Investments Trade Log

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Seppia
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

Dividends can be cut, see Shell, Eni, total (iirc).
We have experienced a decade of incredible underperformance from the energy sector, most of the times these things mean revert, other times they don’t (railway stocks).
I have heard that supply takes years to ramp up, and now we have just had three years of cost cutting which may bring supply down quite a bit in a few years’ time.
People seem to think that the only thing that matters is consumption, but it’s actually the balance between supply and demand. If supply goes down too much and people can’t freely substitute oil with something else, prices may go up even by a lot.

Also consider that the American majors and the European ones are having vastly different approaches:
Europeans are trying to position for the transition away from oil, while the Americans are sticking to oil and its high dividends, in a way that reminds of tobacco companies a while ago.

As usual, who knows, but I’d personally bet on energy and value over performing over the next decade. I’ve been betting on this for the last two years and have been proven wrong so far.

Chris
Posts: 674
Joined: Thu Jul 22, 2010 2:44 pm

Re: Investments Trade Log

Post by Chris »

biaggio wrote:
Mon Aug 10, 2020 3:02 pm
What is your view on big oil as a long term investment (for dividends) at current prices? I don't see oil going away anytime soon; the shift away from fossil fuels will be gradual and the big companies will try to adapt.
People said the same about coal: "such a large portion of electricity generation is from coal, the switch will take years", "steel production needs met coal", etc. Fast forward to today, and coal is still used to produce much of the electricity in this country, and steel is still produced with met coal. But if you were an investor in a coal company in the past decade, you'd likely have lost your shirt as bankruptcies rolled through the industry.

Oil companies will certainly be around for the foreseeable future. Are they investable? Maybe. It can be very difficult for big companies to adapt to change, particularly when their original business had been so successful. Sure, Sears could have become like Amazon -- they were pretty early to invest in the internet -- but they didn't make the turn. Sending money out the door in the form of dividends didn't help. When you have a competitor like Amazon that reinvests everything back into the business, it's hard to win the race. So is a big dividend payer like Exxon going to outpace BP (which slashed its dividend) when it comes to changing their business for the future? And is BP even in a position compared to smaller, more nimble players?

ZAFCorrection
Posts: 428
Joined: Mon Aug 14, 2017 3:49 pm

Re: Investments Trade Log

Post by ZAFCorrection »

Instead of retail, I'd say oil companies are a lot more like telecoms in terms of having a huge moat in terms of infrastructure and government support. Google fiber was going to upend the market but got thwarted every step of the way by the huge infrastructure costs and the unfavorable rules. I'd expect the same to happen in the oil industry.

shemp
Posts: 128
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

With regards to oil, big danger in declining industries like this is precisely that managers dot not accept graceful decline but rather squander capital trying to reinvent the company. Buffett shows the right way to manage declining industries: starve the business of capital and milk it mercilessly for cash. Think of his famous See's Candies. Every penny of operating profits goes to Omaha, then Buffett decides how much to send back to the managers for renovating stores or expanding operations. Of course, it's possible to overdo this, like with Sears. (Though actually, Sears mistake was not failing to transform into Amazon, which is unrealistic, but rather failing to transform into a competitor to Walmart, Target, Lowe's, Home Depot, etc. Overall bad management.)

I suspect part of the problem with coal was excessive expansion back in the 2000-2007 period, when China was going wild building factories and infrastructure. Coal companies probably expected the China demand to last forever. I definitely know the price spike in oil around 2007 is what set off the shale craziness, which is what led to recent energy sector problems.

In all these highly cyclical commodity businesses, look for companies that accumulate cash and avoid over-expansion in good times, then buy up assets cheap from competitors in bad times. Gold, for example, is currently booming, so beware of mining companies who respond by massively increasing capacity.

biaggio
Posts: 11
Joined: Sun Apr 23, 2017 5:31 am

Re: Investments Trade Log

Post by biaggio »

That's a good insight shemp, will be interesting to follow if any of those that cut dividend and claim to be wanting to shift towards cleaner solutions (RDS and Equinor come to mind) will go down this path.

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Lemur
Posts: 817
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

Profited on WMT vertical spread. Used profits to buy Intel. Opened up another spread on WMT.

INTC...growing revenue, earnings, ROE 30% TTM, positive cash flow, and 9 PE ratio. A reasonably priced stock. Doesn't see that much these days.

PEG Ratio

"Currently, Intel has a PEG ratio of 1.15 compared to the Semiconductor - General industry's PEG ratio of 3.17. The company's trailing twelve month (TTM) PEG ratio is the P/E ratio divided by its growth rate over the past 12 months." - zacks.com

ajcoleman22
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Joined: Mon Apr 16, 2018 8:45 am

Re: Investments Trade Log

Post by ajcoleman22 »

INTC is looking pretty good right now.

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

Re: Investments Trade Log

Post by Seppia »

Didn’t they recently admit defeat by TSMC saying they’ll stop producing chips?
I don’t follow the stock and know nothing about this world but that sounds like a big deal. If it’s not, then I could see an opportunity

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Lemur
Posts: 817
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

@Ajcoleman22

Has value-stock written all over it.

@Seppia

Not entirely. They will be outsourcing some of the chip making. But revenues are up 20% YOY and will likely to continue to grow as cloud computing grows. This article gives a good cliff notes of each major player in the semi-conductor world:

https://finance.yahoo.com/news/7-semico ... 43443.html

Intel was a little bit slow to change (moving away from PCs) and that is what has made it a laggard but they're making recent moves to position themselves better (fired Chief Engineering officer for instance) for future growth.

With Intel's bankrolls and brand-power. I think they will be fine.

classical_Liberal
Posts: 2043
Joined: Sun Mar 20, 2016 6:05 am

Re: Investments Trade Log

Post by classical_Liberal »

I shaved 10% off all my US equity index holdings today, except for a few individual picks, went to cash. Dry power now accounts for a third of total portfolio.

giskard
Posts: 154
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

classical_Liberal wrote:
Mon Aug 24, 2020 3:29 pm
I shaved 10% off all my US equity index holdings today, except for a few individual picks, went to cash. Dry power now accounts for a third of total portfolio.
I think this could prove to be a good call. I'm going to shift more towards cash this week.

PUT / CALL ratio looking spicy!
https://ycharts.com/indicators/cboe_equ ... call_ratio

SPY is hitting all time highs, no stimulus deal in sight, VIX has cooled off, volume is down. Its like the market is on autopilot and nobody realizes that there is no gas fueling this thing anymore. Of course I could be wrong and we get SPY at 400 by November. :lol:

Lucky C
Posts: 615
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

Imagine holding TSLA for the first half of the year, selling at the end of July when it was looking like it was rolling over after an easy 350% YTD gain, and then looking at the price now and feeling like an idiot for missing out on an additional 67% in the past month. "I'm such a moron selling after only 350% over 6 months!" Crazy to think that there must be some people out there thinking along those lines even if they have been making once-in-a-lifetime gains betting on tech stocks this year.

I see signs of a much higher than normal chance of a major pullback over the next few weeks. The trouble is major pullbacks don't happen too often so a "much higher than normal chance" doesn't mean it's more likely than not.

ertyu
Posts: 1421
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

I almost get the feeling everyone's expecting that correction so it won't happen just to spite us :lol:

Jason

Re: Investments Trade Log

Post by Jason »

I was concerned about Zoom's pricing in Nov/Dec 2019 so I purchased in four lots. I toyed with selling but when it hit verb status, I said just leave it alone. It's up 550%.

SavingWithBabies
Posts: 678
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: Investments Trade Log

Post by SavingWithBabies »

@Jason Goes to show what I know about investing (when I was talking about the tech side of Zoom a while back). Still feels crazy. Like we're in the age of tulip tech.

Jason

Re: Investments Trade Log

Post by Jason »

550% is all types of wrong. It does not feel like good fortune. It's a little sickening in the too much chocolate sense. Watching things go up yesterday was as sickening as watching them go down in March.

However, most investing nightmare stories are not "I had a choice between Blockbuster and Netflix and I chose Blockbuster." It's I bought Netflix @ x and sold @ x+ % because I thought it was getting too high and now I would have x amount of dollars if I had just held on. The only thing I do know is that I will not be adding to my position.

Lucky C
Posts: 615
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

For psychological satisfaction you could sell about 15% of your Zoom stake. Feel good getting all your initial investment back to redeploy elsewhere, while not feeling bad about selling if it continues to rise and you still make 85% of what you would have made.

Jason

Re: Investments Trade Log

Post by Jason »

I did that with DOCU which I bought at $62 when it hit $210. Now it's $273. I mourn my sold shares.

Thank God ZM is down today. I couldn't take another day like yesterday. When TWLO ran up 40% in one day I had to calm myself. People don't give Warren Buffet enough credit for maintaining his equilibrium while watching his money escalate to unfathomable heights. For all he is blessed with, put disposition at the top of the list. For times like these, reading the accounts of lottery winners is a sobering reminder of the role of disposition when it comes to money, both substantial losses and substantial gains.

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

Re: Investments Trade Log

Post by Lemur »

Having great success with vertical call spreads lately. I have profited on all of the spreads I have set up in the past month and only had to break-even on one... To reduce trading activity, and possibly create increased probability of success to avoid short-term stock bouncing, I started setting my DTE (date till expiration) out about 6 months because I want to become less active. I also always exit at 50% max profit and only do spreads on stocks that I actually own (my brokerage won't let me sell a call otherwise anyway...probably for the best) and feel particularly bullish about. Usually I choose a long that is slightly ITM but did go with a slightly OTM for this one.

Here is today's option spread as an example:

MSFT 2021319 LONG CALL $235.00 for $24.40 Cost
MSFT 2021319 SHORT CALL $285.00 for $9.15 Premium
Call Spread ($285 - $235) = $50.00
Net Debit (Cost - Premium) = $15.25
Max Profit (Spread - Net Debit) = $34.75
50% Max Profit = $17.38

So I set a 'buy to close' on the long for $41.75. This is computed by taking the price I bought the long call for ($24.40) plus the 50% max profit calculation ($17.38) so I have the limit price set for $41.75.

What happens now is simple:

1.) If stock rises somewhere between $235-$285 in the coming weeks or months, the long call appreciates and will trigger the buy to close. I profit from the long call. The funds are immediately used to close out the short which likely will decay in value due to Theta. I profited overall from the position.

2.) Stock trades mostly sideways all the way until DTE. My short will be near worthless (great as I kept premium) and long call will only be worth anything if still ITM. I break-even or profit as long as I can sell the long for the net debit price which should still have intrinsic value as long as the stock is above the strike price of $235 from the long call.

3.) Stock falls below long call strike price. My max risk is the net debit ($1,525.00) if I let the options expire. In these situation's where the stock price is below the long call strike price, I am better off selling the long a bit early about 21-30 days or so because the long call will still have extrinsic value on it and theta picks up greatly around the 21 day time till expiration.

Peanut
Posts: 530
Joined: Sat Feb 14, 2015 2:18 pm

Re: Investments Trade Log

Post by Peanut »

Sold AMZN for 3236. Etrade tells me I bought it 8/3 for 3136. Of course I know this because it was the first new active position I'd taken since March. 40k on Wednesday shrunk to 10k today. I had forgotten it was precisely the volatility I loved. Guess I'll have to make my money the hard way. Which means I should buy back in nowish...

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