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Investment showdown -- beyond the Roth, SDP, & TSP

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I'm not a big fan of the index here. It's still quite expensive, in fact if you look at revised estimates for 2020 earnings you are paying the same P/E today as you were at the market peak in early February. Hardly a steal.  We're also still at almost 2x Sales when historic average is 1.5x and that's on trailing revenues.

relates to Ten Plagues and Four Questions: A Coronavirus Passover

There are some interesting cheap stocks out there although I would avoid airlines and casinos given poor balance sheets and incredibly high operating leverage. The government bailout of the airlines includes warrants which are massively dilutive to the equity in order to save the businesses from bankruptcy. That's not a good thing for those buying today. Aircraft lessors look like a much better bet at 0.3x book value. There are a bunch of junior gold miners who are still discounting ~$1,300 gold when spot is now $1,690 (I did a basket approach here because the risk of any individual miner can still be high). Crude tankers are getting a huge lift from the oil contango that still isn't fully priced in. Some smaller regional banks are now down to 0.5x book, even after they take some loan losses here they're probably ~0.7x book. Gun and ammo companies are getting hit despite the highest ever YoY NICS reading in March and Sportsman's Warehouse saying they are restricting the amount of ammo you can buy each day so they have enough to go around.

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21 hours ago, Ryder1587 said:

What’s everyone buying with the market down?  I’ve bought all the airlines , Vegas casinos , theme parks, etc.  high risk / high reward.  You can buy now for 1/3 the price from last month.  Crazy times. 

Bought a bunch of Disney a couple weeks ago, when it was at ~$90 a share...down from over $150.

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Harvested some capital losses and pushed that cash into oil/energy on 23 Mar. Otherwise just boosting regular contributions to passive funds.

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As someone else pointed out a few days ago.  Here we go, a bunch of military pilots have medical degrees...and now MBAs and economics degrees.  Keep buying chipotle fellas.

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Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


Sent from my iPhone using Baseops Network mobile app

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Posted (edited)
2 hours ago, di1630 said:

Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


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careful with this one.

 

"USO's Benchmark is the near month crude oil futures contract traded on the NYMEX. If the near month futures contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The crude oil contract is WTI light, sweet crude oil delivered to Cushing, Oklahoma.

USO invests primarily in listed crude oil futures contracts and other oil-related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less."

-http://www.uscfinvestments.com/uso

"Since all futures contracts have an expiration date, the United States Oil Fund must actively roll its front-month futures contract to the WTI crude oil futures contract expiring in the next month to avoid taking delivery of the commodity. The fund primarily holds front-month futures contracts on crude oil and has to roll over its futures contracts every month. For example, if it holds WTI crude oil futures contracts that expire in September 2020, it must roll over its contracts and purchase those that expire in October 2020."

https://www.investopedia.com/articles/markets/081116/uso-good-way-invest-oil-uso.asp

full disclosure i've lost about 2k on this fund cause my dumbass threw in a bunch of money at "oil" in march. guys on cnbc have warned against retail investors jumping into USO....basically said it's a fund for more advanced institutional investors

from FORBES:

"The solution here is for USO’s fund administrators to dissolve it, as happened with XIV.  Those administrators made a minute change in the fund’s composition last week—shifting holdings to the second- and third-month contracts instead of fully rolling over from the front-month contract to the second-month contract two weeks prior to expiration——but that was merely the proverbial shifting of the deck chairs on the Titanic.  USO has outlived its usefulness, if it ever had any."

https://www.forbes.com/sites/jimcollins/2020/04/20/the-us-oil-etf-uso-is-the-culprit-behind-oils-massive-plunge/#2de48ed524e8

Edited by BashiChuni
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15 hours ago, di1630 said:

Anyone know much about oil ETF’s? USO...I’ve lost my ass but you guys think that with eventual oil rebounds they could be a long term investment?


Sent from my iPhone using Baseops Network mobile app

Bashi pretty much hit the nail on the head but if you still own it, sell it today. They suspending creation of units, the whole ETF is broken and is now trading at a premium to NAV which should not happen. It is very likely this ETF is worth $0 in a month. No matter how much you already lost, you will probably lose 100% of what you have left if you continue to hold it.

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6 hours ago, Ryder1587 said:

Slowly starting to climb back up. 

Don't get suckered. You are here:

Untitled-3-636838184720637746.jpg

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Anyone else perplexed at the market right now?  There are almost no positive economic indicators at the moment yet the markets are steadily climbing back to pre-COVID levels.  I’m sitting here watching the unemployment numbers, profit/loss reports, etc and it just doesn’t make sense to me. The market is way overbought IMHO.

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Posted (edited)
2 hours ago, Runr6730 said:

Anyone else perplexed at the market right now?  There are almost no positive economic indicators at the moment yet the markets are steadily climbing back to pre-COVID levels.  I’m sitting here watching the unemployment numbers, profit/loss reports, etc and it just doesn’t make sense to me. The market is way overbought IMHO.

First and foremost, stock market doesn’t equal the economy. The economy is, IMHO, headed for a serious recession (if not full Depression), but that doesn’t mean the corps that make up the stock market are hurting as bad as average Americans. They have a faucet of cheap debt and bailout cash to keep their profits up. 

~$3,000,000,000,000 in freshly printed bailout money, with a solid chunk going to corporations to buy back stock, pay bonuses, and take out more cheap debt to lather, rinse, repeat, is a large part of the stock market continued push.

Unemployment benefits and salary loans pushing off the inevitable are trying to stop the bleeding, but it’s not gonna hold. Oh, and the fact it’s an election year and I’m sure more than a few Rs and big money backers think (probably rightfully so) a tanking stock market will hurt election chances (hence higher future taxes), my guess is we’re in solid early-mid 2008 market between Bear Sterns failing and before Lehman went belly up. If it survives to the end of the year (no matter who wins the election), I’ll be pretty shocked. The real estate market might not be far behind, as unemployment hurts demand and the fallout of AirBnB pushes a glut of homes onto the (longer-term) rental and purchase market, I don’t see it being pretty.

Then again, I’m an idiot fireman trying to fly jets and not a trader for Goldman Sachs, so what the hell do I know?

Edited by FDNYOldGuy
Went a little more bearish
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SPACs have terrible track records when bought at NAV and "better burger" restaurants are a dime a dozen now with almost no barriers to entry. If you're treating this like a penny stock promotion and hoping the squeeze keeps running so you can sell to a greater fool tomorrow that's always possible. If you think you're getting a value buying it at over $18 before the deal even closes I think you should do some more detailed research and reassess your valuation.

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Get em! - Album on Imgur

@MilitaryToFinance, what's your take on FNMA/FMCC now? I personally think there will be a wave of foreclosures in the next 6 months or so, but not sure how that affects these 2.

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2 hours ago, Day Man said:

 

@MilitaryToFinance, what's your take on FNMA/FMCC now? I personally think there will be a wave of foreclosures in the next 6 months or so, but not sure how that affects these 2.

I ended up selling my preferred stock a few weeks after our previous discussion in June 2019 so I haven't paid as close attention over the last year. I would say there have been some concrete steps made in moving forward with the plan to get out of conservatorship. They have reserves against foreclosures right now and I don't really see it getting bad enough to cause a big problem for them. I'm more concerned about retail backed properties and some office values than I am residential mortgages. My biggest concern with FNMA/FMCC right now is the election. If Trump wins you probably get them released to be public companies again under his second term. If Biden wins I don't know that this gets done before Jan 2021.

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