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berkshire101

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Posts posted by berkshire101

    I have given up value investing

    in General Discussion

    Posted

    I view investing like mix martial arts.  To get good, you need to take bits from everywhere to eventually create your own style.  Value investing is just one art form.  With top UFC fighters, most are well rounded and are exceptional in one-two things.  Like Jon Jones with his length and wrestling, he's also good in other aspects of the game. 

     

    So just being good with value investing is not good enough nowadays, in the long run anyways.  The game is competitive nowadays so we need to constantly learn from other styles to create our own. 

     

    Also, everyone peaks.  Like in sports, there are people who figured out an inefficiency and make it to the top.  Eventually, others figure it out.  Like Conor McGregor with his striking.  Other fighters learned if you make him tired then his edge goes away. 

     

    I think investing is like the same.  Traditional value investing might still work, but long term its edge isn't so black and white.  So it's up to us to add to the depths that is value investing. 

    7,500 Faceless Coders Paid in Bitcoin Built a Hedge Fund’s Brain

    in General Discussion

    Posted

    Ran across this fund while listening to a podcast.  It's an interesting take on investing and leveraging crowd sourcing with machine learning.  How can a value investor compete?!  :o

     

    https://www.wired.com/2016/12/7500-faceless-coders-paid-bitcoin-built-hedge-funds-brain/

     

    https://techcrunch.com/2016/12/12/numer-ai-is-a-crowdsourced-hedge-fund-for-machine-learning-experts/

     

    https://numer.ai/about

    Calculating enterprise value for financials like banks and credit services?

    in General Discussion

    Posted

    Enterprise value is calculated as market cap plus debt minus cash.  For financials such as banks and credit services, what do you consider as debt?

     

    SYF's liabilities that would be consider - I think - deposits ($43.5 billion), borrowings of consolidated securitization entities ($13.6 billion), bank term loan ($4.2 billion), and senior unsecured notes ($6.6 billion).  In total, SYF has $67.8 billion in borrowing liabilities and $15.5 billion in cash/investments.

     

    SYF's current market cap is $21.2 billion.  If you take the numbers above, the enterprise value would be $73.5 billion.  Is this the correct way to calculate enterprise value for financials?  Typically, the  deposits and borrowings of consolidated securitization entities are secured by loan receivables.  Would you include loan receivables in the cash/investments too? 

     

    Many thanks.

    Theranos

    in General Discussion

    Posted

    Aren't you missing the forest for the trees here? The point isn't that the regulatory burden was too heavy. The point is that their tech doesn't work. Even within their own allowable variances!

     

    Has anyone even seen the technology in person to be sure that it even exists?!

    Where's the value?

    in General Discussion

    Posted

    Is anyone finding value out there?  There's always good bargains if you look hard enough. 

     

    However, I'm finding it difficult to find bargains in the Growth At Reasonable Price section.  I mainly see energy and materials in the biggest losers category regularly and those are outside my area of expertise. 

     

     

    Writing Covered Calls on SPY

    in General Discussion

    Posted

    As anyone thought about writing weekly covered calls on the SPY?  Say you own 100 shares of SPY at $205.68.  You write a call option at strike price of $206 for $1.08 premium.  That's about 0.5% gain (excluding taxes and fees).  Annualized that, it's around 27%. 

     

    Any thoughts to the downsize of this?  You could be stuck holding the SPY, shares are called away, and might not get the premiums you want.

     

    You have covered the down- and up-sides. But why not do this with a particular stock? With an individual stock you could have a better understanding of price to intrinsic value. For instance, I have been doing this with BAC at prices of $16-17 and currently with BRKB at $130-131. I actually start by writing a naked put. If it expires I try to do it again. If I get put to I write a covered call.

     

    Good point.  It's mainly volatility.  The probability of the SPY swinging +10% in a given week is lower than a single stock.

     

    What premiums and returns are you seeing by doing it on single stocks?  Thanks.

     

    Here is how the 17-strike options turned out for me on BAC in 2015,

     

    Wrote 1/9/15, 17-strike puts on 12/12/14 for $0.24 per share.

    Put to on 1/9/15

    Wrote 1/17/15, 17-strike covered calls on 1/12/15 for $0.19 per share.

    Wrote 3/20/15, 17-strike covered calls on 2/6/15 for $0.36 per share.

    Wrote 6/19/15 17-strike covered calls on 5/13/15 for $0.15 per share

    Called out on 6/19/17

    Wrote 8/21/15 17-strike puts on 7/15/15 for $0.20 per share

    Put to on 8/21/15

    Wrote 9/18/15 17-strike covered calls on 8/24/15 for $0.16 per share

    Wrote 10/30/15 17-strike covered calls on 9/25/15 for $0.15 per share

    Wrote 11/6/15 17-strike covered calls on 11/2/15 for $0.16 per share

    Called out on 11/6/15

    Wrote 12/11/15 17-strike puts on 11/9/15 for $0.20 per share

    Put to on 12/11/15

    Wrote 12/18/15 17-strike covered calls on 12/14/15 for $0.26 per share

    Wrote 12/24/15 17-strike covered calls on 12/21/15 for $0.21 per shared

    12/24/15 called out

     

    Thanks for the trade info.  Writing puts and calls seem like a good strategy, rather than just doing one or the other.  I guess I'll paper trade with the idea to see how it goes for next year.  I'm in no rush to actually implement this strategy as investing in regular stocks is hard enough haha. 

     

     

    Writing Covered Calls on SPY

    in General Discussion

    Posted

    As anyone thought about writing weekly covered calls on the SPY?  Say you own 100 shares of SPY at $205.68.  You write a call option at strike price of $206 for $1.08 premium.  That's about 0.5% gain (excluding taxes and fees).  Annualized that, it's around 27%. 

     

    Any thoughts to the downsize of this?  You could be stuck holding the SPY, shares are called away, and might not get the premiums you want.

     

    You have covered the down- and up-sides. But why not do this with a particular stock? With an individual stock you could have a better understanding of price to intrinsic value. For instance, I have been doing this with BAC at prices of $16-17 and currently with BRKB at $130-131. I actually start by writing a naked put. If it expires I try to do it again. If I get put to I write a covered call.

     

    Good point.  It's mainly volatility.  The probability of the SPY swinging +10% in a given week is lower than a single stock.

     

    What premiums and returns are you seeing by doing it on single stocks?  Thanks.

    Writing Covered Calls on SPY

    in General Discussion

    Posted

    As anyone thought about writing weekly covered calls on the SPY?  Say you own 100 shares of SPY at $205.68.  You write a call option at strike price of $206 for $1.08 premium.  That's about 0.5% gain (excluding taxes and fees).  Annualized that, it's around 27%. 

     

    Any thoughts to the downsize of this?  You could be stuck holding the SPY, shares are called away, and might not get the premiums you want. 

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