Message from @Tanner - SC

Discord ID: 395810538296180746


2017-12-27 23:12:40 UTC  

@everyone if you have any interest in investing in 2018 read the below:

2017-12-27 23:12:52 UTC  

I have been thinking about 2018 as an investment year. I have come to the conclusion I think there is a strong possibility the S&P 500 will go up rather than down in 2018. As such I will be establishing a rather large position in the S&P 500 2x leveraged ETF ticker symbol: SSO. My thoughts are as follows: 1) I think the tax bill will provide substantial tailwinds for the economy. businesses are optimistic and will be more likely to provide employees with bonuses, higher wages, and increased hiring/more job security. consumer confidence has risen precipitously since trumps election and I believe it will continue to rise and stay high due to 1) more money in their paychecks, 2) better prospects for raises/promotions, 3) job security (due to companies hiring). The economy is ~70% consumption driven so it is always a good thing for the economy when consumers feel good about their economic prospects. the proverbial animal spirits are most certainly at play here.
How does this investment work? It’s a directional bet on the S&P 500 with 2x leverage. I think the S&P will go up rather than down in 2018 and I am buying this ETF to magnify my returns. Ex: lets say the S&P goes up 10% in 2018. This ETF will return 20% over the year. If I am wrong and the S&P goes down rather than up, remember, you’ll lose twice as much.
Who this investment is good for? 1) someone with an IRA who does not care about cash flow and will not be able to touch the money in 30+yrs, 2) someone with substantial resources who can afford to take risks. 3) someone willing to take on risk in general. Understand, if I am wrong, and the S&P decreases over 2018, you’ll lose twice as much as you would otherwise.

2017-12-27 23:15:53 UTC  

Something to watch also, Dominion energy as a long play

2017-12-27 23:16:02 UTC  

whats your thesis?

2017-12-27 23:16:52 UTC  

new facility built in cove point that exports natural gas from fracking in PA

2017-12-27 23:17:20 UTC  

The pipelines already existed as import lines

2017-12-27 23:17:30 UTC  

but are now being used to export to Japan

2017-12-27 23:18:56 UTC  

Cabot Oil and Gas contracted with Sumitomo corp and Tokyo Gas

2017-12-27 23:19:48 UTC  

selling 350,000 million British thermal units of shale gas per day for 20 years

2017-12-27 23:21:15 UTC  

@Deleted User What’s the ticker symbol?

2017-12-27 23:21:19 UTC  

D

2017-12-27 23:21:37 UTC  

Thanks!

2017-12-27 23:34:50 UTC  

@here Just a generic but friendly reminder not to risk money you can't lose

2017-12-27 23:36:23 UTC  

2017-12-27 23:42:38 UTC  

@Zyzz The SSO prospectus states its investment objective is to have 2x the daily % movement each day. How does that translate to a longer term investment over 2018? Also, any thoughts on using options on SPY to get leverage as opposed to a 2x ETF?

2017-12-27 23:50:05 UTC  

@ThisIsChris my theory is the s&p will go up in 2018 rather than down(reasons stated above). the ETF magnifies the % gain of the S&P. If you have good conviction the market will go up rather than down why not magnify your return if you are willing to take the risk?

2017-12-27 23:51:38 UTC  

in regards to options...

2017-12-27 23:54:00 UTC  

you can purchase a LEAP with an expiration of Jan 2019/Dec 2018. I do not have much insight to those strategies so really can provide much color

2017-12-28 00:12:30 UTC  

@Zyzz Thanks. Yeah just wondering.

2017-12-28 05:29:04 UTC  

There are many ETFs available that are set up to track S&P500 at various levels of leverage. No need to spend the fees on options, these ETFs utilize economies of scale of thousands of people wanting S&P leverage and do the options trades from a centralized role.

2017-12-28 05:29:46 UTC  

I’m concerned that they could manipulate the interest rate to take the wind out of Trump’s sails.

2017-12-28 05:30:46 UTC  

We’re 10 years out from the last recession, there’s been a lot of money printing, I’m expecting another recession before Trump’s first term is over.

2017-12-28 05:35:20 UTC  

People are euphoric about the economy, housing index and equities are at all-time highs. The tax breaks are great for business, but we’re also very inflated from money-printing that dug us out of the last recession and that check always comes due. It’s what causes the boom-bust cycle, “stimulating” the economy with tomorrow’s dollars today, over and over, until the distortions get out of control.

2017-12-28 05:41:50 UTC  

@Tanner - SC i have a lot of the same concerns as you in regards to the easy money policies. it will be interesting to see at what pace the fed raises interest rates. i do think trump will be successful with actually getting some inflation. i suppose this could prompt the fed to raise rates although i'd rather see them sell off their MBS portfolio which will steepen the yield curve. we are absolutely in a bubble. current valuations from everything from stocks to hard assets has gotten out of control and is certainly in excess of intrinsic value. asset prices are being kept up by easy money and low interest rates. the only question is what will cause the bubble to pop and when

2017-12-28 05:44:31 UTC  

One attack avenue is simply raising the interest rates quickly. Easy onset of volatility, popping the bubble, and it can still be blamed on Trump.

2017-12-28 05:45:14 UTC  

yes we will have to watch for the cadence of rate increases

2017-12-28 05:47:58 UTC  

And even though there are reasons for growth, I have a hard time going long S&P500. It feels like betting on the greater fool. If it’s fundamentally over-valued, it shouldn’t be bought, even if you think you can sell to a greater fool in 6 months. Because the underlying fundamentals are a vacuum that could suck the price down at any moment. Though I suppose you could put in a stop loss, but ... eh.

2017-12-28 05:49:08 UTC  

I’m always reminded of my favorite quote, “there are no markets anymore, only manipulations.”

2017-12-28 10:09:49 UTC  

I do feel lonely being the only one trading options here

2017-12-28 10:10:26 UTC  

If you like thinking about volatility and time value then they are very interesting.

2017-12-28 16:36:58 UTC  

@ThisIsChris I think @Deleted User does as well

2017-12-28 16:41:01 UTC  

@ThisIsChris in terms of option strategies I only utilize them in one way. If I see a company that is going into earning where expectations are low (perhaps the stock has sold off quite dramatically prior to earnings). I will buy at the money calls for the front month contract (earnings date is in Jan. 2018, I will buy option contract with expiration in Jan 2018 assuming it does not expire prior to the earnings date). My plan is always to exit the position the day of earnings whether I am right or wrong. My goal being to take advantage of any volatility that was present itself. Time decay is not on my side here so i try to minimize that risk.

2017-12-28 16:41:14 UTC  

I did this with GIII prior to their recent earnings and made out well

2017-12-28 16:41:26 UTC  

What strategies do you use?

2017-12-28 21:26:51 UTC  

@Zyzz Nice, I like to use options during earnings season too, though I will usually get ones expiring a few days or maybe a week max after the earnings report comes out since they respond more sharply to the movement of the stock.
Outside earnings season, I still like to use options for all sorts of things. For a while I was using OTM "protective" puts as insurance on an ETF I was holding (This was USO for the first six months of 2015). Sometimes I buy naked puts deep ITM as a way to short a stock, which I did with SPY in the 3rd quarter 2014 and turned my first profit. More recently I've been selling OTM covered calls on SPY as a way to get extra money out of holding that stock. During earnings season I will usually use vertical spreads as a way to cap the cost of the options I buy and as a way to more easily quantify my risk/reward ratio (vertical spreads, especially with very close strikes, act a lot like binary options). Those are the main strategies I use. Sometimes if I have an opinion about something long term but I don't think it will happen short term, (like if I think SPY will go up in the next 3 months, but not in the next week) then I might buy a calendar spread where I buy longterm OTM and sell short term OTM. I also played with selling an Iron Condor once and I might a few bucks. The covered calls and the Iron Condors I used for safer bets that net me just a few bucks, and they're always near-term expiry.

2017-12-28 22:18:20 UTC  

what are good resources (preferably free) to learn about options and how to use them>

2017-12-28 22:18:22 UTC  

?*

2017-12-28 22:18:50 UTC  

I gave a talk on here a few weeks ago. I can do it again.

2017-12-28 22:19:00 UTC  

If you get one or two more people to join that would be even better @Deleted User

2017-12-28 22:19:51 UTC  

@ThisIsChris Options are a lot of fun. I usually buy puts on stocks I think will bomb on earnings.

2017-12-28 22:20:20 UTC  

Here's a leverage story you might like: