Investments Trade Log

[ajcoleman22]

Thinking about it. haha

[giskard]

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]

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]

Probably bullish.

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

[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]

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.

[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]

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]

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.

[take2]

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]

@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]

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]

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?

[George the original one]

Hertz sounds like Gizmondo! https://www.inputmag.com/features/remem ... e-gizmondo

[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]

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.

[take2]

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]

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]

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]

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.