(03-05-2020, 06:13 PM)Otter Wrote:

(03-05-2020, 02:04 PM)vbin Wrote: Closed my spy puts today, lol and bought leap calls on oil. Big money is following oil and I am sure airlines will start hedging soon.

My short thesis has not changed, and my puts are long-dated. So, trying to ignore the day-to-day volatility and keep my eye on epidemiological developments (case numbers, % hospitalized, % in ICU, case fatality rates), and data relating to economic/societal impacts. Will sell if the data changes my thesis. I still think SPY 260 is extremely likely (TTM P/E of about 15). That is only a 23% drop from the recent highs, and just barely into official bear market territory. All of my puts should be deep ITM at that point (well, maybe not TSLA), and discount for time value should be negligible. I will probably start to unload some around that point, so I can begin to deploy some of the proceeds on the long side.

Again, if circumstances appear to change materially from my standpoint, out come the sell to close orders. 

 

(03-06-2020, 10:58 AM)vbin Wrote: Questions for folks here. If there is a interest rate cut, seems like bank will be impacted negatively. Can anyone enlighten how and why? If this continues we might see 0 interest or close to it and as per one theory banks will suffer..

(03-06-2020, 11:54 AM)fenders53 Wrote:

(03-06-2020, 10:58 AM)vbin Wrote: Questions for folks here. If there is a interest rate cut, seems like bank will be impacted negatively. Can anyone enlighten how and why? If this continues we might see 0 interest or close to it and as per one theory banks will suffer..

I'm no expert but interest rates spread matter.  You are 75yrs old with a couple hundred K in cash.  I am US Bank.  I've been paying you 1% on your savings and 2 1/2% for a CD for years.  I need to loan your money out at a higher rate and make a profit.  I'm competing with GM and Ford that are giving away car loans at 1.9% to sell product because sales are slowing.  How am I going to pay you that CD rate?  I can't so I drop it to 1.5% and you go buy an overpriced utility stock your financial avisor recommended that barely pays 2.5% because Utes already ran, but it's better than your banks offer.  So now you are 55yrs old and I am Prudential.  I would like to sell you an annuity.  I'll give you 1% return because I have to pay .5% to get the money.  You aren't impressed at all because it used to be 3% not long ago, and I'm not making the profits I did a year ago.  I have to find another way to meet my profit forecasts.  You will look elsewhere to get some real yield.

P.S. I'm long all stocks mentioned and that is why they are under performing the market.  That was a ridiculously low level explanation but you get the point.  There is value at some SP, but they aren't worth what they were last month.  There is a legitimate reason for the SP discount. Interest rates aren't going higher anytime soon. They are much more likely to go lower and it feeds the fear. The fear is legitimate.

(03-06-2020, 11:59 AM)vbin Wrote:

(03-06-2020, 11:54 AM)fenders53 Wrote:

(03-06-2020, 10:58 AM)vbin Wrote: Questions for folks here. If there is a interest rate cut, seems like bank will be impacted negatively. Can anyone enlighten how and why? If this continues we might see 0 interest or close to it and as per one theory banks will suffer..

I'm no expert but interest rates spread matter.  You are 75yrs old with a couple hundred K in cash.  I am US Bank.  I've been paying you 1% on your savings and 2 1/2% for a CD for years.  I need to loan your money out at a higher rate and make a profit.  I'm competing with GM and Ford that are giving away car loans at 1.9% to sell product because sales are slowing.  How am I going to pay you that CD rate?  I can't so I drop it to 1.5% and you go buy an overpriced utility stock your financial avisor recommended that barely pays 2.5% because Utes already ran, but it's better than your banks offer.  So now you are 55yrs old and I am Prudential.  I would like to sell you an annuity.  I'll give you 1% return because I have to pay .5% to get the money.  You aren't impressed at all because it used to be 3% not long ago, and I'm not making the profits I did a year ago.  I have to find another way to meet my profit forecasts.  You will look elsewhere to get some real yield.

P.S. I'm long all stocks mentioned and that is why they are under performing the market.  That was a ridiculously low level explanation but you get the point.  There is value at some SP, but they aren't worth what they were last month.  There is a legitimate reason for the SP discount. Interest rates aren't going higher anytime soon.  They are much more likely to go lower and it feeds the fear.  The fear is legitimate.

I do get what you are saying but I need more than this, lol. I am learning that if interest to go zero. Banks would get crazy cheap. I dont know exactly why?

(03-06-2020, 12:45 PM)fenders53 Wrote:

(03-06-2020, 11:59 AM)vbin Wrote:

(03-06-2020, 11:54 AM)fenders53 Wrote:

(03-06-2020, 10:58 AM)vbin Wrote: Questions for folks here. If there is a interest rate cut, seems like bank will be impacted negatively. Can anyone enlighten how and why? If this continues we might see 0 interest or close to it and as per one theory banks will suffer..

I'm no expert but interest rates spread matter.  You are 75yrs old with a couple hundred K in cash.  I am US Bank.  I've been paying you 1% on your savings and 2 1/2% for a CD for years.  I need to loan your money out at a higher rate and make a profit.  I'm competing with GM and Ford that are giving away car loans at 1.9% to sell product because sales are slowing.  How am I going to pay you that CD rate?  I can't so I drop it to 1.5% and you go buy an overpriced utility stock your financial avisor recommended that barely pays 2.5% because Utes already ran, but it's better than your banks offer.  So now you are 55yrs old and I am Prudential.  I would like to sell you an annuity.  I'll give you 1% return because I have to pay .5% to get the money.  You aren't impressed at all because it used to be 3% not long ago, and I'm not making the profits I did a year ago.  I have to find another way to meet my profit forecasts.  You will look elsewhere to get some real yield.

P.S. I'm long all stocks mentioned and that is why they are under performing the market.  That was a ridiculously low level explanation but you get the point.  There is value at some SP, but they aren't worth what they were last month.  There is a legitimate reason for the SP discount. Interest rates aren't going higher anytime soon.  They are much more likely to go lower and it feeds the fear.  The fear is legitimate.

I do get what you are saying but I need more than this, lol. I am learning that if interest to go zero. Banks would get crazy cheap. I dont know exactly why?

Didn't mean to offend your intelligence.  Expand your studying WAY past an in internet chat forum lol.  Didn't mean to waste your time.  It really is all about the rate spread, and customers chasing elusive yield.  Banks have to loan money at a profit and at extreme low rates the competition gets extremely tough.  It really is about that i the end.  They borrow and loan money at a higher rates.  EPS suffers when the spread contracts.   They hope you remain a customer and and sell you other services, but they have to keep you as a customer and the competition is fierce to keep you from shopping.  Put in some reading, or youtube time and somebody far much more intelligent than I will teach you more effectively than a paragraph ever could. This is Banking 101.

(03-09-2020, 09:37 AM)Otter Wrote: Still sitting on Puts.