Is the stock market going to tank?

**Bromontana** · 02-02-2017, 02:24 PM

Charts of energy complex setting up as well. I'm long a few in energy. I'm a massive dolt on options, shouldn't have said anything

**Alpinord** · 02-02-2017, 02:25 PM

Originally Posted by Bromontana

Selling a call spread is an option as opposed to selling naked calls.

True and you'd think a 110 strike would not be breached until the sale happened or the deal falls apart.

**Brock Landers** · 02-02-2017, 05:40 PM

I wouldn't necessarily look at it like 'don't breach the strike'. Your question was if you could outperform the premium by selling it now, basically the opportunity cost.
Selling a call allows you to invest that call premium in the meantime. If it's exercised at say 105 or whatever, fine you get the premium (immediately, so it's already invested in that opportunity cost) and whatever appreciation up to the strike.

I do think the merger premium is warranted in this case, there's a bit of risk so I don't think taking profits and selling now is necessarily a bad idea. Or sell a Feb 17 100 call. A little additional premium instead of just selling for "free"

**Alpinord** · 02-02-2017, 07:09 PM

Many thanks!

(FWIW, it'd be a half-covered or a half-naked call.

)

**Brock Landers** · 02-02-2017, 08:22 PM

Don't sell a naked 'in the money' call! You'll be on the hook for buying at whatever the market price is and delivering at strike. Not a bad strategy if you have a view on the company and how it's risks relate to short term price changes. But in your case you're just trying to fast forward potential merger premium. Don't get greedy

**Bromontana** · 02-02-2017, 08:49 PM

Rotation into energy gents. Shit b real, especially if Trump goes to war w Iran

**grapedrink** · 02-07-2017, 09:26 AM

Originally Posted by neufox47

Being good at trading your own stocks and thinking you can be a fund manager is a lot like making a good burger and thinking you should start a restaurant. Significant barriers to entry, regulations, etc.

I do hear FINRA is very helpful and forgiving though.

That's a terrible analogy, most people CAN make a great burger, it's relatively simple. Quality meat, cooked just right, fresh ingredients. It's not rocket science. Almost no one can consistently beat the indices over a 10 year horizon. Not even professional fund managers with teams of analysts and researchers. So if you can do it, then you are either exceptionally lucky, or exceptionally skilled. Over a long timeframe the former becomes less and less likely.

And if you're not beating the basic couch potato portfolio long term, it all just seems like a monumental waste of time. Seems like there are much more enjoyable ways to blow your money. Different strokes I guess

**Bromontana** · 02-07-2017, 10:51 AM

First mistake you're making is assuming you know who beats the market. You don't know how many people can or do. My 60yo co-worker does in his spare time. So does my dad. It's not *hard* so much as it's just not easy to implement. It's more a function of patience and clarity of vision than any savant level of aptitude in finance.

**4matic** · 02-07-2017, 11:55 AM

A small investor has the advantage of mobility and scale for alpha generation. While I agree it is rare to beat an index it is not that difficult. For example, a $1b gain for Warren Buffett is .25% increase and he doesn't have the advantage of speed.

Also, most fund managers are mandated to be mostly all in on their strategy.

**4matic** · 02-09-2017, 08:47 AM

Busy markets today. Will be bullish if they hold gains.

**nest** · 02-09-2017, 10:49 AM

I doubt you guys are as good as you think you are:

https://www.justetf.com/uk/news/pass...he-market.html

**4matic** · 02-09-2017, 11:20 AM

I don't believe I said I could beat anything. I just like making my own decisions because I have a lot of resources and enjoy the work.

Plus, your article is comparing active management vs indexing. An active "manager" is bound by the terms of the management contract. An individual investor is a different class.

This is why hedge funds will continue to attract money. Suggest listening to this podcast with the author of "more money than god" and how he explains the value of hedge funds as an asset class despite how performance is muted in a low rate correlated environment

http://ritholtz.com/2017/02/176562/

**Bromontana** · 02-09-2017, 02:15 PM

The funny thing is that much of the anxiety over how other people manage their own money is rooted in personal doubts about the durability of the system those same people have resigned themselves to tracking.

Lots of people enamored with, and writing about, indexing are 100% unaware of the long term externalities of passive investing. Notably, that the proliferation of passive investing is inherently a destabilizing force that reduces the efficiency of markets & increases the long term opportunity for independent managers.

**grapedrink** · 02-11-2017, 03:20 PM

Originally Posted by Bromontana

First mistake you're making is assuming you know who beats the market. You don't know how many people can or do. My 60yo co-worker does in his spare time. So does my dad. It's not *hard* so much as it's just not easy to implement. It's more a function of patience and clarity of vision than any savant level of aptitude in finance.

your 60 yo co-worker beats the market over a 10 or 15+ year period, after taxes and costs are factored, with his entire portfolio? as does your dad? and you too i presume? impressive.

**4matic** · 02-11-2017, 03:37 PM

Raised more cash this week. Around 25% cash as of today. 30% eguity. 40% various bonds. 25% cash. Equity markets look higher everywhere. Especially emerging. My risk right now is higher rates. If rates stay flat I'm good for a while.

Tax plan announcement might create a spike higher. Im not concerned about missing 5% move right now.

**Bromontana** · 02-11-2017, 05:03 PM

Originally Posted by grapedrink

your 60 yo co-worker beats the market over a 10 or 15+ year period, after taxes and costs are factored, with his entire portfolio? as does your dad? and you too i presume? impressive.

Not with everything, only self directed portions (which is all I do anyhow). You see, everything in this world isn't black & white - it only is in your eyes. You're extremely unimaginative & repetitive on this topic so feel free to troll elsewhere.

**4matic** · 02-11-2017, 07:47 PM

Right. Can break out on the daily chart but no matter how high I think it comes back to the line Lots of things in that position right now. Which way USD swings away from 100 is important for next wave of momentum.

**bigdude2468** · 02-12-2017, 07:55 AM

I remember back in the DotCom boom my hair dresser sister in law (great gal) was telling us about how much money she was making trading stocks, everyone was a genius. We have been in a bull market for what seven years? Since January 1st 2012 the S&P 500 has risen from 1370 to 2315, roughly 70% in five years. My point is its real easy for people to "talk smart" when you have to be a complete idiot not to be making money. Doing essentially nothing by investing in an S&P 500 index fund has returned 14% a year. I remember the day traders of the early 90's where brokerage firms had computers set up in their lobbies so day traders could make trades. When the bubble burst they disappeared overnight. Lets see how the smart talkers do when the bear takes over.

**Bromontana** · 02-12-2017, 09:34 AM

FYI, shorting the bull market started for me in August last year with 20yr USTs.

**Brock Landers** · 02-12-2017, 02:26 PM

When the 'bear takes over' is the s&p index still going to be up 14%?

**4matic** · 02-12-2017, 02:40 PM

Originally Posted by bigdude2468

S&P 500 index fund has returned 14% a year.

The 10 and 15 year returns on $SPX is 7% annually Considerably less if you go back to the .com highs. 7% is from the 9/11 lows. If you calculate from the .com highs the return is more like 4%. Better off in Treasury.

I did a calculation for $spx from Dec. 1999 to December 2016. The annualized gain is 2.85%.

http://www.buyupside.com/shillerdata...culate+Returns

If an individual can side step just a portion of a secular decline it enhances return significantly. That in itself is the biggest advantage to active management or hedge strategy. Capital preservation in a decline

I just don't need the risk of a 20-30% drawdown. Seen it too many times. Seen people devastated never to recover.

**bigdude2468** · 02-12-2017, 07:52 PM

Originally Posted by Brock Landers

When the 'bear takes over' is the s&p index still going to be up 14%?

My point exactly.

**Brock Landers** · 02-12-2017, 09:06 PM

Originally Posted by bigdude2468

My point exactly.

What's your point?

And where do you get the 14%?

**bigdude2468** · 02-13-2017, 07:02 AM

Originally Posted by Brock Landers

What's your point?

And where do you get the 14%?

My point was in a cyclical bull market it does not take much skill to do well. On January 1st 2012 the S&P 500 was 1370, today it is roughly 2315. Pick your date and you can make it look really good or not as good. If you take the peak of the dot com bubble, January 2000, right before the crash the compound average return is 4.47%. But move it back to 1995 and the annualized S&P 500 return with dividends reinvested is 9.55%. I am an old guy, go back to 1950 and its 11.92%.

http://www.moneychimp.com/features/market_cagr.htm