Investments Trade Log

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shemp
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Re: Investments Trade Log

Post by shemp »

https://www.epsilontheory.com/the-grift ... r-1-kodak/

Great piece about Kodak. Lends support to Project Zimbabwe theory.

[Edit:] After reading the above, read the following, for a good laugh:

https://adventuresincapitalism.com/2016 ... o-hillary/

"...Almost everyone in Hillary’s inner circle—including her—is under some form of criminal investigation. She’s one of the most crooked people to ever run for President of this country, but where’s the reporting on this?..."

https://adventuresincapitalism.com/2016 ... ca-part-i/

"...There are going to be huge winners ... in Trump’s America. If you can figure it out before it happens, fortunes can be made...."

_bb_
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Re: Investments Trade Log

Post by _bb_ »

@shemp - thanks for sharing. All I can do regarding Kodak is shake my head, non-recourse, non-secured loans and an 8 year time horizon?!?

There were many funny points of hindsight in both of the follow-up articles; related to the markets this line stood out to me, "Before the election, all asset classes moved in unison to Central Bank printing. Now policy changes will bring back prosperity—the Central Bankers will matter less."

Have we seen a change from the status quo? Within my limited scope of understanding, the CB's (at least the US Fed) has come to matter more. It seems like assets are still moving in unison with CB printing, however at a more accelerated rate. In my view, the role of the CB has been amplified in a negative way to bring more fragility to the system.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Intel down 15% this morning. They basically declared they lost the chip war. In doing so, that is partially one of the reasons AMD shot up 10% today. If AMD stays above $65 today, then my shares get called away because I had some covered calls on them. My cost basis on AMD is $51 per share. I'll net a good profit and will probably want to buy back in by selling puts but also divesting some of the profits away to PLUG since I'm overweight AMD now and I want to build up my PLUG position.
How lucky :D
https://finance.yahoo.com/quote/PLUG?p= ... c=fin-srch

Up 17% today. I have covered CALLS at $9.50 and $10.00 expiring end of August. Stock is at $9.00 flat. I'm already up 25% by cost-basis.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Another one of my portofilo's stocks popped again today. This time SQ. I'm trading away gains on that too with covered calls..but still will end up with 20% or so profits if gains are realized.

Personal Return January 1 to Today: 16.28%
S&P 500 Total Return YTD: 3.63%
https://www.ytdreturn.com/on-s-p-500/

Despite my strategy having a few unlucky holes (trading away gains), my gains in short-positions have vastly overcome those and I'm crushing it by this benchmark comparing to the S&P 500 total return.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Decided not to let my SQ shares go because I'm still very bullish on this company that just had earnings. I've noticed in recent tech earnings calls that there is always a second pop that occurs the day after earnings as well. Lets see if I predicated this right... so this is the first time I have rolled up my options:


Square Price Today: $153.00
Buy to close $140.00 CALL Contract = $16.40 * 100 = $1,640 Loss
Sell Covered Call at $160.00 = $6.00 * 100 = $600 Gain
Net = -$1,040 Loss + 433 premium from $140 call = $-607
Gains protected from $140 to $153 = $1300.00
---------------------------------------------
Net = $693

Because that final net was positive, I'm thinking this is what they would deem a successful roll-up to be worth it to do this sort of transaction. Lets see how this one plays out.

Edit: This is actually very risky on second thoughts because if the stock falls, I will lose the amount that the stock could go down by plus the amount paid for the roll ($1,040). If anything, I would actually need SQ to reach $160.00 for this to have been worth the small $260 price gained or just stay above ~150 in the long-run via 140 + debit cost-basis. In the future, what I should've done is try to roll-out to the same strike for a net credit.

Edit 2:Also forgot to take into account the original premium made. More like I need the stock to stay above about $145ish.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

I mean it’s only valued 150 times forward earnings and 12.5 times sales so no way it’s overvalued.
There are many things I know I don’t understand, but the USA stock market in 2020 really leaves me with a massive “????????” above my head

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Seppia
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Re: Investments Trade Log

Post by Seppia »

Would you pay a lemonade stand that’s making $1 per year $150?

If the answer is no, and still you’re willing to buy the business, you’re speculating. Which is ok of course.

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

But as soon as the highest bid for the lemonade stand drops to $110, Daddy will step in and offer to buy it for $155 to maintain price stability so let me buy at $150 to front run Daddy. As long as Daddy is there forever and never loses his job or runs away with the babysitter or dies it’s ok.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@Seppia

Doesn’t make sense to me either but the sentiment is going to keep driving up the price so I’m gonna ride the roller coaster up. Sure it might come crashing down but I still will be ahead then if I just sat on the sidelines holding cash.

Market is being driven by...

1.) No where else to put money.
2.) Cheap borrowing.
3.) Recession already priced in.
4.) Money printer go brrr.
5.) Probably another tech bubble.

My finance degree says nothing is worth buying in this market. But school is not reality...

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Lemur
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Re: Investments Trade Log

Post by Lemur »

NKLA...A company with $30k quarterly revenues but valued at $12B. OTM Long Puts looking real tempting....

shemp
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Re: Investments Trade Log

Post by shemp »

There's two markets. Regular market is driven by factors 1-4. Ordinary companies are reasonably priced, assuming economy eventually recovers. Maybe even cheap, given that fiscal stimulus will cause profits explosion if pent up demand is ever released. Nothing bubbly about KO (Coca-Cola) for example. Then there's tech, which has been bubbly since 2017.

I'm convinced there will be better treatments for covid-19 soon, which will allow some normalization. And I predict more fiscal stimulus and eventual consumer price inflation. Fiscal austerity to control inflation is politically difficult, so path of least resistance is allow 5% inflation for several years and use monetary policy (higher interest rates) to keep inflation from soaring higher. Higher interest rates will have negative impact on all long duration asset prices. Cash will not be much of a refuge because interest rates will be only slightly positive in real terms and most investors are subject to high tax rates on interest income.

I think low P/E and high dividend "value" stocks will fare best overall, and that's where I have most of my money. Lower P/E = shorter duration. P/E of 1 and dividend rate of 100% (business that is closing down) is equivalent to zero-duration cash. Gold equivalent to infinite maturity 0% coupon inflation-protected bond, so very long duration. High P/E stocks also very long duration.

ertyu
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Re: Investments Trade Log

Post by ertyu »

Lemur wrote:
Wed Aug 05, 2020 10:54 pm
NKLA...A company with $30k quarterly revenues but valued at $12B. OTM Long Puts looking real tempting....
They're literally running the same scam as tsla. it even says so on the name :lol:

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@Ertyu

We are in a new stage of irrational exuberance.....
https://www.cnbc.com/2020/08/05/nikolas ... idappshare

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Seppia
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Re: Investments Trade Log

Post by Seppia »

I really enjoy Kuppy's posts, here's the latest
https://adventuresincapitalism.com/2020 ... -zimbabwe/

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@Seppia

Thanks for that article. Its a great reminder of why not to SHORT. Companies can in fact remain fraudulent longer then one can remain solvent. Nothing makes sense in this market...the obvious doesn't seem so obvious anymore. I am on some sort of killer lucky streak though...Plug is up 7% before hours again and like I guessed the AMD party is still on. I'm past the strike price for covered calls AGAIN on PLUG. Ever since the AMD situation I've been doing a lot of reading into options again....AMD, SQ, and now PLUG I'm profiting greatly from but in every scenario I'm losing gains due to my CCs.

I understand now why stock traders use the vertical bull spread on growth stocks...a vertical bull spread is when one buys a call and sells a call at the same expiration date. The long position is the lower strike price, the short position is the higher strike price. In this way the cost of the long position is partially offset by the premium collected from the short position. There are 4 different scenarios that can happen:

Scenario 1 (Stock Trades Upwards): Stock price rises up to almost the short position strike price by expiration. One profits from the long call and keeps the premium from the short call.

Scenario 2 (Stock Trades Sideways): Stock trades sideways and ends up at the long call break-even price (Strike price of long position + Cost). You break-even on the long but keep the short premium.

Scenario 3 (Stock Trades down): Stock price tanks below long call strike price.Your long call expires worthless but your short-call premium is kept.

Scenario 4 (Stock Moons): Stock moons and blows past your short call strike price. You profit more off the long-call as the price rises but the short call caps gains. If one has covered calls, the shares get sold.

I would have made a lot more money had I used vertical spreads on AMD, SQ, and PLUG. Up until this point, I've only been selling CC. The extra money I would've made from those CALLS probably would have helped me more easily buy back in too or buy something else.

Note* You could do the vertical spreads without technically owning the stock if your brokerage allows you too. The benefit of owning the stock in a vertical spread is being able to profit greatly if you set the short position above your cost-basis; the profits from the long-call could help you buy back in when you sell for a profit and want to buy back in.

Edit: On further reading...there is bit more to vertical call spreads that I had originally imagined. One must read more on intrinsic vs extrinsic value in options.

biaggio
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Re: Investments Trade Log

Post by biaggio »

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.

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Seppia
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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.

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Chris
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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
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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
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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.

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