Early Retirement Extreme Forums

Might be a good time to bet on higher volatility

Anyone anticipating any more big moves in the EUR - USD? Will the EUR recover a little? Fall further?

jennypenny wrote:Anyone anticipating any more big moves in the EUR - USD? Will the EUR recover a little? Fall further?

Has anyone in history ever been consistently successful in predicting currency fluctuations?
I have the impression that it's so influenced by non-forecastable events that it must be close to impossible.

@Seppia, currency market is much like any other prediction market (maybe one of the most efficient/liquid?). If you only go all-in on wagers only when you have high confidence (say 85% chance) of winning, you will still converge on broke. That's why you never use Martingale.. and why stuff like Kelly criterion got discovered, at least.

Bryan: I 100% agree.
Exchange rate for me is a random exogenous element.
I consider it when I'm buying stuff, but I don't try to profit from it at any time.
Over the long run and across many trades, it should become irrelevant (especially if one focused on large internationally connected businesses)

@Seppia - According to "expert traders", currencies is the easiest asset class to trade. Equity is the hardest. Now, before anyone signs up for a 10x leveraged account at random-scammy-offshore-broker, know that this is over the 2-5 year term.

@Jacob
Intersting.
I never studied this, would you mind Pointing me in the direction of some good reading on the subject?
Thanks a ton

Thanks!

I bought some Danone and some Engie yesterday.
Danone is a phenomenally well run company that sells yoghurt and dairy products, they recently bought the producers of Alpro (soy milk and other dairy substitutes) as a hedge against the decline in usage of dairy products (it's a recent trend).
It could fall further but long term I really like them.

Engie is French utilities, they are undergoing a big restructuring that will probably hurt them in the short term but that should position them very well for the future.
Similarly to E.on in Germany, they're making a big shift towards renewables, and it's hurting their bottom line.
Still, Engie will pay a 70c euro dividend in 2017 and 2018, and are now priced at 11.55€ per share

I sold CAT, X, and CMI in my father's portfolio to lock in some very nice gains. Then sold STX for some offsetting losses, as it's hard to see how they will be able to continue that huge dividend (same with CAT).

While, I do think Trump's focus on infrastructure will help CAT, X, and CMI, it seems like that is already priced in. Especially, for CAT and X. CAT needs more than a US economy growing at 3-4% to hit their current P/E.

If these go back down before the government actually passes the infrastructure bill I will look at them again.

I've been looking at tech and I'm starting to look at healthcare, as both sectors are underperforming the market. Also, looking to add to my father's US pipeline companies for the dividends and maybe add to some of the higher quality shale plays once this oil rally dies and pulls back.

Still going very long on emerging markets, but that is in my portfolio, not my father's.

If my income didn't push me into the 25% bracket, I'd be selling CAT & CMI as well as MDU. Up 50%, 50% and 60% on these. I'd love to move that to something else, but as it is, I'd lose 15% if I sold.

Yeah, I'm offsetting those gains against some loses in companies where I can sell and just buy a similar competitor and wait for the recovery. Except for Seagate. Good dividend, but payout ratio is too high for earnings growth.

cmonkey wrote:If my income didn't push me into the 25% bracket, I'd be selling CAT & CMI as well as MDU. Up 50%, 50% and 60% on these. I'd love to move that to something else, but as it is, I'd lose 15% if I sold.

Check your LC portfolio, because that will generate some capital losses that you may be able to balance against some of the gains and net them out.

Dragline wrote:Check your LC portfolio, because that will generate some capital losses that you may be able to balance against some of the gains and net them out.

I thought LC losses offset LC gains (also ordinary income)? I would still have gains whether they came from LC or the stock sale, since I wouldn't have any excess LC losses.

Gosh, When I read that I am happy there is no capital gain taxes in Switzerland. I would hate to not be able to sell/buy as i wish just because of tax considerations.

sell (short): AMD

cmonkey wrote:If my income didn't push me into the 25% bracket, I'd be selling CAT & CMI as well as MDU. Up 50%, 50% and 60% on these. I'd love to move that to something else, but as it is, I'd lose 15% if I sold.

Not sure if you're into charitable donations, but donating appreciated stock instead of cash is one way to avoid paying cap gains tax. Of course you don't get the the profit... but if you'd be donating anyway, it's donating a pre-tax asset instead of post-tax cash. And you get a deduction for the full amount (in most cases).

cmonkey wrote:

Dragline wrote:Check your LC portfolio, because that will generate some capital losses that you may be able to balance against some of the gains and net them out.

I thought LC losses offset LC gains (also ordinary income)? I would still have gains whether they came from LC or the stock sale, since I wouldn't have any excess LC losses.

No, they are capital losses and can be short or long-term depending on how long you have held the instruments. LC will give you a 1099 with two components -- 1099-OID for the income and 1099-B for the losses. It's one of the weird quirks of this investment and why its better when paired with a portfolio that is likely to achieve capital gains.

The gains and losses do not offset except for the first $3K of losses (if memory serves me, but don't quote me on IRS rules). Meaning if you have less than $3K in losses, we may both be correct.

operation pump-dump Trump continuing.

bryan wrote:My gamble will be to take some short term profit on this Trump president-elect market after thanksgiving and then make a few bets that he will not win the electoral college. The big unknown in this scenario is who (3rd place finisher) do the GOP faithless electors want to put to the House to be chosen over Trump? Also there would be the air of uncertainty with Trump losing and if the 3rd place man is not a clear favourite going into the House.

dump stage now full swing. Looks like I was a day (weekend) late for some picks. Many potential candidates, but for today I:
sold: CCJ, CNQ
sold (short): XME, OIH, GM

Another Trump strategy I am considering is doing the opposite of what people think Trump means. e.g. He thinks the F-35 is too expensive so LMT dropped a bit.. but he'll probably come out in a week saying "Hey, they are way better than Boeing; giving them a HUGE contract. Made a deal for more jobs!"