Lack of trading and market thoughts/opinions on this site
I remember when I first joined this site there was a lot of talk about what moves the market and the true fundamentals of why security value changes. After any relatively "significant" move of any security, a thread would be started and a good debate would ensue where I would be able to learn and gain a bit more knowledge.
However, the site has devolved into something more along the lines of students asking for advice and people giving their opinions about relatively unimportant matters. While I too did ask for help on this site and post dumb things that could have been found/answered with a wuick Google search, I'd like to ask the community to try and push towards going back to what this site was founded on: talking about Wall Street. I want to hear more about what goes on in the market and what big players are doing.
I get this isn't r/wsb but I really miss the content of people talking about their market positions and what their outlook on the economy/ securitiy is.
I'll try to start us off, I have a 327 $SPY 06/12 Call which is down around 12% (11 dollars) and am planning to hold until the 11th or 10th. On Wednesday, I managed to get into some very good Delta, United, and American calls and turned around 280 dollars into 800 by selling at market open on Frisay. I also have a couple of positions in Delta, American, and BRK.B which have yielded very solid returns (around 25%). If you have any cheap buys or discounted equities drop them below.
For next week, my mentality is that the market overracted to the "good" news of unemployment numbers falling and that we will see a small (1-2%) decline in $SPY for the day with the dip coming in the morning and equities remaining flat throughout the trading day. However, with Trump doing everything he possibly can to save the economy and big daddy powell making the printer go bbrrr, equities will be back to highs within a week or two. Should I load up on calls and buy the possible dip or look for cheap buys (airlines, manufacturing, C&R, etc).
Also, what will the effect of the OPEC decision be on the overall market? Will higher prices help the economy grow or add to the COVID destruction of wealth? With demand growing at an ever slowing pace and a glut of supply globally, O&G firms were already levered to shit and im danger before being destroyed by COVID. While higher prices may save some firms on the brink of collapse, what will the higher prices mean for the economy?
What's your outlook on the dollar and the euro? Short term, mid term and long term that is.
I mean the dollar as the global safe currency of the world will continue to rise as long as there is some level of uncertainty in the world. Global, European, and Asian investors will dump money into any US asset class because 1) it is safer to hold doars than anything else 2) there is more yield on US instruments whether that is Gov Bonds or equities compared to other markets of the same risk levels 3) with COVID destroying wealth across the globe and creating a never before seen level of uncertainty, investors will flock to the US because of the fear and because tldr the fed is going brrr.
Summary, US is the safe haven and with global uncertainty investors want to hold dollars and invest in US asset classes.
For a long term outlook, I don't know what the effects of the printer going bbrrr in regards to the destruction of purchasing power of the dollar. Usually more money supply means more inflation means less individual dollar power, but with every single central bank making yhe printer go brrr, who knows what currency's will do.
Long term, making the printer go brrr and historically low rates will fuel debt and decrease yields on assets resulting in riskier investments to pay off the massive debt. It's a self fulfilling cycle.
What's your thoughts on LATAM? I know this is quite a broad topic but a lot of interesting political and economic events have always occurred with the market volatility to match. Venezuela is still a mess with migrants wanting to go to Colombia and other South american countries and there was a failed coup plot a couple of weeks ago while Brazil is dealing with most confirmed cases in the region as Bolsonaro doesn't seem to care about the virus as he took a more relaxed position in dealing with the spread including social distancing measures and now he wants to leave WHO. How do you view the economic and political state of the region to be in post covid? Any major changes or concerns that will occur specifically in LATAM as we adapt to a new world?
Also curious on how you view the importance of these countries in the global economy moving forward. Obviously they are important for exports but how do you see these countries emerging as inflation and debt rises in a region that has never been able to handle those things well with massive amounts of corruption and increasing wealth inequality. Would there be an increasing chance of a potential revolution in more countries if the poor continue to suffer as they can't find jobs to support themselves with the adjustments to inflation and potential lack of jobs given the automation and digitalization that we have seen being used efficiently and effectively.
Anyone with thoughts on the Norwegian Krone? It has dropped a lot, even in comparison to other commodity currencies
USD/EUR is a good trade imo.
Dollar value is gonna keep going up as a safe haven and Euro will likely go slightly down but not by much.
I would put more stock to USD/JPY or anything/JPY really.
In my opinion, the market has become completely out of wack with true fundamentals. The market is weighing states reopening the economy and a possible vaccine too heavily in the overall trend. Additionally, the economy hasn't been able to fully evolve to deal with the aftermath of Covid. I believe most furloughed workers aren't going to get their jobs back, yet many don't realize that due to the Fed providing insane stimulus packages for unemployed workers (most unemployed workers right now are making more than when they worked full-time). Consumer demand is at all time lows and just because states are reopening doesn't mean demand will be back at pre-Covid levels.
It seems that all the market cares about today is the Fed, vaccines, and reopenings. Equities continue to climb higher despite numerous issues that would normally shake investor confidence. We have civil unrest in the country and we also have international unrest with China over Hong Kong.
I know this was a little rantish and slightly rambled, but I am honestly confused on how stocks continue to climb higher and how investors continue to have confidence to buy. If I am missing something please let me know.
https://www.cnbc.com/2020/06/04/stock-market-futures-open-to-close-news…
I do not believe that the market has moved away from fundamentals to the point where there is an insane crash coming due to COVID. I do believe that we are overdue for a downturn that will be brought on not by COVID but by stagnating growth across the world. A few months ago we had an inverted yield curve and Trump passed the historical tax cut as essentially a way to boost corporate earnings which were already growing at a slower rate than before. Slowing economic growth was already occuring in Asia and Europe while the US was an outlier because of sentiment of having orange man at the helm (which helped US asset classes hit historica highs because foreign money poured into the economy). The global ecocnomy was struggling even before COVID and everyone knew a recession was coming. COVID complicated things, an understatement, and crashed entire industries, but not because of normal cyclical economic factors, but because of the fucking virus that destroyed supply chains and made demand for goods fall to 0 because of fear and uncertainty.
Right now, stocks are going up because printer go brrr. Think of it as this way, the PV of 100 dollar at a 10% discount rate 90.91 dollars. The Fed is essentially cutting that rate to .000000001% which makes PV of cash flows go up. On top of that, the Fed is actively scooping up assets so from a supply and demand perspective, you have low risk, infinite demand, and prices skyrocketing because the storngest central bank on the planet is guaranteeing securities.
Thanks for your reply and I agree with a lot of your ideas. Especially with the Fed buying up assets if done too much it will definitely create an asset bubble as investors think they will be backed by the fed.
As someone who didn’t study economics in college, can you explain this “fed makes printer go brrrr” (lmao) on how it affects the overall economy and especially inflation. I know lower interest rates theoretically should lead to higher investment from corporations. Yet as you said corporate profits have been stagnant while stock buybacks have increased. Seems to me that the market is out of wack with what’s going on.
Thanks again for your reply and any explanation would be helpful.
Are you even allowed to trade options as an analyst? Lol
Also, I’m not sure day trading options is a good idea, man. You get some big wins and feel invincible but a few wrong moves will blow you up.
bankers good, traders cucks
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Hahah all these "bankers" be trading their own portfolios too...and they say trading is dying FUNNY
I mean this specific forum you posted in is specifically meant for investment banking, so I'm not sure how you're confused.
Curious but how are you trading options (specifically on individual stocks) as analyst? Does your compliance dept allow that?
So there's the "market has become detached from fundamentals" crowd.
Is there a word for the opposite crowd? Because that's the crowd I'm in.
I watch too much CNBC and Bloomberg, which is bad but at least it gives me a sense of why people believe what they do. And the reason I hear all day that "the market has become detached from fundamentals" is that people can't think beyond simple multiples. Some folks are P/E, some folks are EV/EBITDA, some folks are CAPE but no matter what they are, they are incapable of thinking beyond multiples.
This limitation forces them into a place no rational person should be . . they either need to explain huge multiples because NTM earnings are temporarily garbage, or they need to come up with some new earnings number.
They're not capable of either. So what do they say, oh the market is detached from fundamentals. "How can I pay 30x P/E for a sector that's never traded above 20x". Well sir (or madam . . lookin at you Liz Ann Sonders), when E is temporarily down 70% and expected to recover, 30x may not be so bad. Or maybe it is. Gotta do some homework.
Its incredible to watch . . I honestly think the average guy on Robin Hood trading a $5k account knows more than the average CNBC talking head in times like these.
When people say the "market has become detached from fundamentals" I think most of them are referring to the current state of the economy and other factors that typically impact the market rather than just fundamental valuation methodologies.
Regardless of your view on whether the market is going to continue with a "V" shaped recovery or maybe have a second drop in prices, it is hard to argue that the current market isn't out of touch with the current state of the economy right now. The markets will always be a leading indicator while the economy is more of a lagging indicator. While investors in equities are betting on pent-up demand and a vaccine for the virus, they are implying that the economy will eventually reach more solid, higher levels.
Market sentiment will always drive the market, it's when that sentiment becomes too far out of touch with reality that a correction will need to occur.
What I think you're saying is that the market should be detached from current economic conditions. I agree with that. It seems obvious to both you and me.
But it doesn't seem very obvious to the talking heads. Many of them seem pretty surprised that the market would detach from the economy. Of course they understand its somewhat of a leading indicator, but they don't seem to fully grasp just how much of a leading indicator it is.
I'm not sure why they struggle with it. Its not hard. If you wipe out a year's earnings, you haven't changed lifetime value very much. In fact if you wipe out a year's earnings, and then increase the money supply, and then weaken some smaller competitors so that our company in question will have more market share in the long term, its quite easy to see why it should have a higher price today than it did 3 months ago.
Airplanes go up -> airplane stocks go up
take any stock you like. buy options for march next year. profit.
Because actual IB professionals can't trade. Hard to trade with a mandated 30 day hold period.
this
But they can buy their choice of ETFs tho right?
What banks let people trade subject to 30 days hold? The ones I know don't let you trade any individual stocks, just ETFs . . and in the case of ETFs, no hold period.
Yeah it's hard to trade. I just dump into my 401k and leave it alone. Anything else is too much hassle to actually get approval and trade
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