Investments Trade Log

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Lemur
Posts: 899
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

SQ 25% run-up just this week. Not making same mistake twice so I sold near the 52-week high. I'll gladly take nearly 300% gain :) by cost-basis. My best trade ever.

I still like this stock long-term...just need a more reasonable valuation and would like to get back in at some point.

Mister Imperceptible
Posts: 1443
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

When Powell "pivoted" on rate hikes at the end of 2018 after the market nearly crashed 20%, rates plummeted. Tech enjoyed huge multiple expansions, and in 2019 gold finally broke thru multi year technical resistance at 1350. With fear of a Blue Wave leading to a sell off at the long end of the Treasury curve, Tech stocks started to crash prior to the election, because Tech stocks are a "long duration trade," essentially, years of future growth are discounted as part of the net present value of the asset because there is no yield available from the risk free asset. This relationship became crystal clear in its all-importance to me this week. As people lost fear of Blue Wave after election with GOP likely regaining control of Senate, and setting up potential fiscal deadlock, rates at the long end collapsed and encouraged a rotation right back into tech.

The paradox? Without massive fiscal stimulus, the stock market will crash. The system is insolvent, with 25% of the SP500 being zombie companies and most players sovereign, corporate, and household unable to generate positive free cash flow, and therefore needs constant liquidity injections. And WITH fiscal stimulus?.....rates at the long end will rise and the "long duration" trade of megacap tech will collapse as the net present values get discounted in the opposite direction. Megacap tech is just a high beta long term US Treasury play.

To prevent a stock market crash, the Fed needs to provide liquidity to the stock market, while starving the masses of stimulus, because fiscal stimulus will blow up the far end of the yield curve. Which is not possible because the masses cannot pay their rent, cannot buy groceries, never mind any discretionary items. In Q1 2021, the moratorium on evictions, foreclosures, student loan payments and installments on other obligations will expire. This last rally propelled by NDX is one final expression of the 38 year trend of long term treasury rates toward the zero bound, coupled with Gen Y and Gen Z FOMO inspired by the Pavlovian response of "buy the dip" with decades of literature brainwashing them into passive indexing.

The collapse will be immense, painful for many, fun to watch (not the pain of the people already suffering, see below chart on those going hungry, but the pain of Jim Cramer and other people like him that deserve to be strapped to a rocket ship and launched into the Sun) and, hopefully, quite profitable for me.


Image

giskard
Posts: 181
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

Mister Imperceptible wrote:
Sun Nov 08, 2020 10:43 am
To prevent a stock market crash, the Fed needs to provide liquidity to the stock market, while starving the masses of stimulus, because fiscal stimulus will blow up the far end of the yield curve. Which is not possible because the masses cannot pay their rent, cannot buy groceries, never mind any discretionary items. In Q1 2021, the moratorium on evictions, foreclosures, student loan payments and installments on other obligations will expire. This last rally propelled by NDX is one final expression of the 38 year trend of long term treasury rates toward the zero bound, coupled with Gen Y and Gen Z FOMO inspired by the Pavlovian response of "buy the dip" with decades of literature brainwashing them into passive indexing.
So to clarify - you think fiscal support isn't coming and the Fed will be forced to provide liquidity again soon which will inflate the stock bubble further but then we hit a massive wave of deflationary forces in 2021 which nobody will be able to counter and thus we get a big crash?

I hope that's not what happens but it looks like it is what could happen. I am incredulous at the fact that Pelosi decided to play politics all summer instead of taking a stimulus deal when there was a chance to get it done. Biden admin will not be able to pass anything until Feb at the earliest, and even then I think that could take longer than people might believe. The current admin looks likely to pass nothing in the lame duck session as they focus on recount lawsuits instead.

I was thinking we come out of this with inflation, but more and more I think we are going into a deep deflationary recession for several years now and no matter how much liquidity the Fed injects, the fiscal support was too late and millions of people are losing jobs and companies are going out of business.

Are you exiting some of your gold / silver trades? I'm starting to think about it. I have a low cost basis on a lot of it but if it really melts up here in Q4 it might be time to take some off the table. I think it was a great thesis but things just didn't pan out as expected. I just don't see how we don't get massive deflation for several years here in the US the way things are going now politically. Maybe it will be time to get back into PMs in a couple of years.

On a side note I can just see the housing market getting crushed relentlessly too when the banks finally start calling in loans and unemployment is still elevated. Maybe not with government interventions but they can only stop the flood for so long.

Mister Imperceptible
Posts: 1443
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

They will continue to tease fiscal stimulus and may pass a skinny one but the preference of the elites is to wash out retail first. Better to pass stimulus with the market down 30-50% than near ATH. I think the people buying SP500 at 3500 expecting SP500 at 4000 after stimulus forget who it is the Fed works for. This has been my thesis since I started buying long dated SPY put options in April and have added to that position the whole summer but even I am surprised by the committed nihilism and delusion of market participants.

I continue to add to the miners and they remain by far my largest position. There is no tolerance for long term deflation. MMT is just QE for the people and is picking up steam (see the board). The alternative is complete collapse of the global financial system. I want the miners to crash 50% with the rest of the market so I can cash my SPY put options and buy even more.

shemp
Posts: 139
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

Feb is not that far off. If the Fed lends directly, most publicly traded corporations can be kept alive until then. At that point, I doubt Republicans want a full blown debt deflation, since their corporate backers don't want that, so we'll get enough stimulus to keep the system from collapsing. Betting on total collapse is betting against the desires of the preponderance of powers that be.

I agree that tech is just a long duration bet, and I consider betting on low yields forever a bad bet. Inflation and rising long term yields are eventually inevitable, IMO. The preponderance of powers that be dislike inflation but they dislike debt deflationary depression more.

Note that gold and miners a bet on low real yields, thus another long duration bet. Personally, I think oil/gas is a safer inflation hedge. Energy sector as cheap as its ever been.

Mister Imperceptible
Posts: 1443
Joined: Fri Nov 10, 2017 4:18 pm

Re: Investments Trade Log

Post by Mister Imperceptible »

The 1970s had high nominal rates and negative real rates. Buying a Treasury yielding 3 or 4% is still foolish if the government is printing $10-20 trillion a year.

I am not bullish on oil yet because of Covid lockdown demand destruction and China has already gone thru their cycle of building ghost cities.

Futures up 3.5%, short squeeze meltup is on. The liquidity in the market is very low. Headlines for next few weeks should be “Market up on Biden win” and “Market up because Trump concedes and election is no longer contested” and “Market up because we have a vaccine to cure our plandemic right after Biden was elected” with another sub-headline “Another 750,000 people laid off this week.”

IlliniDave
Posts: 3138
Joined: Wed Apr 02, 2014 7:46 pm

Re: Investments Trade Log

Post by IlliniDave »

Looks like a good day to "rebalance". I'm not sure the predicted gridlock over tax hikes will happen.

Lucky C
Posts: 669
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

Is today an overreaction or underreaction to the 90% vaccine effectiveness news?

People seemed to be confident in a working vaccine "soon" before today, so the news is 90% effective vs. say 70%, the latter of which would not provide a great level of immunity if you assume that a high proportion of people will be afraid to take the vaccine, at least at first (maybe half of people?)...

The stock market overall was already rallying so people were already bullish, plus prices are already falling relative to the open, which suggests this could be an overreaction. I would think the earnings of companies over the next few years shouldn't really change much with a 90% vaccine in a few months vs. a 70% vaccine in 6 months, for example.

On the other hand, this removes a lot of doubt from people avoiding stocks right now, and the market is making new all time highs, so of course that's bullish.

On the other other hand, it's nothing but good news and optimism now. When it looks like visions of the future can't get any better, that's a good time to be cautious in the market - especially with stock valuations at extreme highs.

Edit: Overreaction it is, I guess! People couldn't even wait til Turnaround Tuesday to sell. But oil held onto its gains an precious metals held on to their losses.

giskard
Posts: 181
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

shemp wrote:
Mon Nov 09, 2020 3:45 am

Note that gold and miners a bet on low real yields, thus another long duration bet. Personally, I think oil/gas is a safer inflation hedge. Energy sector as cheap as its ever been.
Well maybe not after today! :lol:
Mister Imperceptible wrote:
Sun Nov 08, 2020 12:24 pm
I continue to add to the miners and they remain by far my largest position. There is no tolerance for long term deflation. MMT is just QE for the people and is picking up steam (see the board). The alternative is complete collapse of the global financial system. I want the miners to crash 50% with the rest of the market so I can cash my SPY put options and buy even more.
Appreciate you adding a response to my deflationary spiral concerns. I ultimately think I agree with you, I think it's more likely they go too far with the stimulus than the opposite (and we get inflation rather than deflation), it's just that how the last couple of months have played out made me start to question that belief.

7Wannabe5
Posts: 6861
Joined: Fri Oct 18, 2013 9:03 am

Re: Investments Trade Log

Post by 7Wannabe5 »

@MI:

Could you explain this in terms of the Ciara “Goodies” video I posted on the “Distinguishing between “the market” and “the economy”” thread? For instance, would the possibility of increased immigration = more background dancers wearing more chains or just more chains on neck of Peter Pablo? Also, who/what would represent the Fed? Thanks.

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Lemur
Posts: 899
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

Opened position in QCLN.

Flurry
Posts: 63
Joined: Tue Oct 27, 2020 1:30 am
Location: Vienna, Austria

Re: Investments Trade Log

Post by Flurry »

Bought these 2 days ago:

213 shares of Bunzl (LSE:BNZL) for 24.4 GBP/share, solid dividend growth stock and the valuation looks good at the moment + I need more European stocks in my portfolio

162 shares of Enbridge (TSE:ENB) for 40.0 CAD/share, I am very sure that they will stay able to comfortably pay the dividend from their DCF and I think the stock is very undervalued at the moment.

Invested 200€ into estateguru.co real estate crowd investing

ertyu
Posts: 1520
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

What does everyone think about this "rotation" then? Is this the final one that's for real (fintwit seems to behave like it is) or do we have another reversal back into growth as the covid cases in the states are gathering steam?

Flurry
Posts: 63
Joined: Tue Oct 27, 2020 1:30 am
Location: Vienna, Austria

Re: Investments Trade Log

Post by Flurry »

I think the vaccine from Biontech (for which Pfizer takes all the credit) is totally overvalued on the stock markets. My Simon's Property Group position went up 30% on a single day, just like everyone is vaccinated immediately, heading to the Mall to go on a shopping spree.

giskard
Posts: 181
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

ertyu wrote:
Fri Nov 13, 2020 4:03 am
What does everyone think about this "rotation" then? Is this the final one that's for real (fintwit seems to behave like it is) or do we have another reversal back into growth as the covid cases in the states are gathering steam?
I think it's overdone, but I'm talking my book here. We are seeing a very serious surge in virus cases worldwide and the vaccine rollout will be much slower than people expect I think. How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?

2Birds1Stone
Posts: 1237
Joined: Thu Nov 19, 2015 11:20 am
Location: Earth

Re: Investments Trade Log

Post by 2Birds1Stone »

I just made a (likely stupid) move to cash with a large chunk of my domestic and international equities.

Flurry
Posts: 63
Joined: Tue Oct 27, 2020 1:30 am
Location: Vienna, Austria

Re: Investments Trade Log

Post by Flurry »

giskard wrote:
Fri Nov 13, 2020 12:33 pm
I think it's overdone, but I'm talking my book here. We are seeing a very serious surge in virus cases worldwide and the vaccine rollout will be much slower than people expect I think. How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?
I think that will happen, I expect MMT to be widely established this decade.
In Europe many governments simply shut down business and compensate them for the missed revenues what costs trillions of Euros. This can't work without the central bank printing money like crazy and most countries will behave the same because it's stupid to swim against the current.

ertyu
Posts: 1520
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

Something about everyone talking about how wooooo MMT is coming makes me think that MMT will not be coming. MMT is what you do if you want redistribution without unrest and war. The very rich do not mind unrest and war because they usually have the means to be physically away from it and are able to profit from it. Don't forget the logistics of the nazi camps ran on ibm machines.

giskard
Posts: 181
Joined: Sat Apr 30, 2016 12:07 pm

Re: Investments Trade Log

Post by giskard »

ertyu wrote:
Fri Nov 13, 2020 2:06 pm
Something about everyone talking about how wooooo MMT is coming makes me think that MMT will not be coming.
Why not look at it from a standpoint that we are already doing MMT with more steps? They will never "normalize" the fed balance sheet, so they will be able to issue as many treasuries as they like at low or zero rates. The Trump admin was running huge deficits in boom years. Sounds pretty MMT right?

Its probably more risky to the US if we don't go down this path if everyone else is doing it. Our currency could strengthen too much and kill our exports. Helicopter money and e.g. forgiving student loans will be net beneficial to economic activity - we're at the point where we have so much accumulated debt and it's pushing down with such deflationary force it seems like MMT style policy is the only realistic way out.

But as a risk? Yes I do think the Biden administration will try to be more fiscally conservative than the popular opinion is expecting. At some point though they are just going to have to embrace it out of necessity.

shemp
Posts: 139
Joined: Wed Jun 12, 2019 11:17 am

Re: Investments Trade Log

Post by shemp »

giskard wrote:
Fri Nov 13, 2020 12:33 pm
How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?
Some won't survive, but most will because allowing too many publicly traded corporations to fail would bring on a debt deflation. Central banks know this, so if elected governments won't act, central banks will start to lend directly to avoid a meltdown. That's worst case. More likely, elected governments will act.

Remember, most newly created money (deficit spending) flows through business profits (including profits of publicly traded corporations) on its way to final resting place in the hands of misers (net savers, typically wealthy old people). This the ultimate explanation of the boom in stock prices. Big deficits mean corporate profits must necessarily explode upwards, regardless of collapsing household economy. This is a simple accounting identity. Only question is which corporations prosper, because some will miss the boom.

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