Daily Advice Thread - All basic help or advice questions must be posted here. Investing |
- Daily Advice Thread - All basic help or advice questions must be posted here.
- China to halve tariffs on hundreds of US goods.
- TSLA down ~14%
- A detailed discussion of using futures contracts to obtain leverage; holding a long position of the S+P 500 index
- Feb 9th is when China re-evaluates to stay closed
- VW, the Tesla of 2009
- Realestate, is it dead compared to this stock market?
- Greece 1 month bills at 40% yield
- Irish vs American domiciled ETFs for non resident with no tax treaty
- ADP says 291,000 private-sector jobs created in January, largest gain in 4 years
- Any fellow Coronavirus bears here? I am simply shocked that the market doesn't care about this
- So does everybody use Yahoo Finance?
- Ponzi scheme king Bernie Madoff says he is dying, seeks early release from prison
- I built this investment correlation visualization tool
- Does the process of placing a limit order and then cancelling the order before it is filled incur the trade brokerage fee?
- Taco Bell parent’s stock falls on earnings miss
- Corp Bonds
- No wonder the stock market keeps going up.
- Shouldn't we all buy China only ETFs?
- Sortino vs Sharpe
- Preferred Stock Resources Question
- Morning Sources
- Holding too much ESPP, need advice
- Are there any iOS apps to listen to all Nasdaq’s companies’ earnings conference calls.
- Two reasons why stocks aren't as expensive as they look: DataTrek
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 06 Feb 2020 04:09 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions. If you are going to ask how to invest you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| China to halve tariffs on hundreds of US goods. Posted: 05 Feb 2020 08:33 PM PST |
| Posted: 05 Feb 2020 07:16 AM PST |
| Posted: 05 Feb 2020 04:30 PM PST In another post, I reviewed some of the ways to obtain leverage in your portfolio. Here, I discuss futures specifically. Futures may be the most cost-effective way of obtaining leverage, or are at least comparable to options. With index futures, you enter into a contract to buy or sell the index at a future date (NOT optional), and the notional value contract can be 5x, 50x, or 250x the underlying index (in the commonly traded CME group contracts). Depending on how much capital you commit to the margin (a sort of good faith deposit), leverage can be anywhere from almost 0x up to 25x if your margin requirement was 4%. This position can be rolled forward quarterly, and leverage will increase if the index loses value and decrease if the index gains value. You do not earn dividends, although this is reflected in the futures price (Future Price = Spot Price * e^((Financing Cost – Continuous Dividend Rate)*Time to Maturity). When interest rates are high, the exponent is positive and the futures contract trades at a premium; you can end up paying a significant amount of roll adjustment in a market in contango. When interest rates are lower than the dividend rate, the exponent is negative and you get a discount for buying a futures contract; a market in backwardation is helpful for those looking to hold a contract long-term. Note that this roll adjustment does not occur when rolling a contract forward, but rather gradually over the life of the contract. While all that might sound complex, the effect of contango/backwardation has not been substantial over the past 20 years as a whole because interest rates have been both higher and lower than the dividend rate. Let's say we decide to trade the E-mini S+P 500 contract, where the contract size is 50x the index. If you were to enter into a futures contract in 2000 when the index value was ~$1400 and roll it quarterly, you would be forced into a margin call and essentially wiped out in 2008 with any amount of leverage >1.5x (starting balance of ≤~$47000). If you "rescued" your account and injected enough cash to avoid margin calls, you would have had to put up ~$4500 at the worst of the recession, and turned your $47,000 into ~148,000 in December 2019. This sounds great, but if you had simply invested your initial capital plus the $4500 in an S+P 500 index fund and reinvested dividends, you would have ~$164,000 with much less risk. "Rescuing" your account when starting with higher leverage has similar results, with higher ending balances, higher "rescue" requirements, and similar returns to the S+P 500 with dividends reinvested. By the way, releveraging or hedging your account by going long or short on Micro contracts (contract value 1/10 the Emini), you would do even worse. Of course, if you started with $47,000 in 2010 and rolled forward 2 E-mini futures contracts (2 because this results in starting leverage of 2.36x compared with 1.2x for 1 contract) until 2020, you would have ended with ~$269,000 compared with the S+P's return of ~$165,000. So, if you could somehow time the market, leverage obviously does well. The only way I found of consistently beating the passive index holder since 2000 was to "double down", or invest more money AND increase your leverage by buying additional contracts every time the index drops significantly. Let's say you decided to start at 3x leverage with ~$24,000 committed, then trade an additional contract (increasing your leverage, requiring extra money to be injected into your account to avoid margin calls) every time the index dropped to 2/3 of its starting value ($952 for our example of starting in 2000 with the index at $1429), and wait at least a year to "double down" again. You would have started trading 2 E-mini contracts after the dot-com bubble burst in 2002, 3 during the 2008 Great Recession, and maintained those 3 contracts until December 2019. You would have injected ~$36,000 (more than the value of the initial account!) and ended with a final value of ~$427,000, compared to just investing your original $24,000 + $36,000 in the S+P 500 (reinvesting dividends) and ending with ~$191,000. Of course, this requires serious resolve and access to extra cash when the economy is at its worst. My next plan is to test this strategy over many time periods. The final consideration is taxes. If you invest in a taxable account, you will be on the hook for only the long-term capital gains tax of 15% with stocks and ETFs, and you can realize those gains at the end of your investing period. LEAPs and futures are subject to the 60/40 rule, where 60% of your gains are taxed at the long-term rate of 15% and the other 40% is taxed as short-term gains (taxed as income), and you have to do this every year (although you can tax-loss harvest). TL;DR Leverage results in greater gains and greater loss, but can be expensive to obtain. Options and futures are the most cost-effective way of obtaining leverage. Holding a leveraged long position with options and futures is possible, but can be completely wiped out with severe drawdowns. An aggressive futures trading strategy of increasing your leverage and cash committed every time the index loses significant value could be profitable if the value of the index increases over time. Does anyone here use futures to obtain leverage? [link] [comments]  |
| Feb 9th is when China re-evaluates to stay closed Posted: 05 Feb 2020 06:55 PM PST The run up today was nice, but be forewarned: macro risks haven't disappeared. If China stays closed due to the virus, a big chill will sweep through the markets as fear sets in due to an increase in the probability of global supply chain disruptions. We aren't out of the woods yet due to the virus. A lot of this has been a temporary boost due to the Chinese pumping in money, but the sugar high might evaporate quickly if businesses remain closed in 4-5 more days. [link] [comments]  |
| Posted: 06 Feb 2020 12:23 AM PST Did people forget about this? Tesla will fall back to "normal" prices. Ironically we don't know what that is... I'm guessing 3-500? Any other guesses? (They are definitely guesses... no one knows what this thing will be doing a year from now) [link] [comments]  |
| Realestate, is it dead compared to this stock market? Posted: 05 Feb 2020 09:20 PM PST I've been looking at what to put some extra cash ive collected over the years into, I spend a large amount of time in the stock/options market and have done very well recently with the "one directional" market we're in. While i wanted to get some vacation rental units to rent out, i feel like the prices of them are now including the ROI so much that you're getting bottlenecked into a zero profit situation now. Basically build equity at 8% to 12% a year with no extra profit to pocket. I feel like i can flip a coin, throw a dart, spin a wheel, land on a random stock and do some basic "buy the dip" crap and still pocket 25% annually at this point. Doe's anyone have some input to this? I literally just feel like all investments are super inflated but they still go up. What. The. Hell. [link] [comments]  |
| Greece 1 month bills at 40% yield Posted: 05 Feb 2020 06:52 AM PST What is going on here? https://m.investing.com/rates-bonds/greece-7-year-bond-yield The rest of the curve is fine: http://www.worldgovernmentbonds.com/country/greece/ Edit: scroll to /u/al-investing and /u/fakerfakefakerson comments for the actual answer (it's based on a very short term bond, 2 days left, so even a few cents of a price difference makes the annualized yield change a lot; also the bond has no volume so the true price is unknown) [link] [comments]  |
| Irish vs American domiciled ETFs for non resident with no tax treaty Posted: 05 Feb 2020 06:17 PM PST My country of residence does not have a tax treaty with USA, as such irish docmiled etf is most appropriate to reduce tax burden for dividends. (USA domiclied etfs are subjected to 30% for non residents pay while irish domicled ones will incur at 15% tax) i intend to invest in accumulating etfs. So am i right that the selection criteria on which market to invest in be which jurisdiction has a lower corporate tax ? Since reinvested dividends are subjected to corporate tax by the fund managers, instead of personal tax which shareholders have to pay for receiving dividends. (i've checked that non residents of USA do not pay capital gains tax via selling of shares) [link] [comments]  |
| ADP says 291,000 private-sector jobs created in January, largest gain in 4 years Posted: 05 Feb 2020 08:00 AM PST |
| Any fellow Coronavirus bears here? I am simply shocked that the market doesn't care about this Posted: 05 Feb 2020 09:00 AM PST I have been following closely and things are escalating rapidly in China (not just Wuhan). [link] [comments]  |
| So does everybody use Yahoo Finance? Posted: 05 Feb 2020 04:53 PM PST I have seen many links that take me to Yahoo Finance and I am new to trading so I was just wondering is Yahoo Finance trustworthy and what do you personally use? Also, what resource do you use that makes it better than other resources of stock info? [link] [comments]  |
| Ponzi scheme king Bernie Madoff says he is dying, seeks early release from prison Posted: 06 Feb 2020 04:56 AM PST https://www.cnbc.com/2020/02/05/bernie-madoff-says-he-is-dying-seeks-early-release-from-prison.html While I realize this is more "investing-adjacent" I do think Madoff's story is one of the biggest/most important investing stories from the last few decades. Dark reality:
[link] [comments]  |
| I built this investment correlation visualization tool Posted: 05 Feb 2020 02:13 PM PST https://veniamin-ilmer.github.io/analysis/investment/correlation.htm I took data from Vanguard indexes from 2005 to 2019, looked up the correlation coefficent between all of the indexes, and used some open source visualization code to make it interactive. [link] [comments]  |
| Posted: 06 Feb 2020 04:52 AM PST Sorry for the noob question, I've never cancelled a buy order before. [link] [comments]  |
| Taco Bell parent’s stock falls on earnings miss Posted: 06 Feb 2020 04:51 AM PST https://www.cnbc.com/2020/02/06/yum-brands-yum-earnings-q4-2019-miss-estimates.html Net sales rose 9% to $1.69 billion, topping expectations of $1.66 billion. Yum China, which operates brands like Pizza Hut and KFC in China, warned on Wednesday that coronavirus could lead to operating losses in its first quarter. [link] [comments]  |
| Posted: 06 Feb 2020 04:00 AM PST |
| No wonder the stock market keeps going up. Posted: 05 Feb 2020 09:16 AM PST With the Fed keeping liquidity going, and the going rate on treasures at 1.5% , behind inflation of 2%, there's literally no safe haven available to the average investor. Please correct me if I'm mistaken. [link] [comments]  |
| Shouldn't we all buy China only ETFs? Posted: 06 Feb 2020 02:33 AM PST Hi, I'm quite new to investing, so maybe I lack some knowledge, but: Due to the Corona virus the chinese market is suffering (supply chains stopped, etc.). After the Corona virus is gone, the Chinese market will again improve. So it would make sense to me to buy now ETFs that index the Chinese market as a big part (better than direct stocks from chinese companies since they themselves can go bankrupt but the country probably not). Of course ideally in the lowest phase, but still I can buy on a regular basis until Corona is gone and that should make a lot of profit. Do you see anything wrong in this logic or possible problems? Thank you for your opinions Below some points of assumptions I made above: [link] [comments]  |
| Posted: 06 Feb 2020 02:31 AM PST Question from econ undergrad. I'm currently writing coursework on mutual funds and just and reading literature on measuring performance and efficiency of mutual funds. What's the point of using Sharpe ratio when Sortino is basically the same thing, but better and more precise, isn't it? As I see Sharpe is more "popular". [link] [comments]  |
| Preferred Stock Resources Question Posted: 05 Feb 2020 02:50 PM PST Hello all, mentioned this in /r/stocks but didn't get much of any answer/traction other than "just buy a preferred ETF, way better!". (Preferred ETF's are also great and won't get called, totally get it, I understand that argument) anyways, I work for a boutique investment bank, and from time to time we get fairly good new issue preferred's. More and more in this low rate environment they have become timely and a great source of income. My question is, what are some of the best and/or most reliable: websites/programs/resources to track all new issue preferred's? Thank you. TLDR: What are the best/most reliable resources for finding new issue preferred stocks? Thanks for the help in advance. [link] [comments]  |
| Posted: 05 Feb 2020 07:57 PM PST Hello! I wanted to see what everyone's morning rituals and goto news sources are before the bell. I often check some different subreddits, bloomberg and Motley Fool, but I really have gotten in to day trading lately. Is there any type of podcast, or pre-market news sites that you recommend? Something that maybe discusses after-market movements, upcoming events to note such as earnings reports, and predictions for the day? [link] [comments]  |
| Holding too much ESPP, need advice Posted: 06 Feb 2020 01:23 AM PST A couple of months back I decided to invest an extra $3k I have by purchasing VOO. I'm also receiving ESPP shares from work (CHKP), currently have around $16k. I feel like I should diversify and not hold so much CHKP, so I want to sell around $6k of them in favor of some ETF or a long term stock. From reading around, some possible moves I can make that appeal to me are: (or a combination of those) 1) Tech ETF (maybe QQQ) 2) High dividend ETF 3) MSFT 4) more VOO Would like to hear your opinions and possibly saving me from making a mistake. Thanks :) [link] [comments]  |
| Are there any iOS apps to listen to all Nasdaq’s companies’ earnings conference calls. Posted: 06 Feb 2020 01:15 AM PST |
| Two reasons why stocks aren't as expensive as they look: DataTrek Posted: 05 Feb 2020 01:23 PM PST With U.S. stocks continually climbing to fresh records, some investors have latched onto fears that valuations are rising to levels that could warrant a correction. But according to DataTrek co-founder Nicolas Colas, stocks today aren't as overvalued as they look. Traditional measures of valuation including price-to-earnings (PE) ratios do suggest the S&P 500 is trading above its recent historical averages. The S&P 500's current forward P/E ratio is 18.6x, or well above the 10-year average of 15.0x. However, a combination of a low interest rate backdrop and shifting company composition of the blue-chip index today helps make the case for today's rich valuations, Colas said in a note Wednesday. First, interest rates have come down below their levels from the early 2010s, lowering the cost of borrowing for companies and giving them access to capital to grow their businesses at a cheaper price tag. "From 2010-2013, when the S&P's PE was reliably below 14.0x, the average yield of the 10-year Treasury was 2.51%," Colas said. "Everyone remembers when yields were low in 2012, often below 2.0% due to the Greek debt crisis, but bookending that were yields closer to/over 3.0%." Today, the benchmark 10-year Treasury yield is hovering just over 1.6% and has not topped 2.0% since mid-2019. "With corporate earnings stable in 2020 (i.e. no recession expected), valuations should be higher if discount rates are lower," Colas said. And second, more expensive valuations for the S&P 500 as a whole make more sense when considering the most heavily weighted sector is now technology, with high-growth companies in this sector tending to trade at higher multiples relative to corporates in other groups. Case in point: Technology sector companies are trading at 22.5x 2020 earnings, Colas said, while components of the financial and health care sectors – the cheapest groups – are trading at 13.2x and 15.9x this year's earnings, respectively. "Look back at how the S&P sector weightings have evolved over the last decade and you get useful insight into why valuations are high just now," Colas said. "At the start of 2010, Technology was 18.7% of the S&P 500. On an apples-to-apples basis Tech is now 27.5% (with Google which is now Comm Services but was in Tech in 2010, but not Facebook because it was only added in 2013)," he added. "Throw in Facebook, and you get a 29.4% weighting today." That outsized weighting for tech companies has come at the expense of sectors that tend to be lower-growth and trade at lower valuations, including the energy, consumer staples, industrials and materials sectors. "Bottom line: U.S. stocks are expensive, but for understandable and rational reasons," Colas said. [link] [comments]  |
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