growing season. Water stress will send the tree into a survival mode, and the tree will simply not have the energy needed to invest in making fruit. Poorly draining soil and frequent watering will prevent the fruit from forming. I’d review your watering pattern. After the rainy season ends, I put a good size watering basin around the tree. It should be six inches tall and extend from the trunk to beyond the drip line. I’d fill it up several times a week with average temperatures and more often when it’s warmer. I’d also feed it once in the spring with an organic, fruit, and shade tree fertilizer.

If there were ever a year to start drinking, 2020 is very likely the one! With an alarming and dangerous pandemic terrorizing populations from sea to shining sea, jobs lost, schools closed, churches restricted, businesses boarded up, whole countries’ economies shut down, earthquakes, acrimonious political warfare, and incredible wildfires burning across millions of acres of land, it is certainly a year to break open a bottle and escape from our turbulent reality. While drinking to excess is not recommended (Regret is never sweet the morning after!), a moderate amount of good wine might be just the thing to raise one’s spirits and induce more than a few well-deserved moments of joy and wellbeing.

With Thanksgiving and the winter holidays on the way, now is the perfect time to pick up a couple of fabulous bottles of wine to grace your festive table. As our gatherings are smaller and more intimate this year, we have all the more reason to buy better wine and truly indulge in a delicious quaff. As a patriotic American and native Californian, I suggest supporting our local industry and purchasing wines from the areas directly hit by the horrific Glass Fire – the Napa and Sonoma Valleys.

Napa is without a doubt the USA’s most prestigious winegrowing region. However, the USA by tradition, until the 1960’s, was not a wine drinking nation. Just a glance at television shows like “Mad Men” confirms that Americans have historically preferred cocktails and hard liquor to wine. In the 1960’s, little good domestic wine was available to the consumer and French wine was considered overpriced and extravagant. At the time, Americans weren’t convinced that any sort of wine deserved a place on their evening dinner tables, much less American wine. 

So why did Americans finally gravitate to the pleasures of wine, and more specifically, American wine? It may have had something to do with the role of the media. Julia Child was quite the national celebrity and often known to indulge in a glass of wine (or two!) while filming her wildly popular televised cooking show. The effusive Ms. Child literally brought wine into the homes of average Americans on a daily basis.

Meanwhile, the quality of American wine improved drastically in the late 1960’s and early 1970’s. Napa and Sonoma wine producers began planting higher-end grapes in their vineyards. Intrepid winemakers, like the esteemed Andre Tchelistcheff, took the reins from the old guard and ran with cutting-edge wine production technology such as cold and malolactic fermentations, a strict emphasis on hygiene in the winemaking process, and the introduction of aging in American and French Oak barrels.

The American Fine Wine Movement was off and running! Once word got out of the incredible wines being produced in our own humble vineyards, there was a rush on the market. Americans began purchasing the wines of California and not long after, a beautiful love story began. It was only a matter of a few short years before the entire world would sit up and take notice of the stellar wines coming out of California. Today, we reap the bounty of those creative years. California wine is plentiful, affordable, delicious, and celebrated all over the world for its excellence. There is much for which to be grateful!

So, in this year of mind-boggling challenges, let’s give thanks to the wine producers of Napa and Sonoma who led the way to American greatness in the wine industry. Pop open a bottle of classic Napa Cabernet Sauvignon and taste that Rutherford dust! One of my favorites is the earthy and spicy Hall Cabernet Sauvignon – impeccable! Or if white wine is more your jam, savor the toasty notes of butterscotch and vanilla cream in a Walt Sonoma Coast Chardonnay! With wines of such quality and complexity, either is perfect with your holiday feast, or maybe indulge in both.

A bounty of extraordinary Napa and Sonoma crafted wines are easily available at your favorite local wine shops and through online shopping. Support California’s most prestigious local industry. This year, drink California wine! Have a beautiful holiday. Cheers!