Investments Trade Log

[white belt]

@Seppia

I thought about it and I think the FOMO has to do with the fact that everyone knows this type of boom can’t last forever. Or it can last forever and we are all hemorrhaging purchasing power as we speak (see crack up boom theory). The Fed will do anything in its power to keep markets afloat. I get that there is no such thing as a free lunch, but in times like these there is so much easy money to be made. I haven’t done my due diligence so I’m not sure, but I personally would consider getting in on some of the speculation and then dumping profits in gold and commodities.

WallStreetBets is moving the market and the regulators haven’t quite caught up yet, but I assume there will be changes coming down eventually (as ertyu alluded to). What’s unique is social media allows the average joe to have access to such information, when it used to just be Wall Street insiders benefitting from similar practices.

Edit: Also, by piling into stocks that hedge funds have large short positions on, the average joe can get revenge on Wall St for screwing him.

[C40]

Sold one GME share for $320. 11 left. (I bought at $44). That's 423 bahn mi sandwiches in the bank. mmmmmm.

I've never thought about a stock selling decision anywhere near as much.

[Scott 2]

@ertyu - I don't care about GME at all. Zero interest in making speculative investments or chasing momentum.

We already know US valuations are extremely high. My fear is media coverage impacting broader investor psychology, further removing market behavior from reality. I don't think the extreme volatility does anything but extract from the overall economy.

I also think there's a good chance of some suicides when GME inevitably reverts. A large majority of these people clearly have no idea what they are doing.

The resulting regulatory changes are going to add further noise into the already chaotic system. Can they dampen things? I have no clue. I don't enjoy the uncertainty. At this point, I am invested in the market because I don't have a better idea, not because I think it is a good idea.

[C40]

This will bring in a lot of new young investors willing to take huge risks. If I remember correctly, the number of subscribers to the r/wallstreetbets subreddit grew from 1.9 million to 2.8 million over the last 5 days

[Scott 2]

I am sure the professionals are salivating. GME isn't a loss, it is a marketing budget.

[white belt]

I understand the skepticism about speculative bubbles and we certainly appear to be in one of the largest bubbles in history across multiple asset classes. However, that doesn’t necessarily mean the bubble has to burst anytime soon. Experts have been calling for a large stock market correction since the GFC and it hasn’t really come to fruition (with the exception of the flash crash and rally in March 2020).

I think an interesting thought exercise in the current environment is to think through what would happen if we had a stock market correction (20%? 50%? Pick your scenario). Do you think the US government would just standby and allow this to happen? Do you think it’s a coincidence that Janet Yellen is the new Treasury Secretary? Remember how the Fed stepped in to bail out the junk bond market in 2020?

IMO, the Fed and Treasury are going to turn into a self-licking ice cream cone. Call it MMT or whatever you want, but the stock market is too big to fail. Pensions, Wall St hedge funds, and average consumer retirement funds in 401k’s all require large returns to remain solvent. Additionally, Vanguard and Blackrock who rely on passive (ie the market always goes up), spend more money on lobbying then the rest of the industry combined.

What if the speculative bubbles continue for another decade while secular inflation takes hold? Perhaps if you are hedged with assets that do well in inflation then you can ride things out, but I suspect at least some allocation to such bubbles is going to be necessary.

[Hristo Botev]

Maybe this is how we tackle the student loan crisis: young Redditors use cyber-bulling meme tactics to get big hedge funds to pay off their 6-figure inflated college debt.

[white belt]

@Hristo Botev

Or a crack up boom creates runaway inflation, which I guess in the end is the same result because the student loan crisis won’t be a concern anymore.

[Lemur]

Vanguard temporarily halting stock orders? Only ETF trades allowed. WOW. If you want a stock trade, you've to call.

Notice: Currently the only order types available online are Equity and ETF day orders. For all other Brokerage products and order types please contact Vanguard at (800-992-8327). Please monitor this page for balances, holdings and order status at this time. Extended hours trading is currently not available.

Oh well this is probably a good thing for me today.

[Lucky C]

I've got nothing on my Vanguard page, no even balance info available. Can they not handle the volume involved in a 1-2% drop in the market and a mania in a couple of individual stocks? Did they think all their customers would be on board the "buy and hold for the long term" train through this kind of market environment?

Does Interactive Brokers have a track record of lower downtime / better execution vs. Vanguard? I was thinking of moving to them anyway.

[giskard]

@Hristo Botev

Or a crack up boom creates runaway inflation, which I guess in the end is the same result because the student loan crisis won’t be a concern anymore.

I was turning into a deflationist for a while there but now I'm thinking the crack up boom is really coming. Home prices are up 10% year over year, QQQ is up about 50% in 2020. National spectacles like Tesla, BTC and GME debacle are causing everyone to speculate...

How much can you reduce production and real productivity in the economy and fill everyone's pockets with fake paper gains before something bad happens? How long can you keep that going on if you keep bailing everyone out every time it goes a little bit sideways? It's a grand experiment and we are about to find out.

[giskard]

Does Interactive Brokers have a track record of lower downtime / better execution vs. Vanguard? I was thinking of moving to them anyway.

To be fair every broker is falling over today. I just got some very wild executions on some orders I had sitting open on my TD Ameritrade account. The crypto exchanges seem to be having trouble as well. It's systemic.

[white belt]

I think Jacob mentioned it earlier in the thread, but if your strategy relies on frequent trades, you want redundancy at every level. Start with diversifying with at least 2 different brokers, banks, and internet connectivity methods to protect you against outages. If you want to go next level you could figure out the cloud provider the companies are using and ensure you have diversity in case AWS/Azure have an outage.

[Scott 2]

@white belt - I agree with you on the risks. That is precisely why I am unhappy with my paper investment holdings. I am still 40% US Stocks, balanced with 20% cash, because I don't know know any better. I think inflation protected assets have already appreciated to reflect the new crazy.

[biaggio]

I tried doing a little research before dumping money into stocks that guys who called themselves autists and retards were hyping..

One place I looked is here:
https://swaggystocks.com/dashboard/wall ... -sentiment

Scroll down a little to the ticker section. These charts show sentiment on reddit.com/r/wallstreetets (# mentions, bullish vs. bearish - though keep in mind that bearish comments are basically not allowed and may be bannable there), and the stock prices. Most of the stocks they've been bullish on have went up significantly. I tried a little to look back at older history, but didn't bother since I was only putting a little in, and I'm buying these stocks now, not a wsb fund.. But also note, a lot of people buying meme stocks have picked total failures many times, many lost their life savings, sometimes their parents' retirement savings! Right now is the number one most successful pick they've made.

(note that when I say 'they', I am talking about overall sentiment of the subreddit. It is not one message, as there are nearly 2 million members of the subreddit. Some members have more popularity but anyone can post)

Thanks for sharing. Funnily enough, some years ago I worked with a group that was implementing similar things (ML sentiment analysis) for a big financial information supplier. EDIT: Want to clarify that I didn't mean that your reading of subreddit is more profitable; I meant r/wsb & co crowd in general.

I don’t understand why people sometimes pick arbitrary yardsticks to measure performance.

Would I feel bad because Valentino Rossi can ride a bike faster than me?

Would I feel bad because crazy guy X powers through a red light and gets to the other side alive and faster than me?

The answer to both is no for me.
I mean these crazy things happening, wether it’s TSLA being worth more than the entire oil industry while never being profitable though its existence, Hertz going up triple digit while bankrupt, GameStop going from $4 to $100+ because of a Reddit board or some imaginary made up currency supposedly being worth $40k are things that amaze me.

But never in life I would think “oh I could/should have done that”
These aren’t things I’m built for.

It would be like being envious of the guy who won the lottery. I never play the lottery because I consider it stupid and an overall losing proposition, so why would I be mad or suffer FOMO?

I guess the way I wrote the message made it seem as if I was in a bad mood over this---not at all. Primarily wanted to share how surreal it all feels. FWIW I'm staying in positions I bought in at a nice safety margin back in spring (unless Q4 reports bring any surprises of course).

Re yardsticks, I'm mainly saying that momentum trading seems to have worked lately. A rally from $40 to $300 is equivalent (return-wise) to achieving 10.6% annual rate of return over 20 years.

[Lemur]

Joining in on some of this hype. Seeing if I can ride MAC but taking a more risk adjusted approach (capped gains but lower cost basis). Posted more details in my journal.
viewtopic.php?p=236070#p236070

Either brilliant or dumb - only time will tell I guess but figured the risk was worth it to try to ride the retail short squeeze euphoria.

[take2]

Matt Levine from Bloomberg has had a few good articles on GameStop this week. He has a daily free email you can sign up for (“Money Stuff”) which is well written and offers a humorous take from a former investment banker and lawyer.

You can sign up for them here if you’re interested
https://link.mail.bloombergbusiness.com ... 4B6e7c24fe

What’s really interesting is the latest activist board member (Ryan Cohen) who bought a large minority share at $8.43 with a plan to turn them around from a mall-based retailer to an online giant. He’s now a billionaire on paper. Except he can’t really sell and just resign! Strange times.

[IlliniDave]

The Gamestop situation is pretty fascinating. From what I've been reading, sounds like hedge funds are getting somewhat skewered. Since it is hedge funds getting hurt by little people, what's the over/under on when the federal gov't intervenes on behalf of their financial benefactors? I'm surprised it's gone on this long.

[white belt]

@IlliniDave

My guess is any day now regulators will intervene, just based on the amount of hype on Wall Street that GME has generated. However, I think the decentralized nature of social media means it may be trickier to crackdown because it’s not clear who to go after. I mean you can ban WallStreetBets, but that will just turn into a game of whack-a-mole as they pop up on different platforms.

You could introduce trade restrictions, but that would affect the markets in other ways that are not favorable to the ruling class. So who knows how it will play out, but I suspect hedge funds won’t continue with their previous short strategies given what we’ve seen. Maybe Jacob or someone with more high finance perspective can give a more informed opinion about how things might look from inside.

[Hristo Botev]

@IlliniDave: The conspiracy theorist in me wonders whether that's part of why some retail brokerages have halted trading on GME (and AMC).