Investing General Discussion

Blazin said:

Weekly jobless claims just came in 6.65M

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Blazin said:

You have to remember that options are priced for the current volatility level. So a straddle will still have trouble making money unless volatility exceeds the expected level at the time you enter the trade. We are at a 60 vix so obviously we are going to have volatility in the next week but if that volatility declines during the hold period then the straddle will likely just eat your paid premiums. I know some people like to put on a straddle when they can see that the market is squeezing into a tight range and will break a direction, they then exit the side of the trade that is wrong. This obviously requires not being fooled by head fakes.

It is not a trade that I would currently be interested in.


Weekly jobless claims just came in 6.65M

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Sanrith Descartes said:

I didn't think it was possible for me to hate our elected officials more than I do. I was wrong. Johnny53 them all.

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Big Phoenix said:

And the market is green. Im assuming from the huge rise in oil?

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Blazin said:

Can't be all of it, market rallied into the close two hours after the oil market closed. Reality is an overwhelming majority are positioned for the market to go lower and retest lows (some believe it will hold some believe we go lower) and the market is never going to let the majority make money that easy. I have the same feelings but yet I've seen enough to know that the zigs and zags will continue to shake people's resolve in their positions. This could go on for weeks. Most recessionary bear markets that set a low and a subsequent test take months to do so. We are all kind of impatient right now wanting it to hurry up and do what it's going to do. Us spending time in this price range, does not mean we are out of the woods nor does it mean another large leg down is imminent.

Data is horrible, the market expect that horrible data. In fact I believe most investors have thrown out 2020 at this point. It's why people are going to keep being so confused on how it seemingly ignores the bad data that is coming. THe market is forward looking, we just crashed 35% in 20 days because of that coming bad data. We have earnings starting in a few weeks as the market begins trying to price 2021 earnings is likely what is going to drive us lower or continue the recovery. Companies are going to use this to throw everything out now knowing the number will just be set aside. The earnings hit is going to be massive, but investors are going to want to know what they see going forward.

I still believe we have a retest ahead because companies during those earnings are not going to be able to give any valuable guidance on 2021 earnings this quarter it's going to take till July for any kind of clarity, this is going to disappoint investors who will pull back bids in the face of that unknown.

Couple data points, one way to measure cyclical bear markets is to see what P/E they trade down to based on the previous peak earnings. So for the S&P around $165 in earnings, if the pullback would be as severe as 09 and 00 then we would go back to and likely break 2000 to trade in a P/E of 10 on previous peak earnings. Investors are willing to pause here trying to figure out if this recovery will be faster than those incidents, and if is that level of discounting won't be necessary. It's hard to see the numbers coming in and not think we are in for quite a recession, but we have factors that did not exist during those down turns. We have a massive liquidity injection (absolutely massive) and we had a economy that was booming and not rolling over due to internal dysfunction so every PhD and analyst out there is going to try to figure out what the shape of this recovery is.

I'm not going to guess, because that's all it would be. The more information I get the clearer it will become, for me and the market. It may not feel it day to day but the market in the long run follows earnings, so energy is better be focused on where we are headed with fundamentals. I like that stock picking is likely to increase vs indexing. It's easier to analyze what MSFT earnings might be next year than try to model the Wilshire 5000.

I do find it funny that people will give targets for an index and if you then ask them what earnings and multiple they are modeling to get there they don't even know, just pissing in the wind. For those people they can just stop pretending they understand things they don't and just sit an index fund and stop looking at it, and be happy knowing they will end up doing better than people who actually do understand the dynamics. Investing can be a beautiful thing in that you don't need to understand high finance to succeed, but people with high confidence and little understanding are a huge detriment to their own returns.

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Sanrith Descartes said:

I would take all yields with a certain amount of skepticism under current circumstances. I consider very, very few to be safe.

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