Investments Trade Log

Ask your investment, budget, and other money related questions here
giskard
Posts: 116
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

Mister Imperceptible wrote:
Mon Jun 08, 2020 3:47 pm
I am not saying the stock market cannot go up, but I am doubting its ability to keep up with inflation, and there will be huge air pockets along the way. This rally has traded with low volume.

Since January 2018 the SP500 has traded above and below the 2700-2800 range, but has not gone very far, up about 10%. But the Fed’s balance sheet has gone from around $4T to over $7T. The last 2009-2018 saw stocks beating inflation, and now we are seeing stocks lose ground to inflation.

This is a good point about the market not keeping up with inflation, my feeling is that it makes sense to ride the rally up short-term taking profits along the way and moving into harder assets. I think that as we get asset price inflation (and maybe CPI inflation eventually) we are going to see a big move up in stocks first which can be captured but at some point if that happens it seems like a high probability that they start to under-perform against inflation if that goes on for any length of time.

I'd like to reduce my exposure to american stocks a lot and debating about how to do this other than gold, crypto, and residential real estate.

Seppia
Posts: 1415
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: Investments Trade Log

Post by Seppia »

MI, what are the precious metals miners you own and why?
If you don’t mind I’d be interested to start exploring.

Mister Imperceptible
Posts: 1289
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

Mister Imperceptible wrote:
Sat Apr 25, 2020 6:07 pm
I own ETFs, call options on ETFs, and I have money invested with Myrmikan and Crescat.

I do not want to get the vehicle wrong, go I am content to try and generate alpha by leveraging beta.

Seppia
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

Oh ok so no individual stocks.
That's a no go for me, I don't want to own ETFs other than large cap indexes as I'm weary of the potential divergence and distortion from/of the underlying assets they're tracking.
Thanks for your reply

Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

Rick Rule has been interviewed a bajillion times on YouTube and articulates how one might invest in the sector.

I also recommend the Myrmikan write ups and Crescat twitter feed, they do a great job documenting the slow motion train wreck.

Seppia
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

Great thanks a lot.

shemp
Posts: 48
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

Some thoughts:

1) Governments and central banks have made it clear they will not allow massive deflation, which removes the big risk from owning stocks. Stocks do well in both mild deflation and mild inflation, and they pass through the fire of hyperinflation with little damage once the hyperinflation ends (though profits are all taxed away while the hyperinflation is in progress). But massive deflation is deadly to stocks, because of possibility of bankruptcy. Removing risk of bankruptcy means equity risk premium will be much lower henceforth. "Reversion to mean" PE will be more like 20 than 15 (and CAPE-10 more like 25 than 20). That is, stocks will be much more expensive in the future than in the past: "at a permanently high plateau". Or, if not permanently, then until world is ready to allow massive deflation again.

2) Higher real interest rates will be needed to prevent hyperinflation. High real interest rates hit stocks, real estate and commodities, including gold. Because all asset prices are currently inflated from low interest rates, it will not take significantly high real interest rates to have a moderating effect on inflation.

3) Gold ultimately is anchored to mining costs, which are about $1300/oz currently, average for all gold mines worldwide. Mining cost should go up in line with energy costs. In other words, gold at $1300/oz or less will hold value indefinitely (provided people continue to want to hoard gold, which is a reasonable though not guaranteed bet), while gold at higher prices is a bet on demand (mostly hoarding demand, since gold has few industrial uses) outrunning mining supply. This bet can succeed for a few years, but not permanently. Higher real interest rates shorten time required for bet to fail.

4) Wage/price inflation is ultimately caused neither by money printing nor aggregate supply outrunning aggregate demand, but rather by aggregate political power of those who want inflation exceeding aggregate political power of those who want deflation. If the will for inflation/deflation is there, the way is obvious: give everyone $1 million for inflation, tax wealth at 99% for deflation, as extreme examples. Argentina, among others, has a perpetual will to inflation, and thus perpetually finds a way to achieve it.

Obviously, bondholders want deflation, but now that central banks are the major owner of government bonds, that constituency is of diminished importance. Remaining pro-deflation constituencies are: elderly with lots of cash (short bonds, bank accounts); elderly on fixed pensions (not adjusted for inflation); "little" people who hate for prices to go up even if their wages go up more. Constituencies for inflation: owner of real estate, especially with mortgages; corporations and their stockholders, especially corporations with debts or pension liabilities; governments with pension liabilities. 40 years ago, sea change occurred throughout developed world when forces wanting deflation finally gained upper hand versus forces wanting inflation. IMO, we are about to see sea change in opposite direction in next few years.

5) Baby boom in developed world was roughly 1950-1959, thus peak at 1955. Peak hit age 20 in 1975, causing maximum inflation as peak boomers went into debt to get married, set up independent households, buy cars and houses, while being unproductive workers because not yet trained. Push for deflation in 1980 was driven by elite, who gained power then for various reasons, including discrediting of communism in Soviet Union, and thus dimished need to appease worker class elsewhere. Peak baby boomers hit age 55 in 2010, and began to save furiously for retirement, adding to existing deflationary forces. Peak hit 65 in 2020, and thus savings glut due to boomers should soon start receding. Dis-saving by elderly should become significant by 2025, when peak reaches age 70. Dis-saving includes spending down of accumulated private wealth (housing equity, stocks, bonds) plus spending by corporations and governments on pensions and medical expenses. Sea change from savings to dis-savings by boomers will be highly inflationary.

6) Developing world baby boom, especially in China, is delayed relative to that in developed world. So possibly continuing massive deflationary savings (trade surpluses) by China, etc will offset massive inflationary dis-savings in developed world.

7) Japan bubble of 1989, USA tech/telecom bubble of 2000, USA housing bubble of 2007, related to demographics, though loosely. Investment bubbles are constant phenomenon because of humans naturally like to gamble, so impossible to drawn too many conclusions from such bubbles.

8) Current social unrest in USA, and likely future unrest in Europe, is threatening to elite. Path of least resistance is to buy peace with lots of inflationary government deficit spending.

9) Constant theme of these thoughts is that inflation is coming sometime in next decade, and likely sooner than later. Real interest rates will eventually be higher to control inflation, but not massively higher. Gold is no safe refuge in long run. Nominal bonds and cash will both lose to inflation. Inflation-indexed bonds pay 0% real currently, so will lose when real rates go positive.

10) Real estate normally survives or even thrives under inflation, but maybe not expensive urban real estate that might be affected by migration to exurban satellite towns: close enough to drive to city occasionally, far enough away to be cheap and safe from big city problems. Quick access to city no longer needed due to telecommuting or movement of both workers and businesses to exurbia. Quick access no longer wanted in pandemic-conscious era.

11) Value stocks likely to survive inflation far better than growth stocks. In particular, financial stocks will benefit from steep yield curve. Basic materials and energy stocks produce useful commodities, and should do better than sterile gold in a vault, especially if they have substantial long term debt or pension obligations that cam be inflated away.

12) US dollar likely to lose its reserve status in favor of basket of currencies. No need to international agreement for this to happen. Businesses can simply write contracts to be paid 33% dollars, 20% euros, 10% yen, 5% british pounds, and so forth. Eventually, everyone will settle on a standard combination of currencies for contracts, and then revise this standard every 10 years. Loss of reserve status for dollar will have many effects, including more inflation in the USA.

13) USA big tech stocks (Apple, Microsoft, etc) are good businesses with good future, but this is more than reflected in prices. These stocks could easily fall 30% over next few years relative to value stocks, as euphoria dissipates. Because of inflation, they may not fall in absolute terms.

14) It is tempting to market time: sell stocks in anticipation of crash while buying gold in anticipation of bubble, then trade gold for stocks later. Actually succeeding with such market timing is very difficult. Over very short intervals (under a week), you are competing with Renaissance Technologies and will surely lose. Over medium intervals (under three years), you are competing with hedge funds and need to be smarter than them to succeed: unlikely. Over long intervals (beyond three years), competition diminishes because of "career risk" in hedge funds: they cannot underperform for long periods without losing their clients. Only competition for long term market timing is other individuals, and there is not enough wealth controlled by smart individuals doing long term market timing (aka tactical asset allocation) to compensate for wealth controlled by herd followers who create bubbles.

When engaging in long term market timing, remember that both bubbles and periods of gloom can go on for very long periods. Sell SLOWLY into bubbles. Buy when price is good, fully expecting good prices to become better immediately after you buy: that doesn't negate your good price.

15) For the record, I'm up 4% this year as of today. Currently 29% USA stocks (value stocks only, tilted small value), 4% rest of UCAN block (USA, Canada, Australia, New Zealand), 18% europe, 15% japan/korea/se asia, 13% china/hong kong/taiwan, 13% russia, 6% other emerging markets, 1% cash. Other than USA, which is tilted value, other ETFs are market cap weighted indexes, mostly from Vanguard, other than ERUS and RSX for Russia. Russia is a huge bet on energy, basic materials and mining, optimistic view about future of Russia in case of worst case global warming scenario, geo-political diversification, cheap ruble, incredibly cheap PE and PB ratios.

I consider myself a very conservative investor, much more concerned about wealth preservation than growth. Because of massive bias towards inflation by governments everywhere, 99% stocks feels safer to me than bonds or cash.

For personal reasons, I don't want to own real estate currently. Otherwise, I would definitely diversify into exurban or rural real estate with part of my wealth.

jacob
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Re: Investments Trade Log

Post by jacob »

Jim Cramer recommends certain stocks yesterday two minutes after closing and today the lemmings pile in. Pretty much the green spots: https://finviz.com/map.ashx

ZAFCorrection
Posts: 365
Joined: Mon Aug 14, 2017 3:49 pm

Re: Investments Trade Log

Post by ZAFCorrection »

I followed the lemmings on DAL last week thinking to get a bit of fed pump money. Got out this morning with a tidy $0.30 profit.

My money is going back under the mattress where it belongs.

Mister Imperceptible
Posts: 1289
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

Sven Henrich: Crash #2

His Twitter feed is hilarious right now.

The video of Larry Kudlow on the White House Twitter feed is pure gold. :lol:

Reminds me of this Tweet:

Image

Our oligarchs have used car salesman personas.

Another contrarian indicator: Real Vision has removed “World in Recession” from their recent video intros and Ash Bennington and Ed Harrison have promised in a recent video for more “bulls” to come on Real Vision because I guess the RV subscribers are starting to get upset that the advice they have been getting has caused them to miss this move or even lose money on shorts.

Bears are capitulating. How are your 409k’s doing?

Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

Nikola Corp., a $26-billion truck company with zero revenue, just surged 103%

Tesla Inc. shares are at an all-time high. Hertz Global Holdings Inc.’s are well above where they were before the company went bankrupt. But no stock in the automotive sector is a better indication of equity-market exuberance than Nikola Corp.

The aspiring battery-electric and hydrogen fuel-cell truck maker debuted on the Nasdaq last week following a reverse merger with a blank-cheque company headed by a former General Motors Co. executive and board director. It’s forecasting zero revenue for 2020 and its first US$1 billion year won’t be until 2023.

Ford Motor Co., by comparison, is expected to report about US$115 billion of revenue for this year. And yet Nikola, whose stock more than doubled Monday, traded up another 24 per cent to as high as US$90.71 in early trading Tuesday, giving the company a richer market capitalization than the almost 117-year-old maker of the F-150.




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For I knew there would be a time
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When I would buy a brand new 409
(409, 409)
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Nothing can touch my 409
409
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When I take her to the track she really shines
(Giddy up giddy up 409)
She always turns in the fastest times
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My four speed dual quad posi-traction 409
(409, 409, 409, 409)

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(Giddy up giddy up 409)
Giddy up 409
(Giddy up giddy up 409)
Giddy up 409
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Giddy up 409

Nothing can catch her
Nothing can touch my 409

Seppia
Posts: 1415
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

Mister Imperceptible wrote:
Tue Jun 09, 2020 8:53 pm
The video of Larry Kudlow on the White House Twitter feed is pure gold. :lol:
That’s how I sound after three martinis.

Mister Imperceptible
Posts: 1289
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

Only three martinis! What are you doing wrong?

Lucky C
Posts: 557
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Re: Investments Trade Log

Post by Lucky C »

There are some amazing tail risk / downside opportunities that should only come once in a lifetime but are now seemingly better than in February. I'm still liking December as an expiration date for hedging options to give plenty of time for the euphoria to come back down and Robinhooders to get wiped out. Until then US stocks might still go parabolic if the RH bros are encouraged by some June 19th (already coming up next week!) successes. If stocks go negative over the next week and wipe out all those easy money 6/19 call options, it's hard to imagine euphoria holding through the next quarter.

Also, nobody seems to be talking about how the yield curve inverted almost a year ago... historically if you chose to be out of the stock market around a year after a yield curve inversion you wouldn't be missing much, while avoiding periods of increased volatility.

ajcoleman22
Posts: 47
Joined: Mon Apr 16, 2018 8:45 am

Re: Investments Trade Log

Post by ajcoleman22 »

Shorted $TSLA today (pure gamble play). This is craziness.

Lucky C
Posts: 557
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

Why not NKLA instead / in addition to TSLA? :)

ajcoleman22
Posts: 47
Joined: Mon Apr 16, 2018 8:45 am

Re: Investments Trade Log

Post by ajcoleman22 »

Thinking about it. haha

giskard
Posts: 116
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

ajcoleman22 wrote:
Wed Jun 10, 2020 10:57 am
Shorted $TSLA today (pure gamble play). This is craziness.
Wow, playing with fire. I hope you have a stop set! You know the quote "Something something ... longer than you can stay solvent".

Mister Imperceptible
Posts: 1289
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

By the way, “official” US recession that started in February announced 2 days ago.

https://www.nber.org/cycles/june2020.html

I suppose announcement was anticlimactic because

1) Everyone already knew we were in a recession
2) Most people are paying attention to the virus, protests, or upcoming election
3) Stocks are almost at all-time highs and the narrative of a V-shaped recovery has dominated



Today the Fed announced zero percent Fed Funds Rate thru 2022. After both stocks and gold bounced on the news, gold carried strong thru the close and stocks finished down at the day, as enough money sold the news.



On another note, now that the economy is officially reopened from virus lockdown: The monstrous unemployment numbers being released on Thursday, like last Thursday, are people that were shitcanned despite the reopening. Meaning unemployed for good. While the media narrative has normalized dropping rates of unemployment as good news, and new but previously unheard of multi-million unemployment claims per week are now routine, it should be observed that the people now being laid off are being laid off despite the fact the economy is reopening and we are in a “V-shaped recovery baby.” If the economy is reopening, why would corporations be laying people off? Because corporations crunched the numbers and realize the economy is actually contracting. The unemployment rate also does not count people under certain furlough categorizations, people who are essentially being subsidized by unemployment via the PPP (using companies as shell operations to pay UI discreetly and without calling it UI), nor does it count the people who are newly underemployed or no longer looking for work.



Additionally, the Fed announced GDP would contract 6.5% in 2020 and expand 5% in 2021. So by their own admission, the economy will be smaller at the end of 2021 than it was at the beginning of 2020. That is contraction over two years. Remember that there was only a marginal contraction of GDP in 2008, and this caused markets to drop almost 60%, because the global economy was so highly levered. The global economy is even more levered now than it was then. And if the last 10 years have taught us anything, is that growth has fallen short of forward projections, and has been revised downward after the fact, every time.

Seppia
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

Probably bullish.

I don’t want to get too excited, but it really feels like this could be a melt up before The Crash

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