Investing General Discussion

Blazin · Mar 30, 2020

Sanrith Descartes said:
I will try to distill down the mortgage issue going on now. So mortgage lenders hedge against downside. They do this by shorting MBS (mortgage backed securities). Those instruments don't move much at all in terms of price (a handful of basis points).

An unintended consequence of the Fed buying truckloads of bonds is they are driving up the prices of those same MBSs the mortgage lenders shorted as a hedge. Instead of the prices fluctuating a few basis points, they are rising a full percent or two. This is causing large scale margin calls on those short positions. They have reached out to FINRA, the SEC and the FED to address this unintended consequence. This in effect can cascade to a mortgage crisis that would do the same type of damage to the market's health that the oil war is doing. There are only so many major shocks the market can take and continue to function.

Blazin did I explain that correctly?

Yes, the Fed has already back off purchases as the market has calmed.

Big Phoenix · Mar 30, 2020

Bought more AMD @ 47.25 friday, sold today at 47.85. Holding over the weekend with that end of day drop was annoying.

Sanrith Descartes · Mar 30, 2020

I foresee a drop on Weds with the rebalancing completed. I bought short duration puts on the SPYG.

TJT · Mar 30, 2020

Supposedly true unemployment on Thursday right?

Pops · Mar 30, 2020

We are all flying blind. But the US has rebounded from far worse catastrophes. Sadly when we need to pull together as a nation to weather yet another storm, we have this partisan bull shit.

Blazin · Mar 30, 2020

TJT said:
Supposedly true unemployment on Thursday right?

Thu is weekly jobless claims. Friday will be unemployment report. The Friday number will still be a lagging number.

Sanrith Descartes · Mar 30, 2020

Pops said:
We are all flying blind. But the US has rebounded from far worse catastrophes. Sadly when we need to pull together as a nation to weather yet another storm, we have this partisan bull shit.

We will get through this. There will be ugliness to deal with on the other side but the market will rebound. This isnt the time to be conservative in my opinion. These opportunities are rare. Even if/when we retest the lows there are some real bargains available

Furry · Mar 30, 2020

Sanrith Descartes said:
We will get through this. There will be ugliness to deal with on the other side but the market will rebound. This isnt the time to be conservative in my opinion. These opportunities are rare. Even if/when we retest the lows there are some real bargains available

Knowing how deep the rabbit hole goes is gonna come down to two factors:

1. Knowing how retarded the fed can be. Every day I feel like we've hit the peak, but the fed just keeps finding more ways to one up itself. I agree with almost nothing that they've done.
2. Knowing how bad the quarantines are for the economy and how long they last.

We could turn on a dime pretty quick and go back up, or this could be a decade long ultra travesty. More likely we'll probably end up somewhere in the middle, but I think this will be the worst crash since the great depression. I'm almost certainly sure this will be a boon for america long term economically, but we're gonna have to go through a lot of pain to get to that point.

Sanrith Descartes · Mar 30, 2020

I dont think we get a V recovery. I think after initial up we grind our way back up.

Furry · Mar 30, 2020

Sanrith Descartes said:
I dont think we get a V recovery. I think after initial up we grind our way back up.

It's possible, but I agree that it doesn't seem very likely atm.

Pops · Mar 30, 2020

Sanrith Descartes said:
I dont think we get a V recovery. I think after initial up we grind our way back up.

It's full blown printing press from here out. Beggar thy neighbor. Trump has played this hand before. OPM.

Sanrith Descartes · Mar 30, 2020

Pops said:
It's full blown printing press from here out. Beggar thy neighbor. Trump has played this hand before. OPM.

If this becomes a replay of the Xmas crash of 2018 and its crazy PPT assisted recovery I will have little faith in its stability. I much prefer a steady grind up with drops associated with the bad news to come. If we V up, we will just get massive plunges as the bad news rolls in.

TJT · Mar 31, 2020

Sanrith Descartes said:
I decided to bet against real estate. Bought some puts on XLRE. Aug expiry and I believe we will see the shockwaves in real estate long before that.

Why not do a play on Lennar? They handle both the building and they're their own mortgage lender.

Sanrith Descartes · Mar 31, 2020

TJT said:
Why not do a play on Lennar? They handle both the building and they're their own mortgage lender.

I am playing the odds. A single company vs an ETF filling with RE companies. Also the ETF is more business RE which I think is going to tank quicker on bad news.

Sanrith Descartes · Mar 31, 2020

its a crazy day on Wallstreet when your best performers are Exxon and Delta.

karma · Mar 31, 2020

Solid enough day I managed profitable swings on all 3 cruise lines and disney, only holding 1 stock now, an oops I got stuck in, but it doesnt worry me.

Ravishing · Mar 31, 2020

I'm torn between holding, or dumping everything to wait for a huge down day.
Problem is, hard to say if we'll have anymore big down days like the weeks prior. The biggest damage could be over.

TomServo · Mar 31, 2020

wait till thursday i guess

Sanrith Descartes · Mar 31, 2020

Pension rebalancing should end today. I am not hopeful for green tomorrow without some crazy out of left field shit happening.

Blazin · Mar 31, 2020

Ravishing said:
I'm torn between holding, or dumping everything to wait for a huge down day.
Problem is, hard to say if we'll have anymore big down days like the weeks prior. The biggest damage could be over.

Do a little of both, drop a position you are most concerned about to raise cash for another decline. Selling everything is a gamble that can leave you having to buy back higher. Time in the market beats timing the market. I have raised cash again on this bounce but I'm still keeping longs even though I think a decline is likely.

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