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.
- My experience of the 2008 bailout
- California reports 1 million unemployment claims in March.
- Ford Downgraded to Junk (BB+ from BBB-)
- Ackman buys hedges for $27M. Closes them for $2.6B and buys more stocks.
- U.S. Jobless Claims near 3.3 million for week prior
- If you already have a entry-exit goal for a stock, use a two-legged delayed bull spread for your long term positions instead of limit orders
- Reuters: Reopened factories in China laying off workers due to cancelled orders
- Full text of the $2 trillion stimulus bill that was just passed
- Do you think this surge is a bulltrap?
- Do institutional investors really control 99% of the money in the market?
- Investing psychology: do people who make more money care less about getting the "best" returns?
- Bull Trap?
- Tomorrow the USA becomes the epicenter of Covid19 infections.
- CNBC: Negative rates come to the US: 1-month and 3-month Treasury bill yields are now below zero
- Apple Tumbles After Report Says 5G iPhone Could Be Delayed To 2021
- As deaths surge in the US, the S&P500 soars to mid 2017 levels.
- ECB will not apply issuer limit in new crisis fighting QE
- What companies could excel in an economic shutdown?
- Government Bail Out Terms and Conditions - Cares Act TOS
- S&P bid/ask spreads are awfully high
- Is there really even a risk from buying thousands of dollars of blue chip stocks on discount?
- Maybe a dumb question: is gold jewelry still considered an investment in gold?
- Etf's that offer x3 or x15 the index; Worth a buy?
- Does anybody have a resource that is keeping track of who is cutting dividends right now?
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 26 Mar 2020 05:10 AM PDT 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]  |
| My experience of the 2008 bailout Posted: 25 Mar 2020 09:04 PM PDT I wanted to share my experience of the 2008 bailouts because we are among friends. Right? And friends help each others, and share their experiences. Right? During the financial crisis of 2008, it became clear that the government had to step in. People were losing their jobs, stock market dropped by more than 30%, the market was going up and down by 5-10% a day (the amount my brokerage accounts would go up or down was more than what I was earning in a month at work). It was humbling. It was really tough and difficult to trade. Buy on the down days? Sell on the up days? Hold it until sky clears, despite having bled a lot of money already? I was over leveraged too (through LEAP options), which was not the smartest thing to do at the time, but heh, are you going to lock the loss? Then came the bailout, with a lot of volatility leading to it. A lot of back and forth for days for politicians to get a chance to pass it. (They may have failed to pass the first version even, I don't remember). Finally, one of the branch passes it, and it's time for the other branch to pass it. "About time, after the bailout, things are going to get better, we can save those companies, we can move ahead and blue sky is coming." I remember at the time, I was looking at the final votes, and I could not believe it. As the votes would come in, and it became clear that the bailout would pass, S&P futures started to drop, like a stone. WTF!!! Help is coming, everything will get better, why is it dropping? Well, the reason is simple, by signing the bailout, politicians agreed that we were in a shitty situation, companies needed to be saved, and the lousy bailout was getting signed, and there was no more good news down the line for a while. We shot our ammos, and now let's pray. So it became sell the news. As the market continued dropping days after days, and I was going to be wiped out, I had to sell to not be over leveraged anymore. I had to take a 6 figures loss. And I am fortunate that I sold, because the market continued to significantly tank for almost 6 more months to level I did not think we would reach. After selling, I was not taking as much risk anymore, I got burned hard. After we reached the bottom, I switched my positions to risky assets, and I was able to make up some of the losses. But that was a great learning experience, and I figured that I preferred to learn that lesson at the time, when my accounts were not too big than later. Recovering from a 6 figures loss is doable, but more than that, and it is a decade or more of setback. Well, I can say that almost 12 years later (fuck, already!), the situation is very similar. This time, I was ready, and maybe that will be another post to explain what I did in 2019-2020, as it can be easily applied. So today:
I am not saying that the market is going to drop after the bailout is voted, but watch out for that. Unlike 2008, there is no blue sky coming. The bailout is only a short term fix. How long do you think $1200 per person is going to last? Unlike 2008, we know that the worst is ahead of us. We still don't know. In the US, the coronavirus pandemic is expected to peak in at least 2-3 weeks. But who knows? As we are doubling every 2-3 days, it could mean 100 times more new cases per day. 100 times more death per day (few weeks later the infection). It's absolutely a staggering and awful number. Hopefully, lockdown will be enforced in every state, so we can reduce this grow rate. Hospitals are already over capacity, nobody can tell exactly how this is going to end (except that's going to be a carnage). Esp. as some are talking about removing the lockdown in 2 weeks! And even after the peak, it means that people are still getting sick, people are still dying, as they are hospitalized for 2-4 weeks. Expect at least 1-2 months of pain, even after peak. I understand that the market is forward looking, but there are still many opportunities for false head starts, and failed bounces from the bottom. From my experience with the 2008 bailout, nobody could really predict the bottom. Even as it was a financial crisis. This time, it is not looking pretty, so please don't be like the 2008-me, don't be over-leveraged (yet), things can go either way. Politicians are very good at messing up a crisis. And most of all, be safe and healthy, stay home as much as you can. It is going to be a rough ride, and unfortunately we are only getting started. My sincere thoughts for people with friends and families that are going through hardship, sickness and death. Hang in there! [link] [comments]  |
| California reports 1 million unemployment claims in March. Posted: 25 Mar 2020 02:49 PM PDT According to the CNBC. Surprised or about what you expected? Extrapolating out to the country it's about 8 million+ claims nationally. "California Gov. Gavin Newsom said Wednesday that the state has seen 1 million unemployment claims in less than two weeks as the coronavirus pandemic has led to businesses being shut down across the state. 'We just passed the 1 million mark, in terms of the number of claims, just since March 13,' Newsom said. Newsom's announcement comes one day before a key national data release on new jobless claims for the United States, which some have projected to be in the multimillions. The initial claims data has never before surpassed 1 million, and it was 285,000 last week." https://www.google.com/amp/s/www.cnbc.com/amp/2020/03/25/california-sees-one-million- [link] [comments]  |
| Ford Downgraded to Junk (BB+ from BBB-) Posted: 25 Mar 2020 07:33 PM PDT S&P Global Ratings late Wednesday downgraded Ford Motor Co. F, +8.88% debt to junk, saying the auto maker's credit metrics and "competitive position" were already borderline for an investment-grade rating before the coronavirus outbreak, "and the expected downturn in light-vehicle demand made it unlikely that Ford would maintain the required metrics." Ford's debt was downgraded to BB+ from BBB-. The outlook was negative, which reflects the 50% chance that S&P could lower the rating on Ford "on account of longer-than-expected plant shutdowns or a potential economic recession leading to negative cash flow generation, eroding liquidity, and higher debt leverage," the ratings agency said. Shares of Ford fell 3.5% in the extended session Wednesday after ending the regular trading day up 9%. https://www.marketwatch.com/story/fords-debt-gets-downgraded-to-junk-by-sp-2020-03-25 [link] [comments]  |
| Ackman buys hedges for $27M. Closes them for $2.6B and buys more stocks. Posted: 25 Mar 2020 05:55 AM PDT "In a letter to Pershing stakeholders dated Wednesday, Ackman said the fund completed the exit from his bets against the market on March 23 and generated $2.6 billion compared with premiums paid and commissions totaling $27 million. He first announced his market hedges on March 3." "we became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices," he added. [link] [comments]  |
| U.S. Jobless Claims near 3.3 million for week prior Posted: 26 Mar 2020 05:33 AM PDT https://www.investing.com/economic-calendar/initial-jobless-claims-294 Forecast initially started around 500K, was adjusted to 750K, then 1M, and finally 1.6M late yesterday. Even with all those adjustments the estimates were doubled. Yikes. [link] [comments]  |
| Posted: 25 Mar 2020 09:28 PM PDT You are cheating yourself by using limit orders. Especially during this volatile period when premiums are... well... at a premium Let's use a blue chip. The sort of stock found in a stock-based 401k. We are going to invest in MSFT. Leg 1: Buy stock MSFT 146.92 Normally, you would set a buy limit order (please don't use market orders) at 146 or similar. Instead of a limit order, I suggest writing a put. Determine how long you are willing to wait to get your microsoft share (assuming this is your retirement account and you will hold the stock for years, you can probably wait months for it). The date you are willing to wait will be your options expiration date. So instead you write a put on MSFT at $145 or $150. Lets do $150 expiring on 15 May 2020 (51 days out). In exchange for this put, you receive a premium of 12.00 per share. At some point, you will be assigned on the put since it is in-the-money. This represents a cool 8% return on your money in 59 days (57% annualized) before you even own the stock. In the unlikely event that you are not assigned (and the option expires), you just write another option and take another sweet premium. The downside: You are "locked in" at the strike price you chose. In this scenario, I chose 150 (closest strike price to 146.92). If the price drops to 140 during the time period, you are still getting MSFT for 150. However, if you had done a simple limit order, you would be paying 146 (probably within the day you made the order). You don't get the 12 dollar premium on 150 - making your breakeven price 138. Leg 2: Sell stock It's time to sell the MSFT stock you were banking on retiring with. MSFT is now at $248.20, and the economy is steady thanks to the efforts of president Beiber. How do you sell MSFT traditionally? Write a slightly in-the-money call with a near-term expiration date. We don't know what the prices are today for this, but let's assume we are going to pull the same thing we did on the purchase. Normally, we would make a Sell Limit Order at $248 and sell the stock. What we do instead is write a call option for $245, expiring 51 days later. A $12 premium per share is paid to us for the option. The option is in-the-money and will be assigned at some point. So whats the catch? You are getting a premium paid that limits your entry and exit points. You won't get the extra 50 bucks if MSFT suddenly "moons" to $300 during the period that you want to sell. You still get your $245 per share and the premium. If the price moves away from the strike price you could miss the buy or the sale. You would still get paid the premium, and can write another option, for another nice, juicy premium. What does all this mean? You have sold the "dream" prices of a $50 buy and $300 sale to the speculators. Only they will reap the excess rewards of your stock if something crazy happens to the share price in a short period. People on WSB and speculator discord channels will pay you a healthy chunk of cash to use your shares betting on moonshots that typically will lose them money. Flakey investors will chase prices up and down with limit orders, and are not getting the premium price afforded to people who choose their prices and stick with them. Options are dangerous and can lose tons of money! You are actually reducing your exposure and risk to the market. Stock buyers who use a basic limit order are paying more money for the "unlimited gain" possibility. If you plan to buy MSFT and sell MSFT anyways, you cannot lose money writing options in this way. [link] [comments]  |
| Reuters: Reopened factories in China laying off workers due to cancelled orders Posted: 26 Mar 2020 01:52 AM PDT |
| Full text of the $2 trillion stimulus bill that was just passed Posted: 25 Mar 2020 09:23 PM PDT |
| Do you think this surge is a bulltrap? Posted: 25 Mar 2020 08:18 AM PDT Most news seems really hopeful, but the unemployment does come out tomorrow and it seems that the stimulus deal hype is already starting to cool. [link] [comments]  |
| Do institutional investors really control 99% of the money in the market? Posted: 25 Mar 2020 11:55 PM PDT I have read multiple times that by far the vast majority of money in the markets is controlled by huge institutional investors, not you and me investing individually. If that's true, then what causes this insane volatility? Are the institutional investors also panicking and buying/selling based on headlines? That seems far fetched. They should hopefully be sticking to their strategies and not panicking! So if all the geniuses on this sub can see that this is 'obviously' a bull trap or 'obviously' headed lower, aren't these institutional investors also able to see that? In that case, why does the market jump and fall 10% in a day? [link] [comments]  |
| Investing psychology: do people who make more money care less about getting the "best" returns? Posted: 25 Mar 2020 06:47 PM PDT I realized that when I was a college student, I was pretty obsessed with getting 50-100% returns a year, often taking on big risks to do so. I was trying to time the market, using leveraged ETFs and options, buying and selling VIX products, and buying high risk/high reward stocks. After graduation, I got myself a pretty decent job, and I've been maxing my 401k into an S&P500 mutual fund regardless of market fluctuations without a care in the world. I'm also buying stocks that I like outside my 401k that I think have great future potential through DCA, without much regard to their price movements. I feel like I'm making so much as a 23 year old compared to my peers, that even if my investments underperform, I'll still be doing relatively well later in life, so returns matter less. Like, for example, if I have 0% returns for the next 40 years, I'll still probably be able to amass 5M by the time I'm 65 assuming I get no raises, which would be 2.3M inflation-adjusted at 2%. In a HYSA, it'd be 5M inflation-adjusted. That's definitely enough, and I have no care about getting more than that. I also don't have a target retirement age - more like if I have enough for 3% SWR and I don't care much about working anymore I'll retire. I did a little poll with my other high-earning friends, and they share similar opinions, mostly just DCA away, but when we were in college, we would be thinking about shit like XIV, and how to short the VIX spike, etc. What does r/investing think? Are the market timers mostly people who are earning less and think the stock market is a way to get ahead? I hypothesize that there's a correlation between earning more and taking less risk when investing, and probably why the really rich folks put some money away in hedge funds that return less than the market but with less volatility. [link] [comments]  |
| Posted: 25 Mar 2020 03:49 PM PDT Anyone else think we're in a bull trap? A standard bear market pullback for a few days and then another significant leg down? VERY open to other opinions on this. [link] [comments]  |
| Tomorrow the USA becomes the epicenter of Covid19 infections. Posted: 25 Mar 2020 08:45 PM PDT We will surpass Italy and China in a single day. Wall Street will be a blood bath. Specifically New York City where wall street is- [link] [comments]  |
| CNBC: Negative rates come to the US: 1-month and 3-month Treasury bill yields are now below zero Posted: 25 Mar 2020 09:25 AM PDT The coronavirus crisis has brought another first to U.S. financial markets — negative yields on government debt. Yields on both the one-month and three-month Treasury bills dipped below zero Wednesday, a week and a half after the Federal Reserve cuts its benchmark rate to near-zero and as investors have flocked to the safety of fixed income amid general market turmoil. It was the first time that happened in 4½ years, when both bills briefly flashed red and yields fell to minus-0.002% each. The readings Wednesday were well below those. "This is part and parcel of the whole flight to quality thing," said Kim Rupert, managing director of global fixed income at Action Economics. "They're obviously the most liquid instrument. We saw a lot of selling pressure a few days ago when everyone was selling everything to get cash. But with all the plans the Fed has introduced, the bill market is much safer." The U.S. now joins large swaths of Europe and Japan that also have negative-yielding debt. In Germany, the move was even more prevalent, with all government fixed income instruments except the 30-year bond carrying rates below zero. Denmark, France and Sweden are among other European nations also in the category. Negative yields are largely a function of demand, as prices and yields move in opposite direction for bonds. Investors pay a large premium above par on the bonds and can receive less than their initial investment at maturity. Deposit rates also can be negative. The negative rates, however, are not directly related to central bank policy. Fed officials have rejected the notion that the U.S. central bank might eventually take its policy rate below zero. However, that might not matter if current market trends hold. While longer-duration Treasurys are still a good ways from negative territory, the trend for yields is lower. "There's no telling anymore in this environment. They could spread," Rupert said. "Everyone is expecting the Fed to be lower for longer, and I mean longer. The whole bias is for yields to go lower. I would not rule out the front end of the curve going negative." [link] [comments]  |
| Apple Tumbles After Report Says 5G iPhone Could Be Delayed To 2021 Posted: 25 Mar 2020 05:01 PM PDT A new report from Nikkei Asian Review states that Apple could delay the launch of its 5G iPhone over supply chain disruptions in China and new fears of demand issues as the global economy crashes. Sources told Nikkei that Apple has "held internal discussions on the possibility of delaying the launch by months, three people familiar with the matter said, while supply chain sources say practical hurdles could push back the release, originally scheduled for September." https://marketspanic.com/world/apple-tumbles-after-report-says-5g-iphone-could-be-delayed-to-2021 *Link edited [link] [comments]  |
| As deaths surge in the US, the S&P500 soars to mid 2017 levels. Posted: 26 Mar 2020 03:59 AM PDT This makes no sense at all. Are the companies in the sp500 index better off now, with better future earnings prospects than in 2017? Obviously not.. so what the hell. Seriously. [link] [comments]  |
| ECB will not apply issuer limit in new crisis fighting QE Posted: 26 Mar 2020 01:12 AM PDT |
| What companies could excel in an economic shutdown? Posted: 25 Mar 2020 05:23 PM PDT I know some grocery and medical supply companies have done well in the past couple weeks. What companies would excel if there was an economic shutdown? The motley fool said streaming and gaming services, so was wondering what other ideas people had. [link] [comments]  |
| Government Bail Out Terms and Conditions - Cares Act TOS Posted: 25 Mar 2020 09:48 PM PDT
TLDR: Bail out requires equity stake in the company and the loan cannot be forgiven. [link] [comments]  |
| S&P bid/ask spreads are awfully high Posted: 25 Mar 2020 07:43 PM PDT I don't know why spreads these 2 last days are much higher than during the last weeks big sell off. It doesn't make sense that now, with a lower VIX than previous weeks, spreads are so huge [link] [comments]  |
| Is there really even a risk from buying thousands of dollars of blue chip stocks on discount? Posted: 25 Mar 2020 09:40 PM PDT Very much a bot when it comes to the market, I'm new. Somewhat foolishly sold my old inherited portfolio due to lack of knowledge and pressure from relatives, only lost 11%, the mindset from there has always been put it all back on discount and let it ride for a long time. But am I just missing something? If we know companies have reliable stat sheets, decades of success, cash in the bank, consistent share price averages. I'm struggling to see a drawback. A few I'm interested in are Disney, planet fitness, coca-cola/pepsi, waste management.. even someone like spirit airlines with support from the gov and a bunch of cash in reserves. Genuinely asking for knowledge [link] [comments]  |
| Maybe a dumb question: is gold jewelry still considered an investment in gold? Posted: 25 Mar 2020 07:04 PM PDT This is going to sound really stupid, but in my mind it makes sense and I wondered what constitutes an investment in gold? I don't know anything about gold investments. Are gold coins regulated by the government? I ask because I wondered if gold jewelry counted as an investment. For an example, a solid gold Tiffany ring. Does that have value beyond the resale or secondhand fashion market? What is the difference between a gold coin and a solid gold article, as far as currency value goes (if any)? [link] [comments]  |
| Etf's that offer x3 or x15 the index; Worth a buy? Posted: 26 Mar 2020 03:25 AM PDT As we know the market generally always go up. Then shouldn't you invest in etf's that offers x15 the market index. I understand that the portfolio will have a bigger change on daily basses, but if the investing goal is 30 years the short term doesn't matter. Is it something that I am missing here? Lets ignore the market today [link] [comments]  |
| Does anybody have a resource that is keeping track of who is cutting dividends right now? Posted: 26 Mar 2020 05:03 AM PDT |
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