Investments Trade Log

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

Re: Investments Trade Log

Post by Mister Imperceptible »

Leading up to dot com crash there was narrative of new tech, new era.

Leading up to housing crisis the narrative was that they are not making any new land and housing never goes down.

This cycle there is no narrative of tech or land or any kind of growth. In fact, most everyone acknowledges growth limits, poor demographics, unsustainable debt, underfunded pension plans, etc.

The narrative is Central Bank Omnipotence. QE will not allow asset prices to fall. But for every buyer there is a seller. So even if that were were true, the hypothetical end game of that narrative is the Fed owns everything. They print money to buy all assets and we have a totalitarian government.

So, you bet on that happening, and eventually the Fed buys your land, your house, your retirement account, your wife, and eventually buys and operates the microchip to put in your brain to control your thoughts and physical movements. (Of course they outsource the actual purchases to BlackRock, and the android that used to be Larry Fink collects 2 cents for every $100. They outsource the manufacture of the chip to Microsoft and the android that used to be Bill Gates conducts your movement until your obsolescence, at which times the kill switch from the coronavirus is activated.)

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

Re: Investments Trade Log

Post by Mister Imperceptible »

This week has felt different. They announce the recession. Fed announced contraction thru at least 2021. Jeff Gundlach and many others point out that this rally has been retail driven. Contrarian indicators of bears giving up. Futures down and possibly third consecutive down day for SP500. Not sure if this is a pause of if this has exhausted itself.

Millennials really did not participate in this 11-year rally. Until the end. I thought around 145% Market Cap to GDP was a rough limit. We pushed to 160% in February and without knowing exactly what GDP is now we are likely above 160% now. If you were going to sell stocks, you would send everyone home from work, give them stimulus checks, and the ones that have something left over from rent and groceries throw it in the market. PPP ends at the end of July. Not sure how much longer to run. Give them free money, so they can buy the stocks off of you. Shut off the UI, PPP, and repo money. Let the bottom fall out. Declare another emergency, give you and your friends trillions in loans at zero percent rates. Buy everything. Don’t worry if the companies you own do not make money. You just bankrupted the small business owners like @Augustus and the ones still standing do not have access to trillions in loans at zero percent, so they cannot compete with you.

Rinse and repeat.


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

Re: Investments Trade Log

Post by thedollar »

I agree with most in the above post.

From what I can gather the current uptick is a combination of:
  • Institutional investors having sold too much on the way down, now needing to buy vast amounts of stock
  • Millenials / young men trying to make a quick buck on stocks affected by the crisis (Hertz, Delta, Norwegian etc.)
  • FOMO and a flood of available cash from investors selling before or during the Covid-19 crisis and the Fed
The latter two are dangerous, as people with limited investing experience and people inclined to enter the market for a quick return are usually devastated by just a small pullback leading to sell-offs and starting a negative spiral.

It seems that the market is flooded with cash looking at recent developments for GNUS, TSLA, NKLA and some of the recent IPOs in Denmark.

From where I'm sitting the economy is shit though with some European countries forecasted to see -10% GDP "growth". And meanwhile the Covid-19 crisis is not over just because we have it under control in Europe. The number of new cases in Brazil, UK and the US is still growing. My company - with a global presence - has already laid off a lot of people and we now need to scrutinize all bills and subscriptions because results are so bad and companies have stopped paying us / their bills. I know this might be limited to my sector, but that's pretty scary.

If we have a second Covid-19 wave I think the stock market will do a complete meltdown.

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

Re: Investments Trade Log

Post by Lucky C »

I'll buy that the Fed can help (to a certain extent) a bull market go from an average length of about 5 years to a record long 11 years, especially when starting by coming out of a Great Financial Crisis and sailing through without a major crisis and ending with record low unemployment. Though arguably the record bull market length had more to do with good luck and the Fed had more to do with the magnitude of gains in asset prices.

What I don't buy is the idea that the Fed can help reduce the length of a bear market from an average of about 10 months to only 1 month, especially when starting at one of the most extremely high valuations ever and ending still at a very high valuation.

I know I am simplifying these issues already, but to dumb it down even further, "the bigger they are, the harder they fall." People who think that this is the start of a new business cycle must think that this balance can just be erased? That the new normal is bull markets that last 2x as long as in the past (with less volatility throughout) and bear markets that last only 1/10th as long as in the past? Give me a break.

Fish
Posts: 554
Joined: Sun Jun 12, 2016 9:09 am

Re: Investments Trade Log

Post by Fish »

To me “bull market” and “bear market” are somewhat meaningless when the measuring stick (the $) is being manipulated. It’s interesting to see people talk about NW “recovering” from the recent dip. While that is true in a nominal sense (and also roughly true for purchasing power relative to today’s commodity prices), the increase in the money supply without corresponding increase in production of consumer goods means that $X in Jun 2020 represents a smaller fraction of wealth, as measured by stuff, than $X in Feb 2020. From this perspective nearly all of us are still down, and it puzzles me why more investors choose not to look at it this way. I’m probably missing something.

anesde
Posts: 149
Joined: Wed Jan 09, 2019 8:32 am

Re: Investments Trade Log

Post by anesde »

anesde wrote:
Fri Jun 05, 2020 11:26 am
Selling off a bit of generic mutual funds into this rally. Jobs report is better than expected but I find it hard to believe we don’t have another leg down in the next 6 months that will pose for better entry points. Especially with the volatility of an election year.
Pretty happy with my decision. I made a similar call in December when equities seemed way over valued. Like always I feel I should have sold more (and equally bought more in early April when I finally did) after the fact but likely better off not making drastic calls. I’ll still “lose” a lot of money as I only increased cash reserves from 14% to 18% but strangely I’m happier about getting my timing “right” for a smaller amount vs upset at losing a larger amount to things outside of my control.

I find it always helps to have a large amount in cash (relative to years’ expenses) to not sweat market movements in any case.

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

Re: Investments Trade Log

Post by Seppia »

@fish
As long as $10 today buys you the same amount of housing, food, transportation as it did before, I don’t think people will bother.
I would take a wild guess and say that in the short term, the same $10 has a higher chance of being able to buy MORE than they did a few months ago.
That’s what the bonds across the world are saying.

Jason
Posts: 2753
Joined: Mon Jan 30, 2017 8:37 am

Re: Investments Trade Log

Post by Jason »

Jason wrote:
Mon Jun 08, 2020 3:15 pm
BA is now down a "respectable" 31% from buy point after bottoming (hopefully) 200%.
lol@me

I really need Warren to stay alive to tend to my BRK Babies. I googled centenarian business people. Rose Blumpkin made it to 104. Warren bought her out twice. That's got to be a good sign.

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

Re: Investments Trade Log

Post by Mister Imperceptible »

Mister Imperceptible wrote:
Mon Jun 08, 2020 8:07 pm
Hertz up 112% today after filing for bankruptcy.

https://seekingalpha.com/news/3581266-b ... -for-hertz
"The Most Absurd Moment In The History Of Capital Markets": Hertz Plans To Sell Up To $1 Billion In New Bankrupt Stock

"if successful, Hertz could potentially offer up to and including an aggregate of $1.0 billion of common stock, the net proceeds of which would be available for general working capital purposes. Unlike typical debtor-in-possession financing, the common stock issuance would not impose restrictive covenants on the Debtors and would not impair any of the creditors of the Debtors. Moreover, the stock issuance would carry no repayment obligations, and the Debtors would not pay any interest or fees to those who provide the funding by buying shares at the market."

While something like this has never been done before for the simple reason that in a bankruptcy, the common stock is... worthless - after all Jefferies is effectively asking for permission to steal from Robinhooders knowing full well the equity will be worthless as the various claimant classes are satisfied and there is nothing left for the preptition equity, Jefferies takes the humor up a notch when it claims with a straight face before the bankruptcy judge that "This Court Should Authorize the Sale of Hertz’s Unissued Shares under Sections 105(a) and 363(b) of the Bankruptcy Code." Last we checked, there is nothing in the bankruptcy court authorizing a debtor to effectively take advantage of a massive asset bubble to fund a bankrupt entity.

And just in case someone accuses Jefferies of trying to get away with borderline fraud - you know, in case the SEC wakes up and realizes that what the mid-market investment bank is proposing is to basically steal from clueless Robinhooders, slapping it with a massive penalty - the filing has the following disclaimer:

Hertz would include disclosure in any prospectus used to offer common stock highlighting that an investment in Hertz’s common stock entails significant risks, including the risk that the common stock could ultimately be worthless.





Does anyone want an IBO? :lol:

George the original one
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Re: Investments Trade Log

Post by George the original one »


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

Re: Investments Trade Log

Post by Mister Imperceptible »

Bankrupt Hertz OK to sell $1B in new shares

They’re not even pretending anymore.

Full scale looting. Makes people looting Foot Locker look like peanuts.

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

Re: Investments Trade Log

Post by Seppia »

I have mixed feelings on this one.
If a company declares bankruptcy and you happily dive head first into the stock, either hoping for a quick buck or because you’re too stupid to take 5 minutes to understand what “bankrupt” means for the equity, I can’t feel a lot of empathy for your potential future losses.

anesde
Posts: 149
Joined: Wed Jan 09, 2019 8:32 am

Re: Investments Trade Log

Post by anesde »

I’ve had to actively dissuade some (financially illiterate) friends from buying Hertz stock. It’s just gambling which is fine if you accept that. Less fine if you don’t understand the risk and can’t afford to lose the money. I suppose there’s a way to use the new equity to bridge their solvency issues until the used car prices recuperate...but also could just be willingly handing money to the creditors.

If things do go belly-up it will be interesting to see what psychological effects that has on a lot of millennials who have been sitting out on a large part of the bull market the last 7-8 years.

Jason
Posts: 2753
Joined: Mon Jan 30, 2017 8:37 am

Re: Investments Trade Log

Post by Jason »

Well, if there's one company that knows about getting away with murder, it's Hertz.

https://www.youtube.com/watch?v=Uqd_XZYkZ70

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

Re: Investments Trade Log

Post by Mister Imperceptible »

Took advantage of the bounce to sell off a big chunk of silver miners. Something I noticed in late February and early March was that the miners began to underperform the broad market. This made me angry at the time, because if the economy is crashing why should that be? On days the SP500 was down, the miners would be more down. On days the SP500 was up, the miners were still down. This ultimately was profitable as I was able to monetize my highly appreciated put options and buy the miners at a 50% discount. I began to see this happen again on Thursday last week.

In late March and early April, the dynamic reversed. On days the SP500 was up, the miners were more up. On days the SP500 was down, the miners were less down, or even up.

So even tho I expect the miners to be significantly higher 6 months and a year from now, I see that in the short term the miners are extremely sensitive to local liquidity availability. Fed liquidity has continued to slow, just as it did in late February.

I am still holding my core position in the miners but this sale brings my cash position to over 20% of NW. if there is another sustained sell off I will get back in- the peaks in the VIX were associated with the bottoms in GDX in 2008, and again in March 2020.

I also held almost all of my OTM GDXJ calls expiring Jan 2021. At any moment the Fed can turn the spigot and I must maintain that exposure to protect my cash and SPY put positions. Those call options actually held up better in the March sell off than did GDXJ itself because as expectations of Fed intervention increased, so did the right skew in gold and miner options.

Eventually silver and the silver miners should outperform with the GSR putting in record highs in 2020, but they are most susceptible to deflationary crunches. Silver continues to be in a physical shortage and the premiums for physical silver are still huge. Even on March 16 I called a few dealers and they quoted prices significantly higher than the spot price, which helped give me the confidence to plow back into the miners. But in the short term the miners are bound by liquidity in the stock market.

Stick and move.

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

Re: Investments Trade Log

Post by Mister Imperceptible »

Last Wednesday stocks bounced on Powell’s conference on bad economy because it meant 0% interest rates thru 2022 and continued Fed support, then sold off into the close and dropped 6% the next day.

Today Fed announced purchases of corporate bonds. Stocks go higher on news. I managed to add to my SPY put position with SP500 over 3070.

plantingtheseed
Posts: 62
Joined: Sat Mar 28, 2020 7:23 pm

Re: Investments Trade Log

Post by plantingtheseed »

I managed to add to my SPY put position with SP500 over 3070
I think we're on the same path. Best wishes! :mrgreen:

anesde
Posts: 149
Joined: Wed Jan 09, 2019 8:32 am

Re: Investments Trade Log

Post by anesde »

@MI - curious what you think the catalyst for a drop will be? I agree with you that markets are decoupled from the wider economy but if they’re being driven up primarily due a lack of options (i.e people treating the stock market like a savings account) then what do you expect will trigger a fall?

Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

When enough people on the inside have found as many bag holders as they can.

Afterwards it will be attributed to an exogenous shock, such as a virus, race war, mean orange guy, Dr Fauci, Thomas Jefferson, Elders of Zion, or lizard overlords.

It will not be blamed on moral hazard and endogenous risk.

After a market tanks the Fed will declare an emergency bailout, and buy a one trillion dollar coin from the Treasury, which in a cash for clunkers program will use the proceeds to buy Steve Mnuchin’s wife’s breast implants back from her. The Treasury will send those used implants back to the Fed in exchange for the trillion dollar coin and the Fed will put the implants on their balance sheet as an asset.

Jason
Posts: 2753
Joined: Mon Jan 30, 2017 8:37 am

Re: Investments Trade Log

Post by Jason »

Mister Imperceptible wrote:
Tue Jun 16, 2020 9:59 am
The Treasury will send those used implants back to the Fed in exchange for the trillion dollar coin and the Fed will put the implants on their balance sheet as an asset.
a/k/a The gold digger standard.

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