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Stock Analysis and Trades Thread

Daniel_Doyce

By Daniel_Doyce
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ThePhleo

ThePhleo | 2,184

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As a test to follow the memes I put $100 in Dogecoin last night. When the order went through I realized I made a horrific mistake and added an extra zero.

Instead of immediately cashing out I instead let it ride.

It was only a few minutes later that I realized that I hit the button twice, you see Robinhood was overloaded so I tried to submit the order multiple times by closing the app and reopening it.

$1100 later, I realized I’m an idiot....but I cashed most of it out and sold near the last nights peak. Made like $300 in minutes just following memes, would have been a bit more if I sold it all last night, but I thought the memers would get it up to a quarter by morning.

If memes are the way to go then I’m gonna go full millennial and dye my hair blue.

6A5D3D3C-4FC9-4F0F-AF2B-DBFF4EE60B5C.jpeg.9023b25854957c12e8d9e1b19f835742.jpeg

This is stupid.

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jonebone

jonebone | 1,307

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We're getting towards real trouble here.  Essentially if they recruit enough people to buy out of the money calls they can theoretically push a stock to infinity.  The do loop occurs because the stock moves so fast that those out of the money calls become close to in the money, then the brokerages must buy the underlying stock in case people exercise those calls.  And when the stock is heavily shorted, the shares don't exist.  Not to mention people just hopping on the meme train trying to buy them anyway.

Whatever happens here could have much bigger ripple effects across the entire market.  RH shut down buying not necessarily to side with the hedge funds but just because they're trying to stop the entire system from falling.  Problem will be even if they shut down GME the next meme stock could pop today and they can't just halt trading on everything.

Either way, pucker those buttholes and keep witnessing history.  Still hasn't come to a head.

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DoctorEncore

DoctorEncore | 3,690

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Posted (edited)
25 minutes ago, jonebone said:

We're getting towards real trouble here.  Essentially if they recruit enough people to buy out of the money calls they can theoretically push a stock to infinity.  The do loop occurs because the stock moves so fast that those out of the money calls become close to in the money, then the brokerages must buy the underlying stock in case people exercise those calls.  And when the stock is heavily shorted, the shares don't exist.  Not to mention people just hopping on the meme train trying to buy them anyway.

Whatever happens here could have much bigger ripple effects across the entire market.  RH shut down buying not necessarily to side with the hedge funds but just because they're trying to stop the entire system from falling.  Problem will be even if they shut down GME the next meme stock could pop today and they can't just halt trading on everything.

Either way, pucker those buttholes and keep witnessing history.  Still hasn't come to a head.

I'm seriously considering moving all my money into bonds or even cash for a few months. I can't control every single aspect of my 401ks and 529s, but I have total management of my IRAs. This is getting scary.

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Californication

Californication | 1,477

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I mean we've had massive bubble for a while now. So many stock prices are completly disassociated with earnings - it has been completly irrational. The reddit push is just a dif. flavor of that imo. TSLA was at like 1700 P/E. at one point. At the end of the day, this goes back to thr Fed. and the way they have pumped up the market and refused to raise interest rates before the pandemic as well as congress doing top down stimuls rather than bottom up.

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DoctorEncore

DoctorEncore | 3,690

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10 minutes ago, ThePhleo said:


So, if there’s a pending bloodbath does that mean the best time to buy is coming soon?

Pretty much everyone agrees we're approaching bubble territory. If the Biden administration can manage this with a steady hand, we should just see stocks slow their growth and hopefully avoid a crash. Still, I think there's a decent chance we'll get a correction in 2021 and that will be a good time to buy.

Now if you're talking about long term investing (i.e. retirement), the only strategy you need is buy and hold. The best time to buy is simply whenever you have money to spare. The reason 401ks are so amazing is because people steadily contribute throughout the year. That means your bad buys are negated by good buys and the market just steadily climbs. In that scenario, index funds and bonds are the only things you need to buy. Almost everything I own at this point are index funds. And the few stocks I do own are reliable heavy hitters (Amazon, Microsoft, Netflix, Apple, Walmart, etc).

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jonebone

jonebone | 1,307

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The only reason I don't think stocks are in a bubble is because we've printed the crap out of our dollar with all of this stimulus.  The dollar is so weak now and likely to get weaker.  You have to remember all of the macro economic stuff (and I'm not an expert all) before assessing if the market is overvalued.

Best strategy is to always dollar cost average yourself over time if you have market uncertainty.  Sure, if the market takes off you have to pay more to get in later, but if it tanks, you also didn't lose nearly as much as someone who got in early.  That the best risk adverse approach.

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DoctorEncore

DoctorEncore | 3,690

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5 minutes ago, Californication said:

Index funds won't protect you against a market breakdown. My grandparents were in mostly index before 2008 and it took them 4 or 5 years to recover. So yes, long term you are okay, but you have to be careful when you drop in.

Well if you want to invest in the market, nothing can truly protect you from a total crash. But averaged over time, your gains from the ten years before the crash and ten years after the crash will still have you way ahead compared to bonds or cash. Long term investing is all about constant cash injection, not timing. You shouldn't even look at the market if you're in long term. And as you're nearing short term (i.e. retirement), you should be getting out of the market anyways.

Here's a great article from 538 that touches on a similar (although not identical) scenario: https://fivethirtyeight.com/features/worried-about-the-stock-market-whatever-you-do-dont-sell/

image.png.2ec1ff8f5199db65f3b9eaf00164b24e.png

Edited by DoctorEncore
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a3quit4s

a3quit4s | 4,092

Posted
Posted (edited)
18 minutes ago, Californication said:

Index funds won't protect you against a market breakdown. My grandparents were in mostly index before 2008 and it took them 4 or 5 years to recover. So yes, long term you are okay, but you have to be careful when you drop in.

I've got 30-40 1 ounce silver coins upstairs so I am all set for the apocalypse, either the virus or the stock market hahaha

edit: not to mention a mint Little Samson that will sell quickly in the sewers after the surface becomes uninhabitable 

Edited by a3quit4s
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Californication

Californication | 1,477

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17 minutes ago, DoctorEncore said:

Well if you want to invest in the market, nothing can truly protect you from a total crash. But averaged over time, your gains from the ten years before the crash and ten years after the crash will still have you way ahead compared to bonds or cash. Long term investing is all about constant cash injection, not timing. You shouldn't even look at the market if you're in long term. And as you're nearing short term (i.e. retirement), you should be getting out of the market anyways.

Here's a great article from 538 that touches on a similar (although not identical) scenario: https://fivethirtyeight.com/features/worried-about-the-stock-market-whatever-you-do-dont-sell/

image.png.2ec1ff8f5199db65f3b9eaf00164b24e.png

I'll take a look. I don't like 538 though, their calculations on political numbers are notoriously bad despite being widely used. 

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arch_8ngel

arch_8ngel | 1,597

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52 minutes ago, Bearcat-Doug said:

I feel safer with Bitcoin than stocks right now. 

That is a lot of faith to put in the CCP deciding not to crush it with a 51% attack 😛

In all seriousness -- I could see them deciding to use their mining position as a weapon if they think it will add fuel to the fire on a meltdown that primarily damages western countries.

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arch_8ngel

arch_8ngel | 1,597

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Just now, Californication said:

I'll take a look. I don't like 538 though, their calculations on political numbers are notoriously bad despite being widely used. 

The concept he's referring to with them has been pretty extensively studied by a big range of sources, and there are monte carlo simulations you can run to "prove it to yourself" that gradual accumulation and resulting buy-and-hold is GENERALLY superior to trying to time things.

That said -- you have to do what lets you sleep well at night.  When things are crazy having a chunk in cash as "dry powder" -- even if it is definitely suboptimal -- is one of those psychological things like owning your house / paying off the mortgage. 

Yes, statistically, you're likely to be wrong -- but the toll of stress is very real, and you can rationalize it as "beefing up your emergency fund" in times of uncertainty, IMO.

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arch_8ngel

arch_8ngel | 1,597

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55 minutes ago, ThePhleo said:


So, if there’s a pending bloodbath does that mean the best time to buy is coming soon?

I've been debating this all morning.

One possibility -- if the WSB guys REALLY "succeed" -- it is going to set off a chain of financial-firm bankruptcies that is going to ripple far and wide.

Another possibility -- if they "partially" succeed (i.e. force shorts to cover at what is still a "very high" price -- but not the "infinity squeeze) -- there are going to be a lot of meme-investors VERY flush with cash and looking for places to put it.

Yet another (less likely at this point) possibility -- the shorts somehow manage to survive the next couple of days of squeezes -- the meme investor money simply evaporates, fewer hedge funds get wiped out, and all that cash doesn't get reallocated from hedge funds to WSB to throw whereever they want to next.

 

 

The question is going to come down to:

(1) how the squeeze (both gamma squeezes from options and the short squeeze itself) manifests

(2) how broadly the hedge fund bankruptcy damage spreads -- and what kinds of positions those hedge funds have to IMMEDIATELY exit to cover their losses on this wave of meme stocks

(3) whether ANY of this triggers any buy/sell rules within institutional investor pools, or whether they are able to passively ride it all out

(4) what kind of bi-partisan proposals for changes to trading regulations come out, and how quickly (and what the perception is about who these regulations will hurt)

(5) whether any of the politicians eventually succeed in proposals to add financial transaction taxes to exchanges (would effectively kill high frequency trading and would act as a significant speed bump to meme trading)

 

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