Investments Trade Log

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white belt
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Re: Investments Trade Log

Post by white belt »

thedollar wrote:
Thu Feb 24, 2022 6:24 am
Today feels like the bottom. Our worst fear has come true and nothing really affected the western world truly. This won't be a WW, this will be forgotten shortly. Or maybe the market will bottom out within the next month if something rate (non-war) related happens in March. I predict the market will be back up in 5-6 months. Let's see how this prediction ages :lol:
I’m skeptical of this for the following reasons:

1. None of the underlying energy dynamics have changed, if anything this conflict makes energy supply even tighter. Most analysts seem to think that there won’t be much new energy supply coming online in 2022 because there just hasn’t been investment in the space. It might even increase energy demand because war requires so much energy (to include the increased deployments and training we will see from NATO for coming years, even though direct NATO conflict is unlikely). Higher energy prices are of course inflationary, but if they persist long enough they will also structurally change markets. Most market participants are ridiculously under-invested in energy as a sector still. Ditto commodities as a whole (Ukraine is a huge grain producer).

2. None of the underlying monetary policy dynamics have changed. Keep in mind, the Fed hasn’t even finished tapering or started raising rates yet. Liquidity is going to get sucked out of the markets. Valuations are still high. My feeling is that the market still hasn’t come to terms with the Fed put expiring. If the Fed is serious about fighting inflation, then broad US equities will be the casualty. Apart from the brief taper tantrum, the Fed has supported markets for the past decade. Inflation is a much bigger political issue than equity valuations.

white belt
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Re: Investments Trade Log

Post by white belt »

Sold my last RSX position that I had let run. Ended up being like a 12 bagger, but cost basis was only about $100. So profits on RSX came out to a total of $11k.

Needless to say, I learned an important lesson in managing my emotions and not exiting a trade too early. I don’t regret taking some profits when I did, but I do think I should’ve left some more on the table to run. At the time, I was thinking about how I would feel if RSX rebounded and I lost a lot of paper profits, but I wasn’t considering how I’d feel if RSX plunged and I had already closed out all my trades (which is exactly what happened). Live and learn.
Last edited by white belt on Thu Feb 24, 2022 10:32 am, edited 1 time in total.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Bought more SOFI for the purposes of averaging down. Still proceeding with plans to move out of individual stocks over the course of the year and allocate to index funds. Just trying to breakeven on positions.

It is possible we could see a bounce / melt-up if the Russia/Ukraine situation somehow stabilizes.

thedollar
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Re: Investments Trade Log

Post by thedollar »

@white belt

1) OPEC can crank up oil production quickly with around 10% of global output if energy shortages continue and the high oil price is sustained. When oil production is increased so is gas production. Also, when the oil price is this high we are going to see a huge output increase of oil and gas from US shale.

2) Agree, but I think Fed hoped to talk down inflation by announcing a series of rate hikes. Why else would they announce them like that? The knowledge of coming rate hikes alone has slowed down equity prices and probably investments and consumption. I think Fed is watching inflation numbers closely, and if the inflation goes down on a monthly basis they will cancel the rate hikes. The inflation we are seeing in many areas is from shortages pushing prices up to unnaturally high levels as well as from high energy prices. When things normalize we will be back to low rates to combat deflation.

white belt
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Re: Investments Trade Log

Post by white belt »

thedollar wrote:
Thu Feb 24, 2022 4:01 pm
1. Some analysts are speculating that OPEC can't ramp up production because they've already failed to meet production targets over the past few months. If shale production can increase*, there is still a 12-18 month lag to ramp things up. Hence my comment about little new supply coming online in 2022. In terms of demand, if the US resorts to gas stimmies like some European countries have, then all bets are off. More detail on shale outlook: https://energypost.eu/u-s-shale-product ... -how-fast/

2. Remember the Fed dual mandate is employment and inflation (price stability). There is no official mandate to prop up asset markets, although that is largely what has happened since the GFC. Now we have inflation so that will take priority. Even if we see inflation slow to say 5% YoY, that's still significant compared to bond yields and interest rates. Employment data will be strong for the foreseeable future, so I don't think the Fed will see a reason to stop what it's doing for a while. Eventually something will of course have to give, but I'm hesitant to brush off rate hikes. The Fed telegraphs policy adjustments way ahead of time because they are trying to avoid another taper tantrum.


* = Big if because the most productive shale wells have already been exploited, shale revolution was driven by liquidity, and the political will and investment still aren't there for new permits and drilling.

plantingtheseed
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Re: Investments Trade Log

Post by plantingtheseed »

The spike in the move overnight was hard to ignore and ended up selling over half of the position for profit.

It is clear to see how the leverage can become quickly enticing in this environment. This is truly the wild frontier - a ticking time bomb indeed.

I was able to remain reasonably rational because of the ground work that I had laid beforehand. I faced no consequences - because I could afford to lose what I wagered.

It is so easy. And yet, I see now, how it is a culmination. That's why it cannot be done in mere years or even in a decade. Not bad for a month's hobby work.

Will be looking to continue on as the market unfolds.

A financial foundation, with consistent positive monthly cash flow, is a crucial part of the key.

Hold CVX @8.5%, Hold QMES puts, NW: ~1.28M cash+pension(~1.6M)+HC+SS

white belt
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Re: Investments Trade Log

Post by white belt »

I bought $5k of RSX at $10.90 today. Although catching a falling knife is never easy, I think at this point the sanctions are all priced in and things might even be a bit oversold. If a cease-fire is negotiated, I think we could easily see a reversal. I actually think at this point it would be smart for Ukraine to give up NATO ambitions as part of concessions (at least in the short term). Most importantly, this would buy them and other European countries time to build up military forces and energy capacity that is not tied to Russia. In a few years time, Ukraine could easily renege on the agreement when Russia has much less leverage than it has now.

My intention is to hold this until a ~20% pop and take my $1k in profits. If I'm dead wrong and RSX tanks more, then I will just hold until the rebound after conflict de-escalates (could be a few months, could be a year). Volatility is still at face-ripping levels making calls expensive and I didn't feel enough conviction on the timeline to do anything other than buy the underlying.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@White Belt

Looks like you'll be holding for a while (down 15% today) but this market is insane with the volatility anyway.... If it makes you feel better, I loaded up ~3 year's worth of expenses for SOFI at $20. Watched it fall below $10 and averaged down along the way down to $15.12. Now just trying to break even. Same level of patience - just gonna wait it out.

white belt
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Re: Investments Trade Log

Post by white belt »

@Lemur

Yup. Seems like I have a knack for being early lol.

Married2aSwabian
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Re: Investments Trade Log

Post by Married2aSwabian »

white belt wrote:
Mon Feb 28, 2022 4:28 pm
I bought $5k of RSX at $10.90 today.
Cute. Is this what the US military is calling on it’s men and women to do? Invest in the very country that is causing pain and suffering in the world right now?

News Flash: the rest of world is isolating Russia.

mathiverse
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Re: Investments Trade Log

Post by mathiverse »

Married2aSwabian wrote:
Wed Mar 02, 2022 7:43 am
@M2S - I hear you that this is a difficult time. Nonetheless, no politics, please.

white belt
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Re: Investments Trade Log

Post by white belt »

Married2aSwabian wrote:
Wed Mar 02, 2022 7:43 am
Invest in the very country that is causing pain and suffering in the world right now?
RSX is an ETF that tracks a market-cap weighted index of Russian-listed securities. I own no Russian securities. In fact, the underlying securities haven't traded for days because Moscow's market has been closed: https://www.cnbc.com/2022/02/28/moscows ... eside.html

jacob
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Re: Investments Trade Log

Post by jacob »

Married2aSwabian wrote:
Wed Mar 02, 2022 7:43 am
Cute. Is this what the US military is calling on it’s men and women to do? Invest in the very country that is causing pain and suffering in the world right now?
I'd prefer it if we keep moral judgements out of this thread. People may reach different moral conclusions based on different ethics. For example, is now a good time to invest in the weapons sector to support the arms build up on "our side"? This kind of depends on one's attitude towards war. Similar arguments could be made for and against any controversial behavior: nuclear, pharma, fast food, tobacco, prisons, airlines, coal, oil, mining, cars, ...
white belt wrote:
Wed Mar 02, 2022 9:52 am
RSX is an ETF that tracks a market-cap weighted index of Russian-listed securities. I own no Russian securities. In fact, the underlying securities haven't traded for days because Moscow's market has been closed: https://www.cnbc.com/2022/02/28/moscows ... eside.html


This is a fine technical point for any ETF owner. Investing in the ETF means you own (long) the ETF. The ETF itself then typically owns (long) either the underlying securities or some proxy (for example a synthetic position in futures). However the ETF company holds a short position against you on their books which mean they have to hedge ... and this is typically done by owning the securities for an almost 100% 1-1 cover.
As per the article they're keeping block redemptions and creation open :o This is really interesting since technically a blocktrader can redeem an ETF share (they trade in blocks of 50000 or more) for the underlying securities. I'm curious how they would do this currently ... especially since they're eventually run out insofar they're also creating ETFs on demand. As such the ETF has become detached from the underlying as long as arbitrage (which is very very good at keeping an extremely tight coupling) is gone.
Another way of saying this is that it's truly a Keynesian Beauty Contest. The price is determined by what one thinks other people think... etc. it's worth. Once the Russian exchange can be re-accessed, expect a wild move.

plantingtheseed
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Re: Investments Trade Log

Post by plantingtheseed »

The current short is going well, continuing to hold and seeing how far it can go.

I had expected the market to bounce here, but surprised at its relative weakness.

If it loses it here, we're looking at 4100 level then 3800. But after that, the market will be merciless.

I'd expect an intermediate bounce before then.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

I saw this tweet from Dividend Growth Investor
https://twitter.com/dividendgrowth/stat ... 10916?s=21
And I remembered we had a member that was very overweight Russia.
Hope he’s doing fine

prudentelo
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Re: Investments Trade Log

Post by prudentelo »

@jacob - do you feel comfortable assessing the risk that western-based Russia ETFs will lose significant/all value due to ETF mechanisms even if the underlying index eventually does fine in Russia?

jacob
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Re: Investments Trade Log

Post by jacob »

@prudentelo - Well, the ETFs shut down the mechanisms Thursday so the managers are aware of it. In addition the exchanges shut down trading in the Russian ETFs Friday. So the capital is frozen now. I really have no idea what the different players might or could do to each other in terms of haircuts, confiscation, or sanctions.

classical_Liberal
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Re: Investments Trade Log

Post by classical_Liberal »

@whitebelt
I'm curious if there is any liquidity in RSX, given all the above information. Basically a closed-ended fund now, but is it still liquid?

PS don't feel bad, I considered such a move as well. Luckily I got distracted by adding to my COIN play, It's a value/ massive gorwth star IMO.

plantingtheseed
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Re: Investments Trade Log

Post by plantingtheseed »

Shorting DWAC.

plantingtheseed
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Re: Investments Trade Log

Post by plantingtheseed »

Added to DWAC short position.

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