Gyroscopic Investing

Oh, man, it was a non sequitur!

MangoMan wrote: ↑Sun Mar 29, 2020 4:31 pm

sophie wrote: ↑Sun Mar 29, 2020 4:26 pm

Tortoise wrote: ↑Sat Mar 28, 2020 11:16 pm

Smith1776 wrote: ↑Sat Mar 28, 2020 9:11 pm lmao my favourite one is "Guys I Rebalanced (Moved Monies Out Of S&P 500)." How TF does that constitute rebalancing? That's the opposite of rebalancing. It's capitulation.

Apparently as long as you have an “asset allocation,” you get to keep your Boglehead card — even if you time the market by dynamically shifting your asset allocation around.

Lots of people on this forum do the same thing. I'm one of them in the sense that I shifted from the PP to a GB thinking that "prosperity" is likely to dominate, so overweighting stocks would be better in the long run.

However, we are on average much happier and less tempted to market-time than your average 100% stocks investor...geez, those guys must be REALLY crying into their soup. Can't say they weren't warned though.

My GF has her entire 401k (read: life savings) in a S&P 500 fund. I've been telling her for 2 years she ought to diversify into some LTT, but she ignored my advice. Her retirement date is gonna get pushed out by years, unless she can find some rich guy to marry. Any of you guys interested? She's really cute.

If you don't rebalance out of gold in the next year or two, maybe she could marry you.

MangoMan wrote: ↑Sun Mar 29, 2020 5:37 pm

Libertarian666 wrote: ↑Sun Mar 29, 2020 4:50 pm

MangoMan wrote: ↑Sun Mar 29, 2020 4:31 pm

sophie wrote: ↑Sun Mar 29, 2020 4:26 pm

Tortoise wrote: ↑Sat Mar 28, 2020 11:16 pm

Smith1776 wrote: ↑Sat Mar 28, 2020 9:11 pm lmao my favourite one is "Guys I Rebalanced (Moved Monies Out Of S&P 500)." How TF does that constitute rebalancing? That's the opposite of rebalancing. It's capitulation.

Apparently as long as you have an “asset allocation,” you get to keep your Boglehead card — even if you time the market by dynamically shifting your asset allocation around.

Lots of people on this forum do the same thing. I'm one of them in the sense that I shifted from the PP to a GB thinking that "prosperity" is likely to dominate, so overweighting stocks would be better in the long run.

However, we are on average much happier and less tempted to market-time than your average 100% stocks investor...geez, those guys must be REALLY crying into their soup. Can't say they weren't warned though.

My GF has her entire 401k (read: life savings) in a S&P 500 fund. I've been telling her for 2 years she ought to diversify into some LTT, but she ignored my advice. Her retirement date is gonna get pushed out by years, unless she can find some rich guy to marry. Any of you guys interested? She's really cute.

If you don't rebalance out of gold in the next year or two, maybe she could marry you.

Nope, my point was that if someone was going to marry her, it wasn't going to be me. To be fair, she knew this going in.

Got it.

This is a cool animation... I love the musical score.

https://www.youtube.com/watch?v=X6E9zZ-TG9w

This stock market is just so argggh and I hardly own any. It's just so much foreboding about jobs and all.

ochotona wrote: ↑Wed Apr 01, 2020 3:53 pm This stock market is just so argggh and I hardly own any. It's just so much foreboding about jobs and all.

Yeah stocks are drunk. We are still in the bad economic news is good news regime. 6M+ unemployment claims in the last week, with the 3M+ last week we now have more unemployment claims in the last 2 weeks than we had the entire financial crisis... and stocks are rallying today. Of course they are still in their down trend, I'm still bearish in the short term. But yeah, basically, when volatility is high like this the big league pitching thrown by markets is very hard to hit on a day by day basis.

I think we at the very least need to retest that 2350 area. I only see that holding if data somehow takes an unexpected turn for the better. I'm currently thinking we are most probable to bottom in the 1900-2100 range. If we lose that area, worst case scenario is the 2000 and 2007 highs of around 1550. If we reach that 1550 level I'm buying as many LEAP's as I can afford, haha. That's my back the freaking truck up number. That would be a once in a lifetime kind of opportunity. Because it would be so good, I think it's too good to be true, so I see the 1900-2100 as the most probable bottom given the info I have at the moment. But yeah, the day to day moves make no sense sometimes.

PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

ochotona wrote: ↑Thu Apr 02, 2020 10:41 am PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

Nope, that's it. As long as you are long the leaps, and not short, your maximum risk is your purchase price.

ochotona wrote: ↑Thu Apr 02, 2020 10:41 am PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

Not really, so long as you sell before time decay becomes an issue. I would likely sell with about 3-6 months left for that reason and either roll them or keep profits. I mean, there is always the risk the market goes down and you take a loss (capped at purchase price)... but I do not see a realistic scenario at the moment where the S&P could go much lower than 1550. If we did go lower than 1550... it would be the type of scenario where losing money on your options would be the least of your worries.

pmward wrote: ↑Thu Apr 02, 2020 10:45 am If we did go lower than 1550... it would be the type of scenario where losing money on your options would be the least of your worries.

Hussman's got his bug in my ear, so I'm thinking 1100. Then there's always Nenner... Dow 5000. Maybe instead of bottom picking I'll use leverage when I get a risk-on signal. Paul Novell actually has model portfolio involving 2x and 3x QQQ and SPY, and 3X TLT. They are 40% and 50% CAGR, and bone-burning volatility!!!

I can't even tell you how many back up the truck Leaps I have bought in the past, esp. on GLD and SLV.

Can't lose. Really. Can't lose. Uh huh.

I understand where you are coming from but I envision this for your situation: We hit your 1550, you buy Leaps when volatility is still high. Maybe 1-2 years out expiration. We then settle in a range for months, carving out a U bottom. People either don't have money or don't want to spend money for a long time after this.

Volatility drops. Your options are in the red. Time decay sets in as well. You sell just to save a bigger loss or roll and hope. The once in a lifetime opportunity becomes an ehhh.

Just my general experience!

Being about 2% down YTD, I have thought of selling everything and going into CDs for an undetermined amount of time. But the issue for me is I would likely never get back in for years. So I see no option other than staying the course and rebalancing.

Cortopassi wrote: ↑Thu Apr 02, 2020 11:08 am I can't even tell you how many back up the truck Leaps I have bought in the past, esp. on GLD and SLV.

Can't lose. Really. Can't lose. Uh huh.

I understand where you are coming from but I envision this for your situation: We hit your 1550, you buy Leaps when volatility is still high. Maybe 1-2 years out expiration. We then settle in a range for months, carving out a U bottom. People either don't have money or don't want to spend money for a long time after this.

Volatility drops. Your options are in the red. Time decay sets in as well. You sell just to save a bigger loss or roll and hope. The once in a lifetime opportunity becomes an ehhh.

Just my general experience!

Being about 2% down YTD, I have thought of selling everything and going into CDs for an undetermined amount of time. But the issue for me is I would likely never get back in for years. So I see no option other than staying the course and rebalancing.

Everything about this is correct. When you do go to buy the leaps, the volatility premium will be extraordinarily high. They will not be a "deal". They will be fairly priced. Meaning a crap-shoot on whether you come out ahead or not.

Mark Leavy wrote: ↑Thu Apr 02, 2020 10:45 am

ochotona wrote: ↑Thu Apr 02, 2020 10:41 am PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

Nope, that's it. As long as you are long the leaps, and not short, your maximum risk is your purchase price.

Assuming you sell before they expire, anyway.
If you hold to expiry, you end up with a long position in the underlying that you probably don't want.

Libertarian666 wrote: ↑Thu Apr 02, 2020 11:26 am

Mark Leavy wrote: ↑Thu Apr 02, 2020 10:45 am

ochotona wrote: ↑Thu Apr 02, 2020 10:41 am PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

Nope, that's it. As long as you are long the leaps, and not short, your maximum risk is your purchase price.

Assuming you sell before they expire, anyway.
If you hold to expiry, you end up with a long position in the underlying that you probably don't want.

You only end up long if the leaps expire in the money - and then you can immediately close your position for a profit. A lot of brokers will close the position for you automatically and you never end up holding the underlying stock. So no risk at all. If the options expire out of the money you end up with nothing, including no added exposure.

ochotona wrote: ↑Thu Apr 02, 2020 10:58 am

pmward wrote: ↑Thu Apr 02, 2020 10:45 am If we did go lower than 1550... it would be the type of scenario where losing money on your options would be the least of your worries.

Hussman's got his bug in my ear, so I'm thinking 1100. Then there's always Nenner... Dow 5000. Maybe instead of bottom picking I'll use leverage when I get a risk-on signal. Paul Novell actually has model portfolio involving 2x and 3x QQQ and SPY, and 3X TLT. They are 40% and 50% CAGR, and bone-burning volatility!!!

The only way we go to 1100 is if the entire financial system melts down. I see no evidence yet to even consider this scenario. My mind may change with emerging info, but at the moment the way things are playing out 1900-2100 looks like the most likely bottom. If you wait for a for sure, can't miss "risk on signal" you would be buying back in higher than we are today. The problem is early signals are not reliable, and reliable signals are too late. I personally plan to start scaling in little by little instead of trying to find the perfect bottom. I may even start dabbling a little bit around 2350 depending on what the trends in price action and active cases are looking like at that time. But I would not even consider leverage until we are at least in the 1900 range.

Also, be careful of levered ETF's. The time decay factor in them is huge. I personally have a rule to never hold those overnight as the gap risk is too large. And holding for more than a week or two is silly. Those ETF's always lose in the long run due to the way they are structured. And their 2x or 3x is only setup to be intraday, they rebalance every night, so anything more than an intraday hold is not really 2x or 3x.

Mark Leavy wrote: ↑Thu Apr 02, 2020 11:29 am

Libertarian666 wrote: ↑Thu Apr 02, 2020 11:26 am

Mark Leavy wrote: ↑Thu Apr 02, 2020 10:45 am

ochotona wrote: ↑Thu Apr 02, 2020 10:41 am PM, other than the option expiring worthless, is there any other risk associated with LEAPS?

Nope, that's it. As long as you are long the leaps, and not short, your maximum risk is your purchase price.

Assuming you sell before they expire, anyway.
If you hold to expiry, you end up with a long position in the underlying that you probably don't want.

You only end up long if the leaps expire in the money - and then you can immediately close your position for a profit. A lot of brokers will close the position for you automatically and you never end up holding the underlying stock. So no risk at all. If the options expire out of the money you end up with nothing, including no added exposure.

Yes, I meant to say "if they expire in the money". If brokers will close it for you automatically, that is different from my experience with commodity options, which will leave you with a position if they expire in the money.

pmward wrote: ↑Thu Apr 02, 2020 11:47 am Also, be careful of levered ETF's. The time decay factor in them is huge. I personally have a rule to never hold those overnight as the gap risk is too large. And holding for more than a week or two is silly. Those ETF's always lose in the long run due to the way they are structured. And their 2x or 3x is only setup to be intraday, they rebalance every night, so anything more than an intraday hold is not really 2x or 3x.

My remarks were kind of in jest. Those vehicles are dangerous. Reading the prospecti just makes me... brrrr...

From Fidelity - "Buyers and sellers of LEAPS should consider the implications of Greeks.* Vega (an option price’s sensitivity for a given change in implied volatility) can be much higher for LEAPS. If you are thinking about buying LEAPS, you may want to do so when implied volatility is relatively low. Also, rho (an options’ sensitivity to a change in interest rates) can be important."

So buy a LEAP when VIX has quieted down substantially, when we're stable at whatever low or negative rate we end up at, and people are basically just lying on the floor bleeding out and whimpering?

ochotona wrote: ↑Thu Apr 02, 2020 12:08 pm From Fidelity - "Buyers and sellers of LEAPS should consider the implications of Greeks.* Vega (an option price’s sensitivity for a given change in implied volatility) can be much higher for LEAPS. If you are thinking about buying LEAPS, you may want to do so when implied volatility is relatively low. Also, rho (an options’ sensitivity to a change in interest rates) can be important."

So buy a LEAP when VIX has quieted down substantially, when we're stable at whatever low or negative rate we end up at, and people are basically just lying on the floor bleeding out and whimpering?

Usually markets bottom with lower volatility. Look back at 08. Volatility spiked in October 08, and plummeted by the time the real bottom was hit in March 09 at much lower levels. Volatility is only high when people are still panicking and bulls are still fighting the downtrend. When the bulls give up, volatility will subside, even though the market will still be trending lower. The peak of the VIX in Oct 08 was 96. What was it at the bottom the week of March 9th 09? Only 17. At the time of a real "once in a lifetime" bottom, nobody will want to buy LEAP options. That is precisely the time to load up on them.

And look at that, stocks fading now. Big reversal there.

pmward wrote: ↑Thu Apr 02, 2020 12:15 pm What was it at the bottom the week of March 9th 09? Only 17. At the time of a real "once in a lifetime" bottom, nobody will want to buy LEAP options. That is precisely the time to load up on them.

Sounds great. Oh, the market reverse because everyone figured out DJT was totally lying about 10 million barrel cuts from Saudi and Russia. Both Saudi and Russia issued statements denying speaking about such cuts. This is so not the first time DJT lied like a toddler and then got caught. So many times. Googleplex times. People shorting crude oil at the top of the spike made some coin today, thanks to the Liar-In-Chief.

ochotona wrote: ↑Thu Apr 02, 2020 1:39 pm

pmward wrote: ↑Thu Apr 02, 2020 12:15 pm What was it at the bottom the week of March 9th 09? Only 17. At the time of a real "once in a lifetime" bottom, nobody will want to buy LEAP options. That is precisely the time to load up on them.

Sounds great. Oh, the market reverse because everyone figured out DJT was totally lying about 10 million barrel cuts from Saudi and Russia. Both Saudi and Russia issued statements denying speaking about such cuts. This is so not the first time DJT lied like a toddler and then got caught. So many times. Googleplex times. People shorting crude oil at the top of the spike made some coin today, thanks to the Liar-In-Chief.

Yes, he is always exaggerating and trying to jawbone the market. Of course, at this point, a production cut is a pretty moot point. The damage is already done. We already are drowning in supply and have 0 demand.

I apologize if it's already come up: You know how Gundlach has been predicting a stock drop? At least one stock newsletter guy is really miffed. Louis Navellier accused him of making that prediction to "help bonds" and called Gundlach a "weenie." Hmm. I look forward to their upcoming in-person debate.

Libertarian666 wrote: ↑Thu Apr 02, 2020 1:44 pm Here's the actual tweet:
"Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!"
https://twitter.com/realDonaldTrump/sta ... 7660925952

What is the lie exactly? Is he lying about his hope and expectation? How could you possibly know that?

The lie is not about "10 million barrels". The lie is about having spoken to Putin and MBS.

- the news portal for the Saudi royal family did confirm Trump and MBS spoke, but "10 million barrels" was not in the press release.

- Kremlin spokesman Dmitry Peskov refused on Thursday US President DT's claims about a phone conversation between Russian President P. and Saudi Crown Prince MBS. "No. There was no such conversation".

Also... 10 million barrels... per day? per month? per year? or one-time? He just said, and you quoted him, "10 million barrels". If one-time, that's about 3 hours of world consumption. Big deal!

Never forget, Trump came from real estate! If his mouth is moving... he's lying.

Why do people feel compelled to keep carrying DJT's water? Seems pointless to me.

Oilprice.com

No one has launched any talks about a potential new oil-production deal to replace the OPEC+ format, Dmitry Peskov, press secretary of Russia’s President Vladimir Putin, said on Thursday, hours after U.S. President Donald Trump said that former friends-turned-foes Saudi Arabia and Russia are talking and “I think they’ll to come up with something.”

“No one has started talking about any specific or abstract deals yet,” the Kremlin spokesman Peskov told reporters on Thursday, as carried by Russian news agency TASS.

Also https://www.zerohedge.com/energy/oil-sp ... mm-barrels