Investments Trade Log

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Seppia
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Re: Investments Trade Log

Post by Seppia »

With inflation at 8% and GDP growth negative*, I think the sentiment may be turning on unprofitable growth companies.
See for example the recent and continued annihilation of ARKK and it’s darlings.
I have been defensive and wrong for a while now, but…

*is it bad? I wonder if there is a term for that???? Mumbleeeee /s

jacob
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Re: Investments Trade Log

Post by jacob »

Since personal peak ...
... down 7.5% in taxable account.
... down 5.3% in tax-deferred account.
... down 4.8% overall. (about 7.5 years of spending)

No dividend cuts yet.

PS: How about sending the market down 0.5% each day over two days instead of up 4% one day and down 5% the next, eh? If you don't know where you're going, take the foot off the gas pedal.

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

I think that is a result of derivatives being the primary market now, and the equity market itself has become a derivative of the derivatives market. The train can only go straight up or straight down, there are no brakes.

2Birds1Stone
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Re: Investments Trade Log

Post by 2Birds1Stone »

Not bad at all. DW and I track combined portfolio and we're down 11.35% or ~3 years of TTM spending. Being in the accumulation phase is somewhat comforting, but it still doesn't feel good :)

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Re: Investments Trade Log

Post by jacob »

Mister Imperceptible wrote:
Fri May 06, 2022 8:23 am
I think that is a result of derivatives being the primary market now, and the equity market itself has become a derivative of the derivatives market. The train can only go straight up or straight down, there are no brakes.
The futures market (for pros) allows 30x+ leverage and likely still drives the individual securities intraday. Since there are only 3 regularly traded variables (SPU, Dow, NASDAQ) and their spreads (e.g. NASDAQ-SPU~=FAANG has been a winner for a long time), there's only been a handful of possible positions. E.g. 6 directs and 6 spreads including all combinations of long and shorts.

This is what a lot of the beta-ripping looked like in Mar2020.

However, with interest rates going up, things looks different. Those indices are subject to a limited number of buttons to push. As such, their ability to respond is limited. Those traders might not even have the technical infrastructure to unwind and rewind into a world where quality earnings begin to matter. As such I'm doing much better this time than last time, relatively speaking.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

As of yesterday I was down a bit less than 0.5% since my peak, so at this very moment should be around -1.7-1.8%
Two elements help:
1/ I live in euros, so an appreciating dollar has lifted my performance
2/ I'm overweight inflation hedges (mainly oil and consumer staples) since forever
If I go back since I started investing in 2006, I'm more or less on par with a world index and underperforming the S&P by a fair bit (but that's ok for me)

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Re: Investments Trade Log

Post by jacob »

Seppia wrote:
Fri May 06, 2022 9:57 am
1/ I live in euros, so an appreciating dollar has lifted my performance
I track NW in DKK as well and performance has been pretty sweet in that lens too. However, it's only a matter of time before ECB catches up and starts raising their rates too. It'll be a [for me welcome] game changer if world currencies would actually start competing on interest rates. Also see crypto which still seems to be more correlated to equity (risk on/off) than anything.

IlliniDave
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Re: Investments Trade Log

Post by IlliniDave »

At last check I'm down about 6% in investment accounts since retirement, so probably about 7.5% since EOY 21 (around 4-5 years expenses). Haven't paid attention for the last two weeks so possibly/probably worse. Net worth is down a good bit less, too much cash at the moment. Of course I'm talking nominal, real would have to knock off another 8.5%. Still a net saver even in retirement though--in my planning I thought I could extend that for something between 3 and 8 years. Probably won't happen. Local gas utility just hiked the rates something between 30% and 40% if what I heard is accurate. Regarding the cash, just don't know what to do with it.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@IlliniDave

Depending on how much cash you're holding, maybe consider storing some in I-Bonds? https://www.treasurydirect.gov/indiv/pr ... glance.htm

I'm down 16% overall YTD. VTI is down 14.91% YTD so I'm slightly underperforming the market. I'm tilted more towards accumulation / risk so as expected in this market with a portfolio like mine. A good chunk of this is my conviction on SOFI of course otherwise I would not be down as much. My other stocks are down but not doing terrible all considering.

Added more to my SOFI position today (cost basis per share reduced to $13.77). Earnings May 10 after market close. Hoping to see how guidance will be reflected after acquisition of bank charter, Galileo, and Technisys - a lot of action for one quarter.

WFJ
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Re: Investments Trade Log

Post by WFJ »

Only calculate balances once a week on Friday, down 8% from last close 2021, down 5.5% close first week of 2022, so around 7%, but will have a big tax bill this year.

Large swings in the market are usually due to changes in liquidity; margin calls, short cover rallies and buyers' strikes which cause markets to move violently on a daily basis, but don't mean anything for the long term of the market. One can access this with level 2 or level 3 trading information and really just a feature of market plumbing than anything meaningful. These random large gains/losses only prompt CNBC/Bloomberg to promote "Buy and Hold Disney (ironically companies who buy a lot of ads on their networks)" or give Cathie Wood a 30-minute ad block to pitch her garbage (again ironically from firms who buy a lot of ad time on their networks). Rips higher, slow grind lower and evaluated volatility relative to preceding bull market are all hallmarks of a bear market. There are also no benefits to picking the bottom of bear markets, can miss the bottom by years and only lose a few percentage points.

Being early to predict the end of Bulls/Bears is one of the more costly strategies in investing (Don't try this at home).

white belt
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Re: Investments Trade Log

Post by white belt »

I calculated things and I think my portfolio performance is just about flat thus far this year when I factor in that my portfolio is up by about the amount of new cash I contributed to my portfolio (my savings rate is ~75-80%). My commodity trend following has helped to offset most of the losses from stocks and bonds. My earlier macro trades have also helped a little bit, although my current positions in crypto, MSOS, and URNM/SRUUF haven't paid off yet.

I'm shifting to a larger cash allocation so that I can exploit opportunities in the ugly bear market for broad risk assets I see in the next ~6 months. Right now I'm at about 22% cash and plan on legging into 30-40% cash over the coming weeks. Basically I'm reducing my bond and equity allocations to 10%/10% rather than the 20%/25% I had thus far in 2022.

Trade ideas that I have percolating:

1. Long China. China is in a recession and has been for the last year. Chinese equities have been hammered due to a number of factors (one factor has been the CCP cracking down on what it perceived as overvalued markets). Recently the COVID lockdowns have exacerbated things even more. However, in the past the CCP has always been willing to stimulate to get out of a recession, which means I expect things to start to turn in the next few months, so I'm keeping an eye on price levels and when FXI might be around a tradable bottom.

2. Home builder suppliers. A recession in the USA doesn't necessarily mean that the single family home property market will take a huge hit. There has been such a supply bottleneck over the past few years and there are still a surplus of buyers who want to buy but felt the market was just too hot. I don't think demand is going to trail off because there are still so many millenials who want their own home. Anecdotally, my millenial friends would still be interested in buying a home even if the stock market halved because they only need to save money for a downpayment and the rest of their asset potential is just future earnings. They care way less about stock evaluations than boomers. Rising mortgage rates only raises monthly payments by small quantities. I'll wait to buy until the stocks get more hammered on the initial recession expectations. This is a Kuppy idea that he outlines in more detail here: https://adventuresincapitalism.com/2022 ... f-housing/

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

I like Kuppy, the last time I read something of his he was advising to buy Russian stocks just before a 90-99% decline. The ruble has already recovered but his timing there was atrocious.

Since the housing bust much inventory has been held off market to artificially suppress supply: https://fred.stlouisfed.org/series/EOFFMARUSQ176N

A huge amount of evictions and foreclosures that would have occurred during the recent lockdowns are now susceptible to further increase supply now that the CDC coup d’etat is temporarily forestalled.

Rising mortgage rates reverse the wealth effect (no cash out refi’s to plow money into markets and consumption, boomers frozen in place with rising rates reduces financial activity).

Taxes are the other millstone with inflation that grind the middle class. Property taxes will increase to offset the advantage of rising equity, and political pressure will come from various corners in addition to the CDC to subsidize tenants at the expense of landlords.

If the logic is that a surfeit of wage gains and stimmy checks enabled by money printing will cause further inflation, I would consider food, energy, and precious metals to be superior expressions of the trade. The real advantage of real estate is the embedded leverage and limited risk of the 80% LTV 30 or 40 year fixed mortgage that gets more expensive as rates rise.

Of course, real estate is always local. North Carolina and Tennessee will outperform California and New York. I feel like playing the supplier angle is too cute by half, if that’s the logic then just going long red state real estate is again the superior expression.

Riggerjack
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Re: Investments Trade Log

Post by Riggerjack »

Since the housing bust much inventory has been held off market to artificially suppress supply: https://fred.stlouisfed.org/series/EOFFMARUSQ176N
That's an odd interpretation of your linked chart. You think people have been taking losses on their real estate for years to constrain supply? Even if owned outright, real estate has carrying costs that don't drop, just because there is no income. Insurance, taxes, maintenance, depreciation, but no income. That's some counter-intuitive management, there. :shock:

I look at that chart and see what I would expect to see. ~12 years of increased vacant housing. Which matches the pattern of urbanization leaving rural vacancies. (Rural housing didn't just go away...) Followed by a drop of ~1.5 million units in 2020, as people with $$$, or WFH options moved to the sticks to avoid urban plague-zones, or divorced and one family now needs 2 suburban housing units. Followed by owners adjusting to the new market (remodeling for higher rent or resale).

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

Not people, banks. The term I was looking for was “shadow inventory.” Lenders held houses off the market after the housing bust in the interest of prices. I read detailed articles in the past but here is quick and dirty:

https://corporatefinanceinstitute.com/r ... inventory/
https://www.investopedia.com/terms/s/sh ... entory.asp

Looks like the chart I posted does not represent what I thought it did. I admit I had the shadow inventory idea but yesterday the words in my brain said “vacant housing.” Not sure where you would find shadow housing inventory statistics, by definition.

Cynically you could say that if there was a decrease in shadow inventory recently, it was because the banks finally saw the opportunity to bring to market such inventory.

I am playing devil’s advocate here. I own housing as a defensive asset (with a mortgage), but to play offense and plow a significant portion of one’s net worth into housing or builders with housing already at inflation-adjusted all-time highs is a good way to turn a trade into a long term investment. :P

These nerds have more charts and numbers:
https://m.youtube.com/watch?v=nSqrUT3IEEA
https://m.youtube.com/watch?v=CSe8n50wf3E&t=1s
https://econimica.blogspot.com/2022/01/ ... y.html?m=1

Anecdotally, I have a millennial friend who just took out almost three quarters of a million to buy an overpriced property in a mediocre suburb to impress a woman. That @whitebelt’s millennial friends want to buy property is not evidence to me that housing has room to rise, it is evidence that there is an ample supply of potential bag holders/beasts of burden. Never never never never never never never be.

The type of inflation required to push housing up even further from here despite rising rates should benefit other assets much more than housing. But besides price levels, I can see many circumstances in which the government would simply declare an emergency and cancel rents and evictions and turn landlords into philanthropists.

But hey, what do I know, the best thing to buy in a global lockdown was flaming hot garbage and I missed that trade.

Riggerjack
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Re: Investments Trade Log

Post by Riggerjack »

When a bank forecloses on a mortgage, it goes on the books as REO. (Real Estate Owned)

REO doesn't generate revenue, but it does generate expenses, so banks want that property off the books. REO is a problem for bankers. (And a bigger problem for banks with liquidity concerns.)

Usually there is a problem with the property, (house is damaged, former owner is still present, and armed, or whatever) or someone else would have bought the property. At foreclosure, there is an auction on the courthouse steps, and anyone willing to buy at a price higher than the bank is owed has the opportunity then. If someone else buys, the bank is paid, and the former owner gets the rest.

In 2010 there was lots of REO out there. By 2012 it was gone. One needs to be able to pay cash to play in this market, so mainly I was watching/learning. By the time I had the cash, there was nothing to buy.

Of course from 2008-2012 there was some efforts at keeping property from selling too cheap, and exacerbating the problems of the industry. But still houses moved. And they moved cheap.

Now there could have been big fish buying up REO properties wholesale to drive up prices. It happens in other markets, could happen here. But hold them vacant for a decade?

It seems to me that a series of fires would do that job far better, and far cheaper. If I were looking for this kind of manipulation, that's the pattern I would look for.
But hey, what do I know, the best thing to buy in a global lockdown was flaming hot garbage and I missed that trade.
You and me both, my friend.

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

Riggerjack wrote:
Tue May 10, 2022 5:35 pm
It seems to me that a series of fires would do that job far better, and far cheaper. If I were looking for this kind of manipulation, that's the pattern I would look for.
:idea:

Riggerjack
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Re: Investments Trade Log

Post by Riggerjack »

@MI
It takes a long time to adjust housing levels. It doesn't take long to create charts that match, given enough information. I would counter your link, with a 10 year old Michael O. Church blog post that should give you a wider view of movement in that market:
https://web.archive.org/web/20150915120 ... ing-cause/

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Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

@RJ

I do not see what you posted as a counter. There are many variables here.

Price inelasticity is a tailwind for higher house prices. Death of local economies force migrations, all real estate markets are local.

But there are headwinds I listed above.

I don’t see long housing (or the builders or suppliers) as an asymmetric trade. For me that’s the difference between owning one property (neither long nor short but neutral) or putting on a huge position in that space. If things get bad enough supply-wise, they can repurpose a lot of existing real estate. Or burn it, if things go the other way.

What I tried to articulate is that if you have an underlying view that there are multiple ways to express the trade. For example, Kuppy’s “Buy Russia Putin Always Wins” call was not the best way to express a view that Russia would assert itself successfully. Long energy and food was the better expression because it had a much better risk/reward profile. RSX may recover if it’s ever allowed to trade, and the ruble is even stronger than before, but it’s the same as with rent and eviction moratoriums. Same as with going long meme stocks against hedge funds shorting them or long commodities against Chinese tycoons shorting them: If you express a view with a trade, will you even be allowed to collect your winnings or will the entrenched oligarchs bail out the people on the other side of the trade?

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Re: Investments Trade Log

Post by jacob »

The FAANGs keep getting pulled.

WFJ
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Re: Investments Trade Log

Post by WFJ »

A bear market shoots the generals last (AAPL, MSFT, GOOG, AMZN are still standing, but limping). This is a repeat of 2001 bear market. 99% drawdowns will be common among nearly all "darlings". Cathie Wood is this generations "Henry Blodgett" who will scream buy until nobody listens. Individual investors are still pouring money into ARKK and getting crushed. If one can keep their jobs, the selloff is an incredible opportunity to buy the SP 500 index cheaply for a few years, but many jobs are tied to the stock market (several of my jobs were and why always sell heavily into when it looks like my positions will be eliminated) and people must sell equities to pay off margin debt and pay for living expenses.

I'm still getting crushed but crushing the market on a relative basis. This is why nobody wants a bear market, but they are a feature of a capitalist market system and must be recognized and managed when they occur.

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