Investments Trade Log

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Lemur
Posts: 615
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

I'm sitting pretty as I bought a ton of MSFT around $140 a share after the COVID shock. As well as SQ in the $80 range. Only downside is I made my biggest bet on AMD but that has been slowly trending down / trading flat. WFC isn't doing that well for me either. But since February, I've been selling covered calls on all my stock positions and I only have been assigned once (and was forced to sell at a profit but did miss out on 8% upside with PLUG). Altogether though with $200k capital, I have made ~ $5,000 from selling options since February. This has been a fantastic boost to my savings.

In the ERE book, very early in the book, it is mentioned that one should use the book as a navigation tool ... a 'how-to' of how-to manuals. I've been enjoying the process of coming up with my own investment philosophy that seems to be working well...at least in the short-run. Since I discovered FIRE concepts in 2012, I only ever did index investing up until this year so this has been interesting and quite the learning experience.

I'm only slightly beating the market ...YTD SPY return is -4.50%. I'm only down -1.80%.

plantingtheseed
Posts: 64
Joined: Sat Mar 28, 2020 7:23 pm

Re: Investments Trade Log

Post by plantingtheseed »

Encouraging! Not because of the money, but because you're playing with ideas. You're on the right track. (The quickest way to mediocrity is following the herd.)

Lucky C
Posts: 561
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

OK it's time to short TSLA... now!
No wait, too soon... how about now? ... Wait wait wait!
...OK, NOW!
Yes, now, definitely going to start coming down, starting... now?

thedollar
Posts: 149
Joined: Tue Feb 21, 2017 4:07 am

Re: Investments Trade Log

Post by thedollar »

@Lucky C

Pretty much a suicide mission in this market

Seppia
Posts: 1417
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: Investments Trade Log

Post by Seppia »

I keep being amazed by the complete lunacy of the TSLA story.
It's clearly a stay-away though, the risk is too high. This stock was overvalued at $300 and it quadrupled since


shemp
Posts: 54
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

I have a cousin who is very intelligent is some ways, but very naive in others. Aspergers or whatever the buzzword they use for such guys nowadays. I warned him about speculating in stocks a few months back. Today he replied that he's not speculating, though he does trade based on recommendations from fool.com: "I'm having a good bit of fun with this and I find it entertaining. I just read an article that other day that some pundit said a lot of people are doing "entertainment investing" during this pandemic - that describes me exactly! But, of course, I also am doing it to make money out of it." He's up like 100% for the year with his "sexy growth stocks" as he calls them (versus me up about 2% as of yesterday on value and non-US stocks). No mention in his email of P/Es and other ratios. Instead he describes his method as follows: "I look at the chart for each stock, and ideally I prefer the ones that have had a steady uptick for some time, for the last month and 6 months and if possible for a year or more." Momentum investing, in other words. At least he has the sense to move some of his gains to cash. If you want to know why TSLA keeps going up, guys like my cousin is the reason.

ertyu
Posts: 934
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

I would disagree. TSLA keeps moving up because there's cheap loans for buybacks and because Elon does creative accounting to cause short squeezes (e.g. having Space X buy parts from Tesla to massage the numbers for earnings and cause a surprise up). I also would not be surprised if there is some "you scratch my back, I scratch yours" arrangement going on with the Chinese at Gigafactory Shanghai. And last but not least, I would not be surprised if it turns out that both Space X and Tesla have undisclosed US military contracts and connections. Your cousin is but a single dweeb. Even an army of such dweebs isn't significant enough to move the market when it comes to the largest of the large cap stocks.

Lucky C
Posts: 561
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

I totally get why young inexperienced investors would want to invest in tech stocks now without portraying them as idiots. Like most investors, they're just attempting to do what has worked in the past.

Here's a link to a chart I threw together demonstrating the long trend of divergence between the tech-heavy NASDAQ and other indices.
These are total returns over time:
https://stockcharts.com/freecharts/perf ... 2&O=011000

From least to most tech-heavy, which is also the worst to best performing since the beginning of the chart nearly two years ago:
Red: IWM (Russell 2000 ETF) peaked at the start of the chart (end of August 2018) and didn't even exceed that level in February.
Blue: RSP (S&P 500 Equal Weight ETF) peaked in February and total return is now slightly negative since end of August 2018.
Green: SPY (S&P 500 ETF) also peaked in February and is currently up 11.9% over its September 2018 peak, still a bit to go to hit the 2020 peak.
Magenta: QQQ (NASDAQ ETF) which of course has been making new highs throughout last month.

I started this at the Russell 2000 peak level in August 2018 but if you zoom out as far as the chart will go you'll see that from the beginning of the chart until now the pattern of NASDAQ > S&P 500 > Russell 2000 relative performance has held over the entire period going back to 2003 (after the tech bubble finished bursting), with only a couple small periods when the S&P 500 equal weight and S&P 500 cap weighted ETFs swap positions.

I know this shouldn't be surprising to members of this forum, but think about it from the perspective of a "typical" retail investor. If you invested in NASDAQ instead of the S&P 500 or small caps, you would have more than doubled your earnings over the past 17 years. Even if you only started investing in this market cycle (early 2009), NASDAQ would still get you almost exactly double your money vs. the S&P 500. In fact in any 10 year period since 2004, you'd be better off holding the NASDAQ than the S&P 500 (yes I know there aren't many 10 year periods since then and S&P has outperformed over shorter chunks of time). The further away you have been from NASDAQ-type stocks the past 2 market cycles, the more wrong you would have been!

Now clearly we (members of this forum) can think of many good reasons why this trend isn't sustainable for much longer, why tech stocks are overvalued, why value is due to outperform momentum going forward, etc. But think of the investor with a short attention span who wants to make a quick buck over weeks or months. When a fund or style has been outperforming for 17 years, and you have no idea when or how it's going to end, it's very unlikely that this week or even this month will be the end of it. So why not invest for the week or the month when in all likelihood the trend will continue for another week or month? Especially since all this time the value investors have been wrong and the tech bulls have been right - so why listen to those old school investors at all?

If you have no idea how long any given event is going to last, there's a 50/50 chance that the event is at least half way done. So with NASDAQ outperforming the past 17 or so years, the naive estimate is that there's a 50% chance that it will continue to outperform for the next 17 years or longer. But for those who have a deeper understanding of valuation and market cycles, it seems certain enough that the reign of NASDAQ will not last much longer that it makes sense not to have a tech-heavy portfolio at this time. Of course it also seems to be foolish to make a contrarian bet before the trend starts to reverse. With such a long NASDAQ winning streak, it's not like its downfall, whenever it comes, is only going to last a few weeks or even months. The only thing that makes sense to me right now is to not make a bet on any of the NASDAQ glamour stocks either way.

shemp
Posts: 54
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

Lucky C wrote:
Fri Jul 03, 2020 10:48 am
...But think of the investor with a short attention span who wants to make a quick buck over weeks or months. ...
I think you misspelled either "speculator" or "gambler".

Lucky C
Posts: 561
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

Indeed. I am usually good about distinguishing the two.

Over the past couple of weeks I have seen online ads for options strategies / how to become a winning trader, which I have never seen before.

Looking at Google Trends for "options trading" from the S&P500 peak until now...
https://trends.google.com/trends/explor ... %20trading
The highest search volume for "options trading" was the day after the recent June 8th rebound peak (actually if you zoom in to Past 30 Days it shows June 8th being the exact search interest peak). The second highest peak was March 19th, 2 trading days before the recent lows on March 23rd (and peaking right before the March 20th expiration date).

So maybe June 8th is going to remain the S&P 500 peak for quite a while longer, as the June 19th expiration options were not significant enough to boost search interest above the June 8th-9th peak after the big June 10th drop. The run up to early June was so extreme in bullish speculation that it seems so unlikely to me that the call options mania can resume to new highs.

shemp
Posts: 54
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »


thedollar
Posts: 149
Joined: Tue Feb 21, 2017 4:07 am

Re: Investments Trade Log

Post by thedollar »

@shemp

He has a lot of valid points but in my opinion he can't see the forest for the trees.

TSLA is the BEV category leader by far. More competition is just validation that the BEV space is the future. They are still 5 years ahead in terms of efficiency - for example the model 3 has 50% higher real world range than the Audi e-tron and other new BEVs from tradional automakers. They will even increase the lead if other manufacturers continue to stay silent on the 500 mile cybertruck coming out next year.

Software-wise they have an incredible lead because they have an integrated solution. German manufacturers, highly dependent on outsourcing software, are trying to catch up and VW is now planning to have their own OS ready by 2024 (2024!!). Look at the problems VW is having with the ID3; postpont for a year due to software and when it launches it will be missing functionality such as remote access. Apple is trying to develop a smartphone key with BMW, however, it's nowhere as advanced as the one currently live with Model 3 - you have to tap your phone against the car door. With the model 3 you don't have to do anything - you just have the phone on you.

By next year they'll have the new Shanghai factory up and running plus a new line. In addition, the Berlin and Texas factory will come online as well. Estimating 250,000 cars per year per factory, they'll double their capacity already next year - probably passing 1 mill. cars.

ertyu
Posts: 934
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

This is the "buy the rumor" side. When these factories do come online, sell the news. Cars are still cars, and we're still at the end of a long-term debt cycle.

shemp
Posts: 54
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

I'm retired but computer programming was my old profession. Started university in 1980. Still remember various hotshot computer names from back then: Control Data Corporation, Burroughs, Perkin Elmer, Data General, Digital Equipment, Cray, Silicon Graphics, Gould, Encore, Sun, etc, etc. Plus IBM of course, the only one you still hear about, and even IBM a shell of its former self. I think TSLA will be added to this list of fallen stars eventually.

When tech is good, especially software tech, it's very good. My own business shot from nowhere to market dominance (of a tiny market) in one year, and then I owned my market, with 99% profit margins, for three years before competition arrived. Final result, after taxes, was at least 100:1 return on initial investment. (I'm counting my labor as free, which is not quite kosher, but then labor was not that significant after the first year.) Whereas typical tech company, including TSLA, goes deep into the hole with upfront investment and then never gets a positive ROI. Same problem Buffett used to complain about with airlines: long-term destroyers rather than multipliers of capital.

One thing worth noting from that TSLA article I linked to is that the author is a short seller with a very poor track record. Short selling attracts people who desperately want to appear smarter than the crowd. So desperate that they forget the main goal, which is to make money. I have a contrary personality myself, and so am constantly hearing the Siren song of short selling, but thankfully I'm wise enough to recognize that it's a trap for all but an elite few who can get the timing perfect.

shemp
Posts: 54
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

TSLA up another 13%. Up 560% from this time last year. Short sellers getting absolutely killed. Timing is critical when shorting bubble stocks.

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