Samwise Quick Reference Handbook
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Hi Sam,
I am a new reader and have few questions as below.
Question #1: Why is the cost basis of the cash of Arryn’s portfolio negative (-$35,876)? Additionally, I noticed that its market value has become positive ($25,707). Where does the profit ($61,583) come from?
Also, regarding the Lannister portfolio, where does the profit of the cash from $4495 to $17246 come from?
Question #2: I read some daily briefings from last year and noticed that you mentioned last year that after the FOMC, the market would rise for a while and then fall down. Will it be the same this year?
Thank you very much.????
Best wishes.
Question 1:
So here’s how the accounting works for the cash positions. The cost-basis of every portfolio is the STARTing value of every portfolio. If you click on each of the 8 portfolios, you’l find cost-basis will always equal the original starting capital value. For Baratheon, it’s $10,000. For Targaryen, it’s $5,000. For the other 6 it’s $100,000.00. The difference in cost-basis cash and market value cash is simply the total profit/loss derived from COMPLETED trades. If we made money on a trade, then our market value cash will be higher by that exact amount than cost-basis cash. If we lost money, then our market value cash will be less than cost-basis cash. This allows us to always show the total P/L for the portfolio at all times. At all times, TOTAL cost-basis is always the original cost-basis of the portfolio. Even with new positions. It always comes out to $100,000.
For example, let’s suppose we start out with $100,000.00 in Glover Portfolio. To start off, we have $100,000 in cash right? Suppose we buy Nvidia for $100,000.00. We then sell it a month later for $120,000.00.
The ending portfolio after the trade will be written out like so. we would write $100,000 in the cost-basis column for Cash because that’s what we started with. $120,000.00 for market value because that is what the portoflio is now worth. We’d show $20,000 in profit in the P/L column. $100,000 cost-basis column of the cash row. $120,000 in the market value of the cash row. $20,000 in the P/L column for the cash row.
Check for example, the Baratheon Portfolio which sits in all cash right now. It show $10,000 in the cost-basis column of the cash row. $6,698.00 in the market value column of the cash row. And -$3,302.00 in the P/L column of the cash row. If you click on completed trades for Baratheon, it will show a loss of $3,302.00 total for the sum of all completed trades.
Likewise, if you click on the Arryn Portfolio and click on “Completed Trades,” you’ll see $61,583.00 (+615.83%) return from all completed trades. Eleven (11) trades total.
The original total cost-basis or starting capital will be shown in the cost basis column of every portfolio.
Now let’s go back to our example. We started off with $100,000. We bought Nvidia with the full $100k. We made a $20k profit and we sold it. So we’re now sitting on $120,000 in cash.
The portoflio will show just 1 single line item up to this point. CASH. It will show cost-basis $100,000 and it will show $120,000 market value. The P/L column will show +$20,000 (20%). P/L is determined by subtracting cost-basis from market value.
Okay. Now let’s suppose we buy a new position in Apple with the full $120,000.00 in cash we have in the portfolio. How will that reflected and what is the only way to reflect it?
Well we’ll show a position in Apple for $120,000.00. It will show cost-basis $120,000, market value $120,000 (assuming we freeze at the moment of purchase). But exactly how do we reflect the cash position? If we ant the cost-basis to always be the original starting capital for the portfolio, how exactly do we show it?
If we show it at $0.00, then we’re not showing the original cost-basis. We’re showing 9noly the market value of the cash position. Why? becuase we didn’t start with $120,000 in cash. We started $100,000 in cash. And so in order to show that, we’d have to show cost-basis cash at -$20,000.00. Why? becuase it cost us $20k more than what we originally started iwth. So in the cost-basis column, it would show $120,000 Apple. -$20,000 cash. The total cost-basis would be $100,000.00.
Now suppose we sell Apple for a $12,000 profit. So now we’ve made $20,000 on Nviida nd $12,000 on Apple. Market value cash is at $132,000. Cost-basis cash is at $100,000. Total P/L is at $32,000.
That’s what is going on here. If we then buy a new position for $132,000.00, then our cost-basis cash position will show a negative $32,000.00. Our regular market value cash position will be $0.00. Why because we have no actual cash in the portfolio anymore. We’ve used all $132k on the Apple position. But as to the original cost-basis, it’s going to be -$32,000 because we started off with $100,000.00.
It allows everyone to track the total portoflio value from the very beginning at all times. The difference in cost-basis cash and market value cash is literally the realized gains from prior trades. In Arryn, we’ve realized $61,583.00 in gain from trades. Check the trades by clicking the “completed trades” tab. So there will always be a $61,583 difference between cost-basis cash and market value cash at all times and that will be reflected in the cash P/L line of $61,583. It allows us to always show the total P/l of the portfolio. Not just what we’re currently holding.
Now in Lannister, I just haven’t gotten to completing the “completed trades” tab yet. I have it done for Arryn, Baratheon and Targaryen. However, you can do the math for that very quickly by clicking on the “trades” tab on the mobile app or on the website itself, and then simply click “ctrl-F” and Lannister. that will list every single opening and closing transaction.
I will get to it soon. In fact, I just finished Arryn’s last night. Will do Lannister and stark soon. Lannister and Stark have even fewer completed trades than Arryn does.
If you click on every portfolio, you’ll find the cost-basis column shows the starting value of every portfolio. market value is the current value of the portfolio. This applies to cash as well. Cost-basis cash for Arryn, Lannister, Stark, Tyrell, Tarly and Frey are all $100,000.00. The difference in cost-basis cash and market value cash represents P/L for full completed trades (opened and closed trades).
If any of this does’t make perfect sense, let me know and we’ll work through it. As an exercise, build yourself a model the way we have and think about how to show (1) the cost-basis of new positions while (2) maintaining and updating the total returns of the portfolio at all times. The only way to really get there is to show the returns on the cash position.
Question #2: So the FOMC sometimes matters and sometimes not so much. Right now, I think it’s on the low end of the market’s radar. But that is definitely true. There is a lag effect when the fed plays a big role. The same goes for hte employment report.
When the market is hyper focused on the employment report, what you might often see is one reaction on Friday and then on Monday the entire trend reverses.
So for example, suppose we’re in a correction and the market is selling off. The employment report comes in and the market reacts negatively. Often, you get to Monday morning and we get the opposite reaction. And now the entire trend has reversed course.
This happens in both directions. This can occur in uptrends reversing down or downtrends reversing up.
But yes. That is definitely a phenomenon I’ve seen a number of times. You don’t get the full impact of critical data for a few days. Initial reactions aren’t always dispositive.
Thank you for the detailed explanation. ????????
It’s clear yeah? Hope I didn’t just overwhelm you with a wall of text. If it’s unclear, just let me know. I’ll probably soon add a notation or a tab on portfolio calculations on the portfolio pages so everyone knows how it all works.
Does today’s intraday reversal mean anything? Or do you still think the market will climb a little bit higher before rolling over?
Edit: Excuse typos. I dictated this through Siri/voice. Editing typos now.
Just like yesterday, the reversal is not larger enough to meet anything yet.
Here’s what we know. We know the market just came within 7 to 8 points from reaching its all-time high. We know that all-time highs represents a major psychological line of resistance and a massive draw. It’s like the center of gravity. It is exactly where the QQQ wants to gravitate toward.
If you look at the QQQ historically whenever the ETF closes in on its previous highs, it almost always eclipses it. In the majority of all cases, after a correction, the QQQ returns to its highs and eclipses. it. That’s what you see in 15-years of charting the QQQ and SPY. Correction > new highs > correction > new years. Every so often, you get a double-top. but that’s the rare exception.
We also know that the market has been up massively from its lows (32-33%) and that we are in a period of high risk. A correction can strike at any moment now with the QQQ up 30%+. It’s literally any moment, we can get a top, reversal and boom we’re in a correction.
All of our portfolios are already positioned such that even if a correction happens right now — without us buying the June 2026 $500 puts we want to buy — we’re still very well insulated.
We did the math a few days ago
Having bought Nvidia puts yesterday makes us even more insulated. Because that’s where we were actually most vulnerable. on a big correction, we’d lose more money due to Nvidia dropping than we would the QQQ even though our QQQ position is twice as large. We’d suffer half the loss we would with Nvidia even though Nvidia represents less than half the allocation size of the QQQ. Hence why we bought Nvidia puts yesterday.
The reason we’re insulated is because if the market does pull back to around 470 on the QQQ, our covered calls we sold again our QQQ positions will offset most of the loss to the leaps. And then at that point, our March puts that we bought will start to take over. If the QQQ continues to decline toward $450 or lower, the March puts start to drastically impact the portfolio.
Lannister and Stark are a little more exposed because they don’t have as many puts as does Arryn on a ratio basis.
But rest assured, they’re both protected enough that in a crash, they’d be well insulated.
We will get the same advantage that we got this last crash.
If you look at Array almost all of our profits are from closing out our put positions during the crash.
All I can really tell you at this point is that a few points reversal is meaningless.
We had a bit of a reversal yesterday and it didn’t stop the QQQ from going up to 533 toda.y
We need a big reversal for it to have actual meaning.
A few points is minor. The QQQ can be right back above 530 by the close of trade.
Regardless, I think we’re well situated to handle whatever comes our way at this point. Market goes to all-time highs we buy new puts.
Market sustain a correction here we have cash on the sidelines to capitalize on that. Having sold covered calls and raising cash will allow us to buy a whole new leap position in the NASDAQ 100.
Not to mention, we get all of that opportunity to buy in the near term portfolios.
Hence, why we are sort of just in wait mode. We just need to wait for things to play out.
But to answer your question as of right now I assign no sign significant meaning to the reversal. It’s just not large enough yet.
Tesla just keeps diving. Is it getting to a point where the upside outweights market-related risk?
Hello Sam,
The 20-point decline on NVIDIA seems quite conservative, given that the rally since April hasn’t seen a small respite like the QQQ.
A 30-point decline, therefore, to the $120 zone, seems more likely to me if NVIDIA reaches $150.
We were also expecting NVIDIA to return to the $115-$120 zone pre- and post-release, which it hasn’t done, as it often has in the past.
This is also due to the fact that the QQQ continued its rally and took NVIDIA with it. Isn’t there also a world where the correction could be more brutal, like the one in July and August 2024?
I’m cash and I sold NVDL and my NVIDIA x5 and x6 when NVIDIA crossed $135.
Trading in this market seems very risky to me… it could quickly turn around.
Best
Karl
I would be perfectly fine with a more severe correction. With all of the covered calls we sold and the puts we have, it would work out well, especially on the NVDA side of things. It’s not really risky if you’re well-hedged, which is one of the cornerstones of Sam’s overall strategy. The hedges make a downturn sound way more fun than a continued rally. I would love to see NVDA at 120 next week.
So I notice a lot of your comments don’t separate out near-term, intermediate-term and long-term outlooks. They’re all different things.
Like this comment above references a near-term pull-back comment. Nviida on a “near-term” basis is due for a 20-point pull-back. That’s outside of a correction. That’s within the scope of a normal near-term pull-back that follows the market’s near-term pull-back.
We’ve seen several 12-20 point pull-back in regular uptrends and trading environments. So that’s one outlook based on one timeframe.
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Then you have corrections period outlook. When a correction in the market happens, the pull-back will be much much larger. Now you’re talking 20% is standard for Nvidia. If the QQQ falls 10%, nivida often falls 20%.
In fact, if you go back and look at every recent correction, Nviida fell closer to 25-30%.
in July-August 2024, Nvidia went from $140 down to $90. That’s a 35.7% correction on a 14% market decline.
Then in September 2024, Nvidia fell from $130 down to $100 when the QQQ fell 8%. That’s a 23% Nvidia on a QQQ 8% drop.
Then through November, December January we saw multiple 20-point drops and rebounds in Nviida. All near-term stuff.
In the big correction, we saw Nviida go from $150 at its peak down to $86 at its lows.
—-
So I’d say if you want to get more out of my responses and the commentary in general, I’d start to really focus you questions on near-term, intermediate-term and long-term.
Near-term = nviida is due for a larger 20-point pull-bak. standard.
Intermediate-term = once Nvidia peaks — wherever that peaks happens to be = it will likely drop around 20-25% with the market on correction. That could mean $150 down o $120 or $140 down to $110. When the market finally sustains a correction — and it will between now and July — Nivida will go down in lock step.
Long-Term = whatever the fundamentals indicate Nvidia is worth in teh future. Our long-term price target is $170 by January.
Hello Sam,
Thank you for your patience, your insight, and the wisdom of your reminder.
You are absolutely right to emphasize the short, medium, and long term horizons!
For my part, in the short term, I am quite wary, like you, given the rally, which has historically been quite violent, but also the geopolitical context, tariffs, and now the ego battle between Trump and Musk.
It doesn’t take much for a spark to cause the market to shift! What is worrying is, as you point out, that this expected decline in NVIDIA is normal, between 10% and 20%, and that in more worrying contexts, we have seen NVIDIA fall by more than 35% or even 43% recently in April 2025.
For the medium term, I expect a more significant decline to a level below $110, given the above factors. I agree with you on the $170 target, and I’m even aiming for $190-$200 by the November financial statements, once we have real impact studies on the implementation of AI agents.
Some industries such as media, copywriting, consulting firms, and sales prospecting firms are already struggling with AI agents, whose cost is relatively low with solutions like Dust.
Jensen is speaking in Paris at Viva Tech next week, and I think we’ll hear more about his projects, including robots, AI agents, and new chips for China.
Looking forward to hearing from you, Karl.
Hello Sam, Based on the data, I ran simulations based on the Monte Carlo model with over 10,000 simulations.
Grey lines: 50 possible stock price paths based on realistic market behavior.
Blue line: the median expected trajectory — the most probable single outcome.
Red & Green dashed lines: the 10th and 90th percentiles, showing worst- and best-case paths within the central 80% of simulations.
Shaded blue area: the 80% confidence interval — where NVIDIA’s stock is most likely to end up by January 2026.
Interpretation by January 2026
80% probability range: between $125 and $185
Median expectation: around $155–160
Extreme downside (10% chance): NVIDIA exceeds $185
it’s less precise and surgical than your data despite more than 10,000 probabilistic simulations ????
Best
Karl