Investing General Discussion

Hateyou · Mar 6, 2020

Blazin said:
Oh I have no doubt, we some have some Robinhood level amateurs. I wish there was a way for us to show real account levels and weed out some of the BS, but this thread has been pretty free of them over the years, red markets always brings them around.

I’m in one of those categories compared to you guys. I’ve just been putting in over the past few years and only have $10k to bounce around, the rest in mutual funds I just slowly add to. I’m fully honest about not knowing the technical terms and lingo. I read about the deeper investing but smart enough to know I’d lose my ass trying it. I just do minor buy / hold / sell shit while trying to learn. Don’t imagine I’ll ever have serious cash to throw around like you rich bastards. I just read about what certain companies are into and buy when ones I like are low. My Cigna and AMD have been doing well, others are mixed, Ardelyx has some wild swings, I may buy some more if it keeps going down. That’s the smallest company I have so don’t trust it to buy much. May buy some Disney if they keep dipping up and down.

Khane · Mar 6, 2020

"Deeper investing" is mostly bullshit "investment vehicles" or "products" that quite honestly shouldn't exist. There are people who are savvy enough to take advantage of them but by and large they are created to take advantage of the layman and take their money, not help them invest. I even find myself coming close to buying into them in market situations like these but ultimately never do. Something about being able to bet against a company, a fund, or the market in general rubs me the wrong way and goes against everything that investing should be.

One of these bullshit investment "products" that were talked about recently in this thread are put options. I'm not trying to call anyone out on utilizing them, especially in this market climate, they are there so if you know enough it's smart to take advantage. But they really are essentially a legal scam, or more correctly, legalized gambling. I hate Wall Street and how it's increasingly becoming more and more predatory, even after 2008, but I'm your average hypocrite because I participate anyway because there are a lot of effortless funds and indexes that are basically guaranteed money in the long run.

Attog · Mar 6, 2020

As usual I was wrong, market didn't get crushed today. I really thought it would. Thought people would not want to be long over the weekend with all the possible uncertainty. I bought a little bit of Bank of America today, assuming the market is going to keep going down and I'll never be able to time the bottom but maybe can buy on the way down.

Voldethlj02 · Mar 6, 2020

Khane said:
One of these bullshit investment "products" that were talked about recently in this thread are put options. I'm not trying to call anyone out on utilizing them, especially in this market climate, they are there so if you know enough it's smart to take advantage. But they really are essentially a legal scam, or more correctly, legalized gambling. I hate Wall Street and how it's increasingly becoming more and more predatory, even after 2008, but I'm your average hypocrite because I participate anyway because there are a lot of effortless funds and indexes that are basically guaranteed money in the long run.

Put options are for hedging downside risk on appreciated positions and for writing on stocks you're bullish on in the long run and don't mind buying at a low cost. Don't use them to try and leverage a downside turn. With that said, all options are basically split the sides as opposed to rising over the long run like the market in general, so there's some truth to that.

Khane · Mar 6, 2020

The point I'm making is there is no place for an "option" in a legitimate investment market. There are odds makers involved in the pricing schema for put options the same way there are odds makers involved in any casino. Selling an option is essentially creating money out of thin air for the institutions offering those options. And they have actuaries and other economic and mathematics professionals creating those odds in their favor to take your money.

wormie · Mar 6, 2020

Khane said:
The point I'm making is there is no place for an "option" in a legitimate investment market. There are odds makers involved in the pricing schema for put options the same way there are odds makers involved in any casino. Selling an option is essentially creating money out of thin air for the institutions offering those options. And they have actuaries and other economic and mathematics professionals creating those odds in their favor to take your money.

Yeah this is pretty incorrect. Options arent gambling as you seem to be implying. They are instruments to mitigate risk. If they were not legitimate tools, I doubt a nobel prize would be given to the people who came up with a way to model options (Black–Scholes model - Wikipedia).

Blazin · Mar 6, 2020

Well I make my living selling put options. I learned long ago that buying them had you on the wrong side of the table. I obviously disagree with the animus, and you don’t sound particularly knowledgeable on the subject in which you are so impassioned to judge.

they are insurance, it’s how I even describe them to laymen . I sell insurance to people who want to protect against loss.

but yet I completely agree with you that investors should stop wasting so much money hedging and gambling on puts. I wouldn’t do it, but I don’t think it makes me evil for selling them insurance they want .

Blazin · Mar 6, 2020

wormie said:
Yeah this is pretty incorrect. Options arent gambling as you seem to be implying. They are instruments to mitigate risk. If they were not legitimate tools, I doubt a nobel prize would be given to the people who came up with a way to model options (Black–Scholes model - Wikipedia).

He doesn’t fully understand it therefor it must be wrong or voodoo tricks, but he isn’t wrong that it’s inappropriate for a lot of people to be involved with .

Khane · Mar 6, 2020

I am as knowledgable as I need to be. You are trying to sell me insurance against what? What you are doing right now is exactly the problem, put options aren't complicated and I'm not "unknowledgeable". Just read your own words.

Typical insurance salesman, acting like the racket was created for our benefit and not yours. These "risk-neutral" formulas are used to create the option price to mitigate risk for the issuer, not the buyer. I'm the one who ultimately decides when to sell the underlying stock (if I even want to exercise the option) and you're using these formulas to assess how likely a scenario is (based on a strike price and duration I want) and adjust the cost of the option accordingly to eliminate your own risk, not mine.

Blazin · Mar 6, 2020

Khane said:
I am as knowledgable as I need to be. You are trying to sell me insurance against what? What you are doing right now is exactly the problem, put options aren't complicated and I'm not "unknowledgeable". Just read your own words.

Typical insurance salesman, acting like the racket was created for our benefit and not yours. These "risk-neutral" formulas are used to create the option price to mitigate risk for the issuer, not the buyer. I'm the one who ultimately decides when to sell the underlying stock (if I even want to exercise the option) and you're using these formulas to assess how likely a scenario is (based on a strike price and duration I want) and adjust the cost of the option accordingly to eliminate your own risk, not mine.

K boss

sadris · Mar 6, 2020

Anyone know of a calculator to get the current Shiller PE10 based on a hypothetical S&P value?

sleevedraw · Mar 7, 2020

Are there any decent relatively low risk options for investing for a house down payment other than a high-yield savings account? I was under the impression that money can't be added to CDs.

Timepoint: 2-3 years
Initial investment: 3k; 3k added per month

Blazin · Mar 7, 2020

sleevedraw said:
Are there any decent relatively low risk options for investing for a house down payment other than a high-yield savings account? I was under the impression that money can't be added to CDs.

Timepoint: 2-3 years
Initial investment: 3k; 3k added per month

there really isn’t any great options at the moment rates have just recently plummeted so you will earn very little in low risk/risk free issues. A money market account would be easy to set up for what you want with current yield around 1.5% and dropping fast. Vanguard and Fidelity being two good choices .

edit... I just went and looked up two year treasury rates which are down to .67% so those money market accounts rates are not going to hold up. Completely sucks for savers, but in the plus side the sooner you get a mortgage you can take advantage of record low rates so speed up your planning

LachiusTZ · Mar 7, 2020

sleevedraw said:
Are there any decent relatively low risk options for investing for a house down payment other than a high-yield savings account? I was under the impression that money can't be added to CDs.

Timepoint: 2-3 years
Initial investment: 3k; 3k added per month

Buy sooner before housing rebounds.

Ppl thinking this isn’t going to crush the housing market seem naive, but I could be wrong

TheBeagle · Mar 7, 2020

I'm a novice idiot about all this but blackjack dealers also sell insurance to mitigate risk. It's still gambling.

*I don't think there is anything inherently wrong with risk taking or gambling as long as the person is aware of the risks, I'm not judging.

Furry · Mar 7, 2020

Most investments are truly a form of gambling if you look at it with cynical eyes. It's just that the more risk you choose to assume, sometimes you can get more reward. You can take that all the way to the all or nothing end of the spectrum with investing if you really want to.

The real difference between investments and gambling is that if you play it normal you will usually be the winner, and always be the winner if you can look far enough to the future. This current drop will probably be a blip on the radar for people who don't need their money for 10 years.

Sanrith Descartes · Mar 7, 2020

LachiusTZ said:
Can you translate this to street person speak?

Sorry for the delay, Blazin looks like he covered it already. I was making a tongue in cheek reference to the Fed buying equities and driving the market higher. Back Dec 2018 the term PPT (Plunge Protection Team) came about (or that was the 1st time I heard it). The last 30-45 minutes yesterday was a sight to see.

Sanrith Descartes · Mar 7, 2020

Blazin said:
Well I make my living selling put options. I learned long ago that buying them had you on the wrong side of the table. I obviously disagree with the animus, and you don’t sound particularly knowledgeable on the subject in which you are so impassioned to judge.

they are insurance, it’s how I even describe them to laymen . I sell insurance to people who want to protect against loss.

but yet I completely agree with you that investors should stop wasting so much money hedging and gambling on puts. I wouldn’t do it, but I don’t think it makes me evil for selling them insurance they want .

While I use puts extremely rarely, I did yesterday. Not for a hedge though. I bought puts on TLT. My analysis says the long end of the yield curve is going to reverse back upwards a bit.

Blazin · Mar 7, 2020

Sanrith Descartes said:
Sorry for the delay, Blazin looks like he covered it already. I was making a tongue in cheek reference to the Fed buying equities and driving the market higher. Back Dec 2018 the term PPT (Plunge Protection Team) came about (or that was the 1st time I heard it). The last 30-45 minutes yesterday was a sight to see.

PPT started in Feb '16 if I recall

Captain Suave · Mar 7, 2020

Blazin said:
PPT started in Feb '16 if I recall

The term has been around since the late 90's.

"The name "Plunge Protection Team" was coined by The Washington Post and first applied to the group in 1997."

Plunge Protection Team (PPT): Definition and How It Works

The Plunge Protection Team is a nickname for the Working Group on Financial Markets, which makes recommendations to the U.S. president.

www.investopedia.com

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