Post by: Shor on January 23, 2017, 10:55:25 AM
This thread is for those of you that got drawn in to the world of picking out stocks. Whether that means buying up stocks, trading options, or hoping X event will happen to cause Y to go up/down sideways. Lay out your Mustachian Sins here!
I want to start this thread because I fully intended to head in to 2017 converting my 'fun money' account in to a Vanguard fire-and-forget index account.
But today, I just triggered a stock trade. Oops.
I'm going to lay out the trade, so that you all can laugh / facepunch / trade against me. Perhaps peer pressure and some accountability will make me think twice before I trade again!
Post by: Shor on January 23, 2017, 11:03:33 AM
Qualcomm (QCOM) opened up 7.5 (~12%) points down today on some lawsuit disputes with Apple.
Trade:
Bought 100 QCOM @ $54.91
Sold 1x 65.0 Jan 19 Call @ $2.26
Bought 2x 50.0 Mar 17 Put @ $1.03
Started a position, set down a sell for 1 year later at a 1k profit + dividend,
put covers short term insurance in case of further price depreciation as more news comes out.
Post by: Fishfindr on January 23, 2017, 11:56:15 AM
Post by: ChpBstrd on January 23, 2017, 12:08:21 PM
I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.
Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.
Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!
Post by: Shor on January 23, 2017, 12:43:03 PM
If you absolutely have an active trading itch, you could always sell monthly OTM cash-covered puts on a "keeper" ETF until you accidentally buy it on a dip. Then commit to hold.Oooh, that's good advice! That would satisfy the market timing itch and at least put the money in to 'that thing I want to eventually have' over time, rather than waiting until I'm totally liquidated.
I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.
Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.
Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!
I could be wrong, but you seem to be questioning the decision you made by stock picking vs more risk adverse methods of investment. You can always sell now and put a little change in your pocket and move forward with your pre-determined plans for 2017.This is true. But, some people buy cars, other people buy dogs... I buy shares of corporate stock as a hobby..
My 401k and t IRA money is all VTSAX, so I'm not completely out of participation in the general market, but moving the fun money from 'active trading' in to a single index takes more mental triggers than I seem capable of hitting at this moment. So for now, I'm just trying to curb the behavior by forcing it out in to the open like this.
Post by: ChpBstrd on January 23, 2017, 02:12:15 PM
If you absolutely have an active trading itch, you could always sell monthly OTM cash-covered puts on a "keeper" ETF until you accidentally buy it on a dip. Then commit to hold.Oooh, that's good advice! That would satisfy the market timing itch and at least put the money in to 'that thing I want to eventually have' over time, rather than waiting until I'm totally liquidated.
I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.
Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.
Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!I could be wrong, but you seem to be questioning the decision you made by stock picking vs more risk adverse methods of investment. You can always sell now and put a little change in your pocket and move forward with your pre-determined plans for 2017.This is true. But, some people buy cars, other people buy dogs... I buy shares of corporate stock as a hobby..
My 401k and t IRA money is all VTSAX, so I'm not completely out of participation in the general market, but moving the fun money from 'active trading' in to a single index takes more mental triggers than I seem capable of hitting at this moment. So for now, I'm just trying to curb the behavior by forcing it out in to the open like this.
The trick would be to make a rule binding yourself to never sell the asset or write covered calls on the asset after you have been assigned. Write this rule down on a piece of paper, sign it, and put it somewhere you can find it. You can only "play again" by depositing new money. In this way, you might be able to convert a very costly itch into a savings motivator. After all, your savings rate determines wealth accumulation much more so than defying gravity to earn a couple extra points of ROI. Build a spreadsheet to see the effects, if you haven't already.
The other thing I worry about is executing this low-volatility strategy in an era that by all signs will be marked by trade wars and increasing inflation. Still, I can console myself with the knowledge that the strategy lowers my cost basis even if markets spend the next few years dropping.
Post by: theolympians on January 25, 2017, 07:25:03 PM
Post by: Mr Mark on January 25, 2017, 11:08:35 PM
I'm totally sympathetic. Active trading and stock picking can be fun, and you seem to be enjoying it!
I often play a bit of texas hold em at my local casino. I really like playing poker and I seem to make a pretty reliable $25/hr on average. Sure, sometimes probability kicks me into a big losing hand, or I just don't play well enough. Meh.
I think the same rules apply to all this fun stuff:
- only do it with a tiny % of your 'stach and even then the remaining 'stach should be sufficient for all your foreseeable needs. This is obviously not an activity for the rent money.
- keep track of your performace against a benchmark. Be honest with yourself. Decide how much underperformace is worth the entertainment element, and if it gets worse than that, stop.
- if you get a string of losses, don't double down or take more and more 'play money' from the 'stach.
- have a strategy, not just blind gambling
Good luck! Over the short term there is a significant chance you will be able to beat the market. Enjoy the ride and keep sharing - that way we get some vicarious pleasure for free.
Post by: chasesfish on January 26, 2017, 05:14:29 AM
Here are the returns below now that I've had the account for five full years. Last year was a good year, but I'm still not significantly above the S&P on a five year basis.
My Account
1-Year 3-Year 5-Year
+24.18% +14.62% +17.14%
S&P 500® Index
1 Year 3-Year 5-Year
+11.96% +8.87% +14.66%
Post by: beastykato on January 26, 2017, 10:19:14 AM
I actually had Qualcomm on my radar as well, but I never pulled the trigger. Lack of liquid funds for play investing at the moment.
I find this quite easy, I try to buy entire industries when they are getting all kinda negative hype. Oil being my most recent cash cow that paid for the new roof on my home last year.
The only time this hasn't worked out for me is with Uranium. I have been buying into Uranium ever since the Tsunami hit Japan and it's been getting a lot of movement lately with Trump coming into office. I'm hoping this pays some major dividends in the next decade or so.
Otherwise, I don't find this stock picking thing all that difficult, or I'm just getting lucky. I never play with more than 5% of my stash though and even then it's usually less. Definitely think indexing should be the backbone of most people's portfolio.
Post by: farmecologist on January 26, 2017, 10:33:21 AM
The biggest success ever came early this year. Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug. Company has since made a rebound and was just bought out for $24 a share. Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time. This stock had it all.
I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.
However, the dilemma now is that the account is becoming more than just a small 'play money' account! Currently holding quite a bit of cash while researching potential leads.
Post by: tomatops on January 26, 2017, 11:17:42 AM
I just was never much a fan of the Canadian indices. Very energy and financials heavy.
It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.
Foolish? Probably as last year I did not beat the TSX's amazing return.
But boy oh boy, it can be fun.
Post by: tomatops on January 26, 2017, 11:18:35 AM
I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index invest the S&P 500 and International Indices.
I just was never much a fan of the Canadian indices. Very energy and financials heavy.
It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.
Foolish? Probably as last year I did not beat the TSX's amazing return.
But boy oh boy, it can be fun.
Post by: Shor on January 26, 2017, 05:48:44 PM
What percentage of your assets do you own/trade in individual stocks? Its not inherently wrong, but you need to research and work and decide if its worth your time. I own mostly individual stocks in my taxable account, but I keep this activity to less than 20% of my portfolio.Wow, those are some impressive returns! I'm really just starting at this stock picking stuff. Is that all done off of realized gains? Single stock picks with a general strategy?
Here are the returns below now that I've had the account for five full years. Last year was a good year, but I'm still not significantly above the S&P on a five year basis.
My Account
1-Year 3-Year 5-Year
+24.18% +14.62% +17.14%
S&P 500® Index
1 Year 3-Year 5-Year
+11.96% +8.87% +14.66%
Only about 30k play money heading in to this. 200k other money in the 401k, IRAs and some after tax is all tied to the VTSAX or equivalent. That actually sounds like too much fun money as it is..
Worth my time? Hmm, I wouldn't put a price on my time for reading a book. I have moments of spare time at work. I could read news articles, comment on forums (oh..) or check out stocks. Would you say that if I wanted big gains that I should take this seriously and dedicate serious hours in to analyzing earnings reports? That would definitely require dedicated hours of time.
I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index the S&P 500 and International Indices.I hear ya, it can be super fun to follow along. Although I'm afraid that I might be falling in to the anchoring bias at times: "I paid $75 for this two weeks ago, so of course it's going to bounce back up!" I can definitely understand wanting to spread the money out so it's not all focused in particular sectors, especially ones that might be heavily disrupted under the wrong conditions.
I just was never much a fan of the Canadian indices. Very energy and financials heavy.
It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.
Foolish? Probably as last year I did not beat the TSX's amazing return.
But boy oh boy, it can be fun.
Shor,Thanks Mr Mark. I'm pretty sure, at this point in time, I am definitely relying on dumb luck, a good amount of the stache is tied to the market, and I'm not gambling with the rent money, but it's still rolling the dice on factors outside my control.
I'm totally sympathetic. Active trading and stock picking can be fun, and you seem to be enjoying it!
I often play a bit of texas hold em at my local casino. I really like playing poker and I seem to make a pretty reliable $25/hr on average. Sure, sometimes probability kicks me into a big losing hand, or I just don't play well enough. Meh.
I think the same rules apply to all this fun stuff:
- only do it with a tiny % of your 'stach and even then the remaining 'stach should be sufficient for all your foreseeable needs. This is obviously not an activity for the rent money.
- keep track of your performace against a benchmark. Be honest with yourself. Decide how much underperformace is worth the entertainment element, and if it gets worse than that, stop.
- if you get a string of losses, don't double down or take more and more 'play money' from the 'stach.
- have a strategy, not just blind gambling
Good luck! Over the short term there is a significant chance you will be able to beat the market. Enjoy the ride and keep sharing - that way we get some vicarious pleasure for free.
I heard that for people that are actually good at it, gambling on cards is definitely profitable, and free drinks to boot! ;)
I don't know where my underperformance limit is, that is definitely a bad thing, as right now, there's nothing concrete to keep the fun money separate from the serious money. I might throw more money after bad trades if the cash happens to be available. My plan going forward is to abstain from funding the fun money account any further this year, all extra cash will only go to index funds.
I will keep the sharing going for your pleasure:
Checked my phone about 5 times an hour today. Yesterday QCOM was up just a nudge to 56.85,(with options mostly cancelling out the difference)
and today it opened down, down 2.85, lower than I had started the position at.
Here are my positions @ purchase price: new price(total difference)
QCOM 100 @ $54.91: $54.05 (-86)
2x Mar 50 P @ $1.03: $0.78 (-50)
-1x Jan 65 C @ $2.26: $1.96 (+30)
Transaction costs: $-30
Well, it looks like today we are down about -$136 in total. The only way those puts will help at all is if the stock drops even further, generally they won't gain a lot of value unless the underlying price trades closer to the strike anyway. As it is, they would only really be worth selling below $51.50.
"Thoughts: if the market sees a huge drop for a stock, then that is probably not the best day to be buying puts with such high volatility priced in." is what I am thinking right now. But thinking back to the day of purchase, the stock had already dropped 12.5%!!! overnight, if it continued to drop further through the day, I would have been kicking myself for not buying the puts and trying to be "smart"
Meanwhile my Smuggy friend "John" is smugly texting me about his awesome Netflix pick of 2016. Damn you John! Dan you and your smuggy face!
I still have at least a month of price bouncing before we see if we want to take further action here.
Post by: chasesfish on January 27, 2017, 06:00:15 AM
I'm in the finance industry and the returns this year were much better than average because I bought and subsequently sold banks twice in 2015 when the stock prices went irrational (Oil concerns in January and Brexit in June). Ironically had I held them longer, I'd be 30% plus, I didn't see the post election rally coming.
Long-term, if you do the research and buy really good companies, you may be able to beat the indexes by a few percentages. My debate is my time is worth more than the research and I have to decide how much I enjoy it. The enjoyment goes in and out.
Post by: WallStreetPhysician on January 28, 2017, 04:00:12 AM
Hi there Mustachians!
This thread is for those of you that got drawn in to the world of picking out stocks. Whether that means buying up stocks, trading options, or hoping X event will happen to cause Y to go up/down sideways. Lay out your Mustachian Sins here!
I want to start this thread because I fully intended to head in to 2017 converting my 'fun money' account in to a Vanguard fire-and-forget index account.
But today, I just triggered a stock trade. Oops.
I'm going to lay out the trade, so that you all can laugh / facepunch / trade against me. Perhaps peer pressure and some accountability will make me think twice before I trade again!
Everyone will trade at one point or another, especially if they are passionate about investing like we are. I laid out MOD EDIT: Spam link removed. some suggestions if you do choose to trade, but most of all, you should be always trying to quit. Good luck!
Post by: Pizzabrewer on January 28, 2017, 05:37:03 AM
I've lost money in the past on biotechs with promising products that didn't pan out or were stymied by the arbitrary nonsense of the FDA (DVAX being the most galling example).
Trying to wean myself from the thrill of the chase as we become Mustachian.
Post by: Mr Mark on January 30, 2017, 12:42:29 AM
I'll share my trades too. I also got a little into picking last year after the market double dipped (Feb) and I was a bit disappointed with the index performance in my retirement account. I'm only trading within my IRA to avoid the vast ST capital gains and ordinary dividend exposure I was going to get of course ;-). First time messing with individual stocks since.... ooooh mid 90's.
So far it's working out OK.
*** Disclaimer: This is <<5% of my 'stach. It's play money, OK? YMMV The rest is all in sensible Vanguard index and mutuals, real estate and bonds***
Started by turning 5k of those IRA index funds into cash. Added 2016 contribution of $6500. So had 11.5k to play with. Knew oil could not stay at <$30 for very long and had been watching California Resources Corp [CRC] a while. It had been floated from Oxy at $10/share at end 2014. By early 2016 they'd collapsed to $1 and as I started buying, they headed south.... so I followed it down.
Bought
2/11 2000 CRC @ 0.94 -$1,897
2/16 2000 CRC @ 0.86 -$1,727
2/17 4000 CRC @0.62 -$2,507
2/18 1400 CRC @ 0.60 -$848
2/18 3000 CRC @ 0.60 -$1,803
3/28 1850 CRC @ 1.45 -$2,689
So ended up with 14250 shares at an average cost basis of $0.808 a share (incl commissions). They then did a 10 -1 reverse split, and there was talk they were waaaay too indebted. As oil rose, CRC went up too, but it was a super volatile ride with huge swings and lots of daily action tusselling between shorts & margin bulls. Got too risky for me, so decided to get my seed money back with a nice return locked in...
6/10 sold 7000 CRC (now 700) @$1.91 ($19.10) +$13,344
Shares started south again on rumours they were insolvent with their bonds trading at 60c to the dollar. Decided to close out of CRC & switch to Prudential as that had a nice dividend yield and looked pretty damn solid to me.
6/27 Sold 7250 CRC (now 725) @$1.495 ($14.95) +$10,833 (so got $1.70 average sale price, more than double investment in about 4 months and tax free - woohoo!)
6/27 Buy 150 PRU @74.56 -$11,191
6/29 Buy 180 PRU @70.94 -$12,776
So now into Prudential with an average share price of $72.67
9/15 +$231 PRU dividend!
Now decided to take some profit on PRU and looked spread it out a bit into a few other higher dividend blue chips, plus take a speculative long term bet on Lithium mining via an Aussie company called Orocobre with a newly commissioned Li brine operation in Argentina .
10/27 Sell 200 PRU @ 83.67 +$16,726
10/27 Buy 200 GIS @ 60.59 -$12,143
10/28 Buy 1700 OROCF @ 2.57 -$4,426
11/30 Sell 130 PRU @100.84 +$13,101
11/30 Buy 200 PFE @31.58 -$6,322
11/30 Buy 170 GSK at 38.89 -$6,618
12/15 +$91 PRU dividend!
Not a bad year. This month, added another $6,500 IRA contribution and diluted the General Mills, as the takeover bid I was hoping for hadn't happened and the stock seemed to be going nowhere. Time for big blue chip Dow Chemical and a nice little care home REIT called National Health Investments
1/20 Sell 100 GIS @ 61.48 +$6,141
1/20 Buy 50 NHI @ 74.19 -$3717
1/20 Buy 150 DOW @ 57.21 -$8588
So, that's where I am right now. All in all I'm very happy with the performance I got (so far) playing in the sandbox. I started with $11,500 in Feb and just added the extra $6,500. So total invested $18k, plus ~$900 of dividends through the year from the IRA mutual funds. Current state is:
150 DOW $9,197
100 GIS $6,272
170 GSK $6,584
50 NHI $3,678
1700 OROCF $6,093
200 PFE $6,284
Cash $1,221
Total $39,329
Now waiting for some dividends from the blue chips to roll in and then we'll see where we go. Hoping to get a bit more of a settled long term hold portfolio now, and look to take the cash balance and coming dividends and buy some more. Probably looking to add to the NHI.
It was a good year - well over a 100% ROI - had a lot of fun making some tax free $!
Post by: ChpBstrd on January 30, 2017, 08:50:51 AM
1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.
2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.
I did, however, tell you about my success selling puts on VB, didn't I?
Post by: Shor on January 30, 2017, 09:09:06 AM
A couple of caveats about discussions of stock-picking wins:However, at the onset every pick is a full conviction, sure thing winner. And over time that belief evaporates in the face of crushing reality. Putting it down here, and we can disclose our terrible trades while they still seem like good ideas :D
1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.
2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.
I did, however, tell you about my success selling puts on VB, didn't I?
For sure though, this belief that we can beat the market is usually stemming from the thought that quite possibly, the market can, at times, misprice things and take them too far.
Not to mention there is the one key human factor that brings all of us to the table in the first place: we're bloody bored! :D
Some people want to go zoom zoom, others blow money on an annual vacation, my entertainment is from gambling on stocks.
Coincidentally I also became the partial owner of a multi-billion dollar chip and tech industry... but that's just a perk. It was mostly just boredom.
Post by: ChpBstrd on January 30, 2017, 10:15:37 AM
A couple of caveats about discussions of stock-picking wins:However, at the onset every pick is a full conviction, sure thing winner. And over time that belief evaporates in the face of crushing reality. Putting it down here, and we can disclose our terrible trades while they still seem like good ideas :D
1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.
2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.
I did, however, tell you about my success selling puts on VB, didn't I?
For sure though, this belief that we can beat the market is usually stemming from the thought that quite possibly, the market can, at times, misprice things and take them too far.
Not to mention there is the one key human factor that brings all of us to the table in the first place: we're bloody bored! :D
Some people want to go zoom zoom, others blow money on an annual vacation, my entertainment is from gambling on stocks.
Coincidentally I also became the partial owner of a multi-billion dollar chip and tech industry... but that's just a perk. It was mostly just boredom.
I share that insight about boredom. I wish I could find something less destructive to my personal wealth and just sit in index funds like most successful mustachians. But goofing on my cell phone and reading bullshit media stories are all I get when life revolves around work and a small kid.
Unfortunately, paper trading doesn't provide the rush.
The right answer is to probably do some squats and push ups every time I'm tempted to gamble stocks.
Anyway, I'm quitting. Going back and realizing I would already be FI had I just pursued a fully invested buy-n-hold strategy for the past 8 years has made me realize the destructiveness of my ways. Now I have 7-8 years of extra labor thanks to holding cash, market timing, stock picking, and other errors.
Learn from my mistakes and kick the habit. Use cash-secured puts until you get fully invested, but then buy-n-hold until you add more cash.
Post by: Mr Mark on January 30, 2017, 11:49:03 PM
Post by: ChpBstrd on January 31, 2017, 09:04:19 AM
Hmmm. You don't think selling cash covered puts is gambling on stock?
If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.
If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*
*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.
Post by: Mr Mark on January 31, 2017, 08:59:24 PM
Hmmm. You don't think selling cash covered puts is gambling on stock?
If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.
If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*
*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.
in a bear market you still catch a falling knife just a bit cheaper than a dca plan. In a bull market you never get the stock and miss the gains and the dividends. I think the selling cash covered puts/covered calls strategy only works in a sideways market, no?
Post by: ChpBstrd on February 01, 2017, 12:23:00 PM
Depends on your definition of "works".Hmmm. You don't think selling cash covered puts is gambling on stock?
If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.
If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*
*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.
in a bear market you still catch a falling knife just a bit cheaper than a dca plan. In a bull market you never get the stock and miss the gains and the dividends. I think the selling cash covered puts/covered calls strategy only works in a sideways market, no?
In a bear market, the writer of cash-covered puts catches the falling knife at a lower cost basis and gets cut less than the person who bought upfront. Depending on timing, the DCO person might do equally well.
In a bull market, the writer of cash-covered puts may underperform the underlying asset. However, s/he also took less risk to do so, as shown above.
For example, you might earn an annualized 9% selling OTM puts in VB each month, but VB often rises at more than 9% per year (last 10 years: 8.2%; last 5 years: 14.85%; last 3 years: 7.05%; not including 1.5% yield). So yes, the strategy is selling some potential upside in return for some definite downside protection. That strikes me as a reasonable alternative to sitting in cash waiting for a dip in this aging bull market with lots of political uncertainty. If the dip never comes, you still earned decent yield while at a lower risk profile.
Post by: zazpowered on February 01, 2017, 03:25:57 PM
Full disclosure...I have been 'picking stocks' for a few years now with my 'play money' account that started with $5000. It is now up to $125,000. I tend to "bottom feed" on companies that have had very bad news but I feel have a potential to rebound. I enjoy the research, etc...
The biggest success ever came early this year. Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug. Company has since made a rebound and was just bought out for $24 a share. Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time. This stock had it all.
I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.
However, the dilemma now is that the account is becoming more than just a small 'play money' account! Currently holding quite a bit of cash while researching potential leads.
Wait, did you go from 5k to 125k purely from trading or did you add money to it?
Post by: lordmetroid on February 01, 2017, 04:54:11 PM
Post by: farmecologist on February 02, 2017, 07:41:49 AM
Full disclosure...I have been 'picking stocks' for a few years now with my 'play money' account that started with $5000. It is now up to $125,000. I tend to "bottom feed" on companies that have had very bad news but I feel have a potential to rebound. I enjoy the research, etc...
The biggest success ever came early this year. Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug. Company has since made a rebound and was just bought out for $24 a share. Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time. This stock had it all.
I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.
However, the dilemma now is that the account is becoming more than just a small 'play money' account! Currently holding quite a bit of cash while researching potential leads.
Wait, did you go from 5k to 125k purely from trading or did you add money to it?
Well quite a few small trades over the years..and a couple big wins. Like I mentioned above, $ARIA went from $4ish to a $24 buyout over three years. I had 18K in it at around the low point. I held the stock the entire time. Extreme risk of course...and you have to have big time conviction to stick to your guns. There is no way I could have done it with 'core' funds. This account started out as 'play money' ( as in 'I'm going to try trading and I don't care what happens to it' money ). So I was comfortable with the extreme risk.
BTW - 'due dilligence' (i.e. - a LOT of research) is extremely important. In the case of $ARIA, research was key to being comfortable with holding the stock. The gang over at the investorshub (investorshub.advfn.com/) forums helped with that. Turned out that Alex Denner ( an activist investor ) took control of the company a couple years ago and the prevailing theory was he was getting the company ready for a buyout. This turned out to be the case...but it took much longer than expected.
Post by: Pizzabrewer on February 02, 2017, 01:21:35 PM
Post by: Raeon on February 02, 2017, 06:27:14 PM
I've lost track of all the small trades I tried but Ive definitely had a couple positives skew my numbers up.
My worst was FLO. Was expecting some recent bakery acquisitions to boost their numbers so I bought the dip. They missed earnings and the dip dipped. Oops. Lost about 200 on that. Since then I've worked on a strategy that seems to be doing decent.
I keep about 10 stocks at a time. I keep 10% free cash. If I see something I want I use the cash, BUT I have to choose what else to sell. This forces me to be realistic about results moving forwards instead of clinging onto something because I don't want to take a loss. Total 6 month gain 13.7%. Sp500 same time frame 5%. Feels good :D
Best winners so far have been...
CWH @23. Now 32. I like the CEO's way of doing business.
Disney @92 now 110. Solid old blue chip. Bought the dip.
Swks @76 now 90. Internet of things play.
DATA. @42. Just jumped to 55 after hours after doubling earnings expectations. I eyeballed it at 60 when they picked up an old CEO of Amazon Web services, but thought it was a little pricey. Bought the dip, waited a little, and was grinning ear to ear all this afternoon! I think following talented staff can be a legit tactic.
Realistically, it means nothing as this whole account is only 1% of my stache, but it's just plain fun!
Post by: MoonLiteNite on February 03, 2017, 04:24:45 AM
22% in 2016 over 33 winning trades and 3 losing trades.
My dumbest mistake though when being trigger happy during my first week. Not following the plane and going with emotion, i quickly saw a RED 2000$ in front of me, and instead of selling like i should have, i kept it for a few days, then weeks. Finally turned green and i sold for a 200$ profit. That was my biggest mistake.
My next set of mistakes is i sell winning trades wayyyyy too early. AMAT, FOLD and MU. I could have more than doubled my money on amat, but i started getting out at 30$ and never got back in, Now 6 months later they are hitting 35, most likely going to 40, but too late to jump on that train.
Post by: Raeon on February 03, 2017, 06:48:38 AM
Second guessing your sell timing is only everybody's sin lol. As long as you're doing well, it's better to forget about it. Those could just as well have dipped back down for a loss. I'm personally getting better now at being thankful for my gains, instead of worrying about what could have been.
Most times I've tried staying longer in trades than my gut says, I've regretted it. The way I see it, I only have to be right 60% of the time to keep pace with the benchmark. Best not to stress those rare times where you could have been "more right."
Post by: Mr Mark on February 07, 2017, 02:13:48 AM
11/30 Buy 200 PFE @31.58 -$6,322
PFE went ex-dividend on 2 Feb and I wasn't happy with their lastest earnings report. Earnings are dropping, they're borrowing to buy back stock and pay the 4% dividend, stock trading pretty flat, so decided to exit PFE yesterday on the bump from the buy back announcement and get into a more solid blue chip J&J and use up the residual cash while I was at it.
I should get about $62 in PFE dividend next month.
2/6 Sold 200 PFE @ 32.14 = $6421.84 (taking a profit of $162 incl. dividend in 2 months for an annualised 15% ROI)
2/6 Buy 68 JNJ @ 113.19 = $7703.91
JNJ are a pretty solid company, AAA rated, and with much better earnings and dividend growth. Yes, dividend is a lot lower at 2.7% but I feel the prospects for earnings growth and share price much better than PFE.
:-)
Post by: Hargrove on February 07, 2017, 04:24:36 AM
I'm a lower-risk spectrum investor, not because I research extensively (I do), but because I do it on mostly blue-chips and stick around for dividends. My down swing isn't 33%, it's 12%. My upswing isn't 33% either, generally, but it is around 20%, and I'm fine with that. I haven't had a downswing that wasn't made even or better by dividends in the same year, and I haven't realized a loss in two years. My lowest current potential loss is only about -.26% in a year. With a long investment horizon, blue-chips are PLENTY volatile. I was up something like 25% on T, down 5-10%, then back up 20%. That was my most volatile.
I managed to invest in Abbot Labs just before they finished their biodegradable heart stent, so when it came, I looked like a winner. Then their buyout issues came and dropped them under my cost, but the approval of St. Jude has pushed them back up again. I'm up about 8% there in under a year, so, not bad, then dividends push it into double digits. Score.
IBM was my biggest win. I read a lot about AI, and IBM appeared to be the sleeper that it seemed only Buffet was betting on. Up 25% since Strategic Imperatives seized the ship, and sweet, sweet dividends. Dividends were also hiked recently.
Ford and InBev are bizarre value plays to me. Ford just hiked dividends a unicorn 33% and the stock is down. "CARS ARE OVER!!!" (record year) "CARS ARE DONE!" (record year). I'm not buying them, but most of America still thinks living 10+ miles from work is reasonable or necessary, and neither employers nor consumers are going out of their way to change that. Even self-driving cars will need companies. The US can convert to driverless cars and lower sales figures, but the rest of the world is still buying cars, too. I wouldn't buy more than one car company, but Ford or GM are pretty easy choices to me.
InBev basically just bought 4/5 of the mainstream beer industry and they're down 12% as they consider buying Coca Cola.
I'm eating up O Realty's doom predictions. This is a company with hilarious amounts of real estate that they're paying off every day, which is required to pay out all the money it makes, which already pays a dividend higher than the retirement withdrawal rule. Hiked dividends 6% this month, like they often do. They make up too much of my "post 65" portfolio before a year or two, but I don't even mind. I love dividend hikes.
(All of these I am invested in, at about 1k each, except O Realty, which is soon to be about 8.5k. The big drawback to this strategy is that US stocks are considered by many "overbought," in that their prices figure in expected future performance to a degree some consider unhealthy and which the Apocalypse NOW, RIGHT NOW guys would go bald over, but I think it's fine. I just wouldn't buy Netflix or Tesla right now - the people looking for the mythical entry point already got in a long time ago, if ever there was one. I buy on dips, almost always see a boost, pocket dividend raises, and am happy floating by around 11% before dividends get hiked again, and blue-chips hike them all the damned time, so I'm happy with the results)
Post by: thunderball on February 07, 2017, 04:41:19 AM
Post by: Mezzie on February 07, 2017, 05:57:08 AM
Lately I've been thinking of buying some stock in companies whose practices I hate just to get my voice heard. I realize my few shares make my voice nearly silent, but it's still not as silent as in an index fund.
If I lose all my money in this account, it's fine. If I somehow beat the market, that's of course, fine too. :p
Post by: farmecologist on February 07, 2017, 08:36:29 AM
I have play money that used to be sitting in my personal savings account that I use specifically for stock picking. All the rational investing is boring, so to make sure I do the boring stuff, I've given myself a little excitement. I enjoy it, and I especially enjoy being able to vote on policies of the companies whose stock I hold.
Lately I've been thinking of buying some stock in companies whose practices I hate just to get my voice heard. I realize my few shares make my voice nearly silent, but it's still not as silent as in an index fund.
If I lose all my money in this account, it's fine. If I somehow beat the market, that's of course, fine too. :p
I'm right there with you. Stock-picking brokerage account is high-risk 'play money'. Mostly invested in biotechs and such. It is a fascinating area to research.
Post by: Pizzabrewer on February 16, 2017, 07:17:12 AM
Post by: Pizzabrewer on April 02, 2017, 05:42:48 AM
Post by: KBecks on April 02, 2017, 06:10:21 AM
Most of my stuff is in a diversified long term portfolio of individual stocks. We have a 401k elsewhere that is in funds. Our goals are conservative and we don't gamble with the money. And I pay for the professional advice to help me stay on course and learn. I've got technology, health care, financial, telecom, restaurant and retail. Then I just committed to trying 9 small-cap stocks, mostly tech, with some fun money on the side. This will be an interesting little basket to watch, and the idea is to hold all 9 positions for 5 years or more.
But I will tell you, for years, I was putting $XXX a month in the S&P 500, fully funding a ROTH into the S&P or total market index and it worked just fine! When we were busy with infants and toddlers, auto indexing was a very good friend for our family. There are many ways to invest. I am not a natural investor and don't have the time to study intensively so I've hired a reasonably-priced advisory service and it's very fun for me.
Post by: Mr Mark on April 02, 2017, 09:34:21 AM
Post by: PaulMaxime on April 02, 2017, 02:00:02 PM
I invest in single stocks and options with the help of Motley Fool Pro and Motley Fool Optons subscription services. I am also dabbling a little bit with their Discovery 2017 collection.
Hi KBecks! I'm also a fan of the Motley Fool and use their Pro and Options services and I've just added some small caps to my portfolio with their Discovery 2017 service as well. I don't mind paying them for advice because it's a flat rate vs a percentage of my assets.
Personally, I only use index funds for my 401K and a small Inherited IRA.
I track my performance against the S&P 500 Total Return index so I can see if I'm doing well versus just buying index funds and for the past 10 years I've managed to outperform by around 4% per year. So it can be done. I don't daytrade or time the market. Just buy good companies for the long term and diversify (my largest position is AAPL at about 10% and I have about 50 different stocks).
Post by: Pizzabrewer on April 27, 2017, 04:54:59 AM
Post by: Pizzabrewer on April 27, 2017, 05:22:57 AM
Post by: Retire-Canada on April 27, 2017, 12:40:03 PM
This one stock is now about 25% of our NW and growing. I know the standard advice to sell some and rebalance but I truly believe this stock is headed to $50+.
That ^^^ sounds like a ridiculous amount of risk unless your NW is very low. I would decide on a max % of NW you'll let your individual stock picks hit [plus a total % for all stock picks combined] and then take the rest of the $$$ and invest in some diversified funds. You can still make lots of $$, but you have also protected most of your NW through diversification.
Post by: Pizzabrewer on April 27, 2017, 02:47:46 PM
Yes it's still a big chunk of our NW (which was about $205k yesterday, $220k today) but I won't sell more at this point. This stock will double a few more times over the next couple years.
Face punches accepted.
Post by: EdwardMM on April 27, 2017, 08:57:41 PM
While I think BAM retail is in trouble, I think Target has a decent change of capitalizing on 1) other major stores closing 2) continual shift away from mall shopping and 3) return of middle class jobs.
Also, they made a huge error taking a strong stand on the bathroom issue (which I've heard the president has admitted internally - they misread the market on it). But that's starting to blow over. People have a short memory.
Stock is sitting just above $56. I'm hopeful I'll be able to unload it for a modest couple-of-points profit in the next few months. But honestly if the whole thing went to zero it wouldn't be the end of the world. I only bought 80 shares and it represents about 0.33% of my portfolio. Everything else is index funds.
I enjoy trading and figure that on average it's better than blackjack... but just keep it at the hobby level. Anything else is stupid.
Post by: Ben Hogan on April 28, 2017, 06:55:28 AM
Post by: talltexan on April 28, 2017, 08:14:46 AM
Now that it's long-term capital gains, I'm considering selling.
Post by: PaulMaxime on April 29, 2017, 09:58:38 AM
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.
Now that it's long-term capital gains, I'm considering selling.
Do you have a better place for the money? Alphabet is trading at a discount to the overall market and is doing extremely well. Selling just because you made a profit without someplace else to put it (Even it that place is a broad market index fund) is a recipe for underperformance.
Post by: Mr Mark on April 29, 2017, 11:30:10 PM
Post by: talltexan on May 01, 2017, 07:33:35 AM
How about just owning half in SP500 index, other half in whatever trade you're considering. Then you know whether you beat the SP because you can see which half is worth more.
Post by: Retire-Canada on May 01, 2017, 07:52:12 AM
Any recommended easy way to benchmark a trade against the vanguard sp500? in a way that takes account of index fund dividends ?
You can do the following:
- note the price change of the S&P500 over the dates you held the other investment
- factor in the dividend based on a S&P500 fund of your choice
--- take the trailing 12 month yield and prorate it for the time you held the other investment
The main flaw with this ^^^ approach that I see is that if you start from cash and then move back to cash you really should include the periods sitting in cash into your calculations since the S&P500 investment option you are trying to benchmark would be a buy and hold strategy with no time out of the market.
Post by: PaulMaxime on May 01, 2017, 09:14:59 AM
Any recommended easy way to benchmark a trade against the vanguard sp500? in a way that takes account of index fund dividends ?
Yes, track yourself against the SP500 Total Return Index. At Yahoo Finance it's ^SP500TR.
I use Apple Numbers for my portfolio tracking and you can directly quote that index inside your spreadsheet. It also handles historical quotes. My tracker has monthly total portfolio value with cash flows compared to the same cash flows invested in something that tracks ^SP500TR and graph the difference. I've been keeping this spreadsheet since 2007.
Post by: Pizzabrewer on May 05, 2017, 09:33:48 AM
The question is, when to sell?
Post by: Retire-Canada on May 05, 2017, 09:35:39 AM
The question is, when to sell?
At the top is best.
Post by: Pizzabrewer on May 05, 2017, 01:50:53 PM
The question is, when to sell?
At the top is best.
There is a certain wisdom to that...
Post by: Pizzabrewer on May 20, 2017, 08:27:27 PM
A particularly sleazy short-seller put out a hit piece on EXAS and managed to drop the price by about 15%. Why this individual has the clout to influence a stock's price so much is a bit of a mystery. By all appearances the company continues to grow at an accelerating rate and is still on track to revolutionize their segment of the health care industry.
My other bio-pick (KERX) is finally starting to hit its stride and has been growing sales nicely. They've had their stumbles over the past 2 years launching their product but things are looking up. I was largely out of the stock until a few weeks ago when I re-bought at $5.80.
I consider both companies to be long-term holds.
Post by: farmecologist on May 20, 2017, 09:46:54 PM
So the shorts are fighting back. Ah, the joys of investing in biotech where market manipulation runs rampant.
A particularly sleazy short-seller put out a hit piece on EXAS and managed to drop the price by about 15%. Why this individual has the clout to influence a stock's price so much is a bit of a mystery. By all appearances the company continues to grow at an accelerating rate and is still on track to revolutionize their segment of the health care industry.
My other bio-pick (KERX) is finally starting to hit its stride and has been growing sales nicely. They've had their stumbles over the past 2 years launching their product but things are looking up. I was largely out of the stock until a few weeks ago when I re-bought at $5.80.
I consider both companies to be long-term holds.
Took a look at EXAS. Yes, manipulation runs rampant and shorts AND longs put out articles all the time to pump their position. However, it's usually the big boys that do the real manipulation ( i.e. - hedge funds and big institutionals ). At any rate, it looks to me like EXAS had a healthy run and now is having a small pullback. The trend line is certainly still bullish though so hang in there!
Post by: runewell on May 21, 2017, 05:56:14 PM
but I'm still not significantly above the S&P on a five year basis.
My Account
1-Year 3-Year 5-Year
+24.18% +14.62% +17.14%
S&P 500® Index
1 Year 3-Year 5-Year
+11.96% +8.87% +14.66%
You're not? I beg to differ.
Post by: Scandium on May 22, 2017, 12:52:34 PM
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.
Now that it's long-term capital gains, I'm considering selling.
Ey! Are you me? I bought 5 shares of then-google couple years go for ~$550 per share! Now at $962 I'm up about $2k, or 80%. It's sitting at a PE of 30, and I'm wondering how much higher it can go?? Thinking of collecting my profits and move on, probably to an index. Advice?
I don't really do play money anymore, and it's a tiny part of my NW, but still money. Loosing out would suck.
Post by: PaulMaxime on May 22, 2017, 01:01:55 PM
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.
Now that it's long-term capital gains, I'm considering selling.
Ey! Are you me? I bought 5 shares of then-google couple years go for ~$550 per share! Now at $962 I'm up about $2k, or 80%. It's sitting at a PE of 30, and I'm wondering how much higher it can go?? Thinking of collecting my profits and move on, probably to an index. Advice?
I don't really do play money anymore, and it's a tiny part of my NW, but still money. Loosing out would suck.
Neither of you should be picking individual stocks. By itself the stock price and how much it has gone up mean nothing.
Is Alphabet still growing, are they continuing to generate more profits? Are they a great business with a history of innovation? Do you see where they are headed in the future?
It's often the case that businesses doing well are the ones that keep on doing well. In many cases the signal of a stock price going up and up is a signal that it's going to go up more.
But most importantly, in order to make money in the stock market you need to find great companies (or buy an index fund) and hold on to it for a very long time, in spite of up and down fluctuations.
You were lucky enough to pick a single good investment. Now you want to sell. What is the chance that you will find another company going forward that is better than GOOGL?
Until you can answer those types of questions instead of being scared off by a little price fluctuation either way you are much better off indexing. But you have to be willing to suffer the fluctuations both UP and DOWN even in an index portfolio.
Otherwise I predict you will underperform over the long term
Post by: Scandium on May 22, 2017, 01:10:38 PM
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.
Now that it's long-term capital gains, I'm considering selling.
Ey! Are you me? I bought 5 shares of then-google couple years go for ~$550 per share! Now at $962 I'm up about $2k, or 80%. It's sitting at a PE of 30, and I'm wondering how much higher it can go?? Thinking of collecting my profits and move on, probably to an index. Advice?
I don't really do play money anymore, and it's a tiny part of my NW, but still money. Loosing out would suck.
Neither of you should be picking individual stocks. By itself the stock price and how much it has gone up mean nothing.
No, nobody should be stock picking. Nobody has proved to do better than an index long term. So I have no better dds than anyone else. But no worse either!
Is Alphabet still growing, are they continuing to generate more profits? Are they a great business with a history of innovation? Do you see where they are headed in the future?
No idea. Yes they have been, but will they? Nobody knows. I have no reliable basis for saying either way
It's often the case that businesses doing well are the ones that keep on doing well. In many cases the signal of a stock price going up and up is a signal that it's going to go up more.
But most importantly, in order to make money in the stock market you need to find great companies (or buy an index fund) and hold on to it for a very long time, in spite of up and down fluctuations.
Yeah "find great companies".. Nobody can do that reliably.
You were lucky enough to pick a single good investment. Now you want to sell. What is the chance that you will find another company going forward that is better than GOOGL?
Yes I realize I was lucky. And that's the point. Feel I should take what I made and "get out" if you will. As is the case for even the best-paid expert, long term my picks are likely to at best equal the index. And probably underperform. So I guess I answered my own question; statistically I'm likely to loose to an index if I keep holding individual stocks so I should sell. This is the Vulcan answer..
Until you can answer those types of questions instead of being scared off by a little price fluctuation either way you are much better off indexing. But you have to be willing to suffer the fluctuations both UP and DOWN even in an index portfolio.
Otherwise I predict you will underperform over the long term
Post by: talltexan on May 23, 2017, 02:22:27 PM
Post by: surfhb on May 23, 2017, 09:17:36 PM
Been there, done that....twice in the last 25 years. No more for me. Slow and steady index investing with a reasonable AA.
This bull market has gone on so long and the age of the avg MMM'er seems to be in their 20s and 30s. It seems many investors here have not yet seen what a serious downturn in the markets can do to ones networth.
Be careful folks. This isn't a game.....even if its a small % of your portfolio. Play it smart.
Post by: talltexan on May 24, 2017, 07:04:10 AM
But someone in zher 30's should certainly remember the downturn of 2008 (as I do).
Post by: surfhb on May 24, 2017, 09:47:29 AM
The next bear market will whack some of my individual positions pretty heavily.
But someone in zher 30's should certainly remember the downturn of 2008 (as I do).
True but when you're young and just beginning to invest, the impact is less significant.
When you are close to FIRE and lose $100k in a month ( like 2008) things look a whole lot different !! Add kids, wife, job loss and loss of home equity in there as well.
Not trying to paint a general picture of the avg MMM or investor but it just concerns me when I see younger investors touting their net worths from the rise of the equity and housing markets in recent years.
I mean, there are posts in this thread who are actually celebrating the fact they have beat the S&P the last 5 years. That's laughable and kinda scary
I'm looking forward to reading this entire blog site WHEN another bear market returns...the whole early retirement thing might look a whole lot different 🙂
Hey! Maybe the next 10 years will go on forever and ever !
Sent from my iPhone using Tapatalk
Post by: farmecologist on May 24, 2017, 02:36:18 PM
The next bear market will whack some of my individual positions pretty heavily.
But someone in zher 30's should certainly remember the downturn of 2008 (as I do).
True but when you're young and just beginning to invest, the impact is less significant.
When you are close to FIRE and lose $100k in a month ( like 2008) things look a whole lot different !! Add kids, wife, job loss and loss of home equity in there as well.
Not trying to paint a general picture of the avg MMM or investor but it just concerns me when I see younger investors touting their net worths from the rise of the equity and housing markets in recent years.
I mean, there are posts in this thread who are actually celebrating the fact they have beat the S&P the last 5 years. That's laughable and kinda scary
I'm looking forward to reading this entire blog site WHEN another bear market returns...the whole early retirement thing might look a whole lot different 🙂
Hey! Maybe the next 10 years will go on forever and ever !
Sent from my iPhone using Tapatalk
I agree...I have mentioned the 2008-09 'crash' in other threads as a cautionary tale. The odd thing is that I felt somewhat berated by others because of it. Many just blow it off and say they will 'dollar cost average' into it, etc...
As one who lived through it, some just don't understand how severe the situation was. Many did panic...Heck, I saw some extremely savvy people panic and take money out of the markets at the absolute worst time.
Another wildcard was the massive loss of jobs that happened. When people lose jobs...they obviously can't invest at the low point...so 'dollar cost averaging' doesn't always work.
Luckily, we were able to see it through..and it worked out very well for us. However, I saw many people 'go under' financially...and had to walk away from their homes (and mortgages), etc...
I really hope something like '08-'09 won't happen again. However, it sure seems like there is a feeling of 'irrational exuberance' in the air again. It can also be argued that another 'housing bubble' is forming.
Post by: talltexan on May 25, 2017, 07:54:22 AM
https://finance.yahoo.com/video/game-over-ai-defeats-game-142739243.html
Along with IBM's Watson winning at Jeopardy, it looks bad for humans when the machines decide they want to run things. I want our Robot overlords to know I was on their side early, and I will be able to prove it with my investment account statements. Of course, the achievements of Watson don't seem to be helping IBM increase sales...
Post by: PaulMaxime on May 25, 2017, 10:44:34 AM
Quote
The next bear market will whack some of my individual positions pretty heavily.
But someone in zher 30's should certainly remember the downturn of 2008 (as I do).
Ahh, you young'uns. Are you too young to remember the crash of '87 or the Internet bubble or even the oil shocks and stagflation of the '70s?
Quote
I agree...I have mentioned the 2008-09 'crash' in other threads as a cautionary tale. The odd thing is that I felt somewhat berated by others because of it. Many just blow it off and say they will 'dollar cost average' into it, etc...
As one who lived through it, some just don't understand how severe the situation was. Many did panic...Heck, I saw some extremely savvy people panic and take money out of the markets at the absolute worst time.
I really hope something like '08-'09 won't happen again. However, it sure seems like there is a feeling of 'irrational exuberance' in the air again. It can also be argued that another 'housing bubble' is forming.
On the other hand, these crashes and downturns are a normal part of investing. If you can't take them in stride then your risk tolerance is not what you think it is.
Even with all these crashes and downturns the market is up ~10% a year on average over the past long time frame. You have to be able to stick with it through the normal inevitable downturns.
The fact that many people were living beyond their means and leveraged up to the hilt in 2008 meant that lots of people were deeply hurt in the crash. It means that you need to prepare yourself financially and mentally for this situation in advance. Keep as much of your net worth in cash that you need to be comfortable when the next inevitable downturn happens. It will happen again in the future. It always does. But the market also always goes up and it goes up more than it goes down.
Post by: Scandium on May 26, 2017, 07:23:57 AM
Agreed that Scandium and I are lucky (and we acknowledge that luck). But that risk has been limited to a very small portion of our respective net worths.
Exactly, $5k is now pretty peanuts in my overall investments. And I've more or less stopped gambling on individual stocks now anyway. FWIW I've decide to hold on to GOOGL. $5k won't make much difference to my life right now, and would just go to VTSAX anyway. I'll hold on and who knows, maybe it follows amazon's price and it's worth $100k in 10 years. If not I'm ok loosing all that. It'll be my lottery ticket and one stock to follow.
I think those of us who acknowledge it's all luck and gambling, and no skills, are in no danger of going crazy stock picking.
Post by: farmecologist on May 26, 2017, 09:49:56 AM
QuoteI agree...I have mentioned the 2008-09 'crash' in other threads as a cautionary tale. The odd thing is that I felt somewhat berated by others because of it. Many just blow it off and say they will 'dollar cost average' into it, etc...
As one who lived through it, some just don't understand how severe the situation was. Many did panic...Heck, I saw some extremely savvy people panic and take money out of the markets at the absolute worst time.
I really hope something like '08-'09 won't happen again. However, it sure seems like there is a feeling of 'irrational exuberance' in the air again. It can also be argued that another 'housing bubble' is forming.
On the other hand, these crashes and downturns are a normal part of investing. If you can't take them in stride then your risk tolerance is not what you think it is.
Even with all these crashes and downturns the market is up ~10% a year on average over the past long time frame. You have to be able to stick with it through the normal inevitable downturns.
The fact that many people were living beyond their means and leveraged up to the hilt in 2008 meant that lots of people were deeply hurt in the crash. It means that you need to prepare yourself financially and mentally for this situation in advance. Keep as much of your net worth in cash that you need to be comfortable when the next inevitable downturn happens. It will happen again in the future. It always does. But the market also always goes up and it goes up more than it goes down.
yes, of course ups and downs are normal. You and I know that...as well as most people here at MMM. However, quite a few 'young investors' have seen very little in the way of significant downturn. The bull market has been incredible over the last decade or so.
A couple other things to think about. First, housing seems to be getting into 'bubble' territory again as well. I've seen many articles arguing both sides...but signs are certainly there. Second, household debt is at an all-time (pre-2008) high again. You would have thought people would have learned. So yeah...it seems that people are becoming 'leveraged to the hilt' again and do appear to be living beyond their means.
At any rate, I don't want to sound like a grumpy old guy (and I'm only in my mid-40s)...but these things need to be thought about by some of the younger folks out there ( although not necessarily the MMM types - I'm probably preaching to the choir ). However, I do feel that some MMM'ers have become extremely bold with their FIRE predictions and really hope they are not disappointed when a significant downturn happens.
Post by: Pizzabrewer on May 31, 2017, 08:52:50 AM
The basis for the recent short attack was lack of coverage by United Healthcare for EXAS' product. Well guess what? Coverage begins July 1.
The shorts are getting roasted. I'm making bank. ;)
Post by: Pizzabrewer on June 04, 2017, 09:20:47 PM
In any event it'll be interesting.
Post by: talltexan on June 05, 2017, 08:32:03 AM
Making the decision to sell some is hard. I am just hanging onto GOOGL for the ride (It's only five shares, so I'm treating them like my fingers). It's really the only thing I own that's doing well. This psychology is part of the reason I'm not fit for substantial exposure on these bad boys.
Post by: thenextguy on June 05, 2017, 08:51:50 AM
MSFT: 100 shares @ $71.94
BR: 100 shares @ $77.58
Post by: talltexan on June 05, 2017, 08:54:16 AM
Post by: Scandium on June 05, 2017, 09:02:46 AM
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.
Now that it's long-term capital gains, I'm considering selling.
Hey, remember when google split to go to ~$500/share? Me neither, as it just passed (arbitrary) $1000/share again! congrats.. :D
Post by: Pizzabrewer on June 25, 2017, 08:11:30 PM
Trying to stretch a double into a triple, I'm calling for another wild week but this time to the upside. We could see $40 by Friday.
I'd like to think I'm smart but I realize my calls have been pretty darn lucky.
Post by: talltexan on June 26, 2017, 09:27:55 AM
Post by: Pizzabrewer on July 12, 2017, 09:53:56 PM
Post by: farmecologist on July 13, 2017, 07:50:29 AM
Good call in EXAS! Looks like quite a few biotechs are doing well now.
My $VRX long position holding is doing great...I got in around the low point. There has been over 1.5 years of bearish sentiment that has just started to turn bullish. All of the Ackman drama is gone now, new management, and they look to be ahead of plan on paying down debt. Still risky though...but every biotech is. If they can overachieve on their plan..this will fly.
Post by: Pizzabrewer on September 01, 2017, 02:21:04 AM
I expect this will pull back to the low-to-mid $30s.
Meanwhile my workhorse EXAS continues to perform. It closed today near $42.
Post by: Mr Mark on September 01, 2017, 03:02:14 AM
It's almost pure gambling. But huge upside if they finally pull off the deal.
YMMV
Post by: chasesfish on September 04, 2017, 06:52:50 AM
www.adpascending.com
Post by: Pizzabrewer on September 18, 2017, 11:55:54 AM
I've been on a remarkable winning streak so I can't be too upset. But it still stings, at least a little.
Post by: talltexan on September 18, 2017, 12:34:51 PM
It's wayyyy more difficult to say, "I currently own 157 shares of Kinder Morgan, and I should sell those even though they may jump 20% when they hike their dividend next year".
Post by: Pizzabrewer on October 02, 2017, 04:19:18 PM
Post by: Mr Mark on October 02, 2017, 11:15:28 PM
EXAS continues to be a beast. New all-time high today, right at the end of trading. A bullish sign if there ever was one.
What's your strategy for taking profit PB?
One of the nice to have 'problems' with good picks that take off is when to sell (& if selling, all or half?), double down or hold.
Post by: Pizzabrewer on October 03, 2017, 07:46:24 AM
Post by: Mr Mark on October 04, 2017, 09:34:41 PM
Would like to pick up more OROCF (pure play lithium miner) but the stock is up a lot recently and so hoping for a dip...
Post by: Mr Mark on October 05, 2017, 01:08:15 AM
1 yr returns were 16.8% vs the 'stache 12.7%
3yr annualised returns (so includes my huge hit on CRC earlier last year) 24.7% vs a boring 8.3%.
BUT dominated by a couple of really good pics - CRC PRU. And helped by more modest gains on OROCF, DOW and JNJ.
Now it's getting harder to find the gems. So as I said intend to pull back into mostly my AA indexes.
But it's been fun, and I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
Post by: farmecologist on October 05, 2017, 08:12:50 AM
Overall the stock picking has been great so far.
1 yr returns were 16.8% vs the 'stache 12.7%
3yr annualised returns (so includes my huge hit on CRC earlier last year) 24.7% vs a boring 8.3%.
BUT dominated by a couple of really good pics - CRC PRU. And helped by more modest gains on OROCF, DOW and JNJ.
Now it's getting harder to find the gems. So as I said intend to pull back into mostly my AA indexes.
But it's been fun, and I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
Our 1 year returns from stock picking 'this year' are stellar because of luck...and 'balls'. We bought ARIA pharm around the low point when it crashed in late 2013 ( average around $3.50). The company was bought out early this year for $24. I say 'balls' because you really, really had to have them to hold long the entire time. It is really hard to hold small, risky biotechs these days due to wall street manipulation! If you watch the chart daily you can actually learn to see the manipulation. Luckily, there was a really great group of folks on the IHUB message board that helped tremendously.
After the big payday I moved some of the winnings to ARRY, AUPH, ADXS, and VRX. yes..that VRX - I was able to get in near the low point and have made a good profit from it. However, TONS of people lost their shirt on it ( including Bill Ackman ). :-)
I should put a disclaimer here though...this money was all earmarked as 'play' money that I don't really care if I lose. You MUST have this mentality to play in biotechs..especially companies whose existence hangs on an FDA approval. Huge risk/reward though.
Also, as an aside, IHUB message boards can be great with the right group of people..but usually are not. I also use StockTwits for 'entertainment purposes'. StockTwits seems to mostly have 'day/swing trader' types on there and the noise gets tiresome quickly for longer term 'investors'.
Post by: xenon5 on October 05, 2017, 06:00:17 PM
Then Sunday night happened... and now I'm up 50% in one week.
It's a terrible coincidence, but I see a lot of value in this company given the current state of gun violence in the US and pressure on police to better serve high crime neighborhoods due to movements like BLM. They're not profitable yet, but they're quite close, and they have no direct competition.
I mostly index, but I figure it's worth putting a small percentage of my net-worth in a few tiny companies that I strongly believe will grow. At worst I'll slightly under-perform the market, and at best I might buy a ticket on a rocket-ship.
Post by: Pizzabrewer on October 08, 2017, 06:04:21 PM
What's your strategy for taking profit PB?
One of the nice to have 'problems' with good picks that take off is when to sell (& if selling, all or half?), double down or hold.
Yeah that is the question, isn't it? I've been selling small amounts on the way up. Yet the strong price action has kept EXAS at about 25% of our net worth. A portion of the sales I've rolled into OTM long calls which potentially produce a multiplier effect.
Post by: Pizzabrewer on October 08, 2017, 06:07:38 PM
I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
I took a quick look at OMAG. Holy cow, that is something I wouldn't touch with a 10-foot pole. What's the case for an upside?
Post by: Mr Mark on October 10, 2017, 02:52:22 AM
I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
I took a quick look at OMAG. Holy cow, that is something I wouldn't touch with a 10-foot pole. What's the case for an upside?
yeah PB you are totally correct - it's a wild gamble - either they go broke in the next 6 months and I'll lose it all, or they have a breakthough, get the investor they need, and the shares will be a 10 bagger ++ in pretty short order. I know some people close to the project and I think there's a chance they pull it off. But it's a lot less than 50/50. And I'm not risking the rent money.
Everyone should do their own due dilligence with any investment. :-)
Post by: farmecologist on October 10, 2017, 08:06:08 AM
I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
I took a quick look at OMAG. Holy cow, that is something I wouldn't touch with a 10-foot pole. What's the case for an upside?
yeah PB you are totally correct - it's a wild gamble - either they go broke in the next 6 months and I'll lose it all, or they have a breakthough, get the investor they need, and the shares will be a 10 bagger ++ in pretty short order. I know some people close to the project and I think there's a chance they pull it off. But it's a lot less than 50/50. And I'm not risking the rent money.
Everyone should do their own due dilligence with any investment. :-)
Quite a few call picks like these 'lottery ticket' picks. Your description above is spot on.
Post by: jacquespluto on October 10, 2017, 09:15:16 AM
Right now isn't even a great time to be doing this with historically low VIX, yet I'm still making solid returns. I'm not yet at a point to throw the majority of my non-IRA portfolio at this, but getting closer every month.
Post by: ChpBstrd on October 11, 2017, 08:47:58 AM
I prefer selling time premium through option structures on the SPX. Mostly some version of a broken wing butterfly. I feel like the "house" at a casino and my monthly returns are around 4-5%, yearly 50-60%.I've been thinking about something like this for a long time, and would like to hear more about your approach. The point would be to tie earnings to something more reliable than stock market returns, such as time decay or risk premium. The trick would be to set up a strategy that works in isolation of the market's ups and downs. I've been considering primarily calendar spreads, butterflies, and verticals for their downside protection. In reality, I'm selling cash-secured puts and covered calls. However I'm also aware that it's easy to "prove" a strategy in a multi-year raging bull market, but that "plans rarely survive the first encounter with the enemy."
Right now isn't even a great time to be doing this with historically low VIX, yet I'm still making solid returns. I'm not yet at a point to throw the majority of my non-IRA portfolio at this, but getting closer every month.
Post by: MrSpendy on October 11, 2017, 09:02:12 AM
selling vol in a declining vol environment will work until it doesn't. I am not sure it's possible to do this properly (which is to say to set up a ringfenced entity that is non-recourse to you) on a small individual scale.
depending on the amount of inherent leverage you are taking on through selling options, you could end up owing your broker money (not just losing 100% of equity, but actually losing more than 100%).
Can you detail the size of the trades (number of contract/notional exposure) versus how much capital you're holding against it to calculate the "making 50-60%" number?
I am curious, because I've thought about doing this and everytime I talk to someone who actually is doing it, they are taking on pretty big time leverage to make decent returns.
Post by: Pizzabrewer on October 31, 2017, 11:16:05 AM
Post by: ILikeDividends on November 07, 2017, 07:49:30 PM
Hmmm. You don't think selling cash covered puts is gambling on stock?If you do it correctly, it absolutely is not gambling; not any more than buying a stock outright is gambling.
The point is that you never want to write an uncovered put against a stock you don't want to own in the first place.
Reread this sentence until it sinks in: writing a naked put is the exact same thing as going long a stock, but at a lower price than the prevailing market price (the only caveat is that you don't collect dividends when writing a put, but that's irrelevant if the stock doesn't pay a dividend).
If the put option expires OTM, then you bank the premium, and write another put until you finally get a position in the stock you wanted all along. And yes, this is pure gambling, but only if you never wanted a position in the stock in the first place. If you DO want a position, it is a very prudent way to establish that position at a lower-than-market cost basis at the time you put the trade on.
Case study. A year or so ago, FB was selling for $127 per share. At the time, I wanted a position in FB, but not at $127. I sold a 3 month put at a $125 strike for $500. A couple of months later, FB briefly fell to $113 or so. I was assigned. So then I had a stake in FB at $120 per share (put proceeds are deducted from your cost basis in an assignment). Nice. Especially given that FB is over $170 now. Even though I was underwater at assignment, I was 50% less underwater than I would have been at $127.
In retrospect, if I had bought at $127, I'd still be good. But I'm even better off with an entry point of $120.
And yes, from the moment I wrote that put, until now, I am still long FB.
Post by: Mr Mark on November 07, 2017, 09:25:30 PM
Hmmm. You don't think selling cash covered puts is gambling on stock?If you do it correctly, it absolutely is not gambling; not any more than buying a stock outright is gambling.
The point is that you never want to write an uncovered put against a stock you don't want to own in the first place.
Reread this sentence until it sinks in: writing a naked put is the exact same thing as going long a stock, but at a lower price than the prevailing market price (the only caveat is that you don't collect dividends when writing a put, but that's irrelevant if the stock doesn't pay a dividend).
If the put option expires OTM, then you bank the premium, and write another put until you finally get a position in the stock you wanted all along. And yes, this is pure gambling, but only if you never wanted a position in the stock in the first place. If you DO want a position, it is a very prudent way to establish that position at a lower-than-market cost basis at the time you put the trade on.
Case study. A year or so ago, FB was selling for $127 per share. At the time, I wanted a position in FB, but not at $127. I sold a 3 month ITM put at a $125 strike for $500. A couple of months later, FB briefly fell to $113 or so. I was assigned. So then I had a stake in FB at $120 per share (put proceeds are deducted from your cost basis in an assignment). Nice. Especially given that FB is over $170 now. Even though I was underwater at assignment, I was 50% less underwater than I would have been at $127.
In retrospect, if I had bought at $127, I'd still be good. But I'm even better off with an entry point of $120.
And yes, from the moment I wrote that put, until now, I am still long FB.
Sure. I understand how options work. But in your example if FB had not dropped to your put but instead climbed you would never have bought the stock and missed huge gains. Conversely if the stock had tanked you'd have caught the falling knife.
So disagree that it's "absolutely not gambling".
Post by: ILikeDividends on November 07, 2017, 09:37:51 PM
I said it's no more gambling than going long a stock is gambling. If you want to establish a long position in a stock, selling naked puts is a way to do that more cost-effectively than buying the stock outright at prevailing prices. And it can produce income when you fail to establish those long positions.
Sure. I understand how options work. But in your example if FB had not dropped to your put but instead climbed you would never have bought the stock and missed huge gains. Conversely if the stock had tanked you'd have caught the falling knife.
So disagree that it's "absolutely not gambling".
If you consider buying any stock at all as gambling, then I guess we're all gamblers, according to that definition. I'm merely suggesting that there is a less expensive way to buy a position, i.e., gamble, if that's the term you prefer. If you fail to establish that position, then you get paid for failing to do so. I just don't see how that is a bad thing.
Post by: talltexan on November 08, 2017, 07:12:56 AM
I suppose I shouldn't criticize, I'm actually only 5'8"
Post by: Retire-Canada on November 08, 2017, 08:07:28 AM
If you consider buying any stock at all as gambling, then I guess we're all gamblers, according to that definition.
Buying a stock is like gambling. Buying an index is like owning part of the casino. I like the house's odds better.
Post by: ILikeDividends on November 08, 2017, 10:23:07 AM
Yes, and to my point, you can write a put against that index, and it's equivalent to going long the index at a lower than prevailing price. If writing a put against that index is gambling, then so is "owning the casino" at an even higher entry price. The written put just lets you buy the casino at a discount. It really is no more complicated than that.If you consider buying any stock at all as gambling, then I guess we're all gamblers, according to that definition.
Buying a stock is like gambling. Buying an index is like owning part of the casino. I like the house's odds better.
Post by: ILikeDividends on November 08, 2017, 10:31:30 AM
Your username is ILikeDividends, but you're buying Facebook?I toyed with the idea of a "ILikeFacebook" handle, but I didn't want to put too much all into one position. ;)
I suppose I shouldn't criticize, I'm actually only 5'8"
Truth be told, on the single stock side of my portfolio, I've made only 3 exceptions to buying dividend paying stocks; otherwise, I hold pretty firm to sticking with dividend payers.
Post by: Mr Mark on November 08, 2017, 10:59:52 AM
Yes, and to my point, you can write a put against that index, and it's equivalent to going long the index at a lower than prevailing price. If writing a put against that index is gambling, then so is "owning the casino" at an even higher entry price. The written put just lets you buy the casino at a discount. It really is no more complicated than that.If you consider buying any stock at all as gambling, then I guess we're all gamblers, according to that definition.
Buying a stock is like gambling. Buying an index is like owning part of the casino. I like the house's odds better.
But that's the thing - you're not buying the stock or the index. And when it rises you lose. Sure you get the premium to compensate somewhat but it doesn't make up the delta.
Post by: ILikeDividends on November 08, 2017, 11:05:04 AM
If stocks (or indexes) grew to the sky in a straight line, I might be convinced that collecting some premium in lieu of riding up with the index is somehow a loss. But they don't. So I'll be happy to look for an opportunity to write another put after the last one expires. Eventually I will get a position at a price I like.Yes, and to my point, you can write a put against that index, and it's equivalent to going long the index at a lower than prevailing price. If writing a put against that index is gambling, then so is "owning the casino" at an even higher entry price. The written put just lets you buy the casino at a discount. It really is no more complicated than that.If you consider buying any stock at all as gambling, then I guess we're all gamblers, according to that definition.
Buying a stock is like gambling. Buying an index is like owning part of the casino. I like the house's odds better.
But that's the thing - you're not buying the stock or the index. And when it rises you lose. Sure you get the premium to compensate somewhat but it doesn't make up the delta.
And to be clear, I'm not advocating using options to zig zag in and out of the market. I like writing puts when I'm establishing a new position. Just as with FB, once I get the position, I'm pretty much done. Buying FB at 127 wouldn't have been a terrible move. I just like owning it at 120 a little bit better. ;)
Post by: Mr Mark on November 21, 2017, 05:51:49 AM
Overall the stock picking has been great so far.
1 yr returns were 16.8% vs the 'stache 12.7%
3yr annualised returns (so includes my huge hit on CRC earlier last year) 24.7% vs a boring 8.3%.
BUT dominated by a couple of really good pics - CRC PRU. And helped by more modest gains on OROCF, DOW and JNJ.
Now it's getting harder to find the gems. So as I said intend to pull back into mostly my AA indexes.
But it's been fun, and I'll hold the bets on OROCF and OMAG. Plus the safer dividends of NHI and WBG
Sorry I’ve been a bit tardy updating the stock picking action, just been darn busy at work lately.
After the recent continued run up (as I mentioned earlier) I decided to take profits and exit most of my individual stocks and increase the concentration in 1 stock – the lithium miner OROCF - and the rest is back into the portfolio index mix.
I found that the dividend stocks that looked good and outperformed a while ago when I started getting back into the picking game have started to just mirror (or underperform) the wider market and figured I’d take my winnings now. Still have some cash waiting for an opportunity to pick up a couple of targets a bit cheaper than now. Problem is Thorstache keeps making the market go up... ;-)
Here’s the status of the picking account as of today*
OROCF
My favourite “I think I know better than the market, because electric cars, wind and PV systems are going to take off IMHO. Lithium ion is still the best game in town, and therefore Li is essential to the success of moving the world’s economy economy from molecules to electrons. OROCF has the cheapest Li mine on the planet and is a pure Li play.”
Bought 1700 @ $2.60 on 10/25/2016
Bought another 3500 at $3.59 10/26/2017
Now $4.55, so balance at $23,659 incl. a paper profit of $6,681 = 39% so far (they don’t yet pay a dividend)
OMAG
Wow, what a ride lately. Penny stock of a super dooper speculative real estate deal company that’s close to a net negative cashflow induced bankruptcy. Very poor liquidity to trade. Lots of insiders with most of the stock. But if they pull it off…
Bought 25,000 @ 19.2c
Now X so paper profit of $1,208 = 25% so far (they don’t yet pay a dividend)
But super volatile! In between buying at 19.2 cents and now, the stock went as low as 4.5 cents a share… uuuggghhh on a tear last few weeks, so maybe someone knows something positive. Fingers crossed.
Other dividend stock holds:
NHI
National Health Investment REIT. Bought 100 for $7750 (50 at $74.33 on 1/17/17 and 50 at $80.63 08/22/17) and it’s been paying me a steady 5% dividend ever since. Price hasn’t moved much. Up just $45 = 0.6%.
WBK
Westpac bank (Australia). Bought 263 @ $22.96 for $6,038 on 06/27/2017 and now up $318 = 5%. But paying a sweet 6% dividend.
*after some posts in investor alley being all snarky recently because we’re talking here about beating the market, a statistical losers game and very non-MMM/BH, please remember we are having a bit of fun and only playing with a very small % of the ‘stache. I do not advocate buying and selling individual stocks with your FIRE ‘stache. In my case specifically, IF I underperformed the market by say 50%, and market went up 20% and my stock picks 10%, the delta to my retirement stache would be… about -0.3%
My 1 year return is 15%, whereas my main balanced index stache is up 16.4%. Ooops. Not so good. But, my 3 yr return is 24.3% vs 8%, and most of that is since start of 2016.
YMMV
Post by: Pizzabrewer on January 05, 2018, 08:26:49 PM
Post by: chasesfish on January 06, 2018, 05:49:40 AM
EPR
Most REITs are down some because of interest rates, but EPR is being hit due to fear about the movie industry. The movie business was down 2% (gross revenue) and 5% (tickets sold) respectively, which is in the same range as other "down" years. 35% debt in this REIT, so it has a little leverage.
Post by: jacquespluto on January 06, 2018, 09:01:40 PM
I prefer selling time premium through option structures on the SPX. Mostly some version of a broken wing butterfly. I feel like the "house" at a casino and my monthly returns are around 4-5%, yearly 50-60%.I've been thinking about something like this for a long time, and would like to hear more about your approach. The point would be to tie earnings to something more reliable than stock market returns, such as time decay or risk premium. The trick would be to set up a strategy that works in isolation of the market's ups and downs. I've been considering primarily calendar spreads, butterflies, and verticals for their downside protection. In reality, I'm selling cash-secured puts and covered calls. However I'm also aware that it's easy to "prove" a strategy in a multi-year raging bull market, but that "plans rarely survive the first encounter with the enemy."
Right now isn't even a great time to be doing this with historically low VIX, yet I'm still making solid returns. I'm not yet at a point to throw the majority of my non-IRA portfolio at this, but getting closer every month.
Sorry, I'm just now responding to this. I'm mostly trading broken-wing butterflies on SPX as well as Crude Oil futures. I have a set target profit for each trade as well as a defined exit point. These trades actually do better in flat or slightly declining markets - however, I'm setting them up with a slight bullish bias to take advantage of the current market.
I'm documenting my trades at RoamingOptions.com (http://RoamingOptions.com) and I'm happy to help answer more detailed questions.
Post by: jacquespluto on January 06, 2018, 09:11:12 PM
Jacques,
selling vol in a declining vol environment will work until it doesn't. I am not sure it's possible to do this properly (which is to say to set up a ringfenced entity that is non-recourse to you) on a small individual scale.
depending on the amount of inherent leverage you are taking on through selling options, you could end up owing your broker money (not just losing 100% of equity, but actually losing more than 100%).
Can you detail the size of the trades (number of contract/notional exposure) versus how much capital you're holding against it to calculate the "making 50-60%" number?
I am curious, because I've thought about doing this and everytime I talk to someone who actually is doing it, they are taking on pretty big time leverage to make decent returns.
mrsspendy -
Sorry I'm very late on the response as I forgot to check back in here. I don't use margin so I have a defined risk. Would never get into a position of a margin call or owing a broker.
As far as the size of trades, for example right now I have a broken wing butterfly on the SPX for a total of 12 contracts. This is a "3 lot' trade as the setup for each lot is 1 long put, 2 short puts in the middle, 1 long put. The max loss on this trade would be around $9k ($3k per lot) and that would happen if the market were to drop 5%+ overnight. If the drop happened over the course of a few days I would be out due to my defined exit strategy for that trade.
I also use cheap out of the money VIX calls to help hedge the risk that the market opens up 5% down the next day. This generally costs me $200-$300 per month and basically acts as insurance against a black swan event.
I'm documenting most of my trading on RoamingOptions.com (http://RoamingOptions.com) and happy to help answer any other questions you have.
Post by: Mr Mark on January 28, 2018, 02:48:42 AM
EXAS pulled back from its all-time high set about 2 months ago. But looking back over the last year's performance I can't complain about a brief period of consolidation. I think it's revving up for another run and predict it will top $100 in 2018.
I see you're down about 12% since then PB - you still holding on for $100?
Post by: Pizzabrewer on January 28, 2018, 04:11:47 PM
I see you're down about 12% since then PB - you still holding on for $100?
Short answer, yes.
EXAS gained over 300% in 2017 and has moved down and sideways the past 2 months due to short-term issues (including a bout of attempted manipulation by shorts). The long-term outlook remains unchanged IMO.
At the risk of sounding like a pumper, the longer I'm in this stock the more I'm convinced it is a once-in-a-decade company. The premise is remarkably simple, the market is huge (30-40 million adults who resist traditional CRC screening methods), the benefits to the health care market AND to patients are extraordinary, management has proven to be top-notch in their execution, and there is no competition for the forseeable future. Plus they are working on new diagnostic tests for several other cancers with strong IP patents and working closely with the Mayo Clinic.
This stock is a buy-and-hold for the next 20 years. In a decade $100 will look like a cheap entry price.
Post by: midwesterner1982 on January 29, 2018, 03:11:38 AM
Post by: Pizzabrewer on January 29, 2018, 06:39:51 PM
https://seekingalpha.com/article/4140784-exact-sciences-corp-admit-early-science-held-back
(https://seekingalpha.com/article/4140784-exact-sciences-corp-admit-early-science-held-back)
Andrew Left is his name and he is a particularly sleazy short seller. He took a shot at EXAS a few months ago and after a brief pullback it continued to climb in price. Now he's taking another shot.
This entire article is garbage. It is full of factual errors, misleading assumptions, unsupported innuendos; in short it is FUD of the highest order. This kind of manipulation can be devastating to developmental-stage biotechs (one of the main reasons I no longer put money in those) but he's butting up against a real success story here. This hit piece barely nicked EXAS stock today.
And for further entertainment, Left faced off against EXAS' CEO on CNBC last time he tried to shoot down the company. The CEO handed Left his ass. You can see the video here:
https://www.cnbc.com/2017/05/15/ceo-fires-back-at-short-seller-on-tv-mr-left-is-dead-wrong.html
(https://www.cnbc.com/2017/05/15/ceo-fires-back-at-short-seller-on-tv-mr-left-is-dead-wrong.html)
Post by: Pizzabrewer on May 31, 2018, 08:20:13 AM
Then yesterday the American cancer society recommended lowering the screening age for CRC to 45 and the euphoria has returned.
Post by: chasesfish on June 01, 2018, 06:41:58 PM
Worked well
Post by: Pizzabrewer on June 05, 2018, 06:47:44 PM
This company is in the early stages of becoming a health care behemoth. Their goal is to be the leading cancer detection company, targeting the top 10 cancer killers.
I ain't selling another share.
Post by: bwall on June 05, 2018, 07:02:54 PM
EXAS set a new closing high today then set a new all time high in after-hours trading. Usually AH is meaningless but not in this case. They announced stellar results in a blood-based liver cancer test.
This company is in the early stages of becoming a health care behemoth. Their goal is to be the leading cancer detection company, targeting the top 10 cancer killers.
I ain't selling another share.
If you're in to bio pharma cancer research stocks, I'd recommend LOXO, new listing, two products now in Phase II studies and smaller market cap than EXAS. They already have one marketing/sales agreement with Bayer. Ripe for a takeover, or better.
As always, do your homework.
Post by: Pizzabrewer on June 05, 2018, 07:20:32 PM
EXAS set a new closing high today then set a new all time high in after-hours trading. Usually AH is meaningless but not in this case. They announced stellar results in a blood-based liver cancer test.
This company is in the early stages of becoming a health care behemoth. Their goal is to be the leading cancer detection company, targeting the top 10 cancer killers.
I ain't selling another share.
If you're in to bio pharma cancer research stocks, I'd recommend LOXO, new listing, two products now in Phase II studies and smaller market cap than EXAS. They already have one marketing/sales agreement with Bayer. Ripe for a takeover, or better.
As always, do your homework.
Are they involved in cancer treatment or detection? I've sworn off investing in companies developing new cures. Way too risky.
Post by: bwall on June 06, 2018, 05:24:28 AM
EXAS set a new closing high today then set a new all time high in after-hours trading. Usually AH is meaningless but not in this case. They announced stellar results in a blood-based liver cancer test.
This company is in the early stages of becoming a health care behemoth. Their goal is to be the leading cancer detection company, targeting the top 10 cancer killers.
I ain't selling another share.
If you're in to bio pharma cancer research stocks, I'd recommend LOXO, new listing, two products now in Phase II studies and smaller market cap than EXAS. They already have one marketing/sales agreement with Bayer. Ripe for a takeover, or better.
As always, do your homework.
Are they involved in cancer treatment or detection? I've sworn off investing in companies developing new cures. Way too risky.
I think that most companies in this space now have to offer a diagnostic device if they are developing new medicines. However, I do see how it's a risky area. I read the reports and press releases and can't make heads or tails of them. My wife, who worked in a university cancer research department, reads them and tells me if it's good news or not.
For example, I read the two paragraph report of a competitor and couldn't figure out why the stock had dropped. My wife read it and told me that the problem was that it had gotten only a 'partial response' (basically meaningless) and not an 'overall response'. Or, what the difference is between 'first line, second line, third line, etc.' treatments are. This after reading a press release about a drug "meeting an unmet need for fourth-line treatments!" (basically useless from an investor's standpoint).
Post by: bwall on June 06, 2018, 10:16:31 AM
Post by: Pizzabrewer on June 18, 2018, 07:53:27 AM
Post by: Pizzabrewer on June 18, 2018, 10:05:14 AM
My other stock pick at the beginning of this thread has been a dud. I've lost 15% on KERX. They still have the best drug in the space (phosphate binder for dialysis-dependent CKD patients) and a few months ago got FDA clearance as the only approved iron supplement for the chronically anemic pre-dialysis CKD population. There've also been several studies released highlighting the benefits of anemia management, showing both the effectiveness of the drug and the overall health benefits to these patients who now largely go untreated.
Yet the management has proven incompetent to capitalize on the overwhelming good news. The CEO was recently fired by the board and the company seems in turmoil. I've lost faith in their ability to execute and my only hope at this point is a buyout by a big pharma. So I've sold off most of my position and hold on to a bit in hopes of a miracle.
Which brings me to my new investment, TRXC. They have the first new robotic surgical system to legitimately compete with da Vinci in the past 20 years. Sales so far are negligible but they have been doing a great job of training surgeons on the system to build the broad acceptance that will lead to sales. One notable recent sale was to the huge LSU/UMC facility in New Orleans, one of the leading medical training grounds in the country. Surgeons who use the system do prefer it to da Vinci. TRXC has a market cap of $800 million while ISRG (da Vinci) is $55 billion. A gamble, yes, but with a big upside.
Post by: Retire-Canada on June 18, 2018, 01:31:52 PM
TRXC has a market cap of $800 million while ISRG (da Vinci) is $55 billion. A gamble, yes, but with a big upside.
How much are you gambling?
Post by: Pizzabrewer on June 18, 2018, 02:11:45 PM
TRXC has a market cap of $800 million while ISRG (da Vinci) is $55 billion. A gamble, yes, but with a big upside.
How much are you gambling?
A bit hard to calculate precisely as I have both shares and calls at several strike prices and dates. But probably 2 to 3 percent of our net worth.
EXAS continues to be a huge chunk of our NW. Historically it has been around 25% but with the recent runup it's probably over 30%.
Post by: Retire-Canada on June 18, 2018, 02:22:47 PM
A bit hard to calculate precisely as I have both shares and calls at several strike prices and dates. But probably 2 to 3 percent of our net worth.
EXAS continues to be a huge chunk of our NW. Historically it has been around 25% but with the recent runup it's probably over 30%.
Thanks for the info. It helps put the situation into perspective. If you'l indulge me with one last question where are you in terms of invested $$ vs. your FIRE $$ target? Like if you are shooting for $1M and have $500K invested you'd be at 50%.
Post by: Pizzabrewer on June 22, 2018, 05:48:21 PM
A bit hard to calculate precisely as I have both shares and calls at several strike prices and dates. But probably 2 to 3 percent of our net worth.
EXAS continues to be a huge chunk of our NW. Historically it has been around 25% but with the recent runup it's probably over 30%.
Thanks for the info. It helps put the situation into perspective. If you'l indulge me with one last question where are you in terms of invested $$ vs. your FIRE $$ target? Like if you are shooting for $1M and have $500K invested you'd be at 50%.
We're around 45% of our goal.
When we started getting serious about our finances 18 months ago we were at 20% so the increase has been remarkable. We're saving much more of our income (all new savings have been going into index funds) but the "risky" investments continue to power our growth. It's been a bit of a high wire act, EXAS alone has been the majority of the increase. And I've been cycling 0% cc debt to max our retirement accounts, for which I'm being mercilessly facepunched on another thread.
Post by: Pizzabrewer on June 22, 2018, 05:50:56 PM
Post by: talltexan on August 16, 2018, 09:10:18 AM
Post by: Pizzabrewer on August 29, 2018, 11:56:42 AM
Then a week ago they announced a marketing partnership with Pfizer. Now the stock is setting new highs. I've gained about $40k in a week. About $30k of that was regaining lost ground. There's a lot of excitement that comes along with stock picking that's for sure.
KERX continues to suck.
TRXC continues to be a company on the rise. The stock now trades around $5.50.
Post by: ChpBstrd on August 31, 2018, 06:27:12 PM
But has anyone noticed how attributions for stock picks that went down are typically "I picked the wrong stock" and attributions for stock picks that went up are typically "I am good at stock picking"? I.e. a losing bet is just a losing bet, but a winning bet implies something about the method.
Post by: Pizzabrewer on August 31, 2018, 07:30:10 PM
But has anyone noticed how attributions for stock picks that went down are typically "I picked the wrong stock" and attributions for stock picks that went up are typically "I am good at stock picking"? I.e. a losing bet is just a losing bet, but a winning bet implies something about the method.
Certainly not in my case. I've never claimed credit for superior ability nor deflected blame when I picked a dog.
I've lost plenty of times in the past and have learned what I think are a few good lessons. Will those lessons produce reliable winning results going forward? I think so but chances are, probably not. As small investors we certainly don't have access to much information.
Post by: Pizzabrewer on September 04, 2018, 12:55:33 PM
I'm getting the message and have been aggressively selling the past few trading sessions. I think even the most ardent bull would admit the valuation has gotten way out ahead of the fundamentals, good as they are.
Post by: Percolate on September 05, 2018, 12:02:24 AM
I'm getting the message and have been aggressively selling the past few trading sessions. I think even the most ardent bull would admit the valuation has gotten way out ahead of the fundamentals, good as they are.
I've made a number of good bets this past year or two in tech stocks and haven't been able to convince myself to pull out. I know I probably should count myself lucky having gambled and beat the market and take my winnings and go home, but it's tough, seems like they just keep going higher.
Post by: Cache_Stash on September 06, 2018, 10:10:55 AM
EXAS continues to be a beast. New all-time high today, right at the end of trading. A bullish sign if there ever was one.
What's your strategy for taking profit PB?
One of the nice to have 'problems' with good picks that take off is when to sell (& if selling, all or half?), double down or hold.
Personally, I don't every buy a stock without an exit strategy. Goals have to be made or events happen etc....
Here is one of mine for Appl: I'll sell all of it if they ever buy TSLA. I have others for Appl, of course. I normally have about 5-6 metrics/events assigned. The exit strategy changes as the company grows. I revisit them about once a year.
Post by: meghan88 on September 15, 2018, 05:54:16 PM
Of course, now that I've gone on the record about this, it WILL start acting unpredictably, but I am not in it right now. Just waiting for the next low, and being mindful of the next central bank interest rate announcement.
Post by: Pizzabrewer on September 21, 2018, 07:53:43 PM
Shareholders are (IMO rightly) incensed by the low buyout price. This may be one of the rare instances in which the shareholders' voice may hold some sway. MDT currently owns 11% of the stock and insiders and institutions another 23%. So "retail" holds more than 50%.
The deal will probably go through as announced but there is a better-than-none chance the offer will be raised or another company will make a competing offer.
So I took a gamble and bought 30 October calls @ $60 strike, at 14 cents. A low-odds speculation to be sure, but my $420 stake could potentially be a big payout.
Post by: Jeffwa365 on September 28, 2018, 04:03:52 PM
Post by: Retire-Canada on September 28, 2018, 04:43:49 PM
I think stocks do derserve a place in every portfolio. Do you own a iPhone? So does everyone else. Why wouldn’t I own a few like 5 percent of my portfolio in individual stocks. Just do some research and buy good established companies. Don’t be a hater
Apple is great. The market agrees and because of that I do hold Apple as part of an index fund without having to do anything at all. Personally I use an Android phone, but I have that stock as well via an index fund.
Post by: Pizzabrewer on December 03, 2018, 08:36:33 AM
Post by: Blueberries on December 03, 2018, 09:10:37 AM
EXAS was in a months-long funk but as it is wont to do it came roaring back. New all-time high this morning.
It was consolidating. I hope you aren't doubting your earlier profit taking; professionals sell into strength and aren't concerned with getting the absolute high.
Post by: gertitorpe on December 09, 2018, 08:27:06 AM
I don't like the idea of investing in ETFs. Love the US and their economy but my experience is that when I read everywhere to invest in "X" you are usually late from the party.
Why have I decided to go for stock picking? I live and work in Eastern Europe where saving 1mill USD from your salary is not realistic in the time frame I have set to retire. (between 35-40. I am now 30)
So I need higher return than the average to achieve my goals.
About 60% of my wealth is in the company (US tech) I work for. Some shares were assigned to me (almost for free) when I joined the company and the company performs well since then. Stock prices climbed about 300% percent in the past 5 years (rough estimate because the stock price was very volatile in the first 6 months. My biggest investment mistake was to sell about the half of the assigned shares too early and buying a car from the money received :) You can guess, I haven't heard about the blog at that time yet.
The other 40% is invested in individual stocks (no leverage) which are picked with my own quiet simple method. I am bad with spotting great companies but perform relatively well to acquire companies undergoing crisis and media hysteria. Whenever you meet you see big financial headlines on BBC.com there is money to make.
I do buy 3-4 stocks per year top and don't hold more than that in the same time so I can retain focus. Usually dump the share in 12 months when the crisis is mitigated. Not all picks are winners but I managed to gain around 20-25% in the past 3 years, including this year where I was lucky to buy the Turkish crisis and PCG in the right time.
This involves a lot's of thinking, reading Financial reports, earnings calls which I especially enjoy to do and courage to act when the stars are aligned.
The good thing about averages that there are always people who over perform them just us people who are stuck at average or below that.
Time will tell if I manage to beat averages on the long term or not.
Post by: Pizzabrewer on January 31, 2019, 09:46:50 PM
If you're in to bio pharma cancer research stocks, I'd recommend LOXO, new listing, two products now in Phase II studies and smaller market cap than EXAS. They already have one marketing/sales agreement with Bayer. Ripe for a takeover, or better.
As always, do your homework.
Hey that was a good call! I hope you followed your own advice and had shares when the buyout was announced.
Congrats!
Post by: Pizzabrewer on January 31, 2019, 09:53:50 PM
Post by: talltexan on February 04, 2019, 01:44:42 PM
I bid on some call options, but I was too low and the order didn't fill.
Post by: Pizzabrewer on February 27, 2019, 09:37:14 PM
Post by: bwall on February 28, 2019, 09:03:11 AM
If you're in to bio pharma cancer research stocks, I'd recommend LOXO, new listing, two products now in Phase II studies and smaller market cap than EXAS. They already have one marketing/sales agreement with Bayer. Ripe for a takeover, or better.
As always, do your homework.
Hey that was a good call! I hope you followed your own advice and had shares when the buyout was announced.
Congrats!
Just now saw the post. Thanks for the well wishes. I kept all my shares. Didn't do as well as I liked, but over 100% return in a year is hard to complain about. I beat the S&P again in 2018. More dumb luck than stock picking or trading skill.
I'm surprised that EXAS is doing as well as it is. Last summer you said it was a great stock and I didn't see it even when you served it up to me on a silver platter.
Post by: Pizzabrewer on May 02, 2019, 01:40:33 PM
Post by: talltexan on May 03, 2019, 09:21:27 AM
Took all the money in my employer's stock, and put it into $SLYV and $DLS.
Small-cap value, set it and forget it!
Post by: Pizzabrewer on June 10, 2019, 09:50:47 AM
I’m sure y’all have seen the ads for Cologuard on TV. they’re still in the early stages but on their way to dominating the CRC screening market. And their pipeline of other cancer tests is looking strong.
Post by: Mr Mark on July 06, 2019, 11:45:31 AM
As I said before you don't get this kind of excitement with index funds.
great call on that pizzabrewer! We can't say we weren't tipped on EXAS!!
Post by: A Fella from Stella on July 16, 2019, 12:53:14 PM
Post by: Pizzabrewer on July 31, 2019, 10:50:35 AM
As I expected/hoped, the price rebounded nicely and is back around $120. I've sold 20 of the $118 contracts for over $6000. The remaining 28 contracts are worth about $8k right now. Maybe I should sell but I'm hoping for a $30-40k windfall. That'll happen if the stock tops $125 in the next day or 2. Not entirely out of the question.
Greedy? Perhaps.
Post by: Mr Mark on August 01, 2019, 10:43:24 AM
Well this is the place to brag, right? EXAS again. On Monday it was announced that they had agreed to buy Genomic Health for $2.8 billion. For some reason it is customary for Wall Street to punish the stock of an acquiring company and EXAS dropped from ~$120 down to about $103 Monday morning. As it dropped I bought some weekly call options, $120 strike at 20 cents (20 contracts) and $118 strike at 15 cents (28 contracts). Total investment (bet) was $870.
As I expected/hoped, the price rebounded nicely and is back around $120. I've sold 20 of the $118 contracts for over $6000. The remaining 28 contracts are worth about $8k right now. Maybe I should sell but I'm hoping for a $30-40k windfall. That'll happen if the stock tops $125 in the next day or 2. Not entirely out of the question.
Greedy? Perhaps.
nice one PB!!
Maybe buy some insurance on that pony you're riding when it goes to 130 and buy some cheap puts?
Post by: Pizzabrewer on August 01, 2019, 09:23:25 PM
Post by: Pizzabrewer on December 06, 2020, 11:17:08 AM
Anyway the company has exclusive rights to what looks like the biggest onshore oil find in decades. They have 25-year exploration and development leases for 8.75 million acres, covering the entire basin. It’s no fly-by-night outfit, the principals and consultants are veteran successful oilfield pros. And they have a lot of their own money in the game. Their rig will begin drilling exploratory wells within 2 months. If they prove the reserves, the company will be worth many multiples of its current value.
How big are the reserves? Estimates vary wildly, from 1 billion to 100+ billion barrels. It’s being compared to West Texas.
If anyone wants to learn more there’s plenty of videos and data on the website. A good place to start is here. https://m.youtube.com/watch?fbclid=IwAR3qV2IRTDUMD-5z1wcrfuiUal1TpUD4rPRgjs2uSrBLidGkwUaHshVR_E0&feature=youtu.be&v=8R1T7QwOnSQ
(https://m.youtube.com/watch?fbclid=IwAR3qV2IRTDUMD-5z1wcrfuiUal1TpUD4rPRgjs2uSrBLidGkwUaHshVR_E0&feature=youtu.be&v=8R1T7QwOnSQ)
Yeah, I know, this sounds like the same fishy pitch we’ve all heard many times before. But I plunked down $3k on the stock, my geologist buddy bought $10k. My average price is a buck, his is 72 cents.
One way or another it’ll be an interesting couple of months...
Post by: bwall on December 07, 2020, 06:51:13 AM
OMG! That is incredibly risky. A Canadian company with 7 employees (!) that only holds an oil and gas license in Africa. What could possibly go wrong? As per their own info:
"Reconnaissance Energy Africa Ltd, formerly Lund Enterprises Corporation, is an oil and gas company. The Company is engaged in the exploration and development of oil and gas in Namibia. The Company holds interest in a petroleum exploration license in northeast Namibia, which covers the entire Kavango sedimentary basin."
So, the first company (Lund) already went out of business and they re-branded the stock as Reconnaissance Energy Africa. Think; reverse merger. Lund had no value left other than their stock listing. So these 7 guys get together and buy the defunct company consisting of only a stock listing, make wild claims about ownership/property rights in Africa, issue new shares, and.... now what? Again, they only 'hold interest in a petroleum exploration license"; meaning, they don't own it outright, therefore they must also have a partner. Who is that partner? What are the terms of that deal?
Going back to the 'reverse merger' method of listing stock--by buying up Lund, Recon. didn't have to submit documents and go through all the due diligence of an IPO. They just updated their info onto the old info by Lund. It's cheaper, of course, but also it hides all the risk for investors. It's the same method by which many many Chinese companies get listed on the NYSE/NASDAQ and then burn the investors.
And, as for Canadian resource extraction companies, I'd encourage any potential investor in that sector to review the cautionary tale of Bre-X: https://en.wikipedia.org/wiki/Bre-X (https://en.wikipedia.org/wiki/Bre-X) That stuff actually happened in a Western country with stock market oversight, a questioning media, rule of law, etc.
Now, Namibia is one of the better run countries in S. Africa, but property rights there aren't the same as in the West. Stuff gets nationalized there all the time. Sam Nujoma tried to kick white farmers off the land in Namibia, with mixed results. He couldn't quite pull off the same trick as Mugabe in next door Zimbabwe.
OK, I just looked on the map on their website where their license claim/rights are. It's right next to Angola and the Caprivi Strip. The southern part of war-torn Angola ruled by Jonas Savimbi for 30 years (or so) until his death in 2002. Will it stay stable and peaceful? Well, as long as no oil or gas is found, why shouldn't it? Back in the 1980's no one went into the Caprivi Strip--it was no man's land. Most of the new large oil and gas deposits found today are found in risky places in the world and this one is no exception.
So, I'd put the chance of a total loss of your investment at about 40%. Since your cost basis is $1 and closing price on Friday was $1.74, I'd put the chance of a 70% return also at 40%. The other 20% I'd say is the chance of a less than total loss.
Post by: Pizzabrewer on December 07, 2020, 03:34:49 PM
The difference here is my lifelong friend, an oilfield geologist with 40 years' experience, who vouches for the science and who knows all the principals either personally or by reputation. is that a guarantee? No.
Yup, they bought out Lund to speed up stock listing. It's done all the time, for reasons both legitimate and nefarious.
They hold a 90% interest in the leases with the other 10% held by the Namibian government. The government also will get a 5% royalty on all revenues generated (compared to the 25% royalties in West Texas). Several major oil companies are already doing business offshore in Namibia, so far no seizures or nationalization of assets. If RECAF does prove the reserves it's likely one or more of those majors will partner and/or buy them out.
Thanks for your DD on the violence in the neighboring countries. That's not something I've looked into but will do further research.
Yes there is a non-zero chance of losing my entire investment. Losing $3k wouldn't be fun but wouldn't affect our finances very much. It's a calculated risk for a potential enormous payoff.
Post by: bwall on December 08, 2020, 06:24:15 AM
Best of luck! Let us know how the trade ends once you've exited your position.
Post by: BoostJunky on December 08, 2020, 08:32:00 AM
Well this is the place to brag, right? EXAS again. On Monday it was announced that they had agreed to buy Genomic Health for $2.8 billion. For some reason it is customary for Wall Street to punish the stock of an acquiring company and EXAS dropped from ~$120 down to about $103 Monday morning. As it dropped I bought some weekly call options, $120 strike at 20 cents (20 contracts) and $118 strike at 15 cents (28 contracts). Total investment (bet) was $870.
As I expected/hoped, the price rebounded nicely and is back around $120. I've sold 20 of the $118 contracts for over $6000. The remaining 28 contracts are worth about $8k right now. Maybe I should sell but I'm hoping for a $30-40k windfall. That'll happen if the stock tops $125 in the next day or 2. Not entirely out of the question.
Greedy? Perhaps.
Awesome job on this one.
Post by: Pizzabrewer on January 12, 2021, 04:50:29 PM
Oh, and EXAS is now $150 after strong Q4 numbers.
Post by: BoostJunky on January 13, 2021, 08:37:42 AM
RECAF is heating up. They’ve started drilling the first exploratory well this week and the stock has spiked up sharply. Lots of FOMO. There’s still a good chance of a total bust but if it’s a home run it just got closer.
Oh, and EXAS is now $150 after strong Q4 numbers.
Been following this one as well, I hopped out last week (1.98) and then of course Monday morning they announce more drilling. (I bought it at 1.59) I always seem to dump right before it spikes. It's at 2.75 now which makes me nervous to get back in so high with so much speculation.
Post by: time is money on January 13, 2021, 09:51:33 AM
Post by: Pizzabrewer on January 16, 2021, 03:45:08 PM
Been keeping an eye on this company. Incredible story, almost too good to be true. Well done on getting in for a buck. Any ideas at all what could be the share price range if the results from drilling are good?
To answer your question, there's lots of wild predictions out there. I'm seeing forecasts of $500-$1000 per share or more. While that is possible (and makes for fun daydreaming), it's pretty remote.
I look at it as a series of de-risking events. The company has just started drilling the first of three exploratory wells. They are not looking to strike oil with these (although that would not be unwelcome), but rather to prove the existence of a petroleum system in the region. This source rock, at sufficient depth and thickness, would indicate oil production is/has been possible. This is the next de-risking step and if successful would probably drive the share price to $20-$50. We should have this data by April.
Once a system has been proven, the next step is to find the actual oil. This depends a lot on the geology; the existence of trap basins, proper seal rock (without a top seal oil will work its way to the surface and evaporate), and any other number of variables.
Once oil reserves are proven it is a matter of scale. The lower estimates of 1 billion barrels of recoverable oil probably mean the company is worth $30-50 per share. If it is indeed a new Midland Basin, with upwards of 100 billion barrels, you could indeed see share prices in the hundreds. Thousands? It's fun to dream. But it's also possible to find oil that's not of sufficient quantity, quality and cost of extraction to make it commercially viable.
Obviously there's a lot of potential roadblocks on the way. If the reserves prove to be mostly gas, or "tight" oil requiring fracking, then extraction, processing and transport costs will be higher than if it is (as hoped) an easily pumped "conventional" play.
The company is comprised of successful oilfield pros who don't need this on their resume, indeed a few have come out of retirement for this opportunity. I'm no expert but my good friend who spent his career as an oilfield geologist, has invested about 10x what I have in this stock. So it's my "moonshot" stock. I'm optimistic.
Post by: time is money on April 15, 2021, 04:25:27 AM
The fact that they have good results already from well #1 is quite promising.
Post by: Pizzabrewer on April 15, 2021, 04:38:10 AM
RECAF first well has confirmed working petroleum system. Frankfurt stock line is up 40% this morning. Will be interesting to see where US snd Canada lines will go later today as Frankfurt line is generally trading quite low volumes.
The fact that they have good results already from well #1 is quite promising.
Yes! I’m excited and my geo-petro friend is ecstatic. It should be the beginning of some fun times. I hope you are holding a few shares.
Post by: time is money on April 15, 2021, 06:05:28 AM
Post by: MustacheAndaHalf on April 18, 2021, 11:09:25 AM
I still hold call options in Callon Petroleum, which is a $1.5 billion company at $34/share. But I bought call options when it was around $6/share, so more of a micro-cap stock back then.
I imagine there's an art to picking enough stocks that you diversify, but not so many you can longer keep track of them.
Post by: i_have_so_much_to_learn on April 23, 2021, 03:16:36 PM
Oil stocks have paid off really well for me in the past 12 months. But I wanted to mention that of dozens of stocks I picked, only two went bankrupt: both were micro-cap oil companies. Fortunately I diversified, and it worked out - but if I put everything in one of those two ... it would have gone very badly.
I still hold call options in Callon Petroleum, which is a $1.5 billion company at $34/share. But I bought call options when it was around $6/share, so more of a micro-cap stock back then.
I imagine there's an art to picking enough stocks that you diversify, but not so many you can longer keep track of them.
Can't agree with this enough. If you pick so many that you need to spend days researching them, that's probably an antipattern. Also a rule for myself: I don't invest in anything I don't understand.
Post by: Mr Mark on April 29, 2021, 04:59:15 PM
RECAF first well has confirmed working petroleum system. Frankfurt stock line is up 40% this morning. Will be interesting to see where US snd Canada lines will go later today as Frankfurt line is generally trading quite low volumes.
The fact that they have good results already from well #1 is quite promising.
Yes! I’m excited and my geo-petro friend is ecstatic. It should be the beginning of some fun times. I hope you are holding a few shares.
great call PB!!
Post by: Pizzabrewer on April 29, 2021, 07:44:18 PM
RECAF first well has confirmed working petroleum system. Frankfurt stock line is up 40% this morning. Will be interesting to see where US snd Canada lines will go later today as Frankfurt line is generally trading quite low volumes.
The fact that they have good results already from well #1 is quite promising.
Yes! I’m excited and my geo-petro friend is ecstatic. It should be the beginning of some fun times. I hope you are holding a few shares.
great call PB!!
It’s still highly speculative. But with the possibility of what this could be, it hasn’t even begun to take off.
Post by: thedigitalone on April 30, 2021, 11:47:21 AM
It’s still highly speculative. But with the possibility of what this could be, it hasn’t even begun to take off.
Bah. Tried to buy @6.40 on the 28th and it didn't go through, it has gone up 3-5% per day since then. Now I need to decide if I should wait for a dip or just jump in.
Post by: Pizzabrewer on May 03, 2021, 06:22:02 AM
Yes it's a typical negative spin (environmental risk, big bad oil company running roughshod over locals) but it's also millions of people hearing about it for the first time.
Post by: talltexan on May 04, 2021, 07:25:22 AM
So I picked all the single-letter stocks to track a while ago, and threw in my kids' initials. Kinda convenient that we named my son "Tesla".
Post by: Pizzabrewer on June 22, 2021, 05:31:11 PM
Post by: MustacheAndaHalf on June 23, 2021, 09:57:53 AM
RECAF broke through $10 in a big way today. Yes it pulled back at the close but no one is going to argue with the gains this stock has made the past few weeks.Earlier you mentioned news in April would send the stock into the $20-$50 range, and it looks like after the dust settled, it doubled ($3 -> $7). Why do you think it hit $7 and not $35 on the news?
I still hold calls in CPE, which has gone from $14 to $57 so far in 2021. But I'm almost done selling my 2022 Jan calls ... oil has been a great run upwards, but I'm not quite sure where it goes from here.
Posts from 2017 show you bought put options with a 2 week expiration, and they expired worthless. I've done something similar: I bought puts on Covid sensitive stocks last year, and was even right about rising cases... but the stocks didn't respond in time. I think if you learn to avoid puts that expire in weeks, it will make you a better stock picker. But that's just my view, I'm not an expert.
Post by: Pizzabrewer on June 24, 2021, 04:37:36 PM
RECAF broke through $10 in a big way today. Yes it pulled back at the close but no one is going to argue with the gains this stock has made the past few weeks.Earlier you mentioned news in April would send the stock into the $20-$50 range, and it looks like after the dust settled, it doubled ($3 -> $7). Why do you think it hit $7 and not $35 on the news?
In hindsight, April was too aggressive as a target. We still don’t have all the data but what we have is positive and IMO justifies a current $12-15 share price. The upside potential hasn’t changed.
Post by: MustacheAndaHalf on June 25, 2021, 01:57:44 PM
I still hold calls in CPE, which has gone from $14 to $57 so far in 2021. But I'm almost done selling my 2022 Jan calls ... oil has been a great run upwards, but I'm not quite sure where it goes from here.I bought CPE calls back in September, and have sold them today after a run up from $6 to $59. Two other tiny oil companies went bankrupt, so the 10x gains should be considered with that in mind.
New oil companies are risky investments. What percentage of your portfolio are you investing, and do you have other stock picks outside the energy sector?In hindsight, April was too aggressive as a target. We still don’t have all the data but what we have is positive and IMO justifies a current $12-15 share price. The upside potential hasn’t changed.RECAF broke through $10 in a big way today. Yes it pulled back at the close but no one is going to argue with the gains this stock has made the past few weeks.Earlier you mentioned news in April would send the stock into the $20-$50 range, and it looks like after the dust settled, it doubled ($3 -> $7). Why do you think it hit $7 and not $35 on the news?
Post by: joe189man on August 09, 2021, 11:12:58 AM
Post by: BigLumox on August 12, 2021, 11:58:05 AM