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    Daily General Discussion and spitballin thread - June 30, 2021 Investing

    Daily General Discussion and spitballin thread - June 30, 2021 Investing


    Daily General Discussion and spitballin thread - June 30, 2021

    Posted: 30 Jun 2021 02:01 AM PDT

    Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here!

    This thread is for:

    • General questions
    • Your personal commentary on markets
    • Opinion gathering on a given stock
    • Non advice beginner questions

    Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google.

    If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions.

    Any posts that should be comments in this thread will likely be removed.

    submitted by /u/AutoModerator
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    Daily Advice Thread - All basic help or advice questions must be posted here.

    Posted: 30 Jun 2021 02:00 AM PDT

    If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:

    • How old are you? What country do you live in?
    • Are you employed/making income? How much?
    • What are your objectives with this money? (Buy a house? Retirement savings?)
    • What is your time horizon? Do you need this money next month? Next 20yrs?
    • What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?)
    • What are you current holdings? (Do you already have exposure to specific funds and sectors? Any other assets?)
    • Any big debts (include interest rate) or expenses?
    • And any other relevant financial information will be useful to give you a proper answer.

    Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources.

    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!

    submitted by /u/AutoModerator
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    ARK files to open bitcoin ETF - ARKB

    Posted: 29 Jun 2021 07:30 AM PDT

    Kind of interesting that it seems to be mostly focused on bitcoin specifically as opposed to a more general crypto etf. That said, I guess exposure to services like coinbase means there's some indirect exposure to other currencies.

    https://www.cnbc.com/2021/06/28/cathie-woods-ark-invest-files-to-create-a-bitcoin-etf.html

    submitted by /u/Youre_Government
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    What are your efficiency hacks when doing a DD? Everything from stock screener setup, DCF templates, etc.

    Posted: 29 Jun 2021 08:14 PM PDT

    I'm just starting out, so would love to hear from you folks.

    • I currently just use finviz but don't know if there's anything better out there
    • I have a pretty robust DCF model template, but I already dread copy-pasting the data from 10Ks especially since most companies have different formats for their P&Ls and across industries. How do you make sure this doesn't take up too much of your time?
    • When working the assumptions, do you just switch back and forth between news and create ad-hoc tables for scenarios to plug into the model?
    submitted by /u/Forrandoqs
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    ARKG vs. GNOM - Is GNOM a better bet?

    Posted: 30 Jun 2021 05:35 AM PDT

    Seems to me GNOM is a better long-term bet on genomic advances than ARKG. GNOM has a lower ER and is likely less volatile and less inflated due to no association with Cathie Wood fanaticism. GNOM is also based on an index (Solactive Genomics Index), which suggests lower expenses over the long term. What are your thoughts? Advantages and disadvantages of each?

    GNOM info from Global X's website:

    FUND SUMMARY

    The Global X Genomics & Biotechnology ETF (GNOM) seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology.

    FUND OBJECTIVE

    The Global X Genomics & Biotechnology ETF (GNOM) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Genomics Index.

    submitted by /u/Market_Psychosis
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    What would you do with your money if you think that the stock market is currently highly overvalued and you expect the mid-term returns to be low if not negative?

    Posted: 29 Jun 2021 10:41 AM PDT

    I think it is hard to argue against, that the market in general is currently very high valued. Many measures like average PE ratio, Buffet Indicator, earnings growth etc. are indicating this. However bond yields are at record level lows and other asset prices like housing or even paintings or classic cars are also from historical perspective extremely high priced.

    If you came to the conclusion, that the prices are too high what would you do with the money instead?

    Staying in cash and lose it on the inflation?

    submitted by /u/doctorzaius6969
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    Does it make sense to buy a bond fund like BIV when interest rates are so low?

    Posted: 30 Jun 2021 02:50 AM PDT

    Title says it all. As the interest rates go up in a couple of years, the bonds currently issued will become less valuable as their coupon would be lower than newly issued bonds. Will the price of funds like BIV or other bonds funds only decrease going forward? In case of another crash the interest rates can't be lowered as they are already near bottom.

    Why would you invest in bonds if you were building a three fund portfolio? Any alternatives to bonds for capital preservation?

    submitted by /u/patientways
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    Question about covered calls

    Posted: 30 Jun 2021 01:49 AM PDT

    If i sell a covered call on a stock that is currently $12 for example and the strike is 13. The premium is 0.35. If the stock kept on going up, the premium foes up to lets say 0.45. The owner of the option decides to sell it and cash in his profits. This option now is only going to be exercised at 13.45. Right? And if the stocks keeps on going up, and the new owner of the option decides to sell it for lets say 0.65. Now these options be only profitable when the stock reaches 13.65. Is that correct?

    So issuing a slightly out of the money weekly calls only risk would be if the first owner of the option bought it with the intention of exercising it, and not trading it. I assume the vast majority of options buyers or highly volatile stocks buy them only to trade them.

    submitted by /u/amrgunner1
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    Choosing Between Vanguard Index vs Other Types of Funds

    Posted: 29 Jun 2021 09:17 PM PDT

    So still fairly new and know the hype around VTI, VXUS, VOO, etc. But what Im not quite understanding is how these seem to be the fan favorites vs some of the other funds out there. Take VPMAX (it's closed to new sadly) and funds similar to it. What are the pros and cons that Im missing when choosing something that is managed? Is it just more associated risk or do the performance gains get offset by the higher fee?

    submitted by /u/Bobby-Biggs
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    Is there a correction looming in housing prices

    Posted: 30 Jun 2021 06:07 AM PDT

    This article delves into the factors driving home price increases. According to the article, they are:

    1. Limited supply
    2. Increased input costs
    3. Increased demand

    It's worth a read, but there are a few things I think they missed:

    1. Supply chain factors impacting the supply side
    2. Costs other than lumber, for ex: copper
    3. Impact of increased institutional buying

    My points 1 and 2 I think are at risk of normalizing soon which should put some pressure on home prices. What other factors should be considered when trying to assess the next move in housing prices?

    Is systematic leverage as high as it was in '08?

    submitted by /u/lasagnahog1
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    Betting on market inflation/correction

    Posted: 29 Jun 2021 03:15 PM PDT

    Hi everyone I've been recently interested in all the inflation talk and treasury yield rates as the economy recovers from last year. I'm interested in learning more about bonds, inflation, the Fed etc. I want to make a play on $TTT ( an inverse (-3x) of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index). Essentially I'd like your help with these three scenarios, is my logic incorrect or am I missing some other important factors- or both.

    Scenario 1: Inflation (currently around 5%, near 2008 high) continues to pick up in the following months. Does the Fed raise interest rates to combat this? I believe Powell has stated they don't want hikes until 2023. So in my mind higher inflation---->demand for higher yields as investors don't want their money eroded by inflation. In this case I would be bullish on TTT (?)

    Scenario 2: Lets assume there is a big selloff/correction in the general market in the following months, for any reason (i.e. overleverage). I'm assuming that investors would be interested in parking their money in safer treasuries/bonds, which would drive the yield down for these securities? In this case I would be bearish on TTT (?)

    Scenario 3: Inflation tapers off in the following months, the economy is showing a decent recovery, no major financial events occur. I'm guessing yield rates remain the same or edge slightly upwards towards the end of the year. So this is a more neutral stance on TTT, slightly bullish (?)

    I do realize that TTT is not meant for long term plays typically, I'm more interested in getting the market dynamics down of these possible futures down. I mostly used it as a real life example I could visualize. Feel free to comment using 1,2, and 3 for direct responses to my thought process.

    Thanks in advance

    Bonus: How do these scenarios affect overnight repo rates, which are currently around 800B .

    submitted by /u/Scary-Passenger293
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    No Hype SoFi Analysis. Long term hold.

    Posted: 29 Jun 2021 04:57 PM PDT

    I've seen a ton of posts about trading SOFI s etc. but I'm investing in SoFi for the LONG TERM and here's why:

    1. SoFi actually had positive EBITDA in Q1 and is forecasting $27M in EBITDA for 2021! How many high growth, recent IPO's can say that! SoFi is forecasting $254M EBITDA in '22, $484M '23 ($1.17B in '25 but that's a bit of a wild card since it's so far in the future…). That's a 162% CAGR over 3 years and 113% CAGR over 5. They exceeded guidance in Q4'20 and in Q1'21 !!! Their forecast is also somewhat conservative since it excludes the impact of the pending bank charter acquisition which could increase these #'s. It also excludes some of the new offerings that were just announced like Auto Loans, Crypto trading and IPO investing (underwriting).
    2. Rapid revenue and customer growth! Forecast of $980M in 2021 to $2.1B in 2023 is a 29% CAGR over 3 years (28% CAGR over 5 years). 2.28M unique customers in Q1 and targeting 3M customers by the end of 2021. They have a great track record of upselling existing customers (very low cost to upsell vs. acquire) with about 1/4 of their customers using multiple products, this should only improve as they add more product lines (like auto loans, crypto…and hopefully options soon!)
    3. Galileo technology platform actually turns a major cost center into a profit center and makes them a true Fintech vs. just an online bank like Ally etc. Galileo is expected to grow 55% CAGR from 2020-2025 with an estimated 62% margin. This gives them a great B2B model and de-risks a 100% banking model. Galileo is the Fintech engine behind 70M accounts (Q1 #'s) and customers include Robinhood, Chime, Monzo, Revolt etc. Galileo's APIs power functionalities including account set-up, funding, direct deposit, ACH transfer, IVR, early paycheck direct deposit, bill pay, transaction notifications, check balance, and point of sale authorization as well as dozens of other capabilities.
    4. Future bank charter with the pending acquisition of Golden Pacific Bancorp will help juice profitability and revenue growth and lowers their cost of capital. This is expected to grow profits from $484M in 2023 to $718M in 2023. If their estimates are correct AND the acquisition goes through that would increase the 3-year earnings CAGR from 162% up to 198%! This deal should close by the end of 2021
    5. Solid leadership: Anthony Noto, CEO has a strong background in Finance with Goldman Sachs and the NFL (CFO) AND Technology from Twitter (COO). Chris Lapointe, CFO also has a great mix of Tech (Uber) and finance from Goldman Sachs. Similar story with the rest of the executive team. Strong marketing with SoFi stadium in LA (Superbowl venue) and SoFi's investment team is frequently on CNBC (Liz Young etc.)
    6. Rising interest rates is actually POSITIVE for SoFi! Banks pay customers a relatively low interest rate on short term deposits and charge customers a higher interest rate on longer term loans. As rates rise their margins increase. With rates at record lows, a rapidly recovering economy and inflation on the horizon rates should only go higher (maybe substantially and much faster than normal). The bank charter only enhances this….
    7. I invested a little in SoFi (via IPOE) originally after it pulled back and wanted to invest more BUT before I did, I opened accounts at SoFi to verify that it's all that they say it is. So I opened a checking account, 2% cash back credit card, active investing account, automated investing account and Crypto trading. This is the real deal: Products are SUPER competitive (2% cash back on a CC with NO annual fee!), Checking account pays 0.25% with no fees, $0 stock trades for active investing and direct access to IPOs (I participated in their 1st 4 IPOs today - 6/29) and no cost automated advisor investing. They really treat you like a "member" and customer service has been great so far. The mobile App is very user friendly with a ton of added features (credit score, education etc.).
      1. If you own SoFi stock for the long term and you're not a customer yet – you're doing yourself a disservice. You are an owner in the company and you should be profiting from your own banking! Try them – you'll love them and start consolidating all your accounts to them like I am.
    8. Post lockup period (ended Monday 6/28) we should see a lot more interest from ETFs, Mutual Funds, Institutional investors and analysts. Volume should dissipate and the stock held its ground even with 50M shares trading a day (10X normal volume). There is a ton of demand for not only high growth but also PROFITABLE companies and FinTech specifically. Based on their market cap and projections for profitability they should be added to the Russell indexes next year and possibly the S&P Indexes if they can meet the profitability criteria etc.

    Analyst Price Targets:

    Oppenheimer: Overweight $30 Price Target

    Rosenblatt = BUY $25 Price Target

    I personally don't follow Analysts too closely but it does drive institutional investor buying and helps give you a sanity check.

    My 2024 Price Target is $42-$50 based on their 2024 projected revenue (with current product offerings, this should increase as they offer new products and finalize the bank acquisition). This is based on a pretty simple comparison to other FinTech's (Square and Paypal) P/S multiples. Pretty rudimentary so I'd welcome other input.

    There are obvious risks if multiples come down or if they miss their targets and there is a very high short interest right now but so far they have delivered on all their guidance and growth.

    I've seen a ton of posts on SoFi trading with a lot of hopes and dreams pushing it higher and sure there's a tiny chance that happens but that's not why I put my money into SoFi. I'm an investor not a gambler…

    Disclosure: I'm long SoFI and it's my largest holding. I continue to buy more on dips and plan to add more in general as they meet their targets and goals, release new products.

    submitted by /u/Slow-Veterinarian-78
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    $DMAC Diamedica new Price Target $32 (580% upside)

    Posted: 29 Jun 2021 09:20 PM PDT

    Roth Capital lowered its price target for the stock to $32 from $38 a share. 580% upside from current levels.

    Despite good news the stock fell yesterday by a wrongly titled article by Seeking Alpha - The article was later deleted.

    MarketWatch:

    "DiaMedica said DM199 is demonstrating clinically meaningful improvements in kidney function in cohorts 1 and 2, as measured by simultaneously stabilizing estimated glomerular filtration rate and decreasing urine albumin-to-creatinine ratio. In participants who were hypertensive, DM199 also reduced blood pressure by clinically significant levels.

    DM199 was well tolerated across all cohorts, with no DM199-related severe adverse events or discontinuations due to drug-related adverse events. Adverse events were generally mild to moderate in severity, with the most common being local injection site irritation that resolved, the company said.

    The company said it will continue the trial of DM199 in IgA nephropathy and hypertensive African Americans with chronic kidney disease, and begin the pivotal Phase 2/3 study in acute ischemic stroke later this summer."

    / Just wanted to share the recent news about Diamedica. I'm bullish and long since earlier.

    submitted by /u/flissan
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    Question about Hedge Fund Performance

    Posted: 29 Jun 2021 11:07 PM PDT

    I'm curious to see if there's any free resources/website where I can find the performance results of hedge funds. I've been reading whalewisdom's white paper and curious to run some backtests and theory craft personally, but I can't seem to find any website where it gives an accurate representation of their performance since a funds inception. Is this information typically free (could be outdated, and not precisely up to date).

    Thanks!

    submitted by /u/Jaywellll
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    Clear Secure IPO thoughts?

    Posted: 29 Jun 2021 07:32 PM PDT

    Anyone like Clear Secure's IPO? Does anyone have any thoughts on it?

    Clear Secure is at $31/Share, above the expected range of $27-$30/Share. CLEAR is set to start trading on the NYSE tomorrow under the ticker "YOU". Clear Secure is selling 13.2 million shares.

    Clear Secure is an alternative to traditional airport security and is much faster than traditional airport security. It uses biometrics to verify identity. Clear costs $179 per year, which makes it more expensive than TSA Precheck.

    Clear's mission is to enable frictionless and safe journeys using your identity. With more than 5.6 million members and 100+ unique locations and partners across North America, Clear's identity platform connects you to the cards in your wallet - transforming the way you live, work and travel. Trust and privacy are the foundation of Clear. We have a commitment to members being in control of their own information and never sell member data. Clear is at the highest level of security by U.S. government regulators and is also certified as Qualified Anti-Terrorism Technology under the SAFETY Act.

    The company has expanded to a create a network of airports, stadiums and business including a nationwide network of 38 airports and 26 sports and entertainment partners.

    submitted by /u/Comprehensive_Rock89
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    Proper Stock Allocation??

    Posted: 29 Jun 2021 04:05 PM PDT

    So I've recently started investing my money and have about 15k invested in my Money Market Account. Im only invested in ETF's as I would like more of a passive approach, but I'm not sure how to allocate all my funds. Some funds have given me a total gain of about 14% while others have only given me 1%. Currently, I have 5 funds with about 3k in each, so it's evenly distributed, but I feel as if it can be better allocated so Im making the most amount of money. Any suggestions?

    submitted by /u/Creative_Strawberry6
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    Intel Corp. (INTC) is undervalued

    Posted: 29 Jun 2021 09:44 AM PDT

    I have only posted twice on this subreddit so I'm still learning to make DD posts.

    I have been an Intel bull for a while, I have built computers and studied computer tech since I was in middle school so I understand Intel and it's products.

    Intel's share price has had a bumpy ride over the past couple years, mostly trading sideways, and giving up gains very soon after achieving them. Intel as a business has had very poor management as intel for a long time has essentially been complacent in its innovation because of lack of competition. Intel only 5 years ago was far ahead of where AMD was (AMD being its most well recognized competitor) this has changed now that AMD has been able to outsource its chip manufacturing to TSMC, which is a Taiwan semiconductor company that produces the smallest chip and most dense chip designs that are available. This partnership has allowed AMD to eat away and Intel's market share over the past 2-3 years, but there are many overlooked reasons for why Intel should still be considered a boof value buy.

    Intel is it's own manufacturer. Intel is not like AMD as intel has its own fab factories meaning they don't have to outsource there products to other companies. This will be huge for intel as the chip trade war heats up, Intel will likely receive large subsidies from the US government as Intel is the only US based chip manufacturing company.

    Intel is expanding into new markets. Intel has as of this year expanded into graphics processing. A market that was completely dominated by Nvidia for decades. This is a very good and logical expansion of intel's market. Intel is also partnering with other companies to try to create new processing technologies. Intel has also announced all new fab factories that will be completed by 2023.

    Intel has had a refocus and has gotten new leadership. Intel has a new ceo (Patrick Gelsinger) Gelsinger has done a fantastic job refocusing the company on innovation, and if AMD is any example of how changing leadership can rejuvenate a company, then this should be great for intel's projected growth, as AMD's ceo (Lisa Su) has saved AMD since she has started working as there chief executive.

    Intel is in a exponentially growing market. The chip industry is a very high growth sector. This has helped intel as its lack of innovation has been offset by its sale performance the past few years. Investors just need reason to believe intel will grow with its completion in order to feel confident in the company as an investment.

    My last point is that Intel is fundamentally undervalued. The other chip companies in the industry have average P/E ratios around 35~40 intel, however, has a P/E ratio of 12. This ties into my previous point that investors just need reason to believe in intel's long term growth, and once they have it intel will likely skyrocket. Intel also has the greatest market cap out of its competitors and has the lowest price to book value and not to mention billions in free cash flow. Intel is also a high dividend stock with a dividend of 2.48. while AMD offers no dividends.

    I will edit this post as I find more information that I didn't cover.

    Thank you for reading! And all criticism is welcomed!

    submitted by /u/BooBeef
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    What are the closest analogues to Fidelity's four ZERO funds?

    Posted: 29 Jun 2021 12:09 PM PDT

    Maybe it's penny-wise and pound-foolish, but I hate fees of any sort. After wresting my 403(b) from Lincoln Financial and transferring it to Fidelity, any funds that didn't directly transfer (and therefore landed as cash) I put into Fidelity's zero-fee funds, as it seemed to be the best "set and forget" solution for cheapskates like me. For those unfamiliar, these funds are:

    • FNILX (Large Cap Index Fund)
    • FZIPX (Extended Market Index Fund)
    • FZROX (Total Market Index Fund)
    • FZILX (International Index Fund)

    Anecdotally I've noticed the best returns with FZIPX, but all of them appear to be pretty good funds. However, their lack of history makes number crunching a bit harder, and I was hoping someone here has already determined which of the more mainstream funds most closely align with the four above. I'm most interested in Vanguard, but Fidelity and Charles Schwab would provide me with good data as well.

    I have too much money sitting in cash and even though I'll eventually have to pay taxes on it all, I want my money to work for me instead of my bank. If this is a foolhardy investment strategy, I'm open to critique as well. Thanks in advance, and good hunting!

    submitted by /u/The_Band_Geek
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    Discussion: Using stop limit orders to limit risk for long term investments

    Posted: 29 Jun 2021 04:05 PM PDT

    I'd like to discuss a strategy I've been considering to use stop limit orders in order to limit risk, even for long term investments. This assumes we own a security and want to continue to own it long term, so whatever we sell we intend to buy again.

    Stop Loss

    In general, the advice is to avoid stop loss orders for long term investments as its expected that over the long term, volatility doesn't matter. The market will always go up. Long term investors should avoid getting caught in the panic of a market crash, and stop loss orders may sell far below where they trigger due to rapid movements in the market. An investor will essentially lock in a loss doing this.

    Stop Limit

    But what about stop limit orders? For anyone unfamiliar, these combine a stop loss trigger and a limit sell, meaning that in the event that the price crosses a predefined threshold (the trigger), a limit sell order (not a market order) with a predefined price will be created.

    The disadvantage of stop limit orders is that they can fail to sell a security in the event of a gap down. This is because stop loss orders guarantee a sell, while stop limit orders guarantee a price. Choosing the price gap between the trigger and the limit sell is the challenge.

    Strategy

    I propose maintaining a stop limit on long term investments 4% from their all time highs, with the trigger at 3.75% below ATH. As new ATHs are reached, the stop limit and the trigger are adjusted accordingly, as often as possible. 4% pullbacks happen on average about 4 times a year, so this is an active strategy.

    In the event the trigger is triggered, a limit sell order is created at 4% down from ATH.

    But timing requires both a sell and a buy, so how do we buy? Simple: We have no idea what the market will do, so we buy frequently and regularly as the market drops. Nobody knows so your guess is as good as mine. Nobody can time the bottom. But hopefully at least every buy is at a level below where we sold.

    Important: If the price reaches 3% down from ATH, we go all in with whatever cash is left. In this case, we have sold at 4% down and bought back in at 3% down. This is the worst case we can face, and is the cost of this type of insurance.

    Why?

    • In order to limit risk of participating fully in huge market selloffs like we see once a decade or so, and provide cash for buying during such an event.

    • In order to try to optimize some of the larger (8%+) market corrections that happen once or twice a year.

    • In order to protect the downside of long term investments.

    • Because I'm becoming less sure by the day that a bond component adequately hedges a primarily stock-based portfolio, especially for those of us near or in retirement.

    • Because my risk appetite is not as high as it used to be, and I'm nervous about the many red flags I see, imagined or not. I'm looking for some downside protection.

    Timing the market

    Timing the market is impossible. At least, timing the market perfectly at tops and bottoms. But what about a strategy that let's an investor time the market imperfectly? At least to avoid the worst drops, at the cost of potentially paying some insurance.

    But time in the market... Yes. And one should still be in the market. I am proposing a short interruption for the sake of risk management.

    Insurance

    What I'm proposing is a form of insurance, and insurance costs money. It costs money to buy fire insure for your house, and yet people do this despite most houses never burning down. Likewise, I'm expecting that this strategy risks shaving a bit of profit in exchange for reduced risk and the potential for buying in during downturns.

    Example 1

    Let's say one owns a popular globally diversified ETF called $GLOB that one intends to hold for 20+ years. $GLOB is currently trading at €100. The investor sets a stop limit at €96 with a trigger at €96.25.

    During the beginning stages of a bear market, $GLOB starts to drop. 2% down. 3% down. At 3.75% down, the limit sell order is created and (hopefully) sells at 4% down from ATH.

    As the market continues to drop, the investor begins to deploy his cash back into $GLOB. This investor realizes he has no idea how far the market will drop, but decides that investing 10% each week is the best course of action.

    During the following 10 weeks, he manages to invest all his money between 5% down from ATH and 25% down from ATH. The market continues to drop for another 6 months, bottoming at 50% down from ATH, but our example investor has long ago run out of cash. However he has done much better than just leaving his money invested through the drop.

    Example 2

    $GLOB is trading at €100, same stop limit at €96 with a trigger at €96.25.

    $GLOB starts to drop. 2% down. 3% down. At 3.75% down, the limit sell order is created and (hopefully) sells at 4% down from ATH (€96).

    However, this was a tiny correction and our investor watches in dismay as, after bottoming at 4.1% down from ATH, $GLOB starts to rise again.

    At 3.5% down from ATH (€96.50), our investor is at least considering the possibility he has made a mistake and invests 20% of the cash. He still hopes it will drop again, but unfortunately for him it continues rising.

    At 3% from ATH (€97), the investor follows his rule and goes all in, investing the remaining 80% of his cash.

    This move has cost him approximately 1% of his shares (if he started with 100 shares, he was able to buy 99 with the same cash in this example). This is potentially the worst case scenario for this strategy.

    What can go wrong?

    • Limit orders can fail to trigger if the market gaps down outside of the trading hours that one has access to. In this case, you've lost nothing compared to not implementing this strategy at all.

    • You can lose about 1% as shown in Example 2. Having this happen multiple times per year would be very unfortunate.

    • Taxes may be a consideration depending on your country.

    • You risk wasting a lot of time/effort for minimal gain.

    • In a volatile market, you might miss the opportunity to get back in at 3% down from ATH (worst case), as the market rises too quickly for you to do so. For this reason I would not recommend this strategy for individual stocks.

    You're a fool

    Maybe. Probably.

    I can't believe I read all that

    You think that was bad? Imagine writing all that!

    Discussion

    I've tried to think this through but I'm very happy to hear criticism of this idea. I'd be thrilled if someone knows an easy way to backtest this. Maybe 3.75%/4% are poor numbers to use as this size of pullback happens too frequently. Maybe 9.75%/10% or even 19.75%/20% would be better.

    submitted by /u/elongated_smiley
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    CCXI as a potential quick rebound play

    Posted: 29 Jun 2021 11:52 AM PDT

    ChemoCentryx, Ticket symbol CCXI, has a few big days coming up.

    Their new drug, Avacopan, is on the track for FDA approval by next Wednesday (July 7th). Even though the FDA Advisory Committee split the vote in a 10-8 decision, there's a high likelihood of approval due to this being the only drug in development that would be a viable treatment for ANCA-Associated Vasculitis.

    Once this decision was handed down, the market way oversold on a massive panic. Price dropped from ~$50 all the way down to $9 dollars in a matter of 3 days during May. Since the drop, the stock has been slowly climbing its way back out of the depths and is currently sitting at $14.15 as of writing, which puts the Market Cap at just $1Bn.

    The company has a low float of 49.92 Mil shares, with 200 Mil shares authorized. The CEO just did an interview with a Raymond James analyst at the Human Health Innovations conference and apparently it went well (I didn't watch it because I don't have time). Raymond James also has a PT of $51, and that's after a downgrade from $120.

    I've got 50 shares and 11 calls at $40 for 8/20. It's basically a 50/50 coin flip on approval and if we win, we go to $50 or above. If anything else happens, we probably go back to $10 before riding the rocket back to $50. GLTA!

    submitted by /u/newdmontheblock
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    Looking for help understanding JEPI (especially the risks)

    Posted: 29 Jun 2021 08:51 AM PDT

    I've been eyeing JEPI lately, and I want to make sure I understand the risks before I invest.

    I'm totally on board with the goals of the fund: targeting low volatility and regular income while also prioritizing modest capital appreciation seems like a really nice compliment to growth stocks to have in a portfolio.

    However, I understand that JEPI incorporates derivatives in its strategy, and since I don't have experience with derivatives, I want to make sure I understand the risks before I get in.

    In particular, I have noticed this line in the prospectus:

    since ELNs are in note form, ELNs are subject to certain debt securities risks, such as credit or counterparty risk. Should the prices of the underlying instruments move in an unexpected manner, the Fund may not achieve the anticipated benefits of an investment in an ELN, and may realize losses, which could be significant and could include the Fund's entire principal investment.

    It seems like this is saying that this fund has the risk of going to zero under the right market conditions. What I want to understand is, under which market conditions could there be a bad outcome? This is a concern not only with the ELN component, but also since the fund incorporates Call Options.

    submitted by /u/pragmojo
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    Are there sectors/types of investments who's Sharpe ratio over the course of a month is known to increase occasionally?

    Posted: 29 Jun 2021 08:27 AM PDT

    I hope the title isn't too confusing. There is a stock market investment competition I am planning to enter where the winner is chosen by ranking investors' Sharpe ratio (where returns are calculated as a coefficient of the risk free rate) over the course of a calendar month and picking the investor with the highest ratio. The winner is given a fixed prize.

    However, this competition is run every calendar month. I'd love to win every month, but doing so would require that I achieve outsized returns every month. Hence, I would like to settle for winning some of the time. If I can find an investment plan with a monthly Sharpe ratio that spikes occasionally, then that would give me a good chance of winning. An illustration of what I mean can be found here; I would like to find an investment who's 30 day Sharpe ratio vs time graph looks something like the one on the right (i.e. occasionally has dramatic increases) in comparison to the one on the left which has a lower maximum Sharpe ratio.

    Because the prize for winning is fixed, I don't really care about the long term sharpe ratio of the investment; I can invest with an amount of money so small that winning even once, assuming all my other investment attempts go to 0, will leave me with a net gain.

    Is there a sector/investment vehicle of some kind that is known to have sharp spikes in monthly Sharpe ratio? How would I find such an investment? Thank you!

    submitted by /u/_PM_ME_YOUR_ELBOWS
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