Kupotea

Puts spreads. Buy $510 sell $490. I don’t usually hold to maturity and would sell on any spike in vol but given that these are hedges for a very specific scenario i probably would just hold.

I started buying out of the money SPY puts on Friday with a Dec/Jan expiry. My portfolio is up nicely for the year and despite the flash crash volatility is cheap again and the S&P is close to all time highs. I don’t want to sell my current holdings so this should give me some cash to deploy if things turn for the worse. On the economy side, unemployment is trending upwards like a recession is coming. Bankruptcies and delinquencies are doing the same. The election means any policy response will be delayed. FED is unlikely to cut significantly until it’s obvious to everyone that the economy has turned over. A lot of the positive data out there has been consistently revised downwards over the last year or so. I could be wrong obviously but if i’m right it’s likely a 10x return and if i’m wrong i lose 5% of my portfolio so whatever.

I’ve been seeing IP address banned for the last few weeks whenever i try to login. If i skip the login page and go directly to the forum i’m able to use the site. Not sure what will happen when the cache eventually resets and my credentials are no longer pre set. i don’t use a VPN and it appears to be tied to my account not the IP address after trying the site in a few different spots.

@Gregmal I’m glad you found something that works well for you. My average holding timeframe is 1-2 years. I use macro to help find undervalued securities based on the cycle. Being a value investor and keeping on top of the macro situation aren’t mutually exclusive. as an aside, I did try my hand at short term market timing and I promptly lost a bunch of money. I’m sure certain people are good at it but i’m not one of them. At least it was a valuable lesson to stick with what you’re good at.

I’ve done really well reading the macro tea leaves. Picking bottoms for cyclical stocks/industries has easily been where i’ve made the most money. That doesn’t mean i always run to cash when i see dark clouds. I would say there’s a greater than 50% chance we’re heading for another slow down in the next year but i’m still fully invested because my investments should do just fine anyway. I would actually love a recession because it would be a great opportunity to pick up some copper/aluminum miners on the cheap. i fully respect the I only buy and hold great businesses mentality. It’s a proven winner. That doesn’t mean it’s the only successful way to invest.

I think you’ve pretty much summed up the breakneck rise in desirable real estate globally. People constantly ask who can afford to live in places like Hong Kong, Vancouver, NYC and the answer is the rich can. It’s less about living there though and more about preserving wealth.

Agreed with the assertion that the index itself has become sort of its own fund or even asset class. I’m not sure this is an entirely new phenomenon. You’ve always had the cycle of an underperforming sector gets beaten down, funds that focus in that sector are forced to redeem and it gets beaten down some more until the next up cycle. This is just an interesting situation where momentum/large cap is riding the hot hand and value/small cap is out. Eventually the S&P 500 becomes so overbought that it underperforms other indexes and investing factors. Then you get outflows and maybe some mean reversion. I think passive indexing will remain the dominant investment strategy you’ll just see those passive flows moving into other geographies and factors.

There’s no money chasing small cap value (it’s all gone to passive large cap) so if a company beats expectations no one notices. Without price discovery you need to find companies willing to initiate large buybacks if you want to get paid. In the meantime, the most overvalued components of the S&P continue to attract ever larger inflows.

North American Construction Group would be my pick. It’s cyclical though and that turns a lot of potential investors off. I think most of the successful consolidators at one point fit the criteria of small cap growth.

Strongly agree with this. I’ve been cautious all year as global (ex US) growth has decelerated and the FED put up a good show of higher for longer interest rates. It made other central bankers reluctant to cut because of the fx implications. I thought there was a real chance that powell would go through with it but clearly today they’ve signaled otherwise. Now we can get a big round of global easing and all those beaten down value and industrial stocks can rip higher. Merry Christmas

Price drives narrative and timeframes matter. In 2022 it was clear to everyone that rates had to go up and that would lead to slower growth (likely a recession) and lower valuations so the market tanked. The recession didn’t materalize because of excess savings accumulated during covid which meant a resilient consumer. Now we’re back close to all time highs, no excess savings, multiple contracting sectors and many marginal firms are going to struggle to roll over debt at current rates. Was the drop in 2022 justified? Does any of this matter in the long run? I’m not personally the buy and hold forever type. I’ve yet to find a company where I feel confident what the earnings will be like 10 years from now. I know Buffet and others have done this to great success but I personally lack the conviction. I feel far more confident in finding cheap businesses with a catalyst or looking through a trough to normalized earnings. That means for certain investments i need to have some sense of where we are in the business cycle. It’s not easy but it’s also not easy to find great business that will compound for decades. There isn’t one true investment style and i find it a little funny how much energy some people are devoting to tell others the right way to invest.

TLT and March puts on QQQ.

Not to mention that with the rapid decrease in headline CPI you have real yields soaring. Hard to see how this doesn’t cascade into a credit crunch unless the FED does an about face soon.

Large buys of SU, CVE, VET, TCW, NE, STNE. Counterintuitive market reaction and I think there's a good chance the recession sensitive/inflation trades rally hard over the next few months.

I don’t think you need a recession for stocks to perform poorly again this year. Lets assume the economy keeps chugging along which by all indications it has to date, where do long term treasury yields go? What’s a fair risk premium for equities if the 10 year yields 4-5%? Look at how copper is reacting with China reopening. Do oil prices stay subdued with low inventories and a global economy moving forward at full strength? How do you convince an entire cohort of retirees to come back to the workforce? There are compelling arguments that the economy remains strong. There are also indicators that we get a recession sometime in H2. I have yet to see a convincing argument that long term rates should be inverted without a corresponding hit to earnings.