Is the stock market going to tank?

[Brock Landers]

Bobmc, be careful man.... Don't put in anything that you might need in the near to medium term. I see a world of hurt on the horizon. Dxy rising, yields rising, yadda yadda yadda. Cash is a position.

Sent from my Pixel 4a using Tapatalk

I co-sign on that shit. That cash is going to look awful nice when I can dump it into some EM local debt.
And more gold.

[BobMc]

Bobmc, be careful man.... Don't put in anything that you might need in the near to medium term. I see a world of hurt on the horizon. Dxy rising, yields rising, yadda yadda yadda. Cash is a position.

Sent from my Pixel 4a using Tapatalk

Honestly I’m a lot more liquid than I was when I started this experiment, my business is in better shape with capital from a low interest government loan. We’ve never really had much of a retirement plan, I’ve morphed this from paying for a cruise to accumulating cash for possible retirement.

I’m long on all of the stuff I’ve been buying lately. I’ve posted my portfolio and it hasn’t changed much except for a trend towards dividend stocks. My latest jam is the midstreams, high yields with the chance for share growth. My order for MMP filled, 100 shares at $45.50. Most price targets are in the 50’s, and “they pay you to wait!” I’ll probably spend the remaining cash on EPD in the same strategy.

[Toadman]

You’re right Tesla is dogshit. But you knew to avoid it because it had a high P/E back in 2015. Amazon too. Good call.

Instead you may have bought GE because it had a low P/E. Good call.

You forgot to mention BTC was a scam back in 2008 when you could get a coin for couple pennies on the dollar. That, however was a very, very bad call.

[GBB]

$45bn into the market this week. not sure what to make of it but hackles are raised.

2021 and 2022 should be interesting. pent up demand, debts paid down resulting in greater household free cash flow, money looking for yield, etc.

[Toadman]

$45bn into the market this week. not sure what to make of it but hackles are raised.

2021 and 2022 should be interesting. pent up demand, debts paid down resulting in greater household free cash flow, money looking for yield, etc.

No where else to put, except buy overpriced RE, or maybe under the mattress. Probably best to stay away from the bond market.

https://www.bloomberg.com/opinion/ar...orse-than-ever

The “Sherman Ratio,” named after DoubleLine Capital Deputy Chief Investment Officer Jeffrey Sherman, basically shows the amount of yield investors earn for each unit of duration. It tumbled to as little as 0.1968 on Dec. 31 for the Bloomberg Barclays U.S. Corporate Bond Index, a record low in data going back more than three decades. That compares with the previous low of 0.3467 I flagged in early January 2020. And while that former milestone wasn’t too much lower than previous instances, current investment-grade corporate-bond yields are an outlier in every sense of the word.

[LeeLau]

Sold some of my GME today at 42.5 if only because that was a 420% gain. Sold covered call weeklies- the 55C. Still keeping the bulk of GME

[Toadman]

Sold some of my GME today at 42.5 if only because that was a 420% gain. Sold covered call weeklies- the 55C. Still keeping the bulk of GME

Nice. Got a little bump on the GILD this morning after appeals court threw out Merck's lawsuit on a patent infringement case that invalidated the Merck's patent.

On a side note, my $4 lottery investment paid out over 1,000 percent! So, I got that going for me. Maybe I will get lucky on yesterday's $2 investment and get a much, much higher return this time around!

[CovertM]

Sold some of my GME today at 42.5 if only because that was a 420% gain. Sold covered call weeklies- the 55C. Still keeping the bulk of GME

Hehe, if only it was 69 shares...

Bought more last week. Are you selling weeklies for income or using them as a limit order plus the premium? Funny that the option chain is cut off at $60 still, don't play with options enough to know if this is normal. Seems like even the $60 has a chance of getting exercised maybe next week.

Do you believe the squeeze hype? Or is it overblown?

[rod9301]

I get your point. But it is like the 5th largest company in the world by market cap. So you can't just brush it off.

No, you can't brush it off. Cars are good, but the valuation of the company!?
I'm short.

Sent from my Redmi Note 8 Pro using Tapatalk

[LeeLau]

Hehe, if only it was 69 shares...

Bought more last week. Are you selling weeklies for income or using them as a limit order plus the premium? Funny that the option chain is cut off at $60 still, don't play with options enough to know if this is normal. Seems like even the $60 has a chance of getting exercised maybe next week.

Do you believe the squeeze hype? Or is it overblown?

Ha. I don't really believe the squeeze hype. Melvin is a big fund and GME is a small position for them. They're also long MSFT and AMZN like me so I don't believe they're irrational. However I disagree (on a fundamentals basis) on their GME short which imo was predicated on a scenario of GME bankruptcy. If that was their theses then that's wrong and when a theses is wrong one should recognize that and move on. If they disagree on VALUATION then sure that's a better argument but my bullishness is based on (i) improving metrics going forward (market looks forward); (ii) MSFT rev-share; (iii) ecommerce conversion; (iv) Ryan Cohen management expertise; and (v) inherent cost conservatism of present boomer management. If any of those five factors played out then there's an upside to my sum-of-the-parts present value of GME (GME has now overshot my back of the envelope valuation hence taking some profit). So I believe GME can still go further with the next catalyst being next quarterly and the floor being in the mid to high 20s

As for the options; I was selling weeklies up till now because GME IV was so high and I wanted to be able to quickly roll if there was opportunity. Up till now the weeklies have expired ootm so I've captured premium for every week save one for the 4 months I've held. The weeklies from last week I covered for a loss because GME spiked that 70+ % and I didn't want to get assigned and lose shares- so I sacrificed income for the cap gain. Turns out my gut was right as I covered GME calls at 28 (sold 23C) and GME then went to 40s. Covering those calls wiped out about 2 months of premium so my GME income from premiums is now only 35% approx but that's still very nice for a 4 month hold.

Long story short I let my last week's covered calls (43C) expire ootm and kept the premium so I went into this week with all the GME I had long and not short calls. I don't sell covered calls unless there's a price uptick. I figured GME would spike again because it's a hot topic among daytrade boards (not just WSB) but I didn't expect a premarket gap. When the premarket gap happened I sold some of my GME long and looked for a GME call that I figured would expire itm so I would get assigned; lose my long and still capture premium. That was the 43C. I then looked for some very ootm calls that I figured would expire worthless and generate income. That was 55C. When I checked the IV for both calls was well over mid 400% which is ridiculous and reflecting extreme bullishness so I staggered sells and managed to fill my orders from the GME spike from 42 to approx 45.

Since then Citron has tweeted about GME saying they thing the short squeeze is overblown. I collaborated with Andrew when he was stocklemon and believe him as he was mostly short and Canadian so he understands short deliveries and clearings so agree with him. GME then went down from 45 to 38 and has subsequently settled at low 40s. The outrageous option IV has settled out from mid 400 to high 200s. The calls I sold have then tanked in price so I have covered some with the expectation of more daytrader shenanigans pushing GME higher thru the week. Bottom line is I am selling weekly calls mainly with a goal to generate the income; secondarily to take some profit (even if I am assigned and lose some shares I still have 80% of my GME shares with a low 10s cost-basis) and thirdly because GME moves so quickly that I would like to take advantage of decay of all the option greeks for when it reverts to median. Bit of a TL'DR techno-babble explanation but writing it helps me think through the strategy so there it is

[CovertM]

Ha. I don't really believe the squeeze hype. Melvin is a big fund and GME is a small position for them. They're also long MSFT and AMZN like me so I don't believe they're irrational. However I disagree (on a fundamentals basis) on their GME short which imo was predicated on a scenario of GME bankruptcy. If that was their theses then that's wrong and when a theses is wrong one should recognize that and move on. If they disagree on VALUATION then sure that's a better argument but my bullishness is based on (i) improving metrics going forward (market looks forward); (ii) MSFT rev-share; (iii) ecommerce conversion; (iv) Ryan Cohen management expertise; and (v) inherent cost conservatism of present boomer management. If any of those five factors played out then there's an upside to my sum-of-the-parts present value of GME (GME has now overshot my back of the envelope valuation hence taking some profit). So I believe GME can still go further with the next catalyst being next quarterly and the floor being in the mid to high 20s

As for the options; I was selling weeklies up till now because GME IV was so high and I wanted to be able to quickly roll if there was opportunity. Up till now the weeklies have expired ootm so I've captured premium for every week save one for the 4 months I've held. The weeklies from last week I covered for a loss because GME spiked that 70+ % and I didn't want to get assigned and lose shares- so I sacrificed income for the cap gain. Turns out my gut was right as I covered GME calls at 28 (sold 23C) and GME then went to 40s. Covering those calls wiped out about 2 months of premium so my GME income from premiums is now only 35% approx but that's still very nice for a 4 month hold.

Long story short I let my last week's covered calls (43C) expire ootm and kept the premium so I went into this week with all the GME I had long and not short calls. I don't sell covered calls unless there's a price uptick. I figured GME would spike again because it's a hot topic among daytrade boards (not just WSB) but I didn't expect a premarket gap. When the premarket gap happened I sold some of my GME long and looked for a GME call that I figured would expire itm so I would get assigned; lose my long and still capture premium. That was the 43C. I then looked for some very ootm calls that I figured would expire worthless and generate income. That was 55C. When I checked the IV for both calls was well over mid 400% which is ridiculous and reflecting extreme bullishness so I staggered sells and managed to fill my orders from the GME spike from 42 to approx 45.

Since then Citron has tweeted about GME saying they thing the short squeeze is overblown. I collaborated with Andrew when he was stocklemon and believe him as he was mostly short and Canadian so he understands short deliveries and clearings so agree with him. GME then went down from 45 to 38 and has subsequently settled at low 40s. The outrageous option IV has settled out from mid 400 to high 200s. The calls I sold have then tanked in price so I have covered some with the expectation of more daytrader shenanigans pushing GME higher thru the week. Bottom line is I am selling weekly calls mainly with a goal to generate the income; secondarily to take some profit (even if I am assigned and lose some shares I still have 80% of my GME shares with a low 10s cost-basis) and thirdly because GME moves so quickly that I would like to take advantage of decay of all the option greeks for when it reverts to median. Bit of a TL'DR techno-babble explanation but writing it helps me think through the strategy so there it is

Great insight, thanks!

Thinking of selling covered calls on a portion to generate some income, but worried about getting exercised and missing out on potential long term gain with shares (I only have a few hundred shares, mostly in the $16-$20 cost range). A jump to $60 doesn't seem that out of the question in the next couple weeks and that seems to be the highest value in the option chain.

[BobMc]

"Tomorrow am at 11:30 EST Citron will livestream the 5 reasons GameStop $GME buyers at these levels are the suckers at this poker game. Stock back to $20 fast. We understand short interest better than you and will explain. Thank you to viewers for pos feedback on last live tweet."

That doesn't sound like a glowing endorsement of not being a short squeeze. I can't figure out the Gamestop thing. Nobody goes into a video game store to buy games anymore, people buy games on-line through their console or through Steam. What is Gamestop going to sell on-line, accessories?

[LeeLau]

Great insight, thanks!

Thinking of selling covered calls on a portion to generate some income, but worried about getting exercised and missing out on potential long term gain with shares (I only have a few hundred shares, mostly in the $16-$20 cost range). A jump to $60 doesn't seem that out of the question in the next couple weeks and that seems to be the highest value in the option chain.

You could sell with the assumption that you have to roll.

"Tomorrow am at 11:30 EST Citron will livestream the 5 reasons GameStop $GME buyers at these levels are the suckers at this poker game. Stock back to $20 fast. We understand short interest better than you and will explain. Thank you to viewers for pos feedback on last live tweet."

That doesn't sound like a glowing endorsement of not being a short squeeze. I can't figure out the Gamestop thing. Nobody goes into a video game store to buy games anymore, people buy games on-line through their console or through Steam. What is Gamestop going to sell on-line, accessories?

Like I said I agree wrt to short squeeze which is overblown hype. I disagree wrt to fundamentals. Bear valuations are looking to trailing eps. Bull valuations look to forward eps.

In the next console cycle GME will be extinct unless they transition as consoles won't ship with DVD or external media players then. Console cycles last 5 - 8 years. In this cycle you have (i) enough people that don't have hi-speed to download games quick; (ii) want to own the physical media; (iii) haven't necessarily paid extra to get extra media so their console can hold multiple games. GME is not a long-term buy and hold for me. GME is a retailer priced for bankruptcy that isn't going to go bankrupt and will be EBIT positive through this cycle. It's also a high-IV options generation cash machine

[BobMc]

Like I said I agree wrt to short squeeze which is overblown hype. I disagree wrt to fundamentals. Bear valuations are looking to trailing eps. Bull valuations look to forward eps.

In the next console cycle GME will be extinct unless they transition as consoles won't ship with DVD or external media players then. Console cycles last 5 - 8 years. In this cycle you have (i) enough people that don't have hi-speed to download games quick; (ii) want to own the physical media; (iii) haven't necessarily paid extra to get extra media so their console can hold multiple games. GME is not a long-term buy and hold for me. GME is a retailer priced for bankruptcy that isn't going to go bankrupt and will be EBIT positive through this cycle. It's also a high-IV options generation cash machine

Ahh, short term money printer, I get it.

I was a hard core video game player for years, I quit about midway through the PS3 cycle. Even then I was downloading games, and playing online games that required a fast connection. My two sons are hardcore players now, had a convo about it with my oldest this afternoon. He agreed with me that nobody (that he knows) buys games from anyone but Steam, Sony, Microsoft or a few players like Activision.


I’d agree that the long term prospects for GME seem grim. Ran across this article posted this evening that pretty much reiterates what I said.

“GameStop Stock Is Soaring. It Could End Badly. -- Barrons.com

6:46 pm ET January 19, 2021 (Dow Jones) Print
By Connor Smith
GameStop stock continues to soar amid interest from retail investors one analyst called "rabid." Now the stock now has the attention of a notable activist short seller.

Citron Research's Andrew Left wrote in a Tuesday post on Twitter that he plans to host a livestream discussing five reasons those buying GameStop (ticker: GME) stock at recent levels "are the suckers at this poker game."

"Stock back to $20 fast," he wrote. "We understand short interest better than you and will explain."

Left did not immediately respond to an inquiry from Barron's asking him to expand on his thoughts, as well clarify whether he's taken a short position himself. But around the time of Left's post, GameStop stock pared back from a $45.52 intraday high. The stock closed up 11% to $39.36.

On Tuesday, 74.6 million GameStop shares were traded, the stock's fifth-highest volume on record, according to Dow Jones Market Data. Last Wednesday set a record volume for the stock, when 144.5 million shares were traded.

GameStop shares doubled last week following news that three former Chewy executives, including co-founder Ryan Cohen, were joining the company's board. Cohen's RC Ventures has a 13% stake in GameStop, and has urged the company to close more stores and embrace e-commerce.

The day of the announcement, the company pulled out of a planned appearance by executives at last week's ICR investment conference. A GameStop spokesman had pointed Barron's to the conference for commentary on the company's long-term plans. GameStop representatives haven't returned repeated requests seeking comment in the week since.

After the pop last week, Wedbush analyst Michael Pachter pointed to the stock's massive short interest, recently at 138% of shares available for trading, according to FactSet data compiled by Dow Jones Market Data. Short-selling analytics firm S3 Partners, which adjusts its short-interest calculations, estimated short interest of about 58% earlier this month.

Such bearish bets have left the stock primed for a short-squeeze, a short-term event where short sellers bid up shares, rushing to cover their positions. Pachter said such short sellers were "squeezed by rabid retail investors." He didn't think the pop would last, and has a $16 price target on the stock.

Left's post signaled he'll discuss the technical factors related to short selling at play during his stream, set for 11:30 a.m. on Wednesday. In recent weeks, Barron's has outlined a long-term bearish case. The company is struggling amid broader shifts to free-to-play games and digital downloads, both of which cut out physical game sales.

Despite new consoles from Sony (SNE) and Microsoft (MSFT) that were forecast to drive stronger sales in the broader games industry, GameStop said last week its sales were down 3.1% from last year during the nine-week holiday period. The company pointed to store closures, limited console supply, and the impact of Covid-19. But comparable sales, which strip out the effect of store closures, were only up 4.8% from a rough 2019 holiday period.

Many of the most popular games, like League of Legends and Fortnite, are free to download and play. Instead, publishers offer in-game cosmetic items directly in their online store. For those games, GameStop is often limited to acting as a middleman, selling gift cards for in-game points.

And as more players opt to download games directly on their consoles, it's the gatekeepers of such systems -- Sony, Nintendo (NTDOY), and Microsoft -- that stand to benefit. Meanwhile, PC game distribution is a crowded space. Valve's popular Steam online store is facing some competition from platforms offered by Fortnite maker Epic Games, CD Projekt (CDR.Poland), and Electronic Arts (EA). It's unclear how an old-school retailer like GameStop can make sustainable headway in this already competitive landscape.

Amazon.com (AMZN) and Google parent Alphabet (GOOGL) are also leveraging their cloud infrastructure to offer cloud gaming-streaming services akin to Netflix. Adoption hasn't yet been disruptive to the broader industry. Microsoft, another major cloud player, and Sony have such services that are backed by their libraries of in-house content. GameStop has a profit-sharing deal with Microsoft for its Xbox Game Pass, but Credit Suisse analyst Seth Sigman noted at the time that he was skeptical that such a deal would offset the decline of physical game sales.

Add it all up, and it's clear GameStop will need to execute a radical turnaround plan to stay relevant.

Write to Connor Smith at connor.smith@barrons.com”

[LeeLau]

Bob. By short term I mean 1 to 2 years for GME just to keep it in context. That'll be a long time to stay short.

The Barron's article paints GME to be a Blockbuster. I and many others think it'll be more like a BBBY

[BobMc]

I’m walking on air today. My 22yo son has been watching me putting all my money into the market and seeing the returns I’ve been getting. Today unprovoked he opened a TDAmeritrade account. He put in half of his savings to start his account. I keep telling him if he did what I’ve been doing for the last 8 months he could retire wealthy at my age, if not sooner.

Next up I need to get my 19yo daughter on the plan.

[JimmyCarter]

I’m walking on air today. My 22yo son has been watching me putting all my money into the market and seeing the returns I’ve been getting. Today unprovoked he opened a TDAmeritrade account. He put in half of his savings to start his account. I keep telling him if he did what I’ve been doing for the last 8 months he could retire wealthy at my age, if not sooner.

Next up I need to get my 19yo daughter on the plan.

Dear god, keep him off WSB...

[BobMc]

Dear god, keep him off WSB...

He tried to buy 8 shares of BEP and 16 of EPD on a market order tonight, tomorrow I’m going to show him how to structure the trade a little better. I think he’ll be ok. I suggested one or the other among others, he decided to diversify his shit. (Kinda)

[mcf258]

I’m walking on air today. My 22yo son has been watching me putting all my money into the market and seeing the returns I’ve been getting. Today unprovoked he opened a TDAmeritrade account. He put in half of his savings to start his account. I keep telling him if he did what I’ve been doing for the last 8 months he could retire wealthy at my age, if not sooner.

Next up I need to get my 19yo daughter on the plan.

My 21 yo daughter opened a Roth last year w my help. She puts $500/month from her job into a low cost 2060 retirement fund......boring as hell, but she has zero interest in business and finance.

[LeeLau]

That's pretty cool. I didn't really start till that age too but caught the bug quick. Your kids' lucky to have you both pushing/guiding them

[Name Redacted]

Just started a Robinhood acct this morning w/ $100 today. Gonna play around and see how it goes. Invest $100 a month till I feel comfortable stepping it up. Pretty fun so far. Spread that $100 across a bunch of different stocks and cryptos.

[AdironRider]

It really is amazing that most people will go through their entire education without a single iota of financial information passed their way.

Target funds are great start, a simple three fund etf portfolio will outperform almost everything else out there (outside of the stuff LeeLau does, but that requires a lot more knowledge and time).

[Danno]

It really is amazing that most people will go through their entire education without a single iota of financial information passed their way.

Target funds are great start, a simple three fund etf portfolio will outperform almost everything else out there (outside of the stuff LeeLau does, but that requires a lot more knowledge and time).

Our education system should absolutely have required curriculum in high school that addresses finances, from credit cards to checking accounts to loans (mortgages and car loans) to investing. So many problems could be avoided if kids were taught this stuff the easy way and not the hard way.

[Name Redacted]

Our education system should absolutely have required curriculum in high school that addresses finances, from credit cards to checking accounts to loans (mortgages and car loans) to investing. So many problems could be avoided if kids were taught this stuff the easy way and not the hard way.

I had a personal finance class in college. It was valuable. Of course that was when I was “going back to college” in my 30s. Ugh. Before that I barely even had a bank account.

[californiagrown]

Finance 101 was a pre-req class in my engineering school. Basically the importance of compound interest was pounded into our heads for a a semester.