Author Topic: An experiment  (Read 45965 times)

ChpBstrd

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Re: An experiment
« Reply #200 on: December 08, 2020, 07:22:25 PM »
We have ignition... the experiment is now beating it's benchmark by 32%.

It seems so obvious in hindsight. As early as last summer we had dozens of viable vaccine candidates in the works, and news that some of them were generating immune responses. Now the first 3 out of 3 to finish stage three trials have been proven to work and we are suddenly in the logistics phase. Of course there was always going to be a vaccine. Should have bet on that. Doh!

The vaccine logistics phase will be much harder to predict. Stock valuations now seem to assume a return to 2019 levels of economic activity by about the 2nd quarter. In fact they're priced beyond that, looking at price/2019earnings, CAPE, or any other relevant metric. So if anything but galloping growth occurs during the next 6 months, covid-sensitive stocks are likely to fall or remain flat. Even if economic activity rises, a tech bubble could burst.

Meanwhile, the pandemic is growing faster than it ever has before, with 7-8X as many infections per day as we were having in April. Xmas is cancelled for many families, business closures are starting to become a thing again, and we'll soon be starting the term of a new president who may be willing to enact restrictions at a national level. Meanwhile much of the economic relief enacted during 2020 is about to expire, with renewal appearing unlikely. Will vaccines be distributed fast enough to dodge the oncoming economic bullet? That's the new game. Shoulda played the old game :)

Hindsight delivers the best returns!! Getting them into the portfolio is so fiendishly difficult though, isn't it?

For some reason we think foresight will eventually develop out of experience, as it does for the vast majority of applications. But not the markets. Looking back just a couple of years, doing the things that I would have considered The Stupidest Move would have earned millions.

MustacheAndaHalf

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Re: An experiment
« Reply #201 on: December 09, 2020, 03:10:04 AM »
I've revealed that I hold call options (M, CCL, XOP) that have had an amazing November to say the least.  My real performance is actually insane - it simply wouldn't be believed, and I wouldn't want to provide the evidence anyways.

The main thing about this experiment is that everyone can verify it - it's just 3 stocks split evenly against the total stock market, measured from March 26.

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Benchmark (VTI)   49.00%                              
Experiment   75.00%   (   DIN   84.00%   /   M   73.00%   /   DXPE   68.00%   )

California's lockdown triggered drops in Covid sensitive stocks, leaving the experiment now +26% against the overall market.

BicycleB

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Re: An experiment
« Reply #202 on: December 09, 2020, 06:04:00 AM »
Congrats, @MustacheAndaHalf.

I think you've been fairly clear about your reasoning. I suppose that's not a proof against losing money sometime, but it's different than someone who just drops in and says "Hey, six months ago I did x and now I tripled my money" without even a nod toward how many times they tried long shots that didn't work. Short of a full detail, it seems like pretty fair communication.

I respect that the experiment is closer to "ordinary" investing normally and reasonably done by us typical Mustachians. Dipping into the risky world of options is another level. Glad it's paying off for you now.

Is there much tax impact from your options?

MustacheAndaHalf

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Re: An experiment
« Reply #203 on: December 11, 2020, 02:54:14 AM »
My option purchases were inside a Roth IRA, so as I understand it, I'll owe no tax.

Today seems like the last chance to buy before the FDA grants approval for a Covid-19 vaccine.  It seems extremely likely they'll approve it, and within hours or days.


MustacheAndaHalf

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Re: An experiment
« Reply #204 on: December 11, 2020, 11:34:53 PM »
After the market closed, the FDA approved the Pfizer vaccine for emergency use.  Vaccines should go out immediately, so Monday's market open should reflect both the vaccine approval and the first doses being administered in the U.S.

Benchmark (VTI)   48.00%                              
Experiment   70.00%   (   DIN   80.00%   /   M   66.00%   /   DXPE   65.00%   )

The experiment is +22% ahead of it's benchmark.  The vaccine can't change the current situation much: 3,000 deaths/day and a quarter million new cases a day in the U.S.

alcon835

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Re: An experiment
« Reply #205 on: December 12, 2020, 10:28:48 AM »
Looking forward to Monday!

MustacheAndaHalf

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Re: An experiment
« Reply #206 on: December 15, 2020, 08:14:01 AM »
If the experiment is a rocket, it appears to be pointed downwards, now +20% ahead of it's benchmark.

Benchmark (VTI)   48.00%                              
Experiment   68.00%   (   DIN   77.00%   /   M   58.00%   /   DXPE   68.00%   )

Monday had some vaccination news, but more significantly a massive hack of the U.S. government was disclosed that involves a state actor (the implication is Russia).  I'm guessing markets expected a lot more fallout, so maybe today will see some recovery.

I wound up buying stocks yesterday at lower prices.

MustacheAndaHalf

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Re: An experiment
« Reply #207 on: December 17, 2020, 09:08:46 AM »
The benchmark keeps narrowing the experiment's lead, which is now just +16% ahead.  4 weeks ago both had total gains of +43% or so.  Going up +7% and +23% since then is pretty good performance for both of them:

Benchmark (VTI)   50.00%                              
Experiment   66.00%   (   DIN   75.00%   /   M   55.00%   /   DXPE   68.00%   )

I suspect realism and cynicism are taking over in the markets.  The start of vaccinations had no impact.  I saw that projections of Christmas sales are falling, which impacts the expected earnings of the retail sector.  That's probably realistic given rising unemployment and Covid-19 cases.  And to add "color commentary" to the scenario, Dr Fauci said he will not be visiting family this Christmas owing to the risks involved.

ChpBstrd

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Re: An experiment
« Reply #208 on: December 17, 2020, 09:45:14 AM »
The benchmark keeps narrowing the experiment's lead, which is now just +16% ahead.  4 weeks ago both had total gains of +43% or so.  Going up +7% and +23% since then is pretty good performance for both of them:

Benchmark (VTI)   50.00%                              
Experiment   66.00%   (   DIN   75.00%   /   M   55.00%   /   DXPE   68.00%   )

I suspect realism and cynicism are taking over in the markets.  The start of vaccinations had no impact.  I saw that projections of Christmas sales are falling, which impacts the expected earnings of the retail sector.  That's probably realistic given rising unemployment and Covid-19 cases.  And to add "color commentary" to the scenario, Dr Fauci said he will not be visiting family this Christmas owing to the risks involved.

I didn't trade out of the benchmark and into the experiment after the vaccine announcements because I was watching the rising case count, observing lots of Thanksgiving travel, and noting the packed restaurants and churches. I also anticipate the Biden administration will be more willing to do things like nationwide gathering bans if necessary. So I thought the rally was premature.

I'm thinking we all get another chance to buy into the experiment about two weeks into January, as many of the people who met with relatives or partied for New Years come down sick and local politicians enact more restrictions once the holiday shopping season is over.

MustacheAndaHalf

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Re: An experiment
« Reply #209 on: December 17, 2020, 12:17:34 PM »
Benchmark (VTI)   50.00%                              
Experiment   66.00%   (   DIN   75.00%   /   M   55.00%   /   DXPE   68.00%   )

I didn't trade out of the benchmark and into the experiment after the vaccine announcements because I was watching the rising case count, observing lots of Thanksgiving travel, and noting the packed restaurants and churches. I also anticipate the Biden administration will be more willing to do things like nationwide gathering bans if necessary. So I thought the rally was premature.

I'm thinking we all get another chance to buy into the experiment about two weeks into January, as many of the people who met with relatives or partied for New Years come down sick and local politicians enact more restrictions once the holiday shopping season is over.
My personal portfolio has no DIN shares or options - I switched to call options in another restaurant company.  But I do hold DXPE shares, and call options in Macy's.  I've been looking for deals on call options, but they're just too expensive.

If you can really time the bottom, you would want to make money on the short and long side.  Take mid-Jan for example, you might sell "put options" at the low point, when they pay the most but will soon be well out of the money.  And at that same point, call options should be cheapest, so you could use those to multiply gains.

The market is already estimating how bad Christmas Covid-19 will be... so things have to be worse than expected, and continue getting worse than expected in early January.

Year to date, retail company stocks are up +37%.  So they might be a bit frothy for a pandemic where people can't buy stuff, and where "black Friday" is the late November day when many retailers actually turn a profit ("go from in the red, to in the black").  So maybe the market isn't being realistic enough, yet.
https://etfdb.com/etf/XRT/#performance

I plan to set aside some investing for late December, some for January, and maybe some in February (when I expect vaccines will be starting to make a difference).  That's a long time for the experiment to try to keep ahead of it's benchmark ...

ChpBstrd

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Re: An experiment
« Reply #210 on: December 17, 2020, 01:02:40 PM »
It also seems premature to value some of these travel/restaurant/retail companies near their pre-pandemic EVs, considering their share dilution, their excess and suboptimal leverage, higher interest expenses and ratings downgrades, backlog of deferred capital spending, the much-changed unemployment picture, and their reductions in employees.

The short-term play might be a bear spread.

MustacheAndaHalf

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Re: An experiment
« Reply #211 on: December 18, 2020, 08:28:30 AM »
I took a very tiny part of my portfolio back in Aug/Sept, and invested in short-term put options.  I "bet" on increasing Covid cases causing stores to lock down.  Instead, governors and people ignored the situation, defying previous behavior.  That loss taught me even if I predict rising cases (like you're mentioning for Jan/Feb), I can't predict people's reactions to rising cases.

Note the retail ETF doesn't represent all retail stocks, with it's 37% YTD gain.  There's the stocks in this experiment, which according to Morningstar are all down:
DIN -19%, M -36%, DXPE -41%

There's other stocks like CCL (Carnival Cruises) down -56% YTD.  Investing in these stocks carries two benefits, in my view: big gains in a recovery, of course.  And if there's overvaluation going on, these stocks are unlikely to have that problem.

So far today, the experiment seems to share some of my optimism, up +19% against it's benchmark.  Too bad I can't swap DIN for CCL!

Benchmark (VTI)   50.00%                              
Experiment   69.00%   (   DIN   77.00%   /   M   62.00%   /   DXPE   68.00%   )

MustacheAndaHalf

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Re: An experiment
« Reply #212 on: December 23, 2020, 09:55:30 AM »
What a biased update on my part - no updates Friday, Monday or Tuesday when Covid-sensitive stocks were sinking much faster than the market.  Some of those drops were mitigated by today's gains, leaving the experiment +16% ahead:

Benchmark (VTI)   51.00%                              
Experiment   67.00%   (   DIN   77.00%   /   M   64.00%   /   DXPE   60.00%   )

Here's today's numbers so far:
VTI +0.48% , DIN + 0.56% , M +7.80% , DXPE +3.57%
Averaging DIN/M/DXPE gives me a +3.98% rise today, versus +0.48% benchmark.
So yesterday, subtracting today's gains, the experiment was probably 16 - 3.5 = +12.5% ahead of it's benchmark.

There's some media attention to Trump's veto, as if Congress didn't have a huge majority when they passed the bill.  If Congress simply votes the same way again, they can easily override the veto.  With pressure of the looming government shutdown, that seems likely.

Tigerpine

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Re: An experiment
« Reply #213 on: December 23, 2020, 09:56:57 AM »
There's some media attention to Trump's veto, as if Congress didn't have a huge majority when they passed the bill.  If Congress simply votes the same way again, they can easily override the veto.  With pressure of the looming government shutdown, that seems likely.

I read something that the concern isn't about whether the veto would get overridden so much as to how long that might take.  The article I saw said it could take several weeks.

MustacheAndaHalf

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Re: An experiment
« Reply #214 on: December 24, 2020, 12:22:15 PM »
There's some media attention to Trump's veto, as if Congress didn't have a huge majority when they passed the bill.  If Congress simply votes the same way again, they can easily override the veto.  With pressure of the looming government shutdown, that seems likely.
I read something that the concern isn't about whether the veto would get overridden so much as to how long that might take.  The article I saw said it could take several weeks.
That makes sense.  The Senate is off from Dec 21-31, so that's at least one week right there.  Looks like they plan to start again on Jan 3.
https://www.senate.gov/legislative/2020_schedule.htm
https://www.rollcall.com/2020/12/22/senate-circulates-2021-calendar/

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Maybe that delay is having an impact, as the experiment dropped 2% today in the half day session, and is now +14% ahead of it's benchmark.

Benchmark (VTI)   50.00%                              
Experiment   64.00%   (   DIN   66.00%   /   M   61.00%   /   DXPE   66.00%   )

MustacheAndaHalf

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Re: An experiment
« Reply #215 on: December 29, 2020, 06:46:12 AM »
Back up slightly, with the experiment 17% ahead.

Benchmark (VTI)   51.00%                                 
Experiment   68.00%   (   DIN   63.00%   /   M   75.00%   /   DXPE   65.00%   )

I've been holding two possibilities in mind when I invest for the next 2 months.  First, Thanksgiving didn't produce a spike in cases and recently cases peaked Dec 23 (*).  So it's possible things get better from here, and investing now is the best choice.  The second possibility is that Christmas will increase the spread of Covid.  Airline travel is relatively higher, and people planning to drive for the holidays is up closer to normal years.  There's certainly enough people traveling to trigger more community spread.

I think the second scenario is more likely, but I've still been buying some investments recently in case this is the low point of the market.

(*) A huge drop on Dec 25 was followed by a large jump on Dec 26.  I assume people didn't get tested on Christmas day.  If you average Dec 25-26 together, it's a decline from Dec 23.

ChpBstrd

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Re: An experiment
« Reply #216 on: December 29, 2020, 09:05:50 AM »
Back up slightly, with the experiment 17% ahead.

Benchmark (VTI)   51.00%                                 
Experiment   68.00%   (   DIN   63.00%   /   M   75.00%   /   DXPE   65.00%   )

I've been holding two possibilities in mind when I invest for the next 2 months.  First, Thanksgiving didn't produce a spike in cases and recently cases peaked Dec 23 (*).  So it's possible things get better from here, and investing now is the best choice.  The second possibility is that Christmas will increase the spread of Covid.  Airline travel is relatively higher, and people planning to drive for the holidays is up closer to normal years.  There's certainly enough people traveling to trigger more community spread.

I think the second scenario is more likely, but I've still been buying some investments recently in case this is the low point of the market.

(*) A huge drop on Dec 25 was followed by a large jump on Dec 26.  I assume people didn't get tested on Christmas day.  If you average Dec 25-26 together, it's a decline from Dec 23.

There will definitely be an xmas bump, starting this week. The Thanksgiving bump peaked Dec. 11 or about 15 days after the gatherings. This would represent the many people infected by silent carriers at Thanksgiving dinner returning to work/restaurants/church and infecting people, followed by the next generation of infection after that (e.g. all the household/bubble members of those infected).

So I will call the xmas peak as occurring on January 9. HOWEVER, big caveat, then there will then be a New Year's peak on Jan. 15 and many red states will allow bars to open for New Year's. We've never had back-to-back big holidays like this during the pandemic, or with this high a percentage of the population walking around carrying the infection. Plus the 6 day span between xmas and New Year's is within the window for the silent carriers to be most infectious. So this peak could have a multiplier effect compared to Thanksgiving. I predict the US will exceed 400k infections a day. That means full hospitals and a higher death rate.

Will the COVID-sensitive stocks tank, or will they rally as vaccine distribution accelerates? Hard to say. I'll stick with the indexes and think about pouncing if the buying opportunity actually occurs. I'll have to look into doing a long straddle or strangle on the covid-sensitive companies, but I bet the market expects a big move too.

MustacheAndaHalf

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Re: An experiment
« Reply #217 on: December 29, 2020, 11:54:11 AM »
... First, Thanksgiving didn't produce a spike in cases ...
There will definitely be an xmas bump, starting this week. The Thanksgiving bump peaked Dec. 11 or about 15 days after the gatherings. This would represent the many people infected by silent carriers at Thanksgiving dinner returning to work/restaurants/church and infecting people, followed by the next generation of infection after that (e.g. all the household/bubble members of those infected).
...
I use two different criteria at different times, and might not have explained them clearly:
(1) as cases are increasing, I look at week over week growth.  With 10% growth, you'll see cases rise (1000, 1100, 1210, ...), but the exponential spread would be constant at 1.1x per week.
(2) peak number of cases is a big media event.  It shows the current wave has peaked and people can expect lower growth and slower spread until the next wave.

So after Thanksgiving, I'd be looking for a growth spike.  California had steady growth for the week after Thanksgiving, and only saw faster growth after that.  New York went from 6.8% to 8.3% growth, while Texas went in the opposite direction from 8.5% to 6.1% in those 7 days.  By size I guess Florida would be next, 6.2% to 5.9%.

Also worth mentioning: people can ignore increased cases.  I correctly predicted a wave several months ago ... and the stock market shrugged it off, until after my speculative options expired.  A prediction also needs to include people's behavior, which then translates to the stock price moves.

Something else to keep in mind: the market knows Xmas and New Year's could be a disaster.  That should be priced in, to some probability.  If things are worse than expected, or as they become more certain, stocks will drop.  If it's not as bad as expected, stocks can rise even as infections go up.

I don't know the percentage of people who show no symptoms for up to 8 days (time between Xmas and New Years), but I'd guess it's significant.  Another point in your favor: most people celebrate those two holidays with different groups of people.  So it's easy to pick it up with one group and spread it to another.

MustacheAndaHalf

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Re: An experiment
« Reply #218 on: January 02, 2021, 12:36:32 AM »
Since my Dec 24 update (about a week ago), DIN and DXPE both dropped, while Macy's pulled ahead.  Overall +11% ahead of the benchmark.

Benchmark (VTI)   51.00%                              
Experiment   62.00%   (   DIN   57.00%   /   M   69.00%   /   DXPE   61.00%   )

Two views of the Covid-19 data.  New cases are heading upwards, 12/27 - 12/31:
147k .. 164k .. 198k .. 225k .. 222k
The main news right now is the total cases passing 20M in the U.S.

But I like to divide the total cases by the total from 7 days prior.  If every case has a chance of spreading, the growth shows how quickly the corona virus spreads.  That measure of growth peaked at 10.5% (Dec 7-8), and is now near 7%.

Following wikipedia's reference leads me to a study from October:
"Among patients who are symptomatic, the median incubation period is approximately 4 to 5 days, and 97.5% have symptoms within 11.5 days after infection."
https://www.nejm.org/doi/10.1056/NEJMcp2009249

With large numbers of cases (150k+/day), it is very improbable that a spike could hide for 7 days after Dec 25th.  From the data I downloaded from John Hopkins, it looks like Dec 25th has not caused a surge.

MustacheAndaHalf

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Re: An experiment
« Reply #219 on: January 03, 2021, 09:43:47 AM »
Dr Anthony Fauci said spikes in cases usually take "a couple weeks" after the event.
https://www.nbcnews.com/meet-the-press/video/full-dr-fauci-it-likely-will-get-worse-in-the-next-couple-of-weeks-98718789839

I suspect he's trying to save lives, in which case he's right that people need to be careful for 2 weeks after an event (14 day incubation period).  Otherwise I don't understand why he's say a spike is not evidence for 2 weeks... maybe up to 2 weeks?  I should check what other epidemiologists or virologists say about it.

In the meantime, the data is starting to show faster growth in cases.  Here's the past 4 days of growth, measured against 7 days prior:
Dec 30 .. Jan 2 :  6.90% .. 6.98% .. 7.26% .. 7.56%

ChpBstrd

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Re: An experiment
« Reply #220 on: January 03, 2021, 09:50:22 PM »
Dr Anthony Fauci said spikes in cases usually take "a couple weeks" after the event.
https://www.nbcnews.com/meet-the-press/video/full-dr-fauci-it-likely-will-get-worse-in-the-next-couple-of-weeks-98718789839

I suspect he's trying to save lives, in which case he's right that people need to be careful for 2 weeks after an event (14 day incubation period).  Otherwise I don't understand why he's say a spike is not evidence for 2 weeks... maybe up to 2 weeks?  I should check what other epidemiologists or virologists say about it.

In the meantime, the data is starting to show faster growth in cases.  Here's the past 4 days of growth, measured against 7 days prior:
Dec 30 .. Jan 2 :  6.90% .. 6.98% .. 7.26% .. 7.56%

I initially (mistakenly) expected simple exponential growth, such as what happens if each carrier infects on average two more people (r=2) typically 3-5 days after infection: 2, 4, 8, 16, 32, 64, 128, 256... What has actually happened seems to be that the virus hits a few limiting factors as it spreads, and so the growth rate does not continue increasing forever:

1) The virus invades new territories, quickly infects the most risk-exposed, including, but not limited to, the reckless, and then spreads at a rapid rate to the next generation, a slower rate to the next generation, and a steady rate to the next - essentially moving down the tiers of risk-exposure. This all happens within a geographical area (e.g. NYC, the Dakotas). Exponential growth in any given area eventually slows as the population of highly-risk-exposed people is depleted and the virus must spread among the more careful, with a lower "r".

2) The virus spreads by penetrating "bubbles" or social/work networks and rapidly infecting people in those networks before growth slows. Fast growth only occurs when the virus infects a new set of bubbles/networks, which goes hand in hand with its movement to new geographic areas. As networks are infected, people in them reduce contact as they observe multiple cases among other people they know, thus slowing the spread. As people get more careful, the "r" lowers and there are fewer bridges between networks.

3) The virus spreads in waves as restrictions are enacted or relaxed, or as cultural behaviors such as restarting school after summer break, gathering for holidays, or the Sturgis rally occurs. Note that each wave has a behavioral/historical explanation or cause, that occurred a few weeks before cases really began to jump. Collective behavior drives the "r" value.

So the virus may face natural limiting factors including (1) the supply of risk-exposed people within any given geographic area, and (2) the informal lockdown of social/work networks after people become aware of multiple infections around them. Note that it would likely take several weeks to exhaust the supply of risk-exposed people in a given area, even if the average time to transmit the infection one generation was only 3-5 days. Also note that it would take a couple of weeks for people to realize others in their network are getting sick, and for them to reduce contact in time so that their own infection is the end of the line (r=0). Contact tracing attempts to speed information transfer so that factor #2 is increased, but most people aren't answering the phone.

So we're left with limiting factor #3. As Republican governors in Florida, the Dakotas, and the South have demonstrated, the pandemic will never get bad enough for them to close restaurants, ban superspreader religious events, or even mandate masks. Mayors have been more bold, despite the pushback, but apparently not bold enough. So January-February will see hundreds of thousands of deaths, but starting in late Feb. I would not be surprised to see a nationwide mask mandate and some herd immunity start to lower the "r". The herd immunity might be due to equal parts infection and vaccination though!

MustacheAndaHalf

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Re: An experiment
« Reply #221 on: January 04, 2021, 05:54:56 AM »
That's a really interesting explanation, and fits with the 2 week time frame.  It also explains why some have claimed herd immunity could be achieved with much lower numbers - the people most able to spread Coronavirus.  Besides the level of risk, there's also the number of contacts.  A risky person with no friends won't do as much harm as a slightly less risky person who sees a few dozen friends each week.

U.S. cases are on a steady path upwards.  Again comparing each day's cases to 7 days before, the past 4 days have been: 6.98% .. 7.26% .. 7.55% .. 7.80%

MustacheAndaHalf

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Re: An experiment
« Reply #222 on: January 05, 2021, 11:05:49 AM »
I can't explain the contract between yesterday's pessimism and today's optimism.  I checked Covid-19 data, but it hasn't been updated since I last checked.

The experiment has jumped to +20% ahead of it's benchmark.

Benchmark (VTI)   50.00%                                 
Experiment   70.00%   (   DIN   65.00%   /   M   70.00%   /   DXPE   74.00%)

ChpBstrd

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Re: An experiment
« Reply #223 on: January 05, 2021, 12:53:18 PM »
The UK and now Germany have gone full lockdown again.
Our existing vaccines may not work as well against the new South African variant: https://www.cbsnews.com/news/covid-vaccine-new-strain-south-africa/
Meanwhile, oil prices are rising, which is one of a handful of reasons to think inflation could rise this year.

The stock market can absolutely do its thing independent of the good or bad news, but if markets decide a Biden administration will do things like the UK and Germany are doing, we could have another big sell-off in the early spring.

MustacheAndaHalf

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Re: An experiment
« Reply #224 on: January 06, 2021, 06:27:46 AM »
Yesterday OPEC+ reached an agreement to not raise oil production until March, which helped oil stocks push higher.  If oil prices are rising with production constant, it means demand is picking back up.  To the extent demand means the world economy is opening back up, I view it as positive.

Until new corona virus variants have a known impact on vaccine efficiency, the impact can't be determined.  Moderna's vaccine can lose a lot of efficiency, and still be good enough to provide herd immunity.

The Georgia Senate race hasn't been called yet, but it's possible both Democrats will win, giving a tie in the Senate (broken by the Democrat's Vice President).  So that possibility multiplied by tax law changes might get priced into the markets today.

Down to beating the market by 18%:

Benchmark (VTI)   50.00%                              
Experiment   68.00%   (   DIN   66.00%   /   M   71.00%   /   DXPE   68.00%)

MustacheAndaHalf

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Re: An experiment
« Reply #225 on: January 06, 2021, 06:55:58 AM »
My experiment here, and my personal performance, have diverged widely.  I sampled some stocks from my high risk account back in March, and kept the same holdings.  The experiment is beating the market by +18%, but my high risk account is beating the market by an insane amount.  There's a huge gap (fortunately for me).

I wonder if I can make the experiment correspond to my results more, but my purchases happened over 4 months ago.  I bought long-dated Macy's call options out of the money, and they've moved to deep in the money.  Leveraged options beat the stock, but the experiment tracks one and my account holds the other.

I found a more beaten up restaurant stock than DIN, so I sold DIN and switched investments (and again used long-dated call options).  DIN will probably perform well, but I no longer own it.

I still have DXPE stock in my portfolio.  But it's value is far less than my Macy's call options, and less than the restaurant call options that replaced DIN.  So even when my portfolio holds the same thing as the experiment, the proportions are off.

I wish Vanguard had a way to just reveal portfolio performance percentage over the past 1 year, without any other information.  But being an audience of one, I doubt there's much demand for that.  So I guess I'll remain excited by my personal investing and shrug when I see the experiment's relatively lesser success.

alcon835

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Re: An experiment
« Reply #226 on: January 06, 2021, 07:17:19 AM »
I agree with you on Vanguard. It's really hard to track real growth over a specific time period without creating a ton of personalized spreadsheets. I'm finally biting the bullet and just doing the spreadsheets, but it's frustrating that it's necessary.

ChpBstrd

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Re: An experiment
« Reply #227 on: January 06, 2021, 09:23:09 AM »
Personal Capital has a function that can do this for you. It'll also tell you at a click which indexes you are beating/lagging, and by how much. And most importantly, I believe this excludes deposits/withdraws.

MustacheAndaHalf

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Re: An experiment
« Reply #228 on: January 06, 2021, 09:30:52 AM »
Vanguard has a "Personal Performance" graph that's interesting, with an annualized performance if you select 1 year.  But that reveals other account information, not just performance.  Also, it seems to only include the prior month end data.

---
The growth rate in Covid-19 cases seems to be leveling off.  For Jan 2021 so far:
7.26% .. 7.55% .. 7.80% .. 7.81% .. 7.87%
From Jan 1-3, the rate of growth was increasing.  From Jan 3-5, it seems to be leveling off.  I don't have more recent data, yet, but from those 1.5 weeks after Dec 25th, I don't see a spike.

Earlier I posted before the market opened, and it has been dramatic since then.  The experiment is now +28% ahead of the overall market.

Benchmark (VTI)   52.00%                              
Experiment   80.00%   (   DIN   75.00%   /   M   83.00%   /   DXPE   82.00%   )

alcon835

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Re: An experiment
« Reply #229 on: January 06, 2021, 10:24:17 AM »
I've also found that Personal Capital's personal performance feature is pretty unreliable. Adding a large chunk of money to an account especially messes it up something awful and makes the returns dive deep into the negative. It's good for accounts that I'm not adding too, though.

MustacheAndaHalf

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Re: An experiment
« Reply #230 on: January 06, 2021, 12:24:08 PM »
If you select "Personal Return" on the Vanguard menu (middle bottom), and pick "1 year", you should get an accurate picture of your 2020 investing performance.  Vanguard tracks withdrawals and seems to exclude that money from performance.

"YTD" is this week, during which time the benchmark has moved 2% higher, while the experiment has gained 26%.  Although the markets haven't closed yet, it seems worth an update: the experiment is beating it's benchmark by 35%.

Benchmark (VTI)   53.00%                              
Experiment   88.00%   (   DIN   84.00%   /   M   92.00%   /   DXPE   89.00%   )

MustacheAndaHalf

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Re: An experiment
« Reply #231 on: January 08, 2021, 09:15:12 AM »
Nearing the end of the week, and the experiment has dropped to +28% ahead of it's benchmark.

Benchmark (VTI)   55.00%                              
Experiment   83.00%   (   DIN   75.00%   /   M   88.00%   /   DXPE   86.00%   )

Some of the call options I hold are very thinly traded, which makes me reluctant to reveal them.  I think that's one of the reasons I didn't change the experiment to fit with my change in investments.  A lot of people own Macy's $8 call options now, but when I bought, it was a much smaller crowd.

In another thread I predicted Macy's ($12.50/sh now) would hit $14/sh this year.  Translated to the experiment, I'm predicting "M 111%" to show up some time in 2021.

MustacheAndaHalf

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Re: An experiment
« Reply #232 on: January 12, 2021, 10:48:49 AM »
The experiment is beating the market by 37%.

Benchmark (VTI)   54.00%                              
Experiment   91.00%   (   DIN   86.00%   /   M   93.00%   /   DXPE   93.00%   )

Measuring total Covid-19 cases against 7 days prior (Sat vs Sat, Mon vs Mon), there's an +8.3% growth during each of the past 3 days.  While that's worse than before Christmas Day, it's now 2 weeks after New Years and the growth looks stable.  In the past, I've seen this happen before the growth rate starts falling.

MustacheAndaHalf

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Re: An experiment
« Reply #233 on: January 16, 2021, 04:37:42 AM »
Pretty good gain since last week's +28% beat.  The experiment is now beating it's benchmark by +40%.

Benchmark (VTI)   53.00%                              
Experiment   93.00%   (   DIN   90.00%   /   M   95.00%   /   DXPE   92.00%   )

The stalled Covid growth rate has started dropping, to 7.75% (versus over 10% a month ago), so that's a sign of hope.  The slow vaccine rollout isn't a good sign, but that situation will become more clear from watching the new administration take over.

The experiment's restaurant, retail and supply chain stocks are still down from 1 year ago, and recovery to their old prices (if possible) is still about +65% away.  Compare that with the benchmark's 5 year average of 15%, and the experiment has the edge.  (That 5 year number is the most optimistic I could find)

ChpBstrd

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Re: An experiment
« Reply #234 on: January 19, 2021, 01:02:23 PM »
If you were to start all over again selecting pandemic-sensitive stocks based on today's prices and news, would DIN, M, and DXPE still be your picks?

Quite frankly, DRI and other restaurant stocks are suddenly more expensive than pre-pandemic. Airlines and cruise lines still have room to go until they again attain 2019 levels, but then again a lot more of them issued shares and increased leverage during 2020, so they probably shouldn't. Retail stocks like M and DDS may be experiencing a short squeeze.

BA? ERJ? JNJ (one-shot vaccine pending approval)? Healthcare REITs which have been beaten up today? XLE?

MustacheAndaHalf

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Re: An experiment
« Reply #235 on: January 20, 2021, 08:27:12 AM »
Interesting, redoing the experiment today... I'd pick the stocks still down a lot, that should do well in a recovery.  DIN is -15.5% , Macy's (M) -26.0%, and DXPE -29.6%.

I'd probably switch to OXY -47.9% / CCL -58.7% / SAVE -35.2%.  SAVE might go up +50% ... the others might double ... then you add leveraged call options.

Their share prices are surprisingly similar, so I might aim for call options with strike prices in the $10/sh to $12.50/sh range, expiring 2023.  I want the most leverage for the lowest breakeven.  I'd probably get around 1.5x to 2.0x leverage, using deep in the money calls.

But instead I'm tracking this experiment (M / DXPE / DIN):

Benchmark (VTI)   56.00%                              
Experiment   95.00%   (   DIN   97.00%   /   M   87.00%   /   DXPE   100.00%   )

Oh, one big advantage of these 3 stocks: it's low effort to track.  There's google sheets with a stock lookup that automatically updates prices (on a 15 min delay).  So I can just copy/paste updates.  With call options, I have to make guesses - the last trade was weeks ago, so which price in the bid-ask range do I use?  Definitely not automated.

The experiment is keeping +39% ahead of it's benchmark, the U.S. total stock market.

MustacheAndaHalf

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Re: An experiment
« Reply #236 on: January 22, 2021, 09:48:44 AM »
Based on which stocks are falling, I think the market is being driven by fears of a lockdown, while President Biden talks about a war on the pandemic.  But looking at the 7 day growth in total cases, I think the market is wrong.  That growth is in free fall, and some day soon I expect to see news stories about fewer daily cases.  That should translate into a rebound for stocks.

Benchmark (VTI)   56.00%                              
Experiment   92.00%   (   DIN   96.00%   /   M   85.00%   /   DXPE   95.00%   )

The experiment is more impacted by fears of a lockdown, which leaves it +36% ahead of it's benchmark.  If you see news stories about fewer cases ... remember you read it here, before it happened.  :)

alcon835

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Re: An experiment
« Reply #237 on: January 22, 2021, 06:46:52 PM »
I agree with you on this one. The vaccine is working. It reports to be effective against the new UK variant. People who get one variant don't seem to every get it again except in extremely rare circumstances.

Things are moving in the right direction and they'll continue to get better the only question now is, how fast can we move?

All that to say, I am 100% on board with you. The drop this week was based on unfounded fears.

MustacheAndaHalf

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Re: An experiment
« Reply #238 on: January 22, 2021, 07:22:51 PM »
My favorite place to be is on the side of experts, against the market.  Dr Fauci spoke and answered questions yesterday after the stock market closed, and said:

"However, when you look more recently at the seven-day average of cases — remember, we were going between 300,000 and 400,000, and 200,000 and 300,000.  Right now, it looks like it might actually be plateauing in the sense of turning around."
https://www.whitehouse.gov/briefing-room/press-briefings/2021/01/21/press-briefing-by-press-secretary-jen-psaki-january-21-2021/

In the markets, the experiment started the day with losses, but then recovered, leaving it +41% ahead of the U.S. Total Stock market in the past 10 months.

Benchmark (VTI)   56.00%                              
Experiment   97.00%   (   DIN   100.00%   /   M   93.00%   /   DXPE   96.00%   )

One cool thing: when the experiment started I posted the gains before the experiment started of +80% for DIN stock, and claimed during the experiment it could still double.  DIN is now the first stock in the experiment to double - but the other two are close behind.

ChpBstrd

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Re: An experiment
« Reply #239 on: January 22, 2021, 08:36:59 PM »
Based on which stocks are falling, I think the market is being driven by fears of a lockdown, while President Biden talks about a war on the pandemic.  But looking at the 7 day growth in total cases, I think the market is wrong.  That growth is in free fall, and some day soon I expect to see news stories about fewer daily cases.  That should translate into a rebound for stocks.

Benchmark (VTI)   56.00%                              
Experiment   92.00%   (   DIN   96.00%   /   M   85.00%   /   DXPE   95.00%   )

The experiment is more impacted by fears of a lockdown, which leaves it +36% ahead of it's benchmark.  If you see news stories about fewer cases ... remember you read it here, before it happened.  :)

I get the sense the market doesn't care how many people get infected or die, it cares about whether businesses are forced to shut down. Given that Biden would like to defeat COVID ASAP, he might throw everything at it even as it declines. Never too late to save another 100,000 lives. We still have at least 300k-400k deaths to go, even as vaccines roll out.

The market also cares about whether another stimulus bill passes. I suggest keeping an ear to the ground on this topic, not so much the virus.

UnleashHell

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Re: An experiment
« Reply #240 on: January 23, 2021, 05:14:15 AM »
The market is more interested in where the money goes. As an older population is more at risk from covid then people dying out in the over 60 group tend to have more money but less spending. Less SS and other government money then gets paid out and the funds those people had will be passed down to a spendier and younger generation.
The market would react positively to this surely?
If covid gets cleared up then more people go back to spending which is also good for the market.
Looking forward its a win for the markets either way.

MustacheAndaHalf

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Re: An experiment
« Reply #241 on: January 24, 2021, 10:24:37 AM »
Based on which stocks are falling, I think the market is being driven by fears of a lockdown, while President Biden talks about a war on the pandemic.  But looking at the 7 day growth in total cases, I think the market is wrong.  That growth is in free fall, and some day soon I expect to see news stories about fewer daily cases.  That should translate into a rebound for stocks.

Benchmark (VTI)   56.00%                              
Experiment   92.00%   (   DIN   96.00%   /   M   85.00%   /   DXPE   95.00%   )

The experiment is more impacted by fears of a lockdown, which leaves it +36% ahead of it's benchmark.  If you see news stories about fewer cases ... remember you read it here, before it happened.  :)

I get the sense the market doesn't care how many people get infected or die, it cares about whether businesses are forced to shut down. Given that Biden would like to defeat COVID ASAP, he might throw everything at it even as it declines. Never too late to save another 100,000 lives. We still have at least 300k-400k deaths to go, even as vaccines roll out.

The market also cares about whether another stimulus bill passes. I suggest keeping an ear to the ground on this topic, not so much the virus.
I agree I missed that in my market analysis, and it's important.  Some of Friday's drop reflected prospects for a smaller stimulus bill.  I can't do much to predict that, except expecting some deadlock.

But at some point, I expect the news to cover falling numbers of cases.  By limiting the length of the current wave of inflections, it foreshadows higher economic activity and I expect will boost stocks.  I haven't tried to extrapolate, but it looks like something that could happen in days - possibly on the weekend, when it's too late to invest.  If I'm wrong, I'll have a longer wait.  Down days also make the time value of call options cheaper, which I like.

I hope we don't rely on stock markets to do our caring for us, but agree they don't care about deaths.  The markets are more about incorporating numerical information.  If the markets dropped in direct proportion to the percentage of Americans who died, that percentage would be 0.1%.  So even if markets cared, the impact might be smaller than we expect.

MustacheAndaHalf

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Re: An experiment
« Reply #242 on: January 25, 2021, 09:29:29 AM »
Wow, a +10% jump from Friday's close, putting the experiment +51% ahead of it's benchmark.  Macy's had the biggest jump, and has now more than doubled since the experiment began.  DXPE, all eyes on you...

Benchmark (VTI)   55.00%                              
Experiment   106.00%   (   DIN   105.00%   /   M   122.00%   /   DXPE   90.00%   )

After jumping +15% so far today, Macy's winds up within 10% of it's price from a year ago.  That sounds like an over-reaction to me, plus I want to start unwinding my positions as the recovery happens.  So I sold 1/5th of my Macy's call options today, slightly before the peak (I'm always early...).  It looks like the market agrees, as that initial 15% to 17% gain has slipped to a +13.5% gain.  So, probably a good move considering my objectives and the conditions.

FrugalFukuoka

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Re: An experiment
« Reply #243 on: January 25, 2021, 09:45:30 PM »
CCL down though with executives selling part of their stock. Are you still optimistic about their recovery? It's an interesting industry, they were hit hard with COVID infected ships isolated in harbors for weeks, but on the other hand, if they can confirm that passengers/crew are all COVID free/vaccinated it could be one of the first industries in tourism back up and running.

UnleashHell

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Re: An experiment
« Reply #244 on: January 26, 2021, 04:41:15 AM »
CCL down though with executives selling part of their stock. Are you still optimistic about their recovery? It's an interesting industry, they were hit hard with COVID infected ships isolated in harbors for weeks, but on the other hand, if they can confirm that passengers/crew are all COVID free/vaccinated it could be one of the first industries in tourism back up and running.

SAGA cruise (aimed at the 50 and over cruiser) has come out and said it'll do cruises only for those with a vaccine. Worth keeping an eye on that and see how it pans out. I could see other cruise lines allocating ships the same way to get up an running.

MustacheAndaHalf

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Re: An experiment
« Reply #245 on: January 26, 2021, 07:21:56 AM »
CCL down though with executives selling part of their stock. Are you still optimistic about their recovery?
I view CCL as a Covid stock that responds strongly to vaccine news.  Right now there's vaccine delays in Europe and problems with distribution in the U.S., neither of which is good for CCL.  They plan to put ships in dry dock until November 2021, which is longer than expected - but maybe those plans can change with time.  Here's the counter argument to my view:
https://www.fool.com/investing/2021/01/25/why-norwegian-cruise-carnival-corporation-and-roya/

That leaves CCL stock down -57% from a year ago, so I invest on the theory they make a significant recovery from here.  In a full recovery they'd gain +132%, and even if they've lost 1/3rd of their revenue permanently (why?), they'd gain +50% from here.  Those dry dock plans are 10 months away, which means plenty of time to change them if the company's predictions are proven wrong.

SAGA cruise (aimed at the 50 and over cruiser) has come out and said it'll do cruises only for those with a vaccine. Worth keeping an eye on that and see how it pans out. I could see other cruise lines allocating ships the same way to get up an running.
Yesterday SAGA.L, RCL and CCL dropped 5%, which is more evidence the drop wasn't related to CCL stock.  Still, it might take longer for a recovery than I expect, so we'll see.

ChpBstrd

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Re: An experiment
« Reply #246 on: January 26, 2021, 07:38:45 AM »
CCL down though with executives selling part of their stock. Are you still optimistic about their recovery?
I view CCL as a Covid stock that responds strongly to vaccine news.  Right now there's vaccine delays in Europe and problems with distribution in the U.S., neither of which is good for CCL.  They plan to put ships in dry dock until November 2021, which is longer than expected - but maybe those plans can change with time.  Here's the counter argument to my view:
https://www.fool.com/investing/2021/01/25/why-norwegian-cruise-carnival-corporation-and-roya/

That leaves CCL stock down -57% from a year ago, so I invest on the theory they make a significant recovery from here.  In a full recovery they'd gain +132%, and even if they've lost 1/3rd of their revenue permanently (why?), they'd gain +50% from here.  Those dry dock plans are 10 months away, which means plenty of time to change them if the company's predictions are proven wrong.

SAGA cruise (aimed at the 50 and over cruiser) has come out and said it'll do cruises only for those with a vaccine. Worth keeping an eye on that and see how it pans out. I could see other cruise lines allocating ships the same way to get up an running.
Yesterday SAGA.L, RCL and CCL dropped 5%, which is more evidence the drop wasn't related to CCL stock.  Still, it might take longer for a recovery than I expect, so we'll see.

IDK. According to this source there are 46% more CCL shares outstanding now than there were in Feb. 2020. Additionally, CCL has lots more debt. In that light, investors are pricing a money-bleeding gamble with negative $3B FCF today at close to the same as they were pricing a profitable corporation with no liquidity questions back then.

https://ycharts.com/companies/CCL/shares_outstanding

MustacheAndaHalf

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Re: An experiment
« Reply #247 on: January 26, 2021, 08:15:32 AM »
CCL down though with executives selling part of their stock. Are you still optimistic about their recovery?
I view CCL as a Covid stock that responds strongly to vaccine news.  Right now there's vaccine delays in Europe and problems with distribution in the U.S., neither of which is good for CCL.  They plan to put ships in dry dock until November 2021, which is longer than expected - but maybe those plans can change with time.  Here's the counter argument to my view:
https://www.fool.com/investing/2021/01/25/why-norwegian-cruise-carnival-corporation-and-roya/

That leaves CCL stock down -57% from a year ago, so I invest on the theory they make a significant recovery from here.  In a full recovery they'd gain +132%, and even if they've lost 1/3rd of their revenue permanently (why?), they'd gain +50% from here.  Those dry dock plans are 10 months away, which means plenty of time to change them if the company's predictions are proven wrong.

SAGA cruise (aimed at the 50 and over cruiser) has come out and said it'll do cruises only for those with a vaccine. Worth keeping an eye on that and see how it pans out. I could see other cruise lines allocating ships the same way to get up an running.
Yesterday SAGA.L, RCL and CCL dropped 5%, which is more evidence the drop wasn't related to CCL stock.  Still, it might take longer for a recovery than I expect, so we'll see.

IDK. According to this source there are 46% more CCL shares outstanding now than there were in Feb. 2020. Additionally, CCL has lots more debt. In that light, investors are pricing a money-bleeding gamble with negative $3B FCF today at close to the same as they were pricing a profitable corporation with no liquidity questions back then.

https://ycharts.com/companies/CCL/shares_outstanding
Wow, thanks for referring to that amazing website.  Months ago I recall trying to track down the amount of dilution, but giving up after paging through the SEC filings on CCL.  That's a much easier way to view it.

I see CCL had about 0.7B shares before Covid-19, and then diluted those owners by increasing the total shares in circulation to 1.1B.  That means prior prices should be adjusted to 63% of their original prices when comparing to present share prices.  Pre-Covid, that turns $43/sh into $27/sh.  So in a full / diluted recovery, the stock gains +41% from here, which is much less interesting.

FrugalFukuoka - Is this the selling by insides you meant, back in November?  As the stock surged, CCL dumped shares on the market.

Since this is a thread to track my investing experiment, I try not to go back and edit posts.  But my prior post has numbers that seem way too optimistic given the data from ycharts that ChpBstrd provided.

I really, really should have sold some when the vaccine news first appeared!  I knew there would be an over-reaction, and CCL stock went up +40% or so that day, with options rising more than double that.  Too bad I didn't know about the dilution then, which would be more evidence to sell some of my position.

Worth noting: Macy's did not dilute their stock, and instead issued bonds.  I'll be looking at various stocks to see how they measure up in ycharts.  Thanks again for the link, ChpBstrd.

FrugalFukuoka

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Re: An experiment
« Reply #248 on: January 26, 2021, 05:20:28 PM »
FrugalFukuoka - Is this the selling by insides you meant, back in November?  As the stock surged, CCL dumped shares on the market.

Something I read yesterday in below's article. However, as other cruise stocks across the line slumped; might be unrelated as you said.

https://www.barrons.com/articles/carnival-stock-is-slumping-and-executives-are-selling-stock-51611353278

MustacheAndaHalf

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Re: An experiment
« Reply #249 on: January 27, 2021, 08:39:59 AM »
See if you can spot the outlier in the experiment.

Benchmark (VTI)   54.00%                              
Experiment   116.00%   (   DIN   105.00%   /   M   168.00%   /   DXPE   75.00%   )

The experiment is currently +62% ahead of it's benchmark, thanks to the middle stock in that group.  I'll probably sell some more call options today, since Macy's is fully recovered (+10% in 12 months)