Markets still falling like whoa

[jimmyjazz 45,907]

19 minutes ago, hornhorn said:

-0.01 for calls and 0 for puts.

So essentially it's synthetic long VIX.  I like it.

[Cajun 11,705]

19 hours ago, Bozo_Casanova said:

I don’t fuck with VIX. There be dragons.

[Tailgate 3,021]

Watching my AAPL position the last few months...

[Celery Man 20,935]

Welcome to the party pal. I’m proportionally way too heavy in AAPL (for any single stock) but only because I’ve been in it so long. The risk remains palatable.

[elfenix 34,236]

On 1/12/2020 at 9:28 AM, Texas Jeff said:

Yesterday, I set out to discover exactly how the DJIA is calculated.  Turns out that it is pretty simple; it actually is an average.  They take 30 stocks, add up the price of all of the stocks, and divide by a "Dow divisor".  The value of the divisor is determined by the Wall Street Journal.  It's actually less than one, which means that the sum of all of the stock prices is actually multiplied by about seven to get the number you see.

So, the Dow changes if the company stock prices go up or down ... or if the folks at the WSJ decide to adjust the Dow divisor.  They are suppose to adjust the divisor to account for stock splits, dividends and other events that affect stock prices, but I couldn't figure out who or what exactly goes into this.  If the WSJ folks fail to take something into account, for example stock buybacks, the DJIA could rise or fall even though a company's value did not change.

Consider two Dow stocks, Boeing and Pfizer.  Boeing has the top price in the Dow today, around $330.  Pfizer is dead last around $40.  So a drop in Boeing of around $40 would do the same damage to the DJIA that Pfizer would do if it dropped to zero.  But Pfizer's market cap is actually higher than Boeing.  A $40 drop in Boeing would destroy about $22 billion in wealth, but a $40 drop in Pfizer would wipe out $220 billion.

It seems crazy to base a well known index on stock prices rather than market cap.  The top six Dow companies by price (Boeing, Apple, UnitedHealth, Goldman Sachs, Home Depot and McDonalds) combine for more than a third of the value of the DJIA.  The bottom six (Intel, Coca-Cola, Walgreens, Dow Chemical, Cisco and Pfizer) have less combined influence than either Boeing or Apple do alone.

 

congratulation, you discovered that it's the "dow jones industrial average"

Edited January 14, 2020 by elfenix

[elfenix 34,236]

20 minutes ago, Celery Man said:

Welcome to the party pal. I’m proportionally way too heavy in AAPL (for any single stock) but only because I’ve been in it so long. The risk remains palatable.

i should have bought shares instead of ipods.

[52-80 19,151]

TSLA has been on a fucking tear

[Tailgate 3,021]

9 hours ago, Celery Man said:

Welcome to the party pal. I’m proportionally way too heavy in AAPL (for any single stock) but only because I’ve been in it so long. The risk remains palatable.

Same...been in since 2000 but not selling. It’s gone down before....always climbs back up.

[Texas Jeff 1,945]

On 1/12/2020 at 12:10 PM, Nice Guy Eddie said:

Complete investing amateur here but the Dow Jones 30 average doesn’t seem like the best index to focus on.  Do 30 companies really indicate short or long term trends?  

Well, the 30 companies in the DJIA are worth about $6.6 trillion.  The largest 500 companies are worth about $25.6 trillion.  So those 30 companies are a big fraction of the market. The original idea behind the DJIA was to look at the biggest companies and see how they were doing and project that out to the entire market.  Back before we had calculators this easy measure was nice to have.  Add up the stock price of 12 big companies and divide by 12.

But today the DJIA is still the number you see on the news the most.  It's flawed because it is not based on market cap, just on the stock price for each company.

[workswithseed 2,103]

SPCE is netting me some nice capital.

[Wally Fairway 5,544]

So I was thinking about throwing a few dollars into the Tesla earning release that happens in the next 10 days or so. My plan was to buy $1,000 in out of the money put and call options, with the idea that TSLA moves in big steps and this way I really wouldn't care if it is up or down as long as it moves a lot. 
Then I looked at their option prices and let me just say WOW, the spreads on this is astounding.

TSLA is around $535 today (open)
$515 puts are $25 (1/31 expire) and $31 (2/7 expire)
$555 calls are $26 (1/31 expire) and $32 (2/7 expire)

to get to a $10 price you get
- puts priced at $470 (1/31) or $450 (2/7) 
- calls priced at $620 (1/31) or $650 (2/7)

and to get a $10 option that is 6 months out (7/17 expire) the strike prices are $850 call or a $330 put....a $500 spread on a $10 option. 

 

tl;dr - just go to Vegas to gamble, it is too expensive to gamble on TSLA
 

[Parliament 14,257]

Chicken

[workswithseed 2,103]

On 1/14/2020 at 9:15 AM, workswithseed said:

SPCE is netting me some nice capital.

Fucking hell, it's taking off.

[Sbbruin 21,847]

8 minutes ago, workswithseed said:

Fucking hell, it's taking off.

it's skyrocketing.

[workswithseed 2,103]

1 minute ago, Sbbruin said:

it's skyrocketing.

Is it a coincidence that it's SPCE dealing with rockets skyrocketing.

[Sbbruin 21,847]

8 minutes ago, workswithseed said:

Is it a coincidence that it's SPCE dealing with rockets skyrocketing.

[Wally Fairway 5,544]

46 minutes ago, Parliament said:

Chicken

Hell I'd rather be a chicken than an idiot; I can't figure which way it's going to go and based on options pricing neither can anyone else. 
If I buy the 6 month expiration for $10 - the stock can go up 59% or down 38% and the option has expires with no value.

Is there any other large cap company with this type of option pricing?
I ask because it seems crazy to me, but I'm a very small option player/investor who looks at them as a way to hedge (which has meant make less in an up market)

[Bozo_Casanova 26,449]

3 hours ago, Wally Fairway said:

Hell I'd rather be a chicken than an idiot; I can't figure which way it's going to go and based on options pricing neither can anyone else. 
If I buy the 6 month expiration for $10 - the stock can go up 59% or down 38% and the option has expires with no value.

Is there any other large cap company with this type of option pricing?
I ask because it seems crazy to me, but I'm a very small option player/investor who looks at them as a way to hedge (which has meant make less in an up market)

That's why I would sell the option instead of buying it  - the implied volatility for TSLA  is pretty high right now, and will likely contract fairly soon. The higher the implied volatility, the more expensive it is to insure.

So, if I was interested in this trade right now, I would sell a vertical put spread however wide I was comfortable with, get paid about $1000, and then wait for volatility to contract and become less valuable, and then I'd go buy the spread back to close the trade and profit. 

Edited January 15, 2020 by Bozo_Casanova

[Tailgate 3,021]

Good call on SPCE for those that jumped in. Got a watch on it now.

[workswithseed 2,103]

3 hours ago, Tailgate said:

Good call on SPCE for those that jumped in. Got a watch on it now.

I got lucky that I got on it on Friday at $12. 

[Incredulity 11,668]

I should buy all the boats.

good lord

[Dbeasy 15,047]

I have a question for the really smart folks on this board. I’m trying to figure out why preferred stock mutual funds drop so badly when interest rates rise.

Most preferred stock is redeemable at par value only at some point in the future. So the fact that preferred stock becomes less attractive as rates rise is almost irrelevant. The stock will eventually get redeemed at par. Obviously I’m missing something here.

[Incredulity 11,668]

2 hours ago, Dbeasy said:

I have a question for the really smart folks on this board. I’m trying to figure out why preferred stock mutual funds drop so badly when interest rates rise.

Most preferred stock is redeemable at par value only at some point in the future. So the fact that preferred stock becomes less attractive as rates rise is almost irrelevant. The stock will eventually get redeemed at par. Obviously I’m missing something here.

further, what is the baseline logic behind a preferred stock mutual fund? 

Mitigate the risk that the issuer doesn't pay the dividend on a single issue?  That seems like a pretty low risk with highly rated companies.

[Wally Fairway 5,544]

On 1/20/2020 at 7:06 AM, Dbeasy said:

I have a question for the really smart folks on this board. I’m trying to figure out why preferred stock mutual funds drop so badly when interest rates rise.

Most preferred stock is redeemable at par value only at some point in the future. So the fact that preferred stock becomes less attractive as rates rise is almost irrelevant. The stock will eventually get redeemed at par. Obviously I’m missing something here.

Pfd stocks are a proxy for debt, as interest rates rise the value of fixed interest/dividends streams decline

[Tailgate 3,021]

Just joined the SPCE race.

[Fudge Nuggets 19,190]

On 1/20/2020 at 8:42 AM, Incredulity said:

That seems like a pretty low risk with highly rated companies.

Do highly-rated companies issue a lot of preferred stock?  I thought preferreds were for the dodgy co's that are trying to dress up their balance sheet by issuing debt without really calling it debt.

[Incredulity 11,668]

Just now, Fudge Nuggets said:

Do highly-rated companies issue a lot of preferred stock?  I thought preferreds were for the dodgy co's that are trying to dress up their balance sheet by issuing debt without really calling it debt.

I'm not an expert.   

FWIW, all the major banks have preferreds yielding 5-6%

[workswithseed 2,103]

Boeing looking to shit the bed.

[Wally Fairway 5,544]

22 minutes ago, workswithseed said:

Boeing looking to shit the bed.

It is bad for the Dow when Boeing crashes

[DaysOff 7,947]

Because they went to banks with their hand out?

[Tailgate 3,021]

On 1/14/2020 at 11:15 AM, workswithseed said:

SPCE is netting me some nice capital.

Because of this post and some minimal online research, as mentioned, I jumped in yesterday. Great day today. I like to stay really long and feel good about this stocks potential. I’ll be researching a lot more now as I may add to my current position. So, thank you! \m/

[Storm the Field 5,294]

TSLA up $19 (3.5%) today. Around lunchtime it was up damn near $50.

[Anastasis 23,469]

Damn.  SPCE doing SPCE things. 

[workswithseed 2,103]

57 minutes ago, Tailgate said:

Because of this post and some minimal online research, as mentioned, I jumped in yesterday. Great day today. I like to stay really long and feel good about this stocks potential. I’ll be researching a lot more now as I may add to my current position. So, thank you! \m/

Yeah, I felt like it was doing me good so I figured to let y'all know.

Hook'em

[JimmyHoffa 1,188]

On 3/26/2018 at 8:39 AM, Yarbr said:

Figure page one needs a reference point.

Dow 23,530

S&P 2,590

Nasdaq 6,990

At open today-

Dow 29,111

S&P 3,315

Nasdaq 9,377

 

The run will come to the end eventually but this thread is pretty damn funny looking back at some of the posts in the early pages. Yes, we all know it's easy to Monday morning QB after the fact but it's still funny.

Oh and Buy low sell high still applies.....  

Edited January 23, 2020 by JimmyHoffa

[gecko 1,104]

A pretty solid indicator of market movements is when there are more buyers than sellers prices tend to go up, when there are more who what to sell than buy, markets go down.

Edited January 23, 2020 by gecko

[sidis 9,827]

1 hour ago, JimmyHoffa said:

At open today-

Dow 29,111

S&P 3,315

Nasdaq 9,377

 

The run will come to the end eventually but this thread is pretty damn funny looking back at some of the posts in the early pages. Yes, we all know it's easy to Monday morning QB after the fact but it's still funny.

Oh and Buy low sell high still applies.....  

in fairness, i believe the thread title was a carryover from one on tos. 

[Rusty Shackelford 414]

The only indicator you need:

[The Whistler 14]

9 hours ago, gecko said:

A pretty solid indicator of market movements is when there are more buyers than sellers prices tend to go up, when there are more who what to sell than buy, markets go down.

seems simple.  what's typical buying season in March when most corporations hand out bonuses?  any correlation?  been wondering if there is a strategy to buy now or soon before bonus season, then sell out sometime later.  

[luke duke 6,413]

The only indicator you need:

What do you think this graph is telling you?

[Rusty Shackelford 414]

What do you think this graph is telling you?

Central Banks print money, money is used to buy stonks.

[WBT 20,564]

18 minutes ago, Rusty Shackelford said:

Central Banks print money, money is used to buy stonks.

And they keep interest rates at zero so the money has nowhere else to go.

[bernorange 8,361]

Quote

...
The Federal Reserve’s low interest rates, the perception that there is a high bar to future increases and expansion of its balance sheet are helping to lift asset prices, Federal Reserve Bank of Dallas President Robert Kaplan said.

“All three of those actions are contributing to elevated risk-asset valuations,” Kaplan told Michael McKee in an interview Wednesday on Bloomberg Television. “And I think we ought to be sensitive to that.”
...
“My own view is it’s having some effect on risk assets,” Kaplan said. “It’s a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.”
...

https://www.bloomberg.com/news/articles/2020-01-15/fed-fuels-rise-in-risk-assets-with-balance-sheet-kaplan-says

That was from roughly a week ago.  A rare moment of honesty from a central banker. 

The bubble is going to keep bubbling until something breaks.  Then the party will be over.

[Wally Fairway 5,544]

1 minute ago, bernorange said:

The bubble is going to keep bubbling until something breaks.  Then the party will be over.

For those who are too young to have been through a bubble, print our what bernorange said save it, then read it regulary - this is exactly how bubbles work. 

The second part is that you never know when that party will be over; bet against them at great financial peril
(if you guess right there can be significant gain, but guess wrong and it will eat your lunch)

 

[ChiTownDoc 21,152]

30 minutes ago, bernorange said:

https://www.bloomberg.com/news/articles/2020-01-15/fed-fuels-rise-in-risk-assets-with-balance-sheet-kaplan-says

That was from roughly a week ago.  A rare moment of honesty from a central banker. 

The bubble is going to keep bubbling until something breaks.  Then the party will be over.

Last year was odd in that it was really good for bonds too.  When that 12-15% correction comes take the pop you get with the bonds and pour even more in to equities.  It’s been said a million times here, unless you’re 55+ just keep investing.  If over a 10 year period stocks are down, we have much bigger issues than money.  

[Fudge Nuggets 19,190]

I always have my 401k maxed out, but no way in fucking hell I would be using extra funds to buy in right now.  This market is insane.

[Wally Fairway 5,544]

1 hour ago, ChiTownDoc said:

Last year was odd in that it was really good for bonds too.  When that 12-15% correction comes take the pop you get with the bonds and pour even more in to equities.  It’s been said a million times here, unless you’re 55+ just keep investing.  If over a 10 year period stocks are down, we have much bigger issues than money.  

Can I have you talk to my Dad? 
He doesn't understand this 10 year time frame 
This is part of an email I got from him in October
- I am concerned that, at my age, I am not as aggressive as I should be insofar as investing is concerned. 
He is going to be 89 in April, and he is basically 90%+ in equities, and only a small part of that in a balanced fund. He rebalances twice a year and it drives me crazy. But he really doesn't need the money as his pension and long-term care insurance cover all of his expenses. So it will be eventually, when he passes, it is mine and my brothers - so why not keep it invested. 

He doesn't really have anything else to do - so he regularly sends me investment advice, and the latest stocks with high dividend rates.
 

 

[bernorange 8,361]

Quote

<analysis, charts, rants>
...
You’re staring at a massive asset price distortion with indices and individual stocks dancing at an 80’s RSI party, while yields and growth not confirming any of this.
I maintain the Fed has set in motion perhaps the most dangerous and reckless asset bubble since the year 2000. Nobody will believe it until something bad happens.

Will Powell be confronted with any of this next week?
Will he get challenged on the obvious effects his not QE lie has on asset prices?
Will he get challenged on the claim that the Fed does not target asset prices when it in effect does?
...

https://northmantrader.com/2020/01/24/80s-party/

 

[ChiTownDoc 21,152]

9 minutes ago, Wally Fairway said:

Can I have you talk to my Dad? 
He doesn't understand this 10 year time frame 
This is part of an email I got from him in October
- I am concerned that, at my age, I am not as aggressive as I should be insofar as investing is concerned. 
He is going to be 89 in April, and he is basically 90%+ in equities, and only a small part of that in a balanced fund. He rebalances twice a year and it drives me crazy. But he really doesn't need the money as his pension and long-term care insurance cover all of his expenses. So it will be eventually, when he passes, it is mine and my brothers - so why not keep it invested. 

He doesn't really have anything else to do - so he regularly sends me investment advice, and the latest stocks with high dividend rates.
 

 

I’d tell your dad not to change a damn thing.  He has enough money and this is his fun.  Fuck it.  I’d love a beer with him.  

[hornbri 1,398]

12 minutes ago, Wally Fairway said:

Can I have you talk to my Dad? 
He doesn't understand this 10 year time frame 
This is part of an email I got from him in October
- I am concerned that, at my age, I am not as aggressive as I should be insofar as investing is concerned. 
He is going to be 89 in April, and he is basically 90%+ in equities, and only a small part of that in a balanced fund. He rebalances twice a year and it drives me crazy. But he really doesn't need the money as his pension and long-term care insurance cover all of his expenses. So it will be eventually, when he passes, it is mine and my brothers - so why not keep it invested. 

He doesn't really have anything else to do - so he regularly sends me investment advice, and the latest stocks with high dividend rates.
 

 

If he does not need the money it sounds like he is doing the right thing. That should continue to grow long term for wherever he wants the money to go when he is gone.