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    JP Morgan joins the list of Wall Street banks calling for the demise of 60/40 portfolio, despite its success this year Investing

    JP Morgan joins the list of Wall Street banks calling for the demise of 60/40 portfolio, despite its success this year Investing


    JP Morgan joins the list of Wall Street banks calling for the demise of 60/40 portfolio, despite its success this year

    Posted: 04 Jul 2020 10:34 AM PDT

    https://www.marketwatch.com/story/jp-morgan-joins-the-list-of-wall-street-banks-calling-for-the-demise-of-6040-portfolio-despite-its-success-this-year-2020-07-01

    I never understood why young people would ever choose this. You shouldn't worry about short term volatility. Invest in the highest expected return instruments.

    Reducing short term volatility also kills expected returns in the long run.

    Short term volatility is a result of emotions.

    Edit: if anyone is interested in more check out behavioral portfolio management by c Thomas Howard

    submitted by /u/iggy555
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    How to not get ruined with Options - Part 4a of 4 - Finally, the TRADES!

    Posted: 04 Jul 2020 02:40 PM PDT

    Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM

    Post 2: Basics: Buying and Selling, the greeks

    Post 3a: Simple Strategies

    Post 3b: Advanced Strategies

    Post 4a: Example of trades (short puts, covered calls, and verticals)

    Post 4b: Example of trades (calendars and hedges)

    ---

    In parts 1 and 2, I explained the basics for options. In parts 3a and 3b I explained simple and more advanced options strategies, but all of this does not help much without concrete examples. These two last posts (4a and 4b) conclude my introduction related to options. I will show some of my key trades, explaining the why, the how, the entries and exits, and potential mitigations in case of losses. Most gave great returns, and I had a few small losses. Overall, in the past few months, I have been lucky to play along with the market, and the high volatility had a positive impact. Hopefully, nothing r/wsb worthy (although few of them might qualify :)). I wanted to explain the basics first, then show the trades last, as I did not want anyone to try to emulate these without understanding how/why they worked.

    First, here are the high-level idioms that drive my investments:

    • Over time, the market is going up.
    • It can fall down violently, or it can jump high without obvious signs ahead of time.
    • When the market goes down, it will go back up over time, and that can be very quick.
    • A single stock will be more volatile than the markets and can go up or down even more violently. And unlike the market, if it goes down, there is no guarantee it will ever go back up.
    • After a significant market move, the market often, but not always, reverts to the mean.

    These idioms are pretty straightforward, and should not be too controversial. Overall, I am pretty market neutral, with a bullish tint. And as I explained before, I prefer selling options than buying them. My trades reflect that, and I avoid making trades that could damage my portfolio significantly if the market went up or down significantly. People who get ruined with options do not take this into account and are just gambling.

    Other key things about trading in general, and options in particular:

    • Always have a clear idea of your max profit and your max loss, and the probability of that to happen. Failing to understand this means that you will take more risk than anticipated, and one day you could blow up your account and get ruined.
    • Keep your trades small, don't have a "sure thing" trade that risks 10% or more of your portfolio. Don't cripple your portfolio because of one bad trade.
    • Don't trade for the sake of trading, wait for the conditions to be right, then wait a bit more, and wait again, then when things look the best, then trade on your own terms. Do not get sucked into gambling with a poor profit/risk profile.
    • Watch out for your leverage, it can be very easy to take too many risks, and use too much of your buying power. If you mix your bearish and bullish bets, you can close one side at a profit to free some buying power and reduce overall risk.

    Now the moment we have been waiting for, some of my trades:

    The short naked puts or covered calls:

    I only do pure covered calls when the market has dropped significantly, and use the recent market conditions as a floor. March dropped quite hard, and I am not convinced that we would reach it again soon, but I still have to prepare for it. That being said, the months of March to June have been really good for covered calls as the market traded up first, then sideways, with high implied volatility. I usually target shares that are solid or did not go up too much, so the March floor is not too far lower than my strike. I usually sell naked puts after a few down days in a row and covered calls after a few up days in a row. And if the market is farther from the floor, I trade safer names when the market goes up, and target high beta when the market dropped significantly.

    I am not giving you a full list, but let's say that it was not hard, and still is, to find good names that return 1-2% per month AFTER accounting for a 15-25% share drop. Yup, you read that right, it does not work in normal markets, but it is the case right now. Even if $WM, $WMT, $INTC, $NNN, $EWW, $DLTR, $COF, $BAC, etc. dropped by around 20%, I would gladly pocket my 1-2% premium, and scoop these at a huge discount. Even if it dropped further, I can continue rolling the puts until the market bounces back. Some of the high beta names include $CCL, $REM, $DIG, $BUD, $JETS, $XOP, etc. For a high beta, I am targeting 3-5-10% or more of premium, but I usually try to offload them when they go up significantly.

    But there are few other riskier trades that are worth calling out:

    $DKNG - DraftKing: 11.8% in ~3 weeks.

    I forgot about the IPO, and got in the game 5 days later. Although, I am not a gambler, and the stock went up already, but I had a feeling that RH fams would jump on it (gamblers beget gamblers), and that would give a floor to the stock. Volatility was high, so selling naked PUTs made sense.

    May 7: SELL -1 DKNG 100 15 MAY 20 22.5 PUT @ 1.06

    Per contract - Max risk: $2144 - Max profit: $106 (4.9% of max risk)

    May 8: SELL -1 DKNG 100 19 JUN 20 22.5 PUT @ 2.15

    Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)

    As you know the max risk of going to $0 is possible but highly improbable, so RORAC (Return on Risk-Adjusted Capital) is much higher than these 4.9 to 10.5%.

    The $1.06 premium was one week before expiration! I sold the MAY and JUNE PUTs at the same time. And the price was at $24 already. If the price dropped, I would continue rolling my PUTs until I am profitable. The price went up, I rolled my MAY PUTs just before earnings (and a day before expiration), to take advantage of the earning volatility, and avoiding expiration day.

    May 14: SELL -1 DKNG 100 15 MAY 20/19 JUNE 20 22.5 PUT @ 2.15

    Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)

    So one week later, I bought back my MAY PUTs for $0.25 (pocketing already 3.7% of the profit) and sold the same JUNE contract as the week before with a better price and an overall premium of $2.15 (same as the week before, despite paying back the $0.25! And the stock was already up in a week. Can you believe that shit? Volatility increase definitely helped. Thanks RH gamblers!).

    June 1: BUY +1 DKNG 100 19 JUNE 20 22.5 PUT @ 0.05

    After a bit more than 3 weeks of holding, I decided to buy back all my contracts for $0.05 per share, for an overall 11.8% profit on risk. I pretty much reached max profit already, no need to take more risk, with 19 days to go to expiration. FWIW the stock was at $44 by expiration. It was way too much for my taste, with no premium worth the risk of any new trade.

    Could I have made more profit buying shares, calls, or synthetic shares? Sure. But there was no guarantee on the direction, timing, or amplitude of the move. Here, I won almost 12% with a high probability of success, even if the stock barely budged or dropped a bit. And since 6/19 expiration, the stock dropped to $33 now. It's hard to predict when to sell. I want many singles and doubles with few losses, instead of once in a while home runs with many losses in between.

    As it dropped for 5 days to $33, I recently sold some PUTs for a $22.5 strike again:

    June 29: SELL -1 DKNG 100 21 AUG 20 22.5 PUT @ 1.25

    Per contract - Max risk: $2125, max profit: $125 (5.8% of max risk)

    Because the PUT was deep OTM, the premium was low. The stock will have to drop by more than 35% for me to start losing money, and I can still roll my PUTs then. That seems a good trade. Wish me luck!

    You can see here, that you have to look at your max risk, your max profit for every trade you are getting into, as well as the chance for them to be profitable.

    $USO / $DBO / $USL: 12% in 2 months

    Here is one that absolutely did not go to plan initially, but I was able to turn it around.

    First, the trade that led to the disaster:

    April 17: SELL -1 MAY 15 20 4 PUT @ 0.35

    Per contract - Max risk: $365 - Max profit: $35 (9.5% of max risk)

    Remember that USO split 1:8 on April 29, if you want to look at the numbers. On 4/17, USO was worth $4.20. Oil kept dropping and dropping for weeks and weeks, until that Friday where I decided that it was finally a good time to get into oil (like a bunch of other suckers). The lowest oil price in 40 years, etc. My trade could absorb a 14% loss in USO before I started losing money, so it did not feel too risky, and I could roll the PUTs if needed. USO rolled all their future contracts earlier that week, they were already into May Futures. Yeah, contango was a concern but seemed manageable (or so I thought).

    Well, except that on Monday 4/20, oil blew up. What was bad, became an awful day. Oil tanked hard because April futures dropped, and some people paid to get rid of their contracts. Tankers started to get full, too much oil, and not enough space. USO dropped to 3.75, it was still above my break-even point of $3.65, but the volatility spiked, so the value of my short put increased a lot, that was some heavy losses. Why did I go into that trade on Friday, gosh?!?

    The volatility was so high, every oil trader was running around like a headless chicken, RH gamblers were taking much heavier losses than mine (because they started buying USO long before me, oil was going to go back up, that was a sure deal! Right?). I decided to wait one more day, to see how the dust would settle. On Tuesday, USO dropped even more because now it started impacting next Month's Future (May). Tuesday was the April Future expiration, so trading was all over the place. USO dropped to $3, well below my break-even point, volatility was still high, my losses were twice as big. There was a strong possibility that May Future expiration would behave the same as April, and the rollover of May Futures to June Futures would end up in a real quagmire due to an even higher contango. USO was not the right tool, I messed up, no way moving forward, even rolling my PUTs are not going to do it, USO will drop faster than the premium I can collect. Get out, get out, get out...

    April 21: BUY +1 MAY 15 20 4 PUT @ 1.42

    I bought back my short PUT at more than 4 times the premium price. Gulp. That hurts.

    Taking a step back, this was an extreme situation and not a normal loss with a stupid long term thesis. And I lost a bit of money jumping at the wrong time. A negative future price is not a common occurrence.

    USO was the wrong instrument to profit from oil, it even dropped down to $2.11. And never recovered its value from 4/17 despite oil being higher than that day. I made a mistake, but there must be better instruments that can tackle contango. Enters DBO and USL. DBO has a 6-12 month away contract, so very little impact from contango. USL has the same number of contracts from all months (next month, month after next, etc..., until the 12th month). It is mostly impacted by the contango on the front months (so for 1/12 of the value, or a bit more), but it is not as volatile as USO (USO since changed their composition too, to buy multiple months futures).

    Oil blew up, volatility is extremely high, many oil traders (and RH gamblers) got ruined, but oil is bound to go up eventually. The initial trade to sell volatility through selling naked puts, and rolling as needed until oil goes back up, without being killed by the contango still seemed sound with even less risk and better rewards this time around.

    April 20: SELL -1 DBO MAY 15 20 6 PUT @ 0.63

    Per contract - Max risk: $537 - Max profit: $63 (11.7% of max risk)

    April 20: SELL -1 USL MAY 15 20 12 PUT @ 1.05

    Per contract - Max risk: $1095 - Max profit: $105 (9.5% of max risk)

    April 21: SELL -1 DBO MAY 15 20 5 PUT @ 0.90

    Per contract - Max risk: $410 - Max profit: $90 (21.9% of max risk)

    April 21: SELL -1 USL MAY 15 20 11 PUT @ 2.25

    Per contract - Max risk: $875 - Max profit: $225 (25.7% of max risk)

    Notice that I sold the first batch on April 20, as I was still losing money from USO. The volatility spiked, and it was too good to pass. This is a key reason why you should never put all your money on one trade, but only a few percents at most. That way if the things are not going as planned, you don't lose a ton, and if you can find a more advantageous position, you can double down if you have some dry powder left (but DO NOT overdo it!). It's all about the proper sizing of trades and overall risk. I sold the 2nd batch when I closed my losing USO trade when oil dropped further and volatility increased even more! 22% to 26% potential profit on ATM puts? Just wow!

    The plan for the exit is to close for $0.05 or roll to the next month for further profit. I sized my DBO and USL trades a bit more than my USO trades, so I would make up for the heavy losses. And I did roll in May and closed the June contracts for $0.05 both DBO and USL. Their prices both creeped up slowly, and the volatility dropped to something normal. DBO and USL trades were extremely profitable, and despite the heavy USO losses, the overall profit was still quite good.

    Today, the price of DBO and USL is a bit high for a good profit/risk profile with naked short PUTs, however, we have some other strategies.

    The verticals:

    Most of my bread and butter is on selling naked puts, and/or selling covered calls, but sometimes I dabble in verticals. Here are some examples:

    $UBER: 13.2% in a month

    This is an example of waiting for the right time before you trade. End of May, the market went up by 36% since the bottom, it started to be over-extended. Although SPY could continue higher, it was time to think about a reversion to the mean. I needed to find a share that would continue to struggle for a long time, even as Coronavirus was lingering. I hear the news that LYFT is taking over UBER's market and that UBER is still struggling, with potential layoffs. That seems a good candidate, and UBER has a good day at $36, let's see what we can make of the numbers.

    May 29: SELL -1 UBER JUL 17 20 42/45 CALL @ 0.40

    Per contract - Max risk: $260 - Max profit: $40 (15.3% of max risk)

    So I keep my $40 profit per contract as long as UBER is under $42 at the July 17 expiration. I did not pick $42 by hazard, this was actually above the top that UBER reached in February. So the struggling UBER would need to go over its pre-corona numbers for me to lose money. Unlike naked puts / covered calls, where you can just be patient and roll over and over, sizing for verticals is important, the potential for full losses is a real possibility, and will happen. Sure, you could try to roll your short call and hope that the stock price will drop, but you may just end up amplifying your losses. If you really want to do that and continue with the risk, it's easier to roll your short puts in a bull spread as the market will eventually go up.

    In any case, UBER continued to go up a bit, struggled at $38 (so not even close to my vertical), then reversed. I put an order to close my position at $0.05, as there was almost a month left until expiration, and I already almost reached my max profit.

    June 22: BUY +1 UBER JUL 17 20 42/45 CALL @ 0.05

    $SPY: Various

    I also have been using SPY verticals directly as the market bounced back like crazy. I earned more than I lost, and because I am overall positive delta, even if I lose a bit of money on my edges, I am still very profitable.

    For shit and giggles, one trade to show how you can take advantage of the high volatility:

    June 5: SELL -1 SPY JUL 17 20 330/333 CALL @ 0.91

    Per contract - Max risk: $209 - Max profit: $91 (43.5% of max risk)

    June 26: BUY +1 SPY JUL 17 20 330/333 CALL @ 0.08

    Profit of $83 per contract (39.7% of max risk)

    June 5, SPY was $320, 45% higher than the bottom 2½ months ago, and I had hard time believing that after the market really thought that SPY would go back to pre-corona level with still phase 1 not over, no clear treatment, vaccine many months away, and potential for a 2nd wave (News flash: It's happening before even the phase1 finished). Trees don't grow to the sky. Again being, overall positive delta, even if this vertical had a loss, I would still profit from SPY going over my short calls. As I said earlier, I am a reversion to the mean guy, with a bullish tint. I can't stand losing money when the market is going up (because the market could always continue going back up).

    Here is another trade, not so good this time, so I don't paint an overly rosy picture:

    May 12: SELL -1 SPY JUN 19 20 305/308 CALL @ 0.79

    Per contract - Max risk: $221 - Max profit: $79 (35.7% of max risk)

    June 18: BUY +1 SPY JUN 19 20 305/308 CALL @ 2.48

    Ouch - loss of $169 per contract (76.4% of max risk)

    SPY blew way past my short and long calls. It dropped a bit before expiration, so I was able to avoid a full loss.

    My verticals above are bearish spreads when I think the market will revert to the mean. But here is an example of a bullish spread:

    April 6: SELL -1 SPY DEC 16 22 200/180 CALL @ 4.85

    Per contract - Max risk: $1515 - Max profit: $485 (32% of max risk)

    May 12: BUY +1 SPY DEC 16 22 200/180 CALL @ 3.95

    Profit of $90 per contract (5.9% of max risk)

    I sold the vertical a couple of weeks after the bottom, with blood in the street, even some of mine, volatility was still very high. With this trade, I would have lost money if SPY was less than $195 in more than 2 years. Heh, I could even roll the puts if the short put was still ITM in 2 years. The only reason I bought back and closed the trade was that it was using a non-negligible buying power for the next 2 years. That is a long time to earn the full $485 per contract. Have to watch out for opportunity costs too in some other trades.

    The hedge:

    Here is another construct that I found interesting. Again, taking advantage of the current high volatility. Back in early June, as the market bounced to $320, I wanted another bearish hedge, but this time more efficient than just selling a vertical. I wanted a good protection for my long delta, but that's not free. And I don't like to lose money if the hedge is not used, so what to do?

    June 5: SELL -1 SPY NOV 20 20 370/380 CALL @ 0.57

    Per contract - Max risk: $943 - Max profit: $57 (6% of max risk)

    I picked November expiration because I expect that we will still be in the middle of the Coronavirus quagmire. $370 is almost 9% higher than the SPY top. I doubt that the economy will be back full speed by then. Again, I am positive delta, so if SPY somehow reaches $370, I may have to forgo all my overall gains between $370 and $380, but I won't lose money overall. And then I bought this bearish vertical:

    June 5: BUY +1 SPY NOV 20 20 245/250 PUT @ 0.57

    Per contract - Max risk: $57 - Max profit: $443 (777% of max risk)

    Here, I used the money from my short bearish CALL spread to buy a long bearish PUT spread. As long as SPY does not end above $370 by expiration, my hedge is free. If the market drops significantly my bearish PUT spread will be very profitable.

    Once again, it's a long post, so that's all for today.

    In the second part of this post, I will show how I used calendars to make some very profitable trades.

    I will also explain a more advanced trade that I used to hedge against big losses in a normal market (setup in low volatility), so you can handle more gracefully bear markets ahead of time, and not sell in panic. You can't use it now, but it could be helpful next time everything is great, and the market is getting overheated a bit.

    And finally, remember to always size your trades properly. Do not make one trade create a big loss in your portfolio. Do not overextend! It's way too easy to be over-leveraged with options, take the full risk into consideration.

    ---

    Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM

    Post 2: Basics: Buying and Selling, the greeks

    Post 3a: Simple Strategies

    Post 3b: Advanced Strategies

    Post 4a: Example of trades (short puts, covered calls, and verticals)

    Post 4b: Example of trades (calendars and hedges)

    submitted by /u/_WhatchaDoin_
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    Stock Market is the Most Overvalued over Last 50 Years Based on P/E Ratio

    Posted: 04 Jul 2020 06:40 AM PDT

    https://thetradable.com/opinions/stock-market-is-the-most-overvalued-over-last-50-years-based-on-pe-ratio

    Analysis of the P/E ratio by Michael Venuto shows that the stock market is now overvalued more than in the past half century.

    submitted by /u/BedGreedy
    [link] [comments]

    Question about Ray Dalio's all weather portfolio

    Posted: 04 Jul 2020 06:49 PM PDT

    hi everyone, i was wondering if someone can help me with this.

    In recent interviews, ray dalio says that you would be crazy to hold government bonds right now.

    https://www.ai-cio.com/news/dalio-says-holding-government-bonds-now-crazy/

    But in his all weather portfolio, he says to hold 55% in governemt bonds, so im confused, does this mean that the all weather portfolio is no longer viable as what he is saying seems to contradict the all weather strategy

    any help will be much appreciated as i couldn't find any answers after many hours of googling.

    p.s sorry if i posted this in the wrong place, im new to reditt and not sure where to put this sort of post

    submitted by /u/sphinx2510
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    Understanding Special Acquisition Companies (Blank Check Companies)

    Posted: 04 Jul 2020 03:56 PM PDT

    Special Acquisition Companies (Spacs) have been becoming more and more popular in the market recently ( DraftKings, SHLL, NKLA) so I wanted to write a little something explaining the differences and risks between a traditional IPO and going public through a SPAC to newer investors.

    What is a Spac?

    A Spac is a company that is created with the sole purpose of acquiring a company from the private sector. The Spac will IPO to raise funds and then immediately take the funds and put them into a trust account until an acquisition target is found. Once a target is found then those funds will be used to buy the target company and the spac investors will now own shares of the acquired company. If an acquisition target is not found within a predetermined time frame (usually 2 years) then the money will be taken out of the trust account and redistributed to the investors + any interest accrued while it sat in the trust account.

    Let's run through a simple example to really drive the point home. Spac A IPOs for 10$ a share. You buy 100 shares for 1000$. Spac A decides to acquire private company B. After the acquisition occurs you now own shares of private company B (that is now public company B)

    The Advantages of a Spac

    Spacs are a relatively safe way to invest in private companies that you normally wouldn't be able to because of redemption. You can redeem your shares for their IPO value at two different points in a Spac's life. The first time is if the company cannot find an acquisition target. if this happens you redeem your shares for their IPO price plus any interest collected on the money while it was sitting in the trust. The second time is if you don't like the target acquisition. Before acquiring a company the shareholders are required to vote on whether they want the acquisition to go through or not. Any shareholder that votes against the acquisition will be given the option to redeem their shares for the IPO price regardless if the vote passes or not.

    Capital Structure

    Spac companies have a comparatively more complex structure than traditional IPOs. In addition to public warrants and public shares, a Spac will also have founder shares and founder warrants. These are given to the management team of the Spac and sometimes to the CEO/employees of the company that is being acquired. Additionally, if the acquisition of a company is approved by shareholders but the spac doesn't have enough funds to complete the acquisition then more shares are sold directly to institutions. (Commonly known as PIPE investment.) Between PIPE investment and founder warrants/shares there can be significant dilution in the market that most people aren't aware of simply because there is a time limit on when warrants or PIPE shares or founder shares etc can enter the market. (This is why NKLA is heavily shorted right now)

    The Risks

    Investing in a Spac can be a safe way to invest in private companies if done correctly, however, there are a few pitfalls to look out for. Most spacs will IPO for 10$ a share, this means that even if you buy a share for 15$ you can only redeem it for 10$. The price of most Spacs will stay relatively stable at 10$ a share until an acquisition is announced, then demand will increase driving the price up. If you buy into a Spac during this period at higher than the IPO price then you are risking the difference between your purchase price and the IPO price if the acquisition were to fall through and the spac were liquidated. (The price will never fall below 10$ a share because no one will sell something they can redeem for 10$ for less than 10$.)

    There is also the risk that the company acquires a flop. If you hold through acquisition and the company stock tanks after the acquisition then you just have to eat the loss. (you cannot redeem your shares for 10$ after the acquisition happens.)

    The Take Aways

    SPACs can be a safe way to invest in the private sector

    Due to their complex capital structure, there can be a lot of shares ready to flood the market that you may be unaware of (see nkla)

    As always I'm willing to answer any questions or discussions in the comments.

    submitted by /u/vandytaw
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    Thoughts on BAM in 2020?

    Posted: 04 Jul 2020 11:08 PM PDT

    Hi all,

    I hold about 20% of my portfolio in BAM for a while now. Since I don't own a house currently, I thought it would be good to overweight some kind of RE exposure while I save for a down payment. I thought why not hold shares in some of the most high end / prestigious real estate in the world through BAM?

    BAM has certainly been one of the great compounders of the last 10 years and the CEO Bruce Flatt is not nearly as famous as he should be for his value investing principles. With the addition of Oaktree and Howard Marks last year, they are even better positioned to take advantage of distressed opportunities. And given the virus situation, there will be a ton of opportunity for them.

    However, I can't help but be extremely worried about the exposure to corporate and retail real estate they currently hold. In that regard, my original thesis doesn't look so good anymore. These assets are clearly distressed themselves and will be impaired for some time.

    I'm counting on BAM to take advantaged of distressed opportunities but I can't figure out if that will balance out compared to the very real short term distress they are currently going through with existing holdings.

    Are there other BAM holders here? What are your views?

    submitted by /u/vansterdam_city
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    Ray Dalio: Capital markets drive the real economy more than vice versa

    Posted: 04 Jul 2020 11:41 AM PDT

    There is certainly a lot to parse in the interview below, my main take away is the central bank provides / should provide abundant liquidity raising the PE ratios, but it is generally worth doing it to save the real economy, so long as it is not abused, which would risk the status of the dollar as the world reserve currency for trade. Thoughts?

    https://youtu.be/7WxfQ2zKXeA?t=793

    submitted by /u/aegeanrain
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    Real estate + pandemic: an exception for passive investors?

    Posted: 04 Jul 2020 10:04 AM PDT

    1. For context, do you consider yourself a passive investor?

    2. Suppose you had planned to make a major purchase such as buying a home right around now. Would you delay that purchase because of COVID? Why or why not?

    3. If you would choose to wait it out, what criteria would you use for finally making the purchase?

    submitted by /u/HowDareYouBubbleSort
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    "Beautiful Deleveraging" -Trying to understand this dynamic

    Posted: 04 Jul 2020 08:02 PM PDT

    I been researching Ray Dalio's work and have a trouble understanding the concept of "Beautiful Deleveraging". To me, it is just matching the movements of deflation with inflation.

    Reading about this concept of "Beautiful Deleveraging" gave me the feeling that the Federal Reserve can go beyond the laws of nature and stabilize the economy when companies have to face the issues with having too much debt and bad business models/direction. Let them fail so new companies can take its place.

    Well..the market is going up- so the Fed can effectively cancel a recession? Keep asset prices stable via QE when values should go down due to economic reality? I don't think the printing of money would go directly to the places where deflation is occurring...wouldn't the mismatch cause more wealth inequality? Those who get the benefits of money printing versus those suffering from the effects of deflation may not be the same?

    It feels that we don't have a free markets because the Fed keeps escalating their actions. The Fed buying bonds feel disconcerting as they are acting more like a market participant.

    I'm just trying to further my understanding. Thanks guys!

    submitted by /u/therivera
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    When investing, do you research corporate job boards to see where thr company is hiring (or offshoring) as a net + or net - when investing?

    Posted: 04 Jul 2020 09:15 PM PDT

    For example, Discover has a low efficiency ratio and most jobs are usa based, where as wells fargo is heavily investing in india and opening up multiple campus all across india to reduce wage pressures, and the efficiency ratio sucks.

    Besides recent stress test results, does where a company employ workers factor in at all to your plans to invest in them?

    submitted by /u/TrumpHasASmallPnis
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    Safe investing for students

    Posted: 04 Jul 2020 11:03 PM PDT

    Hi Guys!

    I am 20 year old student who worked a 12 month internship. I have saved enough money to pay off university, however I don't need to start off my loans until I finish my program (another 1-1.5 years). My money is just sitting in my bank account right now. What would be my best option to safely grow my money for a year or so?

    Edit: I am in Canada if that makes a difference

    submitted by /u/AWildProcrastinator
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    Gold is a Portfolio Management Tool

    Posted: 04 Jul 2020 12:28 PM PDT

    I respect the challenge fundamentals-based investors have with gold as it does not produce cash flow and has no earnings. I've heard "gold is not an investment" for fair reasons from many people for many years now. I understand. However, I am generally surprised to hear these mostly well-schooled investors dismiss gold. If gold is not an "investment", outside of being an alternative currency, what is it?

    Gold is a portfolio management tool. It is a major global asset class that offers zero correlation with the S&P 500. Over the last 20 years, gold has a correlation with the S&P 500 of -0.02. The same finance textbooks that teach fundamental valuation practices also teach the importance of diversification. Good portfolio managers often seek to combine stocks with bullish outlooks and ideally low correlations with each other (the efficient frontier).

    If you foresee gold achieving +5% annual returns in the future, the diversification benefit it provides justifies owning it for many investors. High quality fixed income provides generally better diversification due to the negative correlation it has to equities, but as yields go lower investors no longer receive much of a benefit from the coupons. It may be too much work for some, but covered calls on gold provides income (call premium) for investors and I believe is going to (very) slowly begin to replace fixed income for some select investors if yields stay low. Even without the call premium income, the diversification it provides has real value. Gold begins to make more sense as an investment if you read beyond the DCF valuation chapters in the finance textbooks.

    submitted by /u/OhioBaseball
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    My USMCA & Covid Portfolio Restructure - Part II

    Posted: 05 Jul 2020 12:53 AM PDT

    TL;DR My picks are:

    1. Cloudflare - 25%
    2. Corteva - 25%
    3. Facebook - 12.5%
    4. Kansas City Southern - 8.75%
    5. Adobe - 4.1667%
    6. Paypal - 4.1667%
    7. Texas Instruments - 3.75%
    8. Costco - 2.5%
    9. Teradyne - 2.5%
    10. Microsoft - 2.5%
    11. Berkshire.B - 2.5%
    12. XLB Materials ETF- 2.5%
    13. Tesla - 2.08333%
    14. AMD - 2.08333%

    The USMCA, signed July 1st, includes new regulations & provisions encouraging 21st century developments in:

    • Cross Border Digital Trade
    • Cybersecurity
    • Agricultural Technology
    • Energy Reform
    • Small/Medium Enterprise Support
    • Automotive Trade
    • Increased relationship in materials trade
    • Much more

    Setup

    25% Embedded Industries

    25% Global Scale Technology

    25% High Risk Cybersecurity & Network Management

    25% High Risk Agriculture Biotech

    Why?

    - Cloudflare - CYBERSECURITY & NETWORK MANAGEMENT

    Cloudflare is focused on delivering security & quality. It's a rapidly growing product that I believe will protect interests as Latin America develops. I believe that their development of privacy-focused serverless computing and video streaming infrastructure was what was necessary for it to experience enormous growth in the next few years.

    https://blog.cloudflare.com/scaling-the-cloudflare-global/

    - Corteva - AGRICULTURE BIOTECH

    Corteva is a powerfully focused agritech investment. They have deep investments in corn, which is an enormous product that will always persist in Mexico and US agriculture.

    https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/strengthening

    - Facebook - E-COMMERCE

    I believe Facebook will play a really interesting role with Canada's Shopify in Latin America. WhatsApp is enormously popular in Mexico due to Facebook's networking investments, making it cheap to use. WhatsApp is better suited for Mexico's barter style economy, while Instagram seems to serve America's ad-centric transactions better. I believe we will be seeing Facebook develop deep business support with Shopify that is easy to use for billions of people across different economies. Some of the technology is actually faschinating, as you can purchase products and test products using filters and 1-swipe purchases.

    https://www.facebook.com/business/shops

    - Kansas City Southern - US-MEXICAN RAIL

    Kansas City Southern is an extremely important trade vector between Mexico and the US. In particular, Texas and Monterrey. It's well diversified to deliver at a cost effective rate between changes in agriculture, energy, automotive, machining, food, and more.

    https://www.sec.gov/Archives/edgar/data/54480/000005448016000143/wf_colorkcssystemmap2015a01.jpg

    - Adobe - GRAPHICS

    I'm completely impressed by Adobe's growth and acquisitions across multiple sectors. I believe Adobe is a great longterm AR play as it maintains a close relationship with Apple, develops software for video games, movies, digital signatures, and e-commerce, architecture, design, and an endless array of other software solutions.

    https://theblog.adobe.com/adobe-acquires-allegorithmic-substance-3d-gaming/

    - Paypal - FINANCIAL ACCESS

    Paypal is interesting in regards to US-Mexico.Paypal has always demonstrated itself as a pioneer. It's very easy to send remittance money through Xoom. It's easy to send money to your friends via Venmo. Their credit system is awfully fair, which is helpful in a nation like Mexico that's critically underbanked.

    They also had an excellent acquisition with Honey. I believe they'll be generating billions through their transactions on Amazon and other industries and will force fintech to rethink how far financial technology can go.

    https://www.zdnet.com/article/paypal-acquires-honey-science-for-4-billion-adds-offers-deals-to-payment-network/#:~:text=Dan%20Schulman%2C%20CEO%20of%20PayPal,monthly%20active%20users%20in%20October.

    - Texas Instruments - EMBEDDED SYSTEMS

    I've selected for TI over AMD and Nvidia since TI has a greater distribution. You'll find TI in automobiles, space rockets, airplanes, CNCs, school calculators, concrete producers, and so on. Either way, AMD is listed below as a supplement to an already cloud-heavy setup.

    https://www.fool.com/investing/general/2016/02/24/texas-instruments-incorporated-stock-in-4-charts.aspx

    - Teradyne - SYSTEMS TESTING & INDUSTRIAL AUTOMATION

    Teradyne is part of the COVID restructure. I believe networking hardware chips are only going to be more needed as an economic driver. Teradyne has an excellent client base regarding that and also develops and impressive amount of industrial automation robots across warehouses, farms, and so on. The future is inevitably automation, and this is my participation in that.

    https://www.universal-robots.com/about-universal-robots/news-centre/teradyne-inc-acquires-universal-robots/

    - Microsoft - SOFTWARE AUTOMATION

    I'm really excited to see Microsoft's future in software automation and services. They have a really interesting position with regards to gaming, cloud computing, and wonderful acquisitions for Github & NPM and an array of other tools that can perform intensive software automation.

    https://flow.microsoft.com/en-us/blog/microsoft-acquires-softomotive-to-expand-low-code-robotic-process-automation-capabilities-in-microsoft-power-automate/

    - Costco - QUALITY CONSUMER GOODS

    Costco has an excellent selection process that can be replicated across multiple cultures. The business pays their customers well which in turn results in supreme customer service and care.

    https://futurefuel.io/employee-benefits/costco-careers/

    - Berkshire.B - QUALITY BUSINESSES

    Berkshire.B is selected for similar reasons to Costco. I'm excited for Abel's leadership in the 21st century and they're simply an elegant long term investment with respects to quality business selection.

    https://finance.yahoo.com/u/yahoo-finance/watchlists/the-berkshire-hathaway-portfolio

    - XLB Materials ETF - PROCESS ENGINEERING

    XLB has an excellent selection of dominant businesses with respects to their industry like Sherwin-Williams, Linde PLC, and Ecolab.

    https://www.sectorspdr.com/sectorspdr/sector/xlb/holdings

    - Tesla - FUTURE MANUFACTURING

    Tesla is interesting as it develops robust applications and development of EV batteries, battery solutions, industrial automation and is helmed by a person who is able to mine engineering resources and relationships from SpaceX.

    https://electrek.co/2020/06/17/tesla-new-deal-panasonic-battery-supply/

    - AMD - COMPUTING ACCESSIBILITY

    I feel that the name of the game for AMD is the ability to reduce energy costs and low the cost of computing. They have been excelling at this for years now and I believe this patience will pay off enormously as AMD conquers the maintenance of data centers around the world.

    https://blog.cloudflare.com/technical-details-of-why-cloudflare-chose-amd-epyc-for-gen-x-servers/

    submitted by /u/notbrokemexican
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    Under what circumstances, if any, can an individual trade securities on behalf of others without becoming a Registered Investment Advisor?

    Posted: 04 Jul 2020 04:42 PM PDT

    I presently have a stock portfolio (Which is managed through an online brokerage account and consists of roughly five thousand dollars) and a few of my friends asked me to manage a couple thousand dollars of their own money (In aggregate and between all of them). To oblige them, would I have to register as an Investment Advisor with my state? Further things to take into account would be the fact that I wouldn't be paid upfront for managing their capital, I'd simply retain a percentage of the profits (If any) generated from my investing activities (Sort of like the "two and twenty" hedge fund payment structure but but without the "two").

    I'd like to make it clear that I never marketed myself to my friends as an investment professional or as anything other than an amateur investor. We were just casually talking about investing. I should them my YTD performance. They were impressed. I said I could manage some of their own money if they wanted. And they expressed their interest in the notion. They fully understand the risks but nonetheless think I can do a better job of managing their money than they can on their own. We're tight enough to where a week's paycheck isn't going to ruin our friendship and again, they're aware of the risks. Which brings me to my original question: Do I have to register as an RIA to legally place their capital into my account and trade on their behalf?

    submitted by /u/CrazyHorse888
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    IPO list

    Posted: 04 Jul 2020 12:09 PM PDT

    After reading a recent headline about how Tesla experienced a 4000% gain since its IPO 10 years ago, a one-off I know, I was inspired to (try) and make a list of every single IPO from 2005 and document the sector along with the P/L and I was wondering if there is a specific site that would have a full list of all the IPOs in this time period.

    submitted by /u/Kanyes-middle-nut
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    MLP and unit trust fund securities -- how much of a hassle is the K-1?

    Posted: 04 Jul 2020 10:46 AM PDT

    I'm considering adding Master Limited Partnerships (MLPs)and Unit Trust Funds (UTFs) (for example, Cedar Fair/$FUN) to my portfolio for the yield. I have heard from some that the K-1s are an absolute nightmare from a tax-preparation standpoint while others say a K-1 is no more difficult than a 1099 come tax time. What's your experience?

    submitted by /u/PostNoctem
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    Forecast on the Bond Market?

    Posted: 04 Jul 2020 06:17 PM PDT

    Equities and derivatives get all the buzz, but I haven't seen many posts about the potential future of the bond markets. It seems like the outlook is far scarier than the equity markets.

    Rates have been very low for a long time, but you could still get a few percentage points annually. In a low inflation environment, it's not terrible. With the rates basically at zero - for the foreseeable future - combined with a likelihood of higher inflation, bonds are no longer a viable investment vehicle. What does this mean for pension funds, insurers, retirees etc? What does this mean for the equity markets? There is also discussion about negative rates. Its hard to imagine that not having a disastrous effect.

    I'm not very knowledgable on this stuff, but it seems to be a potential big problem. If there is any good information on this somewhere, please let me know. If anyone here really knows about this and can comment or correct me, please do.

    submitted by /u/XtianS
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    What happens to existing MTCH shares?

    Posted: 04 Jul 2020 09:59 AM PDT

    Hi all — this may be a newbie question, but I'm a newbie investor and can't seem to find an answer on this. I'm a MTCH shareholder and have been for a while. With the IAC separation, my MTCH shares seem stagnant — they don't appear to be going up or down according to my Merrill Edge account.

    With this separation, did I lose my shares? They still appear on my account, but they appear frozen. I'm just confused about why they're frozen and what this means for my shares.

    submitted by /u/mandyaffogato
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    Investment Recommendations

    Posted: 05 Jul 2020 01:18 AM PDT

    I. BUY General: Vroom, Lemonade, AKTS, ZoomInfo, Warner Music, Accolade, Booge Energy, Pinduoduo, Graf Industrial, Mei Pharma, G1 Therapeutics, American Lithium, Blink Charging, United Microelectronics, Big Digital Assets, Fosterville South Exploration

    II. Buy Healthcare

    Buy ACAD under $55

    Buy BLUE under $57

    III. Buy Tech:

    Buy AYX up to $170

    Buy BILI under $45

    Buy XP below $50

    Buy MSGS up to $245

    Buy ESPO under $48, Tencent, Nintendo

    Buy Skyworks at $120

    Buy NXP Semiconductors at $105

    Buy Cirrus Logic at $60

    Buy Qorvo $105

    Buy MU

    Buy Qualcomm & Broadcom

    Buy Taiwan Semiconductors

    Buy Marvell

    Buy ILIKF

    Buy Illumina

    Buy NXP

    Buy ON Semiconductor

    Buy Fabrinet

    Buy Sensata Technologies

    IV. Buy 5G:

    Ericson is the Super 5G Highway, buy at $9.2

    Buy AMBA up to $55

    APTV up to $85

    Buy AYX up to $120

    Buy BILI under $30.

    Buy ISRG below $550.

    Buy Z under $50.

    Buy ISRG

    Buy Zillow

    Buy MRVL Marvel

    V. Buy AI:

    Buy BIDU up to $125

    Buy NVDA below $300

    Buy GLOB under $125

    BABA

    FB

    IQ

    Alteryx

    OLED is a buy up to $165.

    VI. Buy Batteries:

    Bollore

    Buy ILIKF

    Murata Manufacturing

    TDK Corporation

    Toyota

    VII. USE Interactive Broker, Charles Schwab, or Fidelity to buy foreign stocks:

    • Buy 000100.SZ (TCL Technology Group ) under 6.50 Chinese yuan
    • Buy 000725.SZ (BOE Technology Group) up to 5 Chinese yuan
    • Buy 000050.SZ (Tianma Microelectronics) below 16 Chinese yuan
    • ILIKF

    VIII. Put Option/ SELL: KERN, TDOC, IIPR, Blue Solutions (BLUE.PA)

    IX. BUY-CALL OPTION: SOLO $7.5 strike exp Aug 21, BiliBili at $55 exp Aug 21, VKTS exp Aug 21 strike price $15, SHLL exp Aug 21 strike price at $30, Hertz at $1 July 31, GNUS $6 Jul 24th, Nio at $14 Aug 7.

    submitted by /u/NhatNguyen2112
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    Which companies profit when lawyers get a lot of work?

    Posted: 04 Jul 2020 02:51 PM PDT

    Since it's impossible to invest in a law firm, I am looking for some ideas to invest in law firms by-proxy, in a company that many lawyers use, I think that lawyers will have more work than they usually do but I don't see any good company that could profit from that extra work that is obvious to me

    submitted by /u/mivotvo
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