RichardGibbons

In an attempt to prove that pigs get slaughtered, I rolled most of the UAN Aug $50 calls into November $60/$65 calls. However, I increased the number of calls by a third, and did it by legging several times so that there was no additional cash outlay (though some additional short-term risk). This is about a 1,650% return since my first UAN options post here, but I think it's still a decent speculation. If fertilizer prices hold at current levels, which seems possible, then the MLP could distribute $25+ of cash flow in a year. Under that scenario, it's hard to see the units remaining in the $60 range.

One can gain social standing by acting magnanimous, and it's possible that, once one reaches a certain level of wealth, the value of the social standing gained can exceed a relatively tiny economic loss. (I have no idea if this applies to Prem because I don't know the guy, but it's possible. It's also possible that he just screwed up.)

I created an auto-trader using the IB API, but it was with C#. It worked as promised.

I think it's primarily the combination of zoning, bureaucracy, ideology, and immigration. Essentially, a huge percentage of the major cities are zoned to single-family homes. And, it's hard to change that. If you want to build anything else, you have to change the zoning. That means fighting in front of city council with residents who are worried about the neighborhood character changing. And to even get that day in court, would typically take a couple years, and it might not be successful. And if you are successful, it would typically require paying the city hundreds of thousands or millions for neighborhood amenities. Essentially, the city believes that if, as a result of rezoning, the value of the property increases, then the city deserves to take the money created, rather than the owners of the property. So, there's substantial risk and unusually high expenses associated with any development that increases density. More broadly speaking, municipal politicians are fairly ideologically-driven, typically not believing in market-based solutions. Though they're very concerned about affordable housing, if they could get affordable housing, but in doing so, some property developers would become wealthy, they wouldn't view that as an acceptable solution. One councilor in Vancouver, Jean Swanson, sees affordability as a crisis and cares a lot about the underprivileged, but for two and a half years has voted against almost every proposal for adding more supply (because the poorest wouldn't be able to afford that supply. She doesn't see it as a good thing that middle class will move into the new supply, freeing up less-expensive space for the poor, but rather a bad thing because average rental prices will increase.) Finally, on top of these supply restrictions, Canada has relatively high immigration. But much of the country is a frozen wasteland, so about two-thirds of immigrants end up in Vancouver and Toronto, and 80% in Vancouver/Toronto/Montreal. So, you have constantly increasing demand and artificially restricted supply, leading to high prices.

Greg, to not clutter up the thread with political discussions, I've responded to the political aspects through email. On the non-political stuff... I think it's pretty reasonable to write off things as "conspiracy theory", "far right/far left nut jobs", etc. because that's how one functions in the world. One only has so much time to make decisions in the world, so we mostly navigate the world through heuristics. If someone says something clearly false for ideological reasons fives times in a row, then the sixth time I'm going to spend basically no time evaluating their statement before dismissing it. Applying the critical thinking well takes effort and time, and we need to prioritize our resources. The cost of the critical thinking is high, the probability of the heuristic being wrong is low, and the cost when the heuristic is wrong is also low. So, as someone who owned a Portnoy REIT 20 years ago, I'm fine with writing off any Portnoy REIT off immediately. I have enough historical evidence that management is unlikely to be acting on behalf of shareholders, and I have more confidence in Portnoy's ability to screw shareholders than I do in my ability to identify a Portnoy REIT that won't end up screwing shareholders. Plus, there's thousands of non-Portnoy investments I could investigate instead. So, it doesn't make sense to me to spend any time whatsoever on a Portnoy REIT when I could instead spend that time on another investment.

Yeah, that's exactly what I mean. Thanks, Cubsfan!

I think it's kind of worked, actually. What effectively happened is that people with right-wing views keep talking politics, and people with centrist views have shut up. So, effectively, the "arguments" are much shorter and usually end with something like, "I said something political, and you communist bozos aren't even responding because you've been proven wrong." And the centrists think, "OK, that's not at all what happened, but whatever. I'm fine with sticking to the rules and just talking about investments."

This is pretty interesting, because according to this, so far in Q2 they've made over $12M. It's not clear to me that one can just annualize that 12M, because I don't understand that well how they make their money, so it could've been an aberration. I've been mining for a few years, and, for part of the last few months (when the transaction fees for ETH were high) I was making $16-18/day (using a 3070), while more typically--and for the last few weeks--it's been in the $4-5 range. But, if you could annualize the $12M to $72M, then Yearn's P/S (which is pretty close to its PE, since it doesn't have many expenses), is in the low 20s, which seems stupidly low. It makes me wonder if I'm misunderstanding something since I've only stared at this for an hour or so. They plan to use the profits to buy back tokens and potentially ETH for the treasury (though apparently not for cancellation.)

Yeah, it wasn't actually UBI, but it was approaching it more than other natural experiments I've seen. I think the two big questions about UBI are: Can we afford it? Will it affect work incentives in really negative ways? On question 2, the historical evidence (e.g. the Dauphin experiment, the experiment Nixon did) suggested the answer was, "No". The people getting UBI who decided not to work as a result of UBI tended to not work because they were either raising a family or getting advanced education. I perceive those as "good" reasons not to work. Raising a family helps to ensure social cohesion and prosperity for the next generation. Advanced education improves long-term productivity. With these checks, I think we're observing that many people in lower-paying jobs aren't going back to work. Though the unemployment rate is 6% (i.e. not super low) anecdotally, it seems like employers are struggling to find labor. And, to me, it doesn't look like it's because people are going to school or raising families. It looks like it's because they don't want to work. That's not to say that UBI is dead in my eyes. Rather, it's that some (sparse) historical evidence made UBI seem like an obvious win if we could afford the cost. This is the first clear evidence I've seen that the changing incentives with UBI might disrupt the labor market. (Which may be an obvious logical conclusion, but to me, it matters that there's now some evidence to support that logical conclusion.) And maybe those disruptions are fine--the effect might be that the price paid for labor increases until the middle management level and corporate margins fall, which might be a good thing for society, reducing income inequality. But it could also have a bad outcome--many small businesses going bust, a massive spike in unemployment, a reduction in the tax base that would pay for UBI, and even more power consolidated in the biggest companies, exacerbating income inequality. So, that's why I've changed a bit. The little evidence we had seemed to indicate no negative effects on the labor market, and now the little additional evidence provided by stimulus suggests there could be massive, potentially dangerous effects on the labor market.

Further to the options strategy, I'm not sure about regulatory limits on Fairfax, but one thing they might want to consider is converting their long position into synthetic calls. (i.e. buy some puts). Edit: Actually, no. Now that I think about it, they have such a big position, they probably couldn't put on such a massive hedge without demolishing the stock price (as the option writer would likely hedge their short puts by shorting shares.)

Well, there was a conversation about it a couple months ago, but the consensus seemed to be that Fairfax would be insane if it doesn't dump the entire position at $12. It's also noteworthy that pulp has started increasing as well, though not to the degree lumber has. I've had some Resolute calls since $11, because this situation seems like what options were designed for: It's unlikely to be a position that I'd want to hold for a decade. If lumber stays up for a while, the stock should increase and the options' leverage makes me lots of money. If lumber plummets, I lose much less money than I would if I had a comparable position in shares.

One of the nice things to come out of this is that it's provided some evidence in the case for a universal basic income (UBI). Of course, giving people money during a pandemic isn't the same as giving them money during normal times. But even that limitation, it's changed my point of view. A year ago, I thought we needed to run some experiments on this because the small amount of evidence we had seemed to indicate that would work. Today, I think the evidence is starting to indicate that UBI is unlikely to be a sustainable solution.

Yep, as you say, they were treated fairly. There's a lot of value in society shunning those who perpetuate paranoid conspiracy theories without any evidence whatsoever.

I'm not that libertarian relative to others on the board, but I'm still not a fan of the argument that crypto should be banned because it makes illegal things easier. I can see why a state would say that, but as an individual, I think there's value in currencies not controlled by the state. Because even if you think that the state is completely trustworthy, you could be wrong. And, if there is a way for individuals to remove their assets from state control, then the state is less likely to try to implement an oppressive system knowing that the people have an alternative. Plus, just because something is the law doesn't make it right. For instance, the Nazis passed a bunch of laws expropriating Jewish wealth. Even if a Jew could flee Germany, they wouldn't be able to take their money with them. If cryptocurrencies existed then, the Nazis might still have tried the same thing, but wouldn't have been nearly as successful. And maybe you don't think that can happen here, but we already have laws like civil forfeiture. The government can and does seize assets based on suspicion of criminal activity (and for assets like cash, its simple existence seems to often be considered sufficient "evidence" that the asset was acquired through criminal activity.) Effectively, civil forfeiture laws allow the police to steal any large sums of cash that that they happen to stumble upon. So we're part way there. So, I understand why the government would want to eliminate a currency that limits its ability to oppress people. But as an individual, it seems like a good thing that a currency exists that limits the extremes of states' control.

And now sold YALA a week later after fraud allegations arose. Regardless of valuation, I have no tolerance for fraud allegations, particularly when those allegations are hard for me to disprove.

Hmm. My best guess is that some multi-billionaires don't form relationships with women based solely on looks.

Yeah, I think this is a good point. The one proviso is that people shouldn't be bailed out when they make bad bets. So, if bailing someone out for a bad bet would become necessary in order to avoid an economic collapse, then there needs to be some rules in place to ensure that that sort of bet cannot be made.

Bought some YALA. It's a Middle-Eastern voice-centric social media company that grew the top line by 40% since last quarter and 240% YoY. When you look at valuation, the company has a run-rate PE in the low-20s based on Non-GAAP Income (which just excludes share-based compensation) or the 40s based on GAAP income. And it has an EV to run-rate sales ratio of about 10. I'd guess that, because of the voice-centric nature of the business, the pandemic may have provided a tailwind. But, even if tailwinds are potentially going away, I'm still happy to buy a company at a 20 PE that has a moat based on network-effects and is growing the top line by 100%+.

If the broker is receiving 1 cent per share, it's because they're on average making much more than one cent a share because the order was routed to them rather than someone else. So, the cost to the retail trader is going to be much more than a cent. That said, I agree that for those with with limited capital, Robinhood's model is fine. Economies of scale matter, and limited capital implies no benefit from economies of scale.

It's also depends on how one views the lumber market over the next few years. If lumber remains around this level for a year, Resolute is trading for under 1x earnings.

Wow. Just... wow. If you think that a lockdown to save people's lives is one of the biggest injustices in American history then we're so far apart on our views that there's really not much to say. Thanks for the response, though....

One of the challenging things with evidence-based reasoning and science is a lot of the time, it's difficult to measure the impact of people who are skeptical because of ignorance. Science is complex now, so the Dunning Kruger effect is particularly impactful. With things like climate change or improvements in drugs or many other things, it can be difficult to measure the impact of people being skeptical out of ignorance. In some cases, with things like climate change, the impacts are so broad and distributed that it's difficult to prove that those broad impacts are from that one particular cause. And in other cases, such as, say, drug development, it doesn't actually matter if the person is skeptical about the drug because their skepticism is largely irrelevant to the outcome if they're still treated by the drug. And I doubt there are statistics where people are offered the drug, refuse it due to Dunning Kruger, and then die. The interesting thing with COVID is that it's easier to approximate how much this sort of ignorant skepticism costs. It's not perfect, because there are always confounding factors. But the death numbers are pretty black and white, even before you take in to account long-term health impacts that can result from getting COVID. Things like USA losing 1,700 people per million to COVID compared to Canada's 617 people. So, basically a 250% increase in deaths to a large degree as a result of skepticism borne of ignorance. The unfortunate thing is that those deaths aren't actually confined to the skeptically ignorant, but also the people they infect as a result of their disbelief in science. The Libertarian in me wants to say, if people want to make stupid decisions, they ought to be able to. But the issue is that those decisions have negative externalities--the deaths of other people that they infect.

I rolled these calls over in to UAN AUG $50 calls. The original calls cost $2.60 and I sold them for around $19. My belief that Canadian capital gains taxes might increase on April 19 played a role in the decision to make the trade right now.

From the article you posted: Preliminary data points to substantially lower rates of transmission among vaccinated people. During a February news briefing, Fauci cited a study from Israel that showed the amount of viral load -- or the amount of the COVID-19 virus in someone’s body -- is significantly lower if someone gets infected after they’ve been vaccinated, compared with people who get infected and didn’t have the vaccine. A lower viral load means much lower chances of passing the virus to someone else, Fauci says. It is likely that it will help others, and likely to the extent that it's hard to believe that anyone claiming this isn't likely is making a good-faith attempt at analysis.

Yeah, volatility skew does cause higher prices for OOTM options, and in particular puts, but my main points are: If a stock is trading at the strike price, calls are more expensive than puts (because of put/call parity) Even if there is no volatility skew, out of the money puts tend to have higher premium As puts more more and more into the money, they lose premium faster than calls do when they move into the money If you are doing simple, long option trades, these things affect your profitability Also, if you'd don't actually believe McMillan, you can pretty easily verify this yourself by playing around with an options calculator, or just looking at option prices. (And the proviso is that it all goes out the window if shares become really hard to borrow. e.g. with Fairfax back in the early 2000s, it was a profitable trade to convert your long shares into a synthetic long (long shares, short put).)