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1810.HK
Can you share you thoughts on this?
Personally, in terms of how I am positioning, I think as you get closer to a US/China deal, you are going to want to be less overweight US. I have been massively overweight, so I am in the process of reducing exposure. For a long time I have been seeking a good India play. Xiaomi is dominant in India and growing like a weed. In terms of the business, after looking into it further I believe it is largely unappreciated and not well understood. The core business IMO is not really the smartphones but the advertising and services. Lei Jun is an impressive fellow, and Shun Wei Capital(their investing arm) seems to be positioning for dominance in the IOT/AI markets. Where better to be than India/China with a free call option(eventually) on the US? To me, this has the potential to be a mini-Softbank/Tencent. Very long run way.
I mostly agree that india/china will be growing faster than US. Xiaomi's growth in india seems to be driven mostly by its cheap phone -- but i don't know if that's a sustainable advantage. In china, it's proven that price war is very hard to win.
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1810.HK
Can you share you thoughts on this?
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On Friday I wrote USB 50-strike July 20th expiration puts for $1 per share, USB 50-strike June 29 expiration puts for $0.65 per share, and BK 55-strike June 8 expiration puts for $0.43 per share.
Today, in some non-margin accounts because I had to wait for options to expire last Friday, I wrote some USB 50-strike June 15 expiration puts for $0.55 per share, USB 50-strike June 29 expiration puts for $0.58 per share, WFC 54-strike June 29 expiration puts for $0.67 per share, and BK 55-strike June 15 expiration puts for $0.55 per share.
'write puts' == selling puts? and how do you decide which put to write? I sometimes sell puts as well, but only for one week or less time, maybe the profit/cost-of-selling isn't great?
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What's more interesting to me is that he chose to invest in Apple now vs others, in particular google, which I think has a high probability of growth than Apple.
Well for one Apple is a lot cheaper than Google. That has to count for a lot. Also I'm not that sure that google has a higher probably of growth than apple. I can make a case the other way around.
If he were to reflect on the 'mistake' of not investing in google, I wonder what are the lessons, and seems to me that those lessons still won't get him to invest in google. Btw, I don't think google is expensive (not cheap, but not expensive).
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What's more interesting to me is that he chose to invest in Apple now vs others, in particular google, which I think has a high probability of growth than Apple.
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From NYT:
"As for Alphabet, Mr. Buffett said that he had “made a mistake.” He said he was unable to conclude that at Alphabet’s present prices, its “prospects were far better than the prices indicated.”"
Comparing this with his investment in Apple (and IBM), I wish someone would ask him his reasonings.
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i have been looking a cheapishly looking tobacco stocks a while ago and bought a starter position and then started to do some more research and thing this business is on the cusp of a significant change from e-cigarettes. It seems that products from industry newcomers like Juul gain significant market share especially with younger folks. This makes sense to me since starters will likely not be bound by existing habits and chose the product that appears to work best. I have little doubt that smoking vaporware is much less harmful than tobacco and it certainly is less annoying to others.
My guess is that adoption of e-cigs could rapidly increase and destroy the other tradional tobacco business. the fact that a newcomer like Juul can gain almost 50% market share means that the incumbent tobacco companies don’t have that much of an advantage and market shares will be redistributed, but moreover, it is not likely that the e-cig business will have the same obscene profit margins than the tobacco products.
So get the last puff out of tobacco stocks and hope that these companies die faster than their :P
I think that these traditional tobacco companies have a lot more staying power than you think --> they have an addictive product. In addition, most of them have diversified into other business.
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1.5 years? You could basically build a new house in less time than that.
Yes, it's a complete rebuild.
I thought perhaps you should sell and buy. Then again, the realtors would get you for ~14% of your gross, not mention all the other potential fees and costs...maybe I should invest in Redfin?
Pretty sure Prof. Shiller has some data showing US housing is only flat with inflation over the long term (zero real returns).
Some other researchers recently published a study claiming globally it has been a good investment (housing stock). But people have criticized their methodology and the impact of maintenance costs and taxes and stuff. Then again, I can't remember what Prof. Shiller did with implied/avoided rent lodging costs. He probably dealt with it reasonably because he's the shiz.
Thought about renting out our current house (with a bit of touch up, the rent will cover the mortgage), then buying a different house. However, I can't convince myself to pay the sky-high price (in SF area), though interesting enough, this calculator seems to say that buying isn't a bad option:
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
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I think you are missing the point, "A happy wife makes for a happy husband"
I always said it with a rhyme: "happy wife equals happy life!"
It's a big investment and a huge time sink, we'd have to get a rental house for 1.5 years, that's why I'm not too keen on it -- though i think she'll get her way in the end :)
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My wife is planning a rebuild of our house, and I'm trying to convince her that the ROI isn't there -- only 10-20% after 1.5 year of construction. I came across this recent article by Ken Fisher, and showed it her. She is still not convinced :(
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I believe Ericopoly solved this problem a number of years ago. Open a Portfolio Margin account somewhere (I know Interactive Brokers works), buy puts to cover your appreciated position, and then withdraw cash on margin.
Can you elaborate on this or point me to the original post of Ericopoly? I'm trying to figure out a way to hedge the gain on bank stocks.
Dealing with (maybe not hedging per se though) the gain on bank stocks (specifically BAC) is exactly the problem Ericopoly was trying to solve.
In order to avoid a large capital gains tax bill, but still take money out of your portfolio with this strategy, you first must make sure you have a Portfolio Margin account (as opposed to the standard Reg-T margin account). My understanding is that Portfolio Margin will look at different offsetting positions when determining whether or not to make a margin call. For example, if you buy at-the-money puts that cover your bank stock, any decline in the stock should be more or less offset by the gain in the puts. Portfolio margin will give you credit for the gain in the puts, while Reg-T will not.
Once you have your appreciated stock protected with puts, you can remove cash from the account by borrowing on margin. Hopefully, the puts expire worthless and you get a tax write-off. Rinse and repeat by buying more puts. If the puts appreciate in value due to a steep decline, sell them and reduce your margin borrowing. If the stock continues to appreciate, your margin borrowing ability grows.
Removing cash from the account by borrowing on margin -- is that only applicable to the portfolio margin account? can't you simply do it with the reg-T account?
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I believe Ericopoly solved this problem a number of years ago. Open a Portfolio Margin account somewhere (I know Interactive Brokers works), buy puts to cover your appreciated position, and then withdraw cash on margin.
Can you elaborate on this or point me to the original post of Ericopoly? I'm trying to figure out a way to hedge the gain on bank stocks.
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AUM.
There are very real differences between retail/institutional behaviour, and retail that does/does not use a financial adviser. It's also useful to think of a pyramid, where height is a function of financial sophistication, and width is a proxy for % of population 'universe'.
For most people the $ invested in savings (equity) competes against a $ invested in either debt repayment, or living costs. Initially we borrow/invest simultaneously, in the hope that our investment upon disposition will have earned more than the total interest paid on the debt. We borrow to go to university to get a 'sheepskin' and a job that pays enough for us to retire our debt. We borrow to buy a house to live in, that we pay off over a 25 year amortization. Per Clason's The Richest Man In Babylon; after-tax cash flow should be allocated to 10% investment, 20% debt repayment, and 70% cost of living.
It's pretty hard to justify continued participation in an investment, when the unrealized gain is larger than your mortgage. You could sell tomorrow, pay off that mortgage, and reinvest the net proceeds in a zero risk T-Bill - BOTH earning interest AND saving on the mortgage payment every month. The solution is either 1) a bigger house, & a bigger mortgage (the unrealized gain isn't big enough yet - so stay invested), or 2) reduce the AUM that were available to make the investment (you've ALREADY taken $ off the table to repay you debts). The difference is risk management.
Bankers will typically lend up to 3x after-tax income when buying a house. If you've already paid off your debt, this suggests that an equity should start to be sold off when its value exceeds 3x after tax income. Ignoring tax, and simplifying; if portfolio income is 100K/yr, XYZ equity should start selling off when the value of the position exceeds $300K - with the proceeds going to T-Bills. The portfolio continues to grow over time, but T-Bills make up a larger & larger portion of it - reducing portfolio return.
The easiest way to raise portfolio return is to remove the T-Bills, & spend the proceeds on something else (new businesses, real estate, etc). Simplifying it means a portfolio has an optimal size, and its biased towards the smaller end. When it's getting too big, you need to return capital.
Same as you read in the textbooks.
SD
Interesting view. I have never thought it this way -- figuring that with a 3% mortgage, I can get better returns in the market and avoid the tax penalty. Is that not the right way to think about this?
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Interestingly Tilson was (is) right about a number of issues facing NFLX. And yet they still have not affected NFLX stock price, the stock is 10x from 2010 and is still hitting the highs. ::)
He might still be right, except the market can be irrational much longer ...
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Bought more Citi today
To me, a good deed.
I think that financial still have some upside. However, one thing that keeps bothering me is that I don't know how these big banks will do with a) online/mobile payments and b) cyber currency. Does that mostly eliminate the need to go to a branch, which is a big moat for the big banks? How will that impair their earnings?
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New cars:
Wait until next year and buy last years model. In january of this year, I bought a new 16' msrp 51000 for 36500, german not american fyi. This car was 600 miles away.
Dont look local, check uship.com, only once in the last 6 cars have I found the best price in my state even when adding on the cost of shipping the car from out of state. Many of my cars have come from 2000 miles away, there are some arbitrage opportunities. AWD sells for more in rocky's than florida for example. Buy in florida sell in rocky's. Conversely, rwd is a pain to sell in rocky's and in warm climates they don't care. Buy in rocky's sell in florida. Estimate what you can sell your car for by looking at your local car prices for comparable models that are however many years old. If you want to sell in three years, look at the three year old models selling in your area with similar miles, to be conservative, use the lowest numbers.
Don't trade in, if using the strategies above while being patient for the right price you will almost never do better by trading in than you would selling privately, even considering the tax impact. As a rule of thumb, the trade in offers I get inclusive of tax savings are between 1-3k lower than I can sell in private market. When selling in private market plan on it taking 1-3 months. Out of 5 privately sold cars 100% sold when 3 or less people physically viewed the vehicle, two of them the first. Tip, it's easier to sell privately a car with remaining bumper to bumper, even if it's only months. They have nothing to fear. Tell them that/advertise it.
Used cars:
Buy 1 year old car with 4 year bumper to bumper and sell it with 6-12 months left on warranty. Look nationwide. Look at local prices to estimate cost of ownership. In the used market optioned out cars don't command the same price increases as they do new. Ig, 40k highly optioned sells used for 25k, same model lightly optioned that sold for 32k new sells for 24k used. Buy low optioned, low miles cars at the best nationwide price. Again estimate your sale price by looking at same model same mileage that's 2-3 years old locally being sold privately, again use the lower numbers, look to make sure they aren't salvage, obviously don't use those.
Using these strategies I've driven new or nearly new cars for the last decade priced at 30-40k at a total cost of ownership including taxes, everything but gas of 100-200/month.
For all cars, negotiating is playing their game, look nationwide for the lowest price, offer them less than asking say you'll make a deposit now, done.
When buying used cars that are around 1 year old get them with 10k or less miles.
Tip: On new or used, pick a category of car/options you want, don't pick a manufacturer, buy whichever is cheapest. Ig, want a sports coupe? Don't get the 335i look at Acura, bmw, audi, benz, lexus, etc, be dispassionate, it will save you a lot of money.
Once I bought a 6k mile/1 year old used benz suv (I wanted the bmw equivalent) drove it for 2.5 years and sold it for 500 less than I paid for it.
Great post. What website or service that you use to search for used cars?
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more SPY puts
same
Curious on what duration of the puts are you guys buying?
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FUEL, GM
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Wrote AMZN March 17, 170 strike puts.
How? I looked at put options, the lowest is 842.5 strike for march 17.
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I like it a lot, especially the first part of the book.
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-9%
I had a bad year. I had way too many BAC Jan2017 options and sold too early. I was down so much at one point in the year that I was happy to sell two days after the election when they went up a bit. I could have held on another month and had an excellent year. I think I'm done with options for good. I'll certainly never hold such a huge concentrated position in them again.
I had the same issue -- took a big loss on Jan 16, but held on to Jan 17. Fortunately, it worked out, but it was very stressful
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24.72% Time Weighted Return
28.07% Money Weighted Return
Not a bad year considering I was holding a ton of cash (0-15% throughout the year), was actively short the U.S. markets by about 30-40% notional value throughout the year, and that 10% of my portfolio is FRFHF which didn't do much this year.
Basically, this was the reversion trade, led by a handful of names that did terrible in 2014/2015. Commodities and EM were my saving grace this year and I was very fortunate in my timing of adding to most names catching them near their bottoms before taking a wild ride upward.
Major contributors to performance were PEFIX, CLD, CNXC, PDER, ATUSF, BSBR, SBRCY, LUKOY, FNMA, and FNMAJ.
Are you still short US markets?
I reopened about half of them after the bulk of the rally following November's election. Still waiting on clarity for lasting corporate tax reform or for markets to begin to tank to get confident enough to go back to where it was at.
Ultimately, the healthier the U.S. economy is, the higher interest rates go, the higher the dollar goes, and the higher wages will go. These will all act counter-cyclically to continue their contribution to negative earnings growth and I don't believe that there will be an incrementally large pick-up in U.S. consumer spending anytime soon to offset it given that we're hitting years where boomer retirements will be offsetting new job entrants (typically, spending drops in retirement and new workers won't be making enough to offset it).
TL;DR - I'm expecting corporate profits to continue to fall in 2017. Was clearly wrong about 7 or so quarters of profit contractions being the end of the bull market, but I have a harder time believing markets will be ok with 11-12 straight quarters of corporate profit contraction without an eventual correction.
How did you short it?
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Like racemize says, it depends on the tax rates going in and out. It also depends on how good are you in growing your 401k. If you grow 10-20% year, you're likely end up with huge portfolio and very high marginal tax rate even on minimal required withdrawals (oh tough problem to have ;) ) if you go traditional.
There's something nagging in my mind about Roth 401k, but I can't remember what it was. Maybe it's nothing...
Edit: maybe I was concerned on how well Fidelity (our 401k/Roth 401k provider) manages the separation of 401k/Roth 401k money. I.e. if I contribute to Roth 401k, will it go into separate account/bucket or will it be mixed and I'd have to keep numbers myself. Anyone with experience in that? Currently I only have traditional 401k monies.
I'll paste couple links that raise some questions - though some of these were mentioned here already:
https://thefinancebuff.com/case-against-roth-401k.html
http://whitecoatinvestor.com/some-more-thoughts-on-roth-401k-contributions/
We only have Vanguard index funds in 401k, so growing at 10% is almost impossible :(
What are you buying today?
in General Discussion
Posted
6.5% decrease in subscriber is staggering