The Speculative Stocks....

[vbin]

(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. 

 

Agree on 260. I also hold the view that we will see it. If we count 0 growth for 2020. It kinda makes sense but can't say anything for sure in market and can't fight with fed, they can keep cutting the rates and drown everyone in liquidity. Futures are up half a %.

[fenders53]

You nailed the timing on those puts Otter.  I knew you got it about as close to perfect as you could hope for.  If the market even drops halfway to your target from here, you might be able to retire some of the shorter dated ones and play with house money.  Nobody expects the market to launch soon so you have time to decide.  If you're fortunate enough to miss one crash it makes a huge difference.  I'm happy for you.

In other news, JNJ, Berkshire and 30 day US Treasury Bills have been added to the "speculative" stock list. That should about cover everything now, so discuss anything you want here lol. I think I am going to cash out and buy TSLA calls. If I'm going to lose all my money it might as well be exciting. Gotta keep smiling.

Looks like Russia is not going to play ball with OPEC production cuts. I think I might wait for $35 oil before I add any more oil. Russia and the flu just might get that done if both come to pass. That will start killing off excess US shale frackers in a hurry since many of the banks have cut them off already. We could finally get a real oil recovery from there. I expected this someday, but I sure didn't think this had any chance of playing out in 2020.

[vbin]

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..

[fenders53]

(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.

[vbin]

(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?

[fenders53]

(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.

[vbin]

(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.

I do read other material. Like the one I shared about dalio and his book, and others, lol. Please do share articles/ books resources u want to suggest.

[fenders53]

I mostly listen to bank conference calls and news releases for my education.  The big banks charge high fees for under-righting larger company credit offerings,  and other services etc.  We've never seen 0% interest and I hope it doesn't come.  Company pension funds are in big trouble soon.  Perhaps before banks?  They need some spread to payout long-term.  Otherwise they have to invest in equities and that is dangerous.  At some point extreme low rates cause big problems.  We are close enough to there now.

[NilesMike]

Bought a covered call on PENN

Stock 24.28
17APR 20 26C 2.01


(Oh and bought UPRO below the open and closed it out for $2.00 higher around 9:30AM)

[NilesMike]

Bought back the call side for $1.10 and sold out the 17Jul20 26C for 2.55

[Otter]

Still sitting on Puts.

[fenders53]

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

Of course you are, and you called it right.  Got anything that might be helpful to your fellow long-term investors on a DGI forum?