Stock Market

77,905 Views | 827 Replies | Last: 1 day ago by DiabloWags
DiabloWags
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FYI:

As of today's close, the percentage of stocks above their 200 day moving average compared to March 2020 low:

S&P: 30.4% ....................................................................1%

NAZ: 10.4% ............................................................................6%

NDX: 15.0% ...........................................................................10%

cbbass1
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DiabloWags said:

cbbass1 said:


Thanks, you're proving my point!


Which point was that?

The one where you said that the FED was going to engineer the economy into a Recession so that the GOP would sweep midterms?

Or that the Taylor Rule was an outdated formula from the 1960's - 1970's?


Sure. I stand corrected on the timing of the Taylor Rule. It was published in the early 1990s, as you said. My mistake on the quick Wikipedia scan.

However, my statement that "You're proving my point" was related to the graph that you posted previously, with a big spike in the mentions of weak demand.

Wait a minute -- isn't the entire premise of Taylor's analysis that we can use monetary policy to reduce inflation by effectively reducing demand?? If weak demand was already a concern in Q1 2022, as the chart suggests, then what's going to happen when interest rates go up?

I think the markets are answering that question for us.

If I'm correct, we'll see inflation go down a little, but supply shortages and corporate price gouging will continue. And the economy that required massive injections of $$$ from the Fed to stay afloat will crash & burn.


Taylor's analysis was developed using economic data that was before globalism & global supply chains, and before industry consolidation & monopolization.

During this period, businesses had two options for responding to increases in money supply, or demand:
  • Increase Supply by producing more product or service;
  • Raise prices

And during that period, enforcement of the Sherman Anti-Trust Act was vigorous, and there was competition in nearly all markets, across the entire economy. The only viable option for companies to respond to increases in money supply or demand was to produce more product or service.

The option of simply raising prices in order to increase profits was not available; it would lead to lost sales & lost market share, because there was competition.

So all of Taylor's analysis of inflation assumes that there's a competitive marketplace, where companies respond to increased demand by increasing their supply, if they can. [IMO, this is the genius of the balanced New Deal policies!]

In Taylor's analysis, the percentage of inflation that's due to price gouging is zero, because it simply wasn't an option at the time.

Similarly, the percentage of inflation that's due to ongoing supply chain disruptions and supply shortages is also assumed to be zero.

Today's economy is completely different from the days of Taylor. The vigorous competition of the 1960s - 1980s has been replaced by consolidation and monopolization. In every industry, there are so few competitors that nearly all large corporations have pricing power. Even if there's no explicit collusion, there's a common understanding that it's in their interests to increase earnings by raising prices. In fact, if they didn't raise prices to take advantage of the recognition, they would have to justify their failure to maximize their earnings to their shareholders!

Just look at what CEOs are telling their shareholders at conference calls. It's all public information.

In addition, the supply shortages & disruptions of globalized supply chains that persist today were unheard of before 1992.

Taylor doesn't account for Covid-19, either. You think there's any chance that China's current Covid shutdown might have anything to do with supply shortages?

How does Taylor respond to these realities that anyone can see? Or has anyone asked the question??

The Fed raising interest rates won't eliminate corporate price gouging, and it won't fix supply shortages. It'll just crash the economy. The only question for economic policymakers is, was it intentional? Or just incompetent?


DiabloWags
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cbbass1 said:




The Fed raising interest rates won't eliminate corporate price gouging, and it won't fix supply shortages. It'll just crash the economy. The only question for economic policymakers is, was it intentional? Or just incompetent?




Incompetent.
I've been saying that for months now.

Our inflation started to take off in March of 2021 and they ignored it and merely said it was transitory.
They were hell-bent on keeping the accelerator pedal on the floor and trying to re-coop Covid job losses.







OdontoBear66
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DiabloWags said:

calbear93 said:


I think we are going to hit a bear market in S&P 500 fairly soon like we have already for Nasdaq. I would not be surprised if the S&P 500 fell another 10-20% from these levels. Nothing positive right now, everything that even sniffs at a slow-down that still has high EBITDA or sales multiples (God help those who are high growth who were previously rewarded for distant future earnings) are going to be severely punished and even companies that beat will still get hurt. There are too many headwinds right now for too many industries.
I will respectfully disagree with another 10 - 20% lower in the S&P.

Reason being, is that the market is a discounting machine and what is obvious is obviously wrong.
We already know about Ukraine, the lockdown in China, EU growth slowing, high gas prices, etc.
The pessimism is so thick right now you can cut it with a knife.
I know of no one who is positioned for a rally.

The "key" going forward will be the FED.
Just like it always has been.
It's about liquidity,

A bottom wont be made until we see a stock rally on bad numbers.
We clearly arent there yet.

I'm curious.
What companies in the S&P can you point to that you believe still sport "high" price to sales multiples?


I also disagree with another 10-20%. The market usually is focused on 6 months ahead. We just have to listen to it in real time. Relax, be patient, and look at charts of the S&P or Dow or Nasty over 20-40 years and you will have consolation, especially the younger you are. If older, hopefully you have counter balancing accounts that minimize the damages to half of what you see in the percentages on the major averages.
DiabloWags
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OdontoBear66 said:


I also disagree with another 10-20%. The market usually is focused on 6 months ahead. We just have to listen to it in real time. Relax, be patient, and look at charts of the S&P or Dow or Nasty over 20-40 years and you will have consolation, especially the younger you are. If older, hopefully you have counter balancing accounts that minimize the damages to half of what you see in the percentages on the major averages.

Thus far, the "buy the dip" mentality is gone along with FOMO and TINA given where rates are, and where they are heading. And the market has been discounting this because (as you pointed out) that's what markets do. They discount the future.

But as usually is the case, we wont be able to reverse the downtrend until we start to see stocks rallying on bad numbers or numbers being cut. That's the "green" light. But we clearly arent there yet.

I would also caution those who use a broad "brush" approach to lumping everything together.
That's easy to do given that sentiment is so negative that you can cut it with a knife.
But at the end of the day, it really is a market of stocks and not a stock market.


DiabloWags
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PS. This is not necessarily a timing indicator but it gives one a pretty good idea as to where sentiment is.
As you can see, we are getting to an extreme.

This is a sentiment survey of 100 investment newsletter writers:

Stock Market Indicators: Bull/Bear Ratios (yardeni.com)

Unit2Sucks
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DiabloWags said:

FYI:

As of today's close, the percentage of stocks above their 200 day moving average compared to March 2020 low:

S&P: 30.4% ....................................................................1%

NAZ: 10.4% ............................................................................6%

NDX: 15.0% ...........................................................................10%


Interesting stuff, thanks. Where do you get this data?
OdontoBear66
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DiabloWags said:

PS. This is not necessarily a timing indicator but it gives one a pretty good idea as to where sentiment is.
As you can see, we are getting to an extreme.

This is a sentiment survey of 100 investment newsletter writers:

Stock Market Indicators: Bull/Bear Ratios (yardeni.com)


Great stuff DW.....Consolation that cycles are cycles---just don't fall off at the wrong time. I have relatives of all ages positioned for all in (young ones) and waiting it through while learning about these ty[e markets, middle aged with safety protections so damage is half of averages, and then me with powder dry but exposure at the 50% amount. This too will end. Been there, done that---1987, 1999-2001, 2008-2009, 2020, and now....
dimitrig
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DiabloWags said:

PS. This is not necessarily a timing indicator but it gives one a pretty good idea as to where sentiment is.
As you can see, we are getting to an extreme.

This is a sentiment survey of 100 investment newsletter writers:

Stock Market Indicators: Bull/Bear Ratios (yardeni.com)



VIX is rising but still below 40

I think you won't see a bottom until VIX is well over 60

DiabloWags
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Unit2Sucks said:

DiabloWags said:

FYI:

As of today's close, the percentage of stocks above their 200 day moving average compared to March 2020 low:

S&P: 30.4% ....................................................................1%

NAZ: 10.4% ............................................................................6%

NDX: 15.0% ...........................................................................10%


Interesting stuff, thanks. Where do you get this data?

You can get it from www.stockcharts.com

It's a FREE charting service (but subscription if you need intra-day capability)

I use it frequently when I'm out on the road and mobile and not in front of my workstation or just too lazy to boot up my trading platform which is displayed across 4 monitors.

You just punch in the symbols and it displays the data.
The free version allows you Daily and Weekly charting.

It also allows you to input various technical indicators like RSI, McClellan Oscillator's, Bollinger Bands, On Balance Volume, various Moving Averages, etc. - - - and you can format the chart any way that you want. I usually use Candlesticks on it. But you can also display Point & Figure. There's a lot of flexibility.

You can also obtain the percentage of stocks above their 50 day moving average as well.
Put to Call ratios, Advance / Decline lines, etc.

It's a great tool.


DiabloWags
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Years ago, I first started using it at the end of the day to get Advance / Decline data.

SPX = !ADLINESPX

NYA = $NYAD .......................... (must enable "cummulative" in the window marked "Type")

NDX = $NDXADP .......................( must enable "cummulative" in the window marked "Type")

Interestingly enough, the NDX-100 A/D line is trying to put in a double-bottom with the low from March 14th.

Given that the NDX is roughly 900 points lower than where it was on March 14th, the A/D line not having broken that low is a sign of relative strength. If you are a bull on the NDX, you need to see an up day today and more strength in coming days.


dajo9
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I added to my TLT position today (long term U.S. Treasuries). This is cash saved up being added to my portfolio, not an adjustment from any of my current positions. I'm mostly a buy and hold guy (roughly 80% SPY and 20% long term Treasuries) but when adding money to the portfolio I try to be strategic. Like most people, my buy and hold investments have taken a hit this year. My goal here is to ride long term Treasuries up as stocks find a bottom and then convert my Treasuries to SPY. OK, I guess that's not really buy and hold, but with my own twist on it. Haha. I'm not really a stock investor, I'm more of a market investor. It's worked for me before, we'll see how it goes this time.

* Not to be construed as investment advice. I do my thing, you do yours. If you asked me, I'd say buy and hold a diversified portfolio of low fee investments for the long run. Benign neglect - go to the beach.
DiabloWags
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Factoid:

Investors poured $900 Billion into the market in 2021.
Nearly 90% of that came into stock funds like ETF's.
That $900 Billion is more than the last 19 years combined.

The negative wealth effect that the Fed is conducting is in full force.
82gradDLSdad
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dajo9 said:

I added to my TLT position today (long term U.S. Treasuries). This is cash saved up being added to my portfolio, not an adjustment from any of my current positions. I'm mostly a buy and hold guy (roughly 80% SPY and 20% long term Treasuries) but when adding money to the portfolio I try to be strategic. Like most people, my buy and hold investments have taken a hit this year. My goal here is to ride long term Treasuries up as stocks find a bottom and then convert my Treasuries to SPY. OK, I guess that's not really buy and hold, but with my own twist on it. Haha. I'm not really a stock investor, I'm more of a market investor. It's worked for me before, we'll see how it goes this time.

* Not to be construed as investment advice. I do my thing, you do yours. If you asked me, I'd say buy and hold a diversified portfolio of low fee investments for the long run. Benign neglect - go to the beach.


TLT and S&P are down about the same YTD. Just keep adding to keep your 80-20. Nothing wrong with that.
DiabloWags
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The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.

PS. SF Fed Governor Mary Daly to the rescue.
She didnt see a need for a 75 basis point increase.
82gradDLSdad
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DiabloWags said:

The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.



I bought some VOO shares today and continued to sell VOO puts. I almost feel like I know what I'm doing.

Nah.
dajo9
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82gradDLSdad said:

DiabloWags said:

The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.



I bought some VOO shares today and continued to sell VOO puts. I almost feel like I know what I'm doing.

Nah.


So if the market goes down you multiply your losses but if the market goes up your gains are limited to your shares and the premium on the puts?

Walk me through your logic.
82gradDLSdad
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dajo9 said:

82gradDLSdad said:

DiabloWags said:

The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.



I bought some VOO shares today and continued to sell VOO puts. I almost feel like I know what I'm doing.

Nah.


So if the market goes down you multiply your losses but if the market goes up your gains are limited to your shares and the premium on the puts?

Walk me through your logic.


If the market goes down I'll roll the puts and always out enough for a credit. If the puts are close at expiration I'll hope to get assigned because I ultimately want the shares. How's that?

I've had most of my VOO called away over the last year and that has turned out to be a 'sell high' event. I'm now looking to buy a bit lower. Once I have enough I'll sell covered calls.
dajo9
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82gradDLSdad said:

dajo9 said:

82gradDLSdad said:

DiabloWags said:

The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.



I bought some VOO shares today and continued to sell VOO puts. I almost feel like I know what I'm doing.

Nah.


So if the market goes down you multiply your losses but if the market goes up your gains are limited to your shares and the premium on the puts?

Walk me through your logic.


If the market goes down I'll roll the puts and always out enough for a credit. If the puts are close at expiration I'll hope to get assigned because I ultimately want the shares. How's that?

I've had most of my VOO called away over the last year and that has turned out to be a 'sell high' event. I'm now looking to buy a bit lower. Once I have enough I'll sell covered calls.


Interesting strategy. I love how there are so many strategies out there and people go with what they are comfortable with. I hope it goes well for you.
82gradDLSdad
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dajo9 said:

82gradDLSdad said:

dajo9 said:

82gradDLSdad said:

DiabloWags said:

The Dow Jones recovers from being down 600 points to close down "only" 104.

The S&P 500 recovered from making a new low at 3.858 and off 77 points to finish down only 5 points.
At that 3,858 low, you are trading at a P/E of 15.75 assuming $245 per share of earnings this year.

The NAZ came back from losses of 250 points to actually close up nearly 7 points.

Bonds continue their rally after reversing on Monday.

10 year yield was down 10 basis points (3.5%) to 2.817%

The yield is down from 3.13% from last Friday.



I bought some VOO shares today and continued to sell VOO puts. I almost feel like I know what I'm doing.

Nah.


So if the market goes down you multiply your losses but if the market goes up your gains are limited to your shares and the premium on the puts?

Walk me through your logic.


If the market goes down I'll roll the puts and always out enough for a credit. If the puts are close at expiration I'll hope to get assigned because I ultimately want the shares. How's that?

I've had most of my VOO called away over the last year and that has turned out to be a 'sell high' event. I'm now looking to buy a bit lower. Once I have enough I'll sell covered calls.


Interesting strategy. I love how there are so many strategies out there and people go with what they are comfortable with. I hope it goes well for you.


Thank you. Not as comfortable as before options but very interesting. I thought dabbling in selling options could add a bit, another dividend if you will, to my buy and hold strategy. I got too aggressive and coupled with the marker downturn am scrambling a bit. It gets me up in the morning, I'll say that. Good luck to you, too.

Wags is gonna keep me honest, I know that. Having to explain my 'strategy' to someone who knows a bit about the options market keeps me on my toes. Of course, I don't really have a traditional options strategy and he will call me on it. All good.
DiabloWags
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82gradDLSdad said:




Wags is gonna keep me honest, I know that. Having to explain my 'strategy' to someone who knows a bit about the options market keeps me on my toes. Of course, I don't really have a traditional options strategy and he will call me on it. All good.

I've never gotten involved in selling calls against my stock positions (or puts for that matter) because more often than not, I've seen people give away massive gains when their stock gets called away. They may pick up a little bit of "alpha" over a few (successful) months of watching the calls that they sold, expire worthless. But if you are involved in "growth" names in a Bull Market, I think it leads to giving your stock position away and you are left with "chasing" it higher in order to maintain your original position.

Emotionally, that can be very difficult to do.

And given how difficult (and volatile) markets can get, I try to embrace any methodology that embraces the KISS method and allows me to stay somewhat "fresh" . . . focusing on the big picture. In other words, if a large part of your strategy revolves around picking up "nickles and dimes" on a railroad track, be forwarned that you might get run over some day by a Burlington Northern freight train.

I think the better question that one has to ask themselves in the first place is why are they involved in a strategy such as selling puts or calls? And they have to be honest with themselves.

Is it because they've always wanted to be a "trader"? Is it something that is ego driven? Or is it really about trying to genuinely consistently produce some alpha? - - - If it's the latter, I would hope that they are using an options platform that gives them valuable information when it comes to computing implied volatility and comparing it to historical volatility. Purchasing the "bible" of Option Volatility and Pricing by Sheldon Natenberg would also be a prerequisite. - - - That's for starters.

I think that there was a time for selling Puts and Calls, but that was before the market place became extremely sophisticated and electronic. The machine trading has literally taken away a lot of those "fat" premiums with all kinds of super aggressive algos.

That having been said, I've removed myself from options trading for quite some time.
Largely because I have the capital and dont need the leverage, but also because the sector that I focus on has horribly "thin" options markets.

Unfortunately, the two biggest core positions that I own have options markets with terrible liquidity.
Every time I check out a specific strike price to see if it might be worth using as a hedge, there's very little liquidty (trading/volume) and the spread is so big you could drive a White Freightliner through it.



82gradDLSdad
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DiabloWags said:

82gradDLSdad said:




Wags is gonna keep me honest, I know that. Having to explain my 'strategy' to someone who knows a bit about the options market keeps me on my toes. Of course, I don't really have a traditional options strategy and he will call me on it. All good.

I've never gotten involved in selling calls against my stock positions because more often than not, I've seen people give away massive gains when their stock gets called away. They may pick up a little bit of "alpha" over a few (successful) months of watching the calls that they sold, expire worthless. But if you are involved in "growth" names in a Bull Market, I think it leads to giving your stock position away and you are left with "chasing" it higher in order to maintain your original position.

Emotionally, that can be very difficult to do.

And given how difficult (and volatile) markets can get, I try to embrace any methodology that embraces the KISS method and allows me to stay somewhat "fresh" . . . focusing on the big picture. In other words, if a large part of your strategy revolves around picking up "nickles and dimes" on a railroad track, be forwarned that you might get run over some day by a Burlington Northern freight train.

I think the better question that one has to ask themselves in the first place is why are they involved in a strategy such as selling calls? And they have to be honest with themselves.

Is it because they've always wanted to be a "trader"? Is it something that is ego driven? Or is it really about trying to genuinely consistently produce some alpha? - - - If it's the latter, I would hope that they are using an options platform that gives them valuable information when it comes to computing implied volatility and comparing it to historical volatility. Purchasing the "bible" of Option Volatility and Pricing by Sheldon Natenberg would also be a prerequisite. - - - That's for starters.






Those are excellent questions and points. I'm not really sure if all the answers. And while somewhat logical I move away from metrics when I start to feel overwhelmed by the amount of data. Not the best but I'm also not risking a large part of my portfolio after 30 years of buy, hold and buy some more. Selling options, conservatively done, seemed like free money. I now know that it is not. And even an old conservative guy like me can get into trouble. I really do appreciate your insight.
dajo9
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82gradDLSdad said:

DiabloWags said:

82gradDLSdad said:




Wags is gonna keep me honest, I know that. Having to explain my 'strategy' to someone who knows a bit about the options market keeps me on my toes. Of course, I don't really have a traditional options strategy and he will call me on it. All good.

I've never gotten involved in selling calls against my stock positions because more often than not, I've seen people give away massive gains when their stock gets called away. They may pick up a little bit of "alpha" over a few (successful) months of watching the calls that they sold, expire worthless. But if you are involved in "growth" names in a Bull Market, I think it leads to giving your stock position away and you are left with "chasing" it higher in order to maintain your original position.

Emotionally, that can be very difficult to do.

And given how difficult (and volatile) markets can get, I try to embrace any methodology that embraces the KISS method and allows me to stay somewhat "fresh" . . . focusing on the big picture. In other words, if a large part of your strategy revolves around picking up "nickles and dimes" on a railroad track, be forwarned that you might get run over some day by a Burlington Northern freight train.

I think the better question that one has to ask themselves in the first place is why are they involved in a strategy such as selling calls? And they have to be honest with themselves.

Is it because they've always wanted to be a "trader"? Is it something that is ego driven? Or is it really about trying to genuinely consistently produce some alpha? - - - If it's the latter, I would hope that they are using an options platform that gives them valuable information when it comes to computing implied volatility and comparing it to historical volatility. Purchasing the "bible" of Option Volatility and Pricing by Sheldon Natenberg would also be a prerequisite. - - - That's for starters.






Those are excellent questions and points. I'm not really sure if all the answers. And while somewhat logical I move away from metrics when I start to feel overwhelmed by the amount of data. Not the best but I'm also not risking a large part of my portfolio after 30 years of buy, hold and buy some more. Selling options, conservatively done, seemed like free money. I now know that it is not. And even an old conservative guy like me can get into trouble. I really do appreciate your insight.


I once bought some puts on spy when a debt ceiling deadline was looming. Made a killing. Did it again the next time and nothing. The market learned.

I also once bought a single wheat future because I read about El Nino and I like life experiences. Well, El Nino didn't happen and I couldn't believe how much money you could lose quickly from a single future.

I stay away from derivatives now but I had to dabble to figure out what I'm comfortable with.
DiabloWags
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No prob my friend.
As you know, it's a terribly competitive playing field.

I find that as you get older, you have to play to your strengths as much as you can in order to keep things fairly simple and on an even keel. You have to have some kind of an "edge". For me, that's concentrating on one stock sector and not jumping all over the current "flavor of the month".

I have a friend of mine that is also a Cal alum and 20 years younger than me. He's a hedge-fund manager that focuses on "growth" and growth only. He's literally the smartest guy that I've ever met. His forte is figuring out whether there is a management team in place that is good enough to be able to execute at a high level and drive growth. He's constantly kicking the tires and meeting with management. He's long and short about two dozen names at a time.. I dont know how he does it. My brain starts to get overloaded if I have more than 4 positions on.


DiabloWags
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dajo9 said:




I stay away from derivatives now but I had to dabble to figure out what I'm comfortable with.

I think the E-Mini contracts can give you that comfort level.
You're not going to make a fortune, but you wont get chewed up by extreme moves either and you get to see if your hypothesis is right without blowing up your account.
oski003
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Any thoughts on companies in the space and satellite fields such as

SIDU https://sidusspace.com/

ASTR https://astra.com

MAXR www.maxar.com

SPCE https://www.virgingalactic.com/ ?
82gradDLSdad
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DiabloWags said:

No prob my friend.
As you know, it's a terribly competitive playing field.

I find that as you get older, you have to play to your strengths as much as you can in order to keep things fairly simple and on an even keel. You have to have some kind of an "edge". For me, that's concentrating on one stock sector and not jumping all over the current "flavor of the month".

I have a friend of mine that is also a Cal alum and 20 years younger than me. He's a hedge-fund manager that focuses on "growth" and growth only. He's literally the smartest guy that I've ever met. His forte is figuring out whether there is a management team in place that is good enough to be able to execute at a high level and drive growth. He's constantly kicking the tires and meeting with management. He's long and short about two dozen names at a time.. I dont know how he does it. My brain starts to get overloaded if I have more than 4 positions on.





My 'strengths' are:

1. Only sell far OTM CSPs and CCs 30-45 DTE (mostly)
2. Watch daily and if 50% winner I buy to close
3. Very patient
4. Not greedy
5. Not looking for a killing

I don't really know if these are strengths. I don't really know if I'm making more money than just holding my portfolio. I'm just having some fun for now. I figure if I can have fun in this market and not get crushed then what the heck.
Appreciate your thoughts.

Dajo, I've never bought an option other than to close. I think that's a different ballgame but maybe not.
OdontoBear66
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DiabloWags said:

No prob my friend.
As you know, it's a terribly competitive playing field.

I find that as you get older, you have to play to your strengths as much as you can in order to keep things fairly simple and on an even keel. You have to have some kind of an "edge". For me, that's concentrating on one stock sector and not jumping all over the current "flavor of the month".

I have a friend of mine that is also a Cal alum and 20 years younger than me. He's a hedge-fund manager that focuses on "growth" and growth only. He's literally the smartest guy that I've ever met. His forte is figuring out whether there is a management team in place that is good enough to be able to execute at a high level and drive growth. He's constantly kicking the tires and meeting with management. He's long and short about two dozen names at a time.. I dont know how he does it. My brain starts to get overloaded if I have more than 4 positions on.



I have managers for my equity approach and my bond like (think milk toast) accounts---45% each so basically 50/50. It has worked great. The equity managers have underperformed a bull market and outperformed a bear market. Fully invested, rarely trade, select with judicious research on each of about 30 individual stocks and perform greatly in a buy and hold type strategy in Bull and Bear markets. Manager knows I know something about investing and appealed to holding on through full market cycles and I would be happy. 1% cost, and I am a very happy camper. Yes, down about 11-12% from highs but then those highs had gotten to unrealistic levels. Spend more than 6% from this account and it grows with exception of the last three months.

Other side of the equation is "bond like" investments---also managed but different manager. Was in HYCBs from 2019 through last fall, and then have gone to a lot of cash, commodities and hedged MFs. Very safe.

So equities down, bond type down but much much less---maybe 4%. Total of combined accounts down about 8%.
Do I like it? No, but at the same time am very happy when I look outside.

Then the other 10% is my "play money"...Was in heavy tech for the last 3 years and doubled. Lost a bunch on the down but went out of tech in Feb and into energy, health care, and of late some post Covid investments. Theory here is to catch the market and get out after the peaks, and wait until after the bloodbath and be late on the up swing to get confirmation. Right now (today excepted) we are in a Confirmed Down Market. No new investing as such.

So I know enough to be dangerous and outsource for safety and do not mind at all the 1% to each mgt company. Have been retired for 23 years and have more now than I did when I retired with a great lifestyle of travel and family vacations.
DiabloWags
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82gradDLSdad said:



My 'strengths' are:

1. Only sell far OTM CSPs and CCs 30-45 DTE (mostly)
2. Watch daily and if 50% winner I buy to close
3. Very patient
4. Not greedy
5. Not looking for a killing


Using these criteria, I would be a major failure at #3, #4, and #5.
But I have gotten a little better at #3 over the years.

dajo9
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82gradDLSdad said:



Dajo, I've never bought an option other than to close. I think that's a different ballgame but maybe not.
I think you are right.

I got curious about futures because I am told my grandfather-in-law (I never met the man) frequently traded futures for his personal account. This was back in the day when you had to sit in the brokerage office and watch the tape, so he spent a lot of time there with some other traders / gambling addicts. The story is, he once held a futures position so long it qualified as a long term capital gain. None of the traders there had ever seen that before and when he finally went to the desk to close the position the room gave him a standing ovation. That guy must have had balls of steel.
Unit2Sucks
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DiabloWags said:

82gradDLSdad said:




Wags is gonna keep me honest, I know that. Having to explain my 'strategy' to someone who knows a bit about the options market keeps me on my toes. Of course, I don't really have a traditional options strategy and he will call me on it. All good.

I've never gotten involved in selling calls against my stock positions (or puts for that matter) because more often than not, I've seen people give away massive gains when their stock gets called away. They may pick up a little bit of "alpha" over a few (successful) months of watching the calls that they sold, expire worthless. But if you are involved in "growth" names in a Bull Market, I think it leads to giving your stock position away and you are left with "chasing" it higher in order to maintain your original position.

Emotionally, that can be very difficult to do.
My dad isn't a terrible stock picker but he's always been a pretty terrible trader. His strategies change over the years but there were a few distinct periods where he sold calls against his stocks. What invariably happens is that his winners get taken and he's left with losers. Of course, when he isn't selling calls, he still suffers the same fate because he sells his winners too early (after any meaningful pop) and holds his losers.

He enjoys trading and it's a hobby for him but a buy and hold approach would have done much better.

I'm not going to pretend that I'm much better since to this point I've been a market timer (more in terms of choosing not to deploy capital than selling too early). It's been for a variety of different reasons (keeping cash for potential home purchase or to support my fledgling business, etc.) but the end result is that I've missed out on some gains over the years. Maybe I will get some of that back if the market keeps tanking.
DiabloWags
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OdontoBear66 said:


Yes, down about 11-12% from highs but then those highs had gotten to unrealistic levels. Spend more than 6% from this account and it grows with exception of the last three months.

Other side of the equation is "bond like" investments---also managed but different manager. Was in HYCBs from 2019 through last fall, and then have gone to a lot of cash, commodities and hedged MFs. Very safe.

So equities down, bond type down but much much less---maybe 4%. Total of combined accounts down about 8%.
Do I like it? No, but at the same time am very happy when I look outside.

Then the other 10% is my "play money"...Was in heavy tech for the last 3 years and doubled. Lost a bunch on the down but went out of tech in Feb and into energy, health care, and of late some post Covid investments. Theory here is to catch the market and get out after the peaks, and wait until after the bloodbath and be late on the up swing to get confirmation. Right now (today excepted) we are in a Confirmed Down Market. No new investing as such.

So I know enough to be dangerous and outsource for safety and do not mind at all the 1% to each mgt company. Have been retired for 23 years and have more now than I did when I retired with a great lifestyle of travel and family vacations.

Consider yourself lucky.

I know of no bond portfolios that are down only 4%. High quality U.S. bonds are down 10% so far.
This year's loss in the bond market is more than 3x as big as the worst year on record going back to '76

Moreover, I know of no one who has any kind of exposure to "growth" that is only down 11-12% from the highs.
No one. Even the "conservative" Vanguard S&P 500 growth ETF (VOOG) was down 25.8% YTD as of yesterday's close.


OdontoBear66
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DiabloWags said:

OdontoBear66 said:


Yes, down about 11-12% from highs but then those highs had gotten to unrealistic levels. Spend more than 6% from this account and it grows with exception of the last three months.

Other side of the equation is "bond like" investments---also managed but different manager. Was in HYCBs from 2019 through last fall, and then have gone to a lot of cash, commodities and hedged MFs. Very safe.

So equities down, bond type down but much much less---maybe 4%. Total of combined accounts down about 8%.
Do I like it? No, but at the same time am very happy when I look outside.

Then the other 10% is my "play money"...Was in heavy tech for the last 3 years and doubled. Lost a bunch on the down but went out of tech in Feb and into energy, health care, and of late some post Covid investments. Theory here is to catch the market and get out after the peaks, and wait until after the bloodbath and be late on the up swing to get confirmation. Right now (today excepted) we are in a Confirmed Down Market. No new investing as such.

So I know enough to be dangerous and outsource for safety and do not mind at all the 1% to each mgt company. Have been retired for 23 years and have more now than I did when I retired with a great lifestyle of travel and family vacations.

Consider yourself lucky.

I know of no bond portfolios that are down only 4%. High quality U.S. bonds are down 10% so far.
This year's loss in the bond market is more than 3x as big as the worst year on record going back to '76

Moreover, I know of no one who has any kind of exposure to "growth" that is only down 11-12% from the highs.
No one. Even the "conservative" Vanguard S&P 500 growth ETF (VOOG) was down 25.8% YTD as of yesterday's close.



DW....Notice it is a name I have for the account (Bond Like). It has not been in any bonds since last November/December....It is a very vanilla account....Today with my equites up between 2.0-2.4% the bond type (as I call it) is up 0.2%...Managed safety...Yes, losses, but minimal.

Hey when I go away from the % numbers and look at the actuals it gives a lot of pain. But I am getting excited that soon we will be having the escalator going back up....How soon is the question...Good earnings, good valuations key.

I took valuation at the top, valuation today, and got the 12% drop. And yes, I am very lucky with choices I made. We had a great CFP from 1980 to 2004 in Silicon Valley, moved south and acquired our others since.
82gradDLSdad
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I'll leave everyone with this bit of investing hindsight...had I just left my S&P like fund alone in my first phone company 401k and kept adding to it I'm positive I'd be much richer. I got smart and first moved into a globally diversified set of index funds and then even smarter by selling calls and puts against this portfolio. Luckily, I'm first and foremost a saver and a live well below your means person. My wife is too. I guess that's the key unless you just make an awful lot of money. Good luck to you all.
dajo9
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82gradDLSdad said:

I'll leave everyone with this bit of investing hindsight...had I just left my S&P like fund alone in my first phone company 401k and kept adding to it I'm positive I'd be much richer. I got smart and first moved into a globally diversified set of index funds and then even smarter by selling calls and puts against this portfolio. Luckily, I'm first and foremost a saver and a live well below your means person. My wife is too. I guess that's the key unless you just make an awful lot of money. Good luck to you all.
This. I used to do more frequent trading and realized I was better off buying and holding (with occasional macro-economic trades). Benign neglect. Go to the beach. Everybody's trading record seems to be spotless when they report out after-the-fact. I'd rather hear what people are doing in real time, as we all know sometimes all of us are wrong with the market.
 
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