Investing General Discussion

Haus · Jun 27, 2023

Sanrith Descartes said:
"Usually" 12 months.

Thank you! That is what I was thinking, but sometimes I see numbers and either they look WAY too optimistic, or WAY too pessimistic. 12 months from now lines up to what I'm seeing and thinking on one of the stocks I am looking at. Which I know is just walking/talking confirmation bias... But as previously mentioned, I am a simple cave man and whatnot.

Big Phoenix · Jun 28, 2023

Limit down at open? Rip fools who bought at $439.99 a share.

Jysin · Jun 28, 2023

Haus said:
Thank you! That is what I was thinking, but sometimes I see numbers and either they look WAY too optimistic, or WAY too pessimistic. 12 months from now lines up to what I'm seeing and thinking on one of the stocks I am looking at. Which I know is just walking/talking confirmation bias... But as previously mentioned, I am a simple cave man and whatnot.

I don't pay any attention whatsoever to "analyst" coverage. They are always the laggard, waiting for some catalyst with earnings, waiting for guidance, etc. I could link you a million cases where some big firm gives some PT & up/downgrade and a week later they are completely backwards on the call for whatever news event or pre-earnings guide and makes them look like absolute fools.

I simply wouldnt base my trades or investments around analyst coverage.

Sanrith Descartes · Jun 28, 2023

Jysin said:
I don't pay any attention whatsoever to "analyst" coverage. They are always the laggard, waiting for some catalyst with earnings, waiting for guidance, etc. I could link you a million cases where some big firm gives some PT & up/downgrade and a week later they are completely backwards on the call for whatever news event or pre-earnings guide and makes them look like absolute fools.

I simply wouldnt base my trades or investments around analyst coverage.

When i first started out I would build spreadsheets of analyst coverages and price targets/recommendations. Took me about a year to realize how shitty it was. Espcially when they refuse to move off their obviously wrong projections. Like the analyst who had TSLA priced at something like $20 for years on end.

Mist · Jun 28, 2023

I called this nvidia dip being a fucking joke

Flobee · Jun 28, 2023

I have an ETF question. Looking at building a position in the energy sector and think I'll probably just grab an ETF rather than juggling individual companies.

Looking at the available ETFs I see the usual suspects that are largely held by Blackrock, Vanguard, etc but also see something like DRLL which is holding a similar basket as lets say VDE but the main difference (so far as I can tell) is that they intend to vote differently with their holdings. In this case specifically against ESG which, in my view, is sensical in the energy sector specifically.

Can anyone give me an idea of what additional risks I would be taking buying from a smaller ETF like DRLL vs something much larger like VDE given their holdings are very similar?

Sanrith Descartes · Jun 28, 2023

Flobee said:
I have an ETF question. Looking at building a position in the energy sector and think I'll probably just grab an ETF rather than juggling individual companies.

Looking at the available ETFs I see the usual suspects that are largely held by Blackrock, Vanguard, etc but also see something like DRLL which is holding a similar basket as lets say VDE but the main difference (so far as I can tell) is that they intend to vote differently with their holdings. In this case specifically against ESG which, in my view, is sensical in the energy sector specifically.

Can anyone give me an idea of what additional risks I would be taking buying from a smaller ETF like DRLL vs something much larger like VDE given their holdings are very similar?

I will only say that once you leave the bigs, the energy sector can be even more risky than the energy sector normally is. CVX, XOM etc have the size and scale to provide some modicum of safety. There is also some real complexity when you get into the smaller players and their role in the sector. Upstream, midstream, storage, refining. Shit gets very convoluted if it isnt a space you have knowledge of.

Ps, if the ETF is market cap weighted, you will see you are basically investing in the big two on most of the ETFs.

Flobee · Jun 28, 2023

Sanrith Descartes said:
I will only say that once you leave the bigs, the energy sector can be even more risky than the energy sector normally is. CVX, XOM etc have the size and scale to provide some modicum of safety. There is also some real complexity when you get into the smaller players and their role in the sector. Upstream, midstream, storage, refining. Shit gets very convoluted if it isnt a space you have knowledge of.

Ps, if the ETF is market cap weighted, you will see you are basically investing in the big two on most of the ETFs.

Thanks. So the holding weights are nearly identical to Vanguards energy ETF for example. So I -think- the only real difference is the voting power of the creator of the ETF itself. My main question is if my understanding of that portion is correct.

In other words I want exposure to energy sector, with similar weightings as a Vanguard ETF, without giving Vanguard my $ to push their politics. Its a token gesture perhaps but if I can have the same exposure without supporting ESG which is, IMO, an attack on the sector itself (among other things) that would be ideal.

Sanrith Descartes · Jun 28, 2023

Flobee said:
Thanks. So the holding weights are nearly identical to Vanguards energy ETF for example. So I -think- the only real difference is the voting power of the creator of the ETF itself. My main question is if my understanding of that portion is correct.

In other words I want exposure to energy sector, with similar weightings as a Vanguard ETF, without giving Vanguard my $ to push their politics. Its a token gesture perhaps but if I can have the same exposure without supporting ESG which is, IMO, an attack on the sector itself (among other things) that would be ideal.

View attachment 480219

I could be mistaken, but by holding a fund (ETF/Mutual) you automatically proxy your voting rights to the fund manager. The fund itself doesnt matter.

Sanrith Descartes · Jun 28, 2023

Blazin said:
Bought IWM at the open on successful back test of 200d

Im curious your thought process on this. I see (2-year chart) a long string of lower highs over the last 18 months and it has almost no room to run before hitting overhead resistance at $187. The last couple months it has made higher lows which is good but is that enough to overcome the longer downtrend? Wouldnt it be better to wait to see if it can crack and sustain upward movement above $187?

ShakyJake · Jun 28, 2023

Flobee said:
I have an ETF question. Looking at building a position in the energy sector and think I'll probably just grab an ETF rather than juggling individual companies.

Looking at the available ETFs I see the usual suspects that are largely held by Blackrock, Vanguard, etc but also see something like DRLL which is holding a similar basket as lets say VDE but the main difference (so far as I can tell) is that they intend to vote differently with their holdings. In this case specifically against ESG which, in my view, is sensical in the energy sector specifically.

Can anyone give me an idea of what additional risks I would be taking buying from a smaller ETF like DRLL vs something much larger like VDE given their holdings are very similar?

I think the expense ratio is one of the most important things to consider.

Yeah, VDE is .10% and DRLL is 0.41%. 0.41 isn't stupid high but as you can see, VDE is way lower. I think the rule of thumb is anything over .50% is getting up there.

Fogel · Jun 28, 2023

We went over this in the politics thread today too. The difference between a .41 and .10 expense ratio over a 30 year investment at 10k a year 6% annual return is 17k versus 67k in fees on a total investment of 900k

Mutual Fund Calculator: Find What Fees Will Cost You - NerdWallet

Calculate how your mutual fund fees will erode your investment dollars over time.

www.nerdwallet.com

ShakyJake · Jun 28, 2023

So, in other news, I'm considering buying ITM PUTs for RCL and DAL. They have gone nearly vertical with no significant pullbacks and are nearing some strong resistance (I think anyway -- my tech analysis skills are mediocre at best). Any tips on how to time an entry here?

Almost took a position today on RCL as the trend could be changing. This is the 15 minute chart. But I am constantly screwing myself looking at lower time frames.

Fogel · Jun 28, 2023

ShakyJake said:
So, in other news, I'm considering buying ITM PUTs for RCL and DAL. They have gone nearly vertical with no significant pullbacks and are nearing some strong resistance (I think anyway -- my tech analysis skills are mediocre at best). Any tips on how to time an entry here?

Volatility is going to be a big driver for the options price. If it has another big move up, buying during or very soon after the spike is your best bet.

Jysin · Jun 28, 2023

You literally had the DAL CEO yesterday saying record Q2 profits. This is 2 days before end of quarter. He's either lying, or your puts are going to get blown up.

Delta CEO forecasting highest Q2 earnings ever. Here's what the pros are saying

Pros on CNBC discuss Delta Air Lines after its CEO predicts the company could see its highest second-quarter earnings ever.

www.cnbc.com

Tmac · Jun 28, 2023

Sanrith Descartes said:
I am sure there are complex ways to do this, but a simple thing you can do is just make a watchlist of the 11 sector SPDR ETFs. The ones near 52-lows are out of favor and the ones near 52-highs are in favor. Use charts and just keep an eye on them for the changes in price and volume.

View attachment 480108

So, if you look at the 5-YR chart for sectors it seems like there's only one true winner, Technology (XLK):

But, if you lower that window to YTD, it seems like these things exist on 6 mo. cycles. Is that accurate? So if you had a sector strategy, you'd essentially need to pick it and leave it for six months and then reevaluate. For example, Technology (XLK) has crushed since Jan '23, but before that you would've wanted to be in Energy (XLE) from September to March. But, you really would've wanted to sell Energy in January before it cycled out and grabbed Technology.

The sectors with a lot of growth over the last six months are Technology (XLK), Communications (XLC), and Consumer Discretionary (XLY).

Industrial (XLI) and Consumer Staples (XLP) have been relatively flat...

Financial (XLF), Real Estate (XLRE), Energy (XLE), and Utilities (XLU) look like the sectors with the least growth over the last six months, but given the banking shenanigans it seems like you'd want to avoid Financial. So, Real Estate, Energy, and Utilities should get some attention soon?

That how this works? I'm just making observations here.

Jysin · Jun 28, 2023

I have said this in previous posts recently, as affirmed by Blazin's buy today in IWM, is that you need breadth in markets to improve. We've had a huge run up YTD on the back of big cap tech and the AI mania. This can't go on forever and you need all sectors to pick up. If you truly believe the lows of the market have already been put in and this is the slow start of a strengthening market, you need that money to rotate into the lagging sectors like small caps (IWM). Prudent fund managers should be trimming tech gains and rotating.

Whether this sticks or not, is anyone's guess. Fed keeps saying "higher for longer". Market seems to be calling bullshit and dips are being bought. IWM, along with yields and DXY is the canary here for me. If IWM starts falling and yields / US dollar catches a bid, that's going to be bad for equities.

Sanrith Descartes · Jun 28, 2023

Tmac said:
So, if you look at the 5-YR chart for sectors it seems like there's only one true winner, Technology (XLK):

View attachment 480247

But, if you lower that window to YTD, it seems like these things exist on 6 mo. cycles. Is that accurate? So if you had a sector strategy, you'd essentially need to pick it and leave it for six months and then reevaluate. For example, Technology (XLK) has crushed since Jan '23, but before that you would've wanted to be in Energy (XLE) from September to March. But, you really would've wanted to sell Energy in January before it cycled out and grabbed Technology.

View attachment 480246

The sectors with a lot of growth over the last six months are Technology (XLK), Communications (XLC), and Consumer Discretionary (XLY).

Industrial (XLI) and Consumer Staples (XLP) have been relatively flat...

Financial (XLF), Real Estate (XLRE), Energy (XLE), and Utilities (XLU) look like the sectors with the least growth over the last six months, but given the banking shenanigans it seems like you'd want to avoid Financial. So, Real Estate, Energy, and Utilities should get some attention soon?

That how this works? I'm just making observations here.

Yes, playing sector rotations isn't a short term trade. It's also not an explosivewinner trade (usually). Rotating into consumer Staples at the right time still won't give tech like returns. There is only so much alpha you will get from WMT, KMB AND PG.

The idea is to be generating constant upward movement.

Tmac · Jun 28, 2023

Sanrith Descartes said:
Yes, playing sector rotations isn't a short term trade. It's also not an explosivewinner trade (usually). Rotating into consumer Staples at the right time still won't give tech like returns. There is only so much alpha you will get from WMT, KMB AND PG.

The idea is to be generating constant upward movement.

Hrmm, I feel like with a solid plan it could be a realtively straightforward and simple endeavor, but it feels complicated at the moment.

ShakyJake · Jun 28, 2023

Jysin said:
You literally had the DAL CEO yesterday saying record Q2 profits. This is 2 days before end of quarter. He's either lying, or your puts are going to get blown up.

Delta CEO forecasting highest Q2 earnings ever. Here's what the pros are saying

Pros on CNBC discuss Delta Air Lines after its CEO predicts the company could see its highest second-quarter earnings ever.

www.cnbc.com

I guess it could? But if you think DAL is going to keep on going up and up and up and up and up, that's not how it works. The key, as I asked though, is what to look for when a pull back inevitably begins. Any stock that has a massive vertical spike typically has a very sharp pullback.

DAL Daily chart:

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