let's talk stocks!

[speed dawg]

UM, HAVENT I BEEN SAYING THIS THE WHOLE TIME, IT IS NO POINT IN INVESTING IN THE STOCK MARKET, IT IS FINISH AND WILL BE FINISH THIS YEAR.

IF YOU JUST HAVE TO SPEND YOUR MONEY,SPEND IT ON TANGIBLE GOLD,SILVER, GUNS, FOOD, AND WATER

THOSE WILL BE THE ONLY THINGS WORTH SOMETHING ONCE THE MARKET CRASHES

Hush, doomsayer. I am in no way, shape or form agreeing with you. I'll get back to this in a minute.

What I MEANT was, when things are appreciating at a remarkable rate, they WILL crash ie regress back to the mean. The mean is typically, what, a little above inflation? If you're in it for the long haul, you can weather this stuff. Stocks and other stuff has apparently been going up, but not at the rate it was back in the early part of the decade when every jake **** and harry was getting rich by doing nothing.

Now, back to the doomsday scenario. I don't see that happening. You're talking about a world of chaos. When's the last time that went down in the U.S.? Civil War? Yeah, I wouldn't worry too much about that.

Even still, your gold and silver won't buy you sh*t in a situation like that. Land will be much more valuable, but even then, if it's a world of chaos, some foreign army will just push you off the land, or kill you. Not a world worth living in, honestly.

 

[Fatal Jay]

If you don't believe me, then watch the nasdaq today, and tell me it doesn't look bad.

 

[synergy1]

If you don't believe me, then watch the nasdaq today, and tell me it doesn't look bad.

So a index drops a few points? So what? It can't keep going up forever and investors are always skiddish on "bad news". Things like unrevised BLS employment numbers, FED announcements, and overseas activities always spook the market. While I am in agreement a recession is in order within the next 1-3 years, its not my place , nor something I can accurately time. Will my accounts lose a lot? you bet. Thankfully I buy on a margin of safety and am confident that most of the companies I own will weather the storm. Further, a recession like in 2008 is a prime ( and I mean prime) opportunity to buy mispriced companies at insane discounts.

Imagine if you were savvy on special situations like the one Pier 1 imports was undertaking back in 2009 after **** hit the storm. With their earnings eroding and their price in the ****ter, they were literally trading at Less than Net current asset value. You could literally buy a dollar for less than a dollar. Not that I am versed in restructurings/ bankruptcy but if you had invested 10,000 dollars into Pier 1 imports at its low in 2009, you would be a millionaire now. Okay so its paper money which everyone here abhors, but if you had cashed out today, you could have bought your house, purchased some guns/ gold and lived happily ever after.

 

[Fatal Jay]

Continue being an idiot bro, keep buying up stock.

 

[Bible_Belt]

So become a short seller if you think a particular stock is going down. Or if you have even bigger cajones, you can get into options - sell calls & buy puts. There are plenty of legitimate ways to profit from a stock's decline, or any market's decline that lets you sell short.

 

[Epimanes]

Its best to be an intraday trader.. First sign of trouble get out. Set your limits and stop losses and you will be ok. And don't put all your eggs in one basket.

Epi

 

[synergy1]

So become a short seller if you think a particular stock is going down. Or if you have even bigger cajones, you can get into options - sell calls & buy puts. There are plenty of legitimate ways to profit from a stock's decline, or any market's decline that lets you sell short.

Option trading is a great way to erase someones trading account if they aren't careful. As some name calling suggests with regards to maturity in this thread, I sincerely doubt that options trading would be for them. And with that, I will stop posting here as it seems that the discussion is beyond the scope of my expertise.

 

[Bible_Belt]

Option trading is a great way to erase someones trading account

Yeah, I forgot to mention that part. Options gives you the difficulty of picking a stock's direction, with limited time to be right, plus the difficulty of pricing the option. The valuation of options is complex and I don't even try to understand it because I think there is math involved.

The guy who taught me to day trade was one of the Schonfeld traders in the mid 90s. He did very well with stocks. He also said his wife told him she was going to leave him if she saw another envelope in the mail that was a confirmation for an options trade, because he lost most of his stock market profits trading options.

 

[synergy1]

Option trading is a great way to erase someones trading account

Yeah, I forgot to mention that part. Options gives you the difficulty of picking a stock's direction, with limited time to be right, plus the difficulty of pricing the option. The valuation of options is complex and I don't even try to understand it because I think there is math involved.

The guy who taught me to day trade was one of the Schonfeld traders in the mid 90s. He did very well with stocks. He also said his wife told him she was going to leave him if she saw another envelope in the mail that was a confirmation for an options trade, because he lost most of his stock market profits trading options.

Under most instances, the black Shole's formula for pricing options fairly is probably accurate. Meaning without any unexpected surges or declines in the overall market and in the shares price, the pricing will probably win you some and lose you some. Basically long story short is that buying options won't really do much as the mechanics are fairly well established at this point. At least in my opinion.

I am more interested in using option plays when the formula isn't right - spinoffs. Further, using some leverage and structuring your option payments for a Long expiry option, you can free up your capital to invest in other situations as you see fit. Risky still. But understanding how they are priced coupled with understanding the inherit inefficiencies of spinoffs is bound to lead to some good things.

Do you have any experience with LEAPS ( long expiry options) , or by using margin/ leverage to buy them? I am going to try this on one spinoff I am currently valuing, but to a scale that won't clean out my account...think of it as a way to test the waters and see how it works. Any tips would be appreciated!

Thanks in advance!

 

[Bible_Belt]

The general rule is that options are not marginable, but from what I read, you can borrow 25% against leaps. That's up to your broker-dealer, though, whether or not they want to let you. Borrowing money for any high-risk trading is probably not smart. I can tell you that it's a big red flag under the customer suitability rules, which state that you're only supposed to engage in high-risk trading with money that you can afford to lose all of and it not affect your lifestyle.

 

[synergy1]

The general rule is that options are not marginable, but from what I read, you can borrow 25% against leaps. That's up to your broker-dealer, though, whether or not they want to let you. Borrowing money for any high-risk trading is probably not smart. I can tell you that it's a big red flag under the customer suitability rules, which state that you're only supposed to engage in high-risk trading with money that you can afford to lose all of and it not affect your lifestyle.

Excellent. The idea isn't to fleece my trading account in an option play - I plan on doing this with a 5%-10% dollar amount...all of which I can lose. I am not married, no debt, no kids, very modest lifestyle, and good pay. I am venturing further from simply picking stock, but am going to learn some of these special situation now. And as you said, not spending anything I can't afford to lose.

And yes you are right. The source I read also borrows against the LEAPS - didn't trade on margin. Glad you pointed that out and that I re-read that. cheers.

 

[macallik]

Do you have any experience with LEAPS ( long expiry options) , or by using margin/ leverage to buy them? I am going to try this on one spinoff I am currently valuing, but to a scale that won't clean out my account...think of it as a way to test the waters and see how it works. Any tips would be appreciated!

Thanks in advance!

I have experience with LEAPs. The main thing you want to make sure of is that the Implied Volatility (expected future movement) is low prior to buying. Short term volatility has a large effect on long term options because the anticipated volatility affects time value, and long term options are often 100% time value.

You sound like you know a bit about the market and are logical. I would recommend going to something like hotstockmarket.com and seeing what other traders are viewing/doing with options.

 

[AAAgent]

NUGT - 3x bull gold miners, i've been in this for a while. I may be looking at getting out for a short gain/loss next week and sitting on some cash to get in lower. I think later in the year there will be more economic (potentially global) issues and war that might drive up gold. I made over 100%+ gains on this a few months ago.
AAPL- will get in in the next few weeks for a short 1-2 month hold. Icahn has been driving the stock price up screaming for more buybacks (which would drive share price up) and Icahn mentioning he will be increasing his position (which should drive prices up as well) along with Apples fundamentals. expansion in china, tons of cash for acquisitions, etc.
NFLX- I was just about to hop in this one a week ago but did not have the cash…..it just jumped about 20% on earnings….
DDD- 3D printing…… I might jump in this if it comes down to about $50's.
TSLA- I still might jump into this. I have been skeptical about this company for a while.
WMT- I might grab a few of these. I believe we're going to go into a recession and this should draw the general public who was not previously as cost conscious, back to looking to save every penny and dime. If they shopped at ShopRite before, they'll switch back to Walmart. The people that currently shop there, will continue to as there isn't anywhere cheaper that Walmart.

I don't really trade off of technicals anymore as it's too time consuming. I mainly trade off fundamentals and news and global/economic factors.

AAPL- this was around 500-510 when i wrote this, it's now at 530 and Apple did issue a share buyback.
NUGT- It was $34ish when i wrote about this and is now $42. I still think gold will drop a bit and then shoot back up or maybe it will just continue rising.
TSLA- was around $170, now it's at $200
NFLX-Was around $381, now it's at $430.
DDD- did drop to about $60 and i was tempted to buy but didnt.
WMT- this dropped and i didn't buy yet.

 

[Bible_Belt]

WMT got smacked down by poor overseas earnings. They had to close several stores in Brazil and China. Apparently, their business model for the US does not work so flawlessly everywhere, probably due to different shopping habits of consumers. And even here in the US, their business is getting eaten away at by discount stores like Dollar Tree and Dollar General. Regardless of the size of a company, if they can't project growth, the stock is going down.

 

[AAAgent]

WMT got smacked down by poor overseas earnings. They had to close several stores in Brazil and China. Apparently, their business model for the US does not work so flawlessly everywhere, probably due to different shopping habits of consumers. And even here in the US, their business is getting eaten away at by discount stores like Dollar Tree and Dollar General. Regardless of the size of a company, if they can't project growth, the stock is going down.

Yeah, i was going to wait for WMT to get beat down a bit first anyway but after hearing that news i might just wait it out.

I did get into ATVI. They have a solid lineup over the next year, are expected to out perform, and recently bought back their company for their previous owner.

 

[Fatal Jay]

I keep hearing bitcoin is going to make a huge return

 

[Bible_Belt]

here's your entry point:

Bitcoin plunges after major platform indefinitely halts withdrawals
Mon Feb 10, 2014
http://www.reuters.com/article/2014/02/10/us-investing-bitcoin-idUSBREA191Y220140210

I am just now discovering that you can apparently trade cryptocurrencies electronically. Check out www.coinmkt.com and http://www.coindesk.com/

This could be like the old glory days of day trading stocks, when there were lots of not-so-savvy market participants. Sometimes it was like playing poker against Special Ed kids.

 

[AAAgent]

My boss and his best friends (commodities trader) have a 5k bet going that in 2 years which will be higher.

My boss says gold will be higher and closer to 2-3k.

Trader says bitcoin will be like 10k.

Trader is getting smashed right now.

 

[Bible_Belt]

I don't know if they will get it done within two years, but after reading more about it this afternoon, I think the Feds are about to open up a big can o whoopass on anonymous cyptocurrency. Apparently converting it to real money falls under the legal definition of money laundering. Two guys just got charged in Florida. They were charged under state law, but it was all done under direction of the Feds. That's the test case, before they pursue more.

The current consensus says that exchanging bitcoin for goods and services is legal, because no money is involved. It is, however, still subject to income tax. I didn't read that, but I know it from taking Fed Income Tax as a class at law school. Income is anything of value. So you are supposed to pay tax on everything of value bought with bitcoin, just like you won it on a TV game show. I know people aren't, that's part of the appeal of the anonymous currency. So I would add IRS to the long list of Fed agencies that Bitcoin pisses off. Russia has banned it altogether; it will probably be illegal here eventually as well.

 

[Epimanes]

What is 401k? I just got cash in my stocks I saved up to put in there to fart around with. I got hit big time in 2008 with the crash and my RRSPs took a massive hit (in high risk for rrsps) but when the market recovered my rrsps were way up! However I learned a valuable lesson about margin loans in 2008 and will never use broker money again... Only use money you can afford to lose lol.