So thanks for cluing me in on JPIE. I’ve been holding SPHY for yield (it’s corporate below investment grade) at about 7.7% yield, but with the economic concerns the NAV has not been doing well. I should make it all up in dividends, but still.
JPIE looks interesting, but I’m having trouble establishing the risk level it presents. It might be a nice compromise between FTBFX and SPHY.
I’m concerned we’re reached a point where individual stock performance or future potential doesn’t matter at this point. Everything has basically come down to whether the US is going to destroy itself economically or reverse some of the damage at the last second. If the US and China go at it, the market is going to go down. If Trump declares victory and undoes some of the damage he’s doing, the market is going to go up. The whole market. Which stocks are affected in particular or the individual merits that normally determine a company’s stock price doesn’t even seem to matter – everything is stagnant while we all hold our breath and the merit of each individual company is dwarfed by the massive movements we’ll see on the whole. The market has basically been reduced to a binary.
Which is very concerning for me and my bet against Tesla. I feel like the reckoning that’s due for Tesla has basically been forgotten in the face of the Trump/market drama. It doesn’t matter that they’re hated, it doesn’t matter that they’re shrinking, or any of the other dozens of factors that makes them a bad investment. If Trump blinks Tesla goes up, and if the market crashes Tesla will crash proportionately with it. Tesla’s actual merits as a stock don’t really matter anymore. Tesla has been massively saved by the poor outlook of the US’ economic future oddly enough.
So a key event I was counting on, earnings report on Apr 22, may not actually matter depending on where we are with this tariff standoff. No one will give a shit.
And so maybe I should back off from my bet against Tesla, as obnoxious as it is. I think if Trump didn’t decide to destroy the US economy, and things were functioning relatively normally, Tesla would be at least somewhat evaluated by its individual merits, and it would probably be at around $220 right now rather than $250. Trump fucking everything up has inadvertantly propped up Tesla. Every fucking thing that man has done his entire life has been shit.
No, I think you’re probably right. Markets are rational, but they really can’t be rational in an irrational environment. The whole tariff thing needs to be put to rest, one way or another.
Nobody believes that in 90 days we’ll have a final answer. We’ll have another set of mercurial decisions and reversals.
Our best hope is that one of the lawsuits claiming these tariffs are unconstitutional succeeds. Someone needs to take this toy away from Trump.
Today we get better than expected retail spending, on top of the recent better than expected inflation, and markets are down 1/2 to 2%. I know Nvidia had some negative guidance, but that shouldn’t offset the broader market’s good news, IMO.
Any move right now carries additional risk. Bonds? Well, we saw what bond markets thought of the tariffs a week ago. Equities? I don’t think I need to even address them. Cash? Safe, but if we see tariff inflation, not so much. There’s just nowhere to go.
@DSeid and I argued about gold a while ago, as I’m not a fan. But now even I would be thinking about that, except its already so goddamn high that I’d be afraid to touch it.
Being as I’m within 5 years of potential retirement, I’m really frustrated at this.
Yep, I heard on Squawk Box this morning that gold has now reached an all-time high. It’s up over 10% in the past month.
Lots to consider in your post but starting here.
If by merits you mean ever having earnings that will justify P/E, did it ever matter for Tesla?
To the rest: the market will not move in lockstep. Not sure how that should translate to actions but agree with the sentiment expressed earlier to focus on tides not waves. I earlier asked what sectors are best positioned to weather a Trump induced collapse? Anything in them that might still be reasonable picks if a complete collapse never hits?
Yeah gold has done well for me. Especially these past months. I have no idea where it is going from here but I think it is at less risk of collapse than equities are and its return since I bought in 8 years ago is now more than the S&P’s. I’m not adding to it but won’t move from it until my next year’s planned rebalancing time.
The big potential upside for gold now, IMHO, is not those running to it as an alleged safe haven, but the possible loss of confidence in the dollar as the world reserve currency. No other national currency is in position to take that role. Crypto? Don’t think so. So it gets spread around currencies and gold possibly most of all. In that scenario even treasuries are not safe. Bonds go down with equities. Having a modest portion in gold, even at this point, seems like a reasonable hedge against that.
Agreed. I am watching the exchange rates rather closely these days.
I don’t so far see any signs of massive instability, but as you say, there is no other candidate.
If confidence in the dollar as the reserve currency did actually fail, I think we are all in very deep shit. Uncharted territory…?
No, and this is a good point. I should’ve put it more like this: Tesla is narrative driven, and the narrative was finally falling apart even for the true believers. Daily protests at Tesla dealerships, people being embarrassed / scared to own them, lower delivery numbers objectively meaning they’re a shrinking company, and all the other factors we’ve discussed in the thread was changing the narrative on TSLA and taking away its ability to pretend it’s a massive growth tech startup just about to takeover the world.
What’s going on now has distracted people enough that no one is really thinking about why Tesla, in particular, should be falling apart, and only discussing the whole market falling apart. I think that has an (irrational) protective effect on Tesla stock.
That said, if what I’m saying is correct, then the right move here is to either 1) get the fuck out of the market, or 2), if you had the stomach for the risk, pick whether you think the market was going to go up or down and pick a high beta stock (moves more than the market moves) and see which side pays off. Tesla is already a high beta stock (2.3x movement relative to S&P), so if the market crashes, my Tesla puts/shorts should still pay off regardless of Tesla’s own failures. Which sounds like it might be okay for me, but it introduces far more risk – I was investing in a case before where I anticipated Tesla would go down regardless of what happened with the greater market, but now Trump undoing some of his own damage now lifts the entire market, including Tesla. I could lose big on it for reasons that are completely unrelated to my reasons for being down on Tesla at all.
We’re so close to earnings that I hate to back out of the position now, but we could be even closer to some random Trump position that sends the market to the moon.
It has dropped in relative value, but the thing that some economists find more worrying is that it is happening at the same time as T bill yields are jumping as investors pull out of US bonds.
- “The market is re-assessing the structural attractiveness of the dollar as the world’s global reserve currency and is undergoing a process of rapid de-dollarization,” Deutsche Bank strategist George Saravelos said in a note to clients Friday.
So investors are pulling out of dollars, US bonds, US equity … globally equities are at not looking better as Trump’s idiocy brings down the whole interconnected system. So where does it ? Spread across the other currency options and into gold.
From this perspective the dollar doesn’t have to actually lose its world reserve status; it is enough that enough major players fear it might and want to hedge against it.
You may be right. I dunno. But as above, if getting the fuck out, to what? The dollar itself is not a safe haven. Foreign equity and bonds are not safe. Crypto??! Gold? Again I see the argument above as enough to say for modest portion but it is also already at highs and it can drop fast for reasons I will never predict or understand. And I don’t have the same risk tolerance at this point that you do. All-in anywhere is not for the likes of me approaching 66.
It’d rather be in gold than cash but nothing is safe.
So a couple of days ago I had a GLD call execute. I had made a call for $281 strike and at the end of the day Monday gold was at $297 so I was able to buy 800 shares of gold at $281 when the price was $297, so a pretty decent short term play, making $16 a share for 800 shares.
But… I had always sold call and put contracts before they actually executed, to some other buyer who wanted the contract, generally for more money than the current execution value of the contract. In that case, you don’t actually get any new assets – you just pocket the difference between the price you bought the contract at and the price you sold it at.
So I was taken a little bit by surprise, even though I kind of knew this is how it worked, when the 800 gold shares ended up in my portfolio. After all, That’s $225k worth of gold, which is more than the value of my entire portfolio. It seems quite counter-intuitive that you could actually purchase that many gold shares given that you don’t have the money for it even if you liquidated your whole portfolio.
But what I guess happens is that because it was a successful call, then the shares are worth more than the price you paid for them. And because of that, I guess they can serve as their own collateral for their purchase. Does that make sense? So long as the value of the shares is more than what I paid for them, they self-collateralize and I own them in margin (?) but if the value should dip, then the collateral is insufficient to own those stocks in margin, and it would probably start forcing me to liquidate some of those shares to be able to cover the rest.
I decided that since I wasn’t quite sure how it all worked, I went ahead and sold them at about $301 and gained a decent profit. But I regret it, since I had expected gold to keep going up, I should’ve just held onto them and, uh, figured out how that all worked.
I am going to have to research what happened in the 1929 crash and subsequent depression.
The dollar never collapsed domestically, as far as I know, (no hyperinflation) but it may have lost value compared with other world currencies?
In those days though, there were other reserve currencies. The UK pound was still at the time (perhaps) the dominant one… this was before WW2 essentially bankrupted the UK as an economic force.
Today, I think we are in uncharted territory if world confidence in the USD collapsed.
I have no idea how to navigate that.
As others have said: you may have some physical gold: but how are you going to use that to buy your daily bread?
I agree with this. The Euro is too fractured- there’s no way Greece and Germany will see eye to eye on monetary policy, and the increased strength would be painful for some.
The Japanese debt and their relatively small economy (remember, you have to compare them to the EU not to, say, Germany) along with their shrinking demographics make them a poor choice.
Who is left? China? The Pound?
you went from this.
to this
I’m not sure that is the smartest long term investment strategy, despite the insanity we have been seeing recently
The Euro and the yen work well to buy food each day without being the world reserve.
Yeah it is completely uncharted.
My ignorant WAG is that as the dollar as US equities get cheap enough they get bought again. A new baseline gets established. It actually becomes attractive to buy American products as the Euro is worth so much more there than elsewhere. And tariffs go away because no Americans can afford that imported stuff without them even.
A new, fairly sad, baseline.
The likeliest outcome is no one - no single world reserve currency. Everyone holding a variety of forms, and fewer dollars. The Euro, the yen, the Kronar, the renminbi, the pound … and others. Again including the old standby gold.
Very true of course. Though the days where every country was largely self-sufficient in most things have been superceded by globalization for some time. I wonder how long it would take to reverse that if we had to, and how much disruption it would cause?
Reminds me: I need to look up statistics for which countries need to import a lot of their basic foods…
I get the impression that this was supposed to be some sort of “look how far you’ve fallen” statement, but I’m not sure where you’re getting any of that. In the same OP you took that first quote from, I already said I had left owning assets in the US market entirely and started betting against it. Despite some absolute bullshit price increases from TSLA, I’m still up from when I left the US market and I’m doing better than I would’ve done if I had simply maintained my previous positions.
I may be reading too much into your statement, but are you more or less saying “you used to be a reasonable, sane investor, and now look at you, you’ve descended into a degenerate gambler using the stock market”?
There’s a lot of bias in this thread towards using the market “the right way” and buying and holding – and I get it – but I think people are automatically dismissive of things that break that mold as somehow problematic even if the logical reasons for doing them seem to make sense. Though, to their credit, they haven’t been quite so judgmental about it.
The market a human construct that we’re all trying to make money from. So long as you aren’t doing anything unethical, I don’t believe there’s some sort of virtue in doing things “the right way” (holding long) and some sort of guilt or shame in doing anything else. The market absolutely can be used for evil – the big players crush the small players, vulture capitalists can destroy viable businesses - but I don’t really think I’m tied up in any of that. The act of shorting, or buying options, I don’t think are inherently destructive. Especially options — are you a good guy if you buy calls and a bad guy if you buy puts, or if you take the reverse side of those contracts? or are you wrong or scummy or pathetic the moment you make any sort of option contract?
I do not foresee globalization taking a long term hit. But the dollar is accepted as the world reserve currency, was allowed to decouple from gold, because it was consistently strong and stable, backed by what has long been accepted as the safest of paper assets, US treasury bills. That had huge advantages for global trade, especially oil, but it is not essential for it. Exchange rates become a bigger concern. Central banks develop and utilize a variety of hedging techniques. Dollars come out of reserves and into circulation lowering its exchange value and contributing to significant inflation in the US. Again investing in America becomes cheaper for other countries with stronger currencies. The global economy perseveres; American prominence in it does not.
You might think I’m guilty of this, but I’m not.
There are investment strategies that can be proven to be effective and relatively low risk that are appropriate for middle class investors. In my opinion, these can be said to be, factually, the best way for most people to invest, especially those whose goal is “sock it away and retire.”
However, everyone is free to invest how they like, and there are no doubt investors, including small ones, who have made a small fortune with things like options. You do you. But since this is an investment thread, I’m going to state my opinions and defend them (as I did with gold), but never would I say you’re doing it “wrong” or what your doing is unethical. Though there probably are some financial instruments and practices that do nothing to make the markets efficient or work better, but do allow large investment houses to be like ticks on the market’s back. But I don’t think that’s you.
I think you’ll just find the majority of us here are mostly into things like low cost index funds. I am literally 99% into that. I keep a small (meaning, insignificant to my financial health) fund that I play with. For instance, when I saw a particular drug a company I know a lot about was working on, I made a bet on it. But this is really play money, not my savings.
Completely agree. And in the commodities markets it is even essential. Buys and shorts both are what allow those will be supplying and requiring those products to offload the risk of major price changes over the next months, so they can plan ahead.
That’s just the key. The trader is taking on that risk. They know it. They want it. They are doing a public economic good but they are not motivated by that. They want the risk as that risk comes with possible large gains. And they know also with possible large loss. It is not degenerate gambling but it is a bigger roll of the dice.
I have not needed to be so skillful to make money over decades by sticking to my buy and hold plan come up and down and up again, and I suspect that is true even on the other side of Trump. Your bets may make you lots more, or lose you lots more, but for the likes of me, they just take more skill than I have. I know that.
My goal is to maximize my potential gain to risk ratio over a longer term. I am just not sure how to do that. So I default to staying my course. Mostly.
I think (hope) I agree with most of that.
A great deal has been invested in globalization by many organizations, companies and countries over quite a few decades, so there is a strong and wide base of interest in maintaining it.
It (may?) not matter what the medium of exchange is… USD or whatever.. as long as all parties agree on it.