The Warren Basket

[Gregmal]

I hope the headline is tame enough for all the sissy's, there were definitely more compelling title choices, such as "Basketizing the Basket Case" or "Trail of Tears for the Stock Market"...but I wanted to get a thread going, given the overwhelming amount of sentiment that Elizabeth Warren would be very bad for the equity markets, that focused on ideas that hedged and or capitalized on her rise to power. This is an investing website, so for those able to get past the politics I think it makes sense to throw around ways to soften the blow. As we all know(or should know) now is likely the time to prepare for this rather than waiting for the thread about "buying puts" a day or two after she is elected. For the record, I do not think Warren can beat Trump, but in the name of making money, do not think its wise to completely write this scenario off either, at least from a risk management perspective.

 

I'll start with a few that Ive got an eye on.

 

Shorting, or well placed puts on Credit Acceptance, CACC and World Acceptance, WRLD. These are names that have been somewhat controversial and attracted negative attention for supposedly taking advantage of the consumer. They are very prone to regulatory sensitivities.

 

Pelaton, PTON. One can only imagine what would happen to something already as flimsy and non proprietary as this. What happens when the pool of people willing to pay $2500-$5000 plus a monthly subscription fee for what is basically a NordicTrack with an iPad taped on and a Youtube feed gets cut do to the threat of higher taxes and compressed business resources?

 

I'm looking at the frackers as well, but Ive always kind of considered most of the E&P companies pieces of shit anyway. Maybe shorting an ETF or something there has merit.

 

Will add others in time depending on the unfolding of events. Curious to see how others are setting up(outside of 50% cash, bro)...

 

[DTEJD1997]

Hmmm, interesting topic of discussion.

 

I don't think Warren will get the nomination OR win the election.  She is going to have too much trouble with her Indian heritage and pregnancy firing.

 

HOWEVER, you never know!

 

Two stocks that might do well are EZPW and FCFS.  These are pawn shop operators.  They have large portions of their business in Texas and the South.  Warren is anti-oil, and oil will likely suffer.  Texas still has a big chunk of it's economy oil related...so a lot of people there would be out of work.  People who lose their jobs might be going to the pawn shop?

 

Gun manufacturers will probably suffer as attempts to revoke the 2nd amendment are made.

 

Obviously you will want to be short anything auto related.  You will also want to be short shipping & trucking as the economy contracts.

 

Those that say the President can only do so much are right in some sense...but I think they are absolutely WRONG in that they overlook 2nd and 3rd order effects.  The President sets the tone and direction.  If Warren is elected, what would her 2nd term look like?  What will her supporters be up to?  What will the overall mood & direction of the country be?  Short the Bill of Rights, long re-education camps?

 

[Guest cherzeca]

well, I am normally 50% cash bro.

 

I think you have to consider her policies in the context of what she could do by executive order as POTUS.  I read a lot saying not to worry about a warren POTUS if senate remains R.  WRONG.  both Obama and trump have shown the next POTUS that much can be done by executive order, as Obama said, with his pen alone.

 

in this light, the most obvious thing to me that she could do by EO on day 1 is ban fracking (and drilling on federal lands etc).  this to my mind gives rise to a pairs trade, short E&Ps and long oil as a commodity. 

 

an index put makes sense, tho I think you are paying too much for time right now.  other thoughts welcome.

 

edit:  while I think an index put can be placed if the polls show a close race a few months before the election, I wouldn't do the oil pairs trade until Wednesday morning, as that would not be a hedge, like the index put, but rather a position trade that would really require verification that warren had become POTUS

[bizaro86]

Hmmm, interesting topic of discussion.

 

I don't think Warren will get the nomination OR win the election.  She is going to have too much trouble with her Indian heritage and pregnancy firing.

 

HOWEVER, you never know!

 

Two stocks that might do well are EZPW and FCFS.  These are pawn shop operators.  They have large portions of their business in Texas and the South.  Warren is anti-oil, and oil will likely suffer.  Texas still has a big chunk of it's economy oil related...so a lot of people there would be out of work.  People who lose their jobs might be going to the pawn shop?

 

Gun manufacturers will probably suffer as attempts to revoke the 2nd amendment are made.

 

Obviously you will want to be short anything auto related.  You will also want to be short shipping & trucking as the economy contracts.

 

Those that say the President can only do so much are right in some sense...but I think they are absolutely WRONG in that they overlook 2nd and 3rd order effects.  The President sets the tone and direction.  If Warren is elected, what would her 2nd term look like?  What will her supporters be up to?  What will the overall mood & direction of the country be?  Short the Bill of Rights, long re-education camps?

 

I think I gun manufacturers would be a bad short for your basket. If a staunchly pro gun control president is elected, the second order effect is that those who fear gun control will go out and buy a bunch of guns prior to any enactment. So there will be big profits in the short term that the market will react to.

[thepupil]

what I see as the two most straightforward warren hedges:

 

Long term oil/natural gas futures call options. I refuse to believe she could do it, but a fracking ban can only do one thing to prices. Alternatively call options on highly levered traditional production companies like CalRes or offshore drillers or canadian/Russian/wherever E&P. Potentially even something like BTU, fracking kills coal. Killing fracking prolongs coal.

 

XLV puts/risk reversals/put spreads. I like this in that i’d Be comfortable cheapening the cost by selling calls on a basket of US blue chip healthcare stocks. They don’t seem to discount the disruption potential or seem undervalued /coiled springy,

 

Ultimately I just think warren is potentially terrible for US and global corporate earnings power, so broad based hedges may be the best solution.

 

 

 

 

 

 

 

 

 

 

 

 

 

[Gregmal]

I was reading somewhere that guns stocks/sales did far better under Obama than Trump for the reason mentioned by Bizaro. Gun sales can remain elevated in perpetuity if there is the constant threat of killing the second amendment. No one is running to the gun store with a Republican in office.

 

Somewhat half heartedly, I would think certain pot stocks could do well also as legalization is basically a blanket policy for all the dems. Maybe someone can create a 3 P's ETF. Pawn shops, pot stocks, and potato chips....

 

Personally, I'm inclined to look at short opportunities simply because, like with other stuff, you can also kind of be right without Warren getting elected. Things may just slow down on their own. Warren getting elected would just inject steroids to the main vein.

 

You'd also think NNN REITS would go ballistic. I dont want to do a complete reshuffle as Warren is a low probability event, and I think Im decently market natural already, but you can never be too prepared and if the cost is low to put on a few trades with optionality, why not?

[Castanza]

Wouldn’t it be easier to start building a position in $GLD or some other gold etf if she gets the nomination? Not to mention going to more cash.

 

 

[Cardboard]

My view is that you have to respect what the stock market is telling you.

 

This woman is highly unattractive both mentally and physically. If you thought that Hillary was a warmonger then have a look at her facial expression. It is evil in person. Even big money Liberals asset managers are coming out against her which was not the case for Clinton. Then think about all the industries that will push against her along with their employees.

 

Already Colorado, New Mexico and Texas Democrats are pushing back on fracking ban idea. Then you have Ohio, Pennsylvania. 4 are key swing States.

 

North Carolina and Florida are home to BAC and many smaller banks along with multiple money management firms. Even New Jersey could be up for grab by Republicans with such anti-financials programs.

 

Guys like Zuckerburg are promising to fight for their company. What do you think that means? The entire big tech community is a target. So no money from them to push for her election and no praise.

 

So I would not go too crazy on puts and the like as the market has already decided that she has no chance. She is a dream for some of the havenot's, dreamers and eco-nuts but, American society as a whole is smarter than that. Heck I thought that Democrats were smarter than that and could find a suitable candidate.

 

Doesn't mean that buying some puts right now is a poor strategy as the VIX is close to 12 and indexes are at all time highs but, I would not buy them to hedge against her as the market is saying loudly: she is not happening.

 

Cardboard

[cameronfen]

Again I think you people have warren darrangement syndrome.  Also like European derrangement syndrome.  Like I said before, worse case scenario we end up like Germany or France and apprently to you guys that future wasunbareable. You might really dislike those countries but the average citizen there believes their way of life (not just economy-wise) is significantly better than the United States, so its not like they are begging to live in our system of government and politics.  I'm not saying their system is better than ours, but it helps to be open minded to other points of view especially if they are as happy as you are with what they have.  Anyway, I think you'll probably regret hedging as much as you are saying.  Sure buying a little more international stocks would be good, but this idea that she's going to cause the downfall of the US system seems ridiculous. 

[Spekulatius]

Again I think you people have warren darrangement syndrome.  Also like European derrangement syndrome.  Like I said before, worse case scenario we end up like Germany or France and apprently to you guys that future wasunbareable. You might really dislike those countries but the average citizen there believes their way of life (not just economy-wise) is significantly better than the United States, so its not like they are begging to live in our system of government and politics.  I'm not saying their system is better than ours, but it helps to be open minded to other points of view especially if they are as happy as you are with what they have.  Anyway, I think you'll probably regret hedging as much as you are saying.  Sure buying a little more international stocks would be good, but this idea that she's going to cause the downfall of the US system seems ridiculous.

 

I agree with respect to Europe. It would certainly be helpful to actually have lived and worked or at least travelled there before coming to a conclusion. The mean (statistically)  Joe in Germany is better of than the mean Joe in the US, that’s for sure. The averages are heavily tilted by the top 5% and those are better of in the US, than Germany or France, I give you that.

[Castanza]

I travel to Germany about 3 month total including Prague, Costa Rica, and Mexico for work. I work daily with many people from these countries and the ones who are here in the US on work visa beg and moan and cry not to go back when their visas come up for expiration (and I wish they didn’t have to go). They ALL want to have their visas extended. Not to mention that 80% of them have kids while they’re here. I was talking with a coworker Standa a little bit ago. He said he loves the US health insurance. He pays $80 a month company pays like $200ish where as in Prague he said he was paying 10k a year through taxes etc.

Now Germany and Prague are not terrible in any sense. Beautiful countries. But the idea or argument that “oh well, the worst we can be is like so and so.” Is completely counterintuitive. Why does the US exist in the first place? It certainly doesn’t exist to be like Europe. If you all like Europe so much then why choose to live in the US? You sound like the homeschool kids who complain about missing out on sports that the local school offers.

 

You can’t have the cake and eat it too.

[Guest cherzeca]

right now I am watching the D primary process.  Biden could come back after not winning Iowa and NH.  Bloomberg could jump in.  HRC could have her name put in nomination at the convention and win on second ballot (when super delegates are allowed to vote). etc.  but this absolutely bears watching from a portfolio preservation point of view. 

[no_free_lunch]

I'm not sure about Germany but the Nordic countries havhaved a very different taxation policy than what Warren is proposing. Their corporate tax rates are comparable to the US but personal tax is much higher in particular for the middle class. So Warren will reference these countries when it suits her but ignore the details she doesn't care for.

 

I think this Nordic model makes more sense. You want health care?  No problem but you are gonna pay via your taxes.  There needs to be some more personal responsibility, you can't just push it all in business. Why would anyone want to start a business, why would they want to ramp up hiring?

[Gregmal]

It doesn’t need to make sense. Running for President or any of the higher offices is much like holding a senior executive position at a public company. You only need to get in for it to be life changing. So say whatever you have to in order to get there. Results are irrelevant, as once it’s time to judge(in and of itself quite a while as your base will swallow excuses for a long time as well) you’ve already gotten what you want.

[Spekulatius]

I'm not sure about Germany but the Nordic countries havhaved a very different taxation policy than what Warren is proposing. Their corporate tax rates are comparable to the US but personal tax is much higher in particular for the middle class. So Warren will reference these countries when it suits her but ignore the details she doesn't care for.

 

I think this Nordic model makes more sense. You want health care?  No problem but you are gonna pay via your taxes.  There needs to be some more personal responsibility, you can't just push it all in business. Why would anyone want to start a business, why would they want to ramp up hiring?

 

It’s similar in Germany, corporate taxes aren’t much higher there than in the US. Also, health care isn’t free either, it’s paid for in taxes, which is a capped tax of 15.5%, 8.2% paid by the insured and 7.3% is paid by the employer. It’s not free by any means.

[nodnub]

I travel to Germany about 3 month total including Prague, Costa Rica, and Mexico for work. I work daily with many people from these countries and the ones who are here in the US on work visa beg and moan and cry not to go back when their visas come up for expiration (and I wish they didn’t have to go). They ALL want to have their visas extended. Not to mention that 80% of them have kids while they’re here. I was talking with a coworker Standa a little bit ago. He said he loves the US health insurance. He pays $80 a month company pays like $200ish where as in Prague he said he was paying 10k a year through taxes etc.

Now Germany and Prague are not terrible in any sense. Beautiful countries. But the idea or argument that “oh well, the worst we can be is like so and so.” Is completely counterintuitive. Why does the US exist in the first place? It certainly doesn’t exist to be like Europe. If you all like Europe so much then why choose to live in the US? You sound like the homeschool kids who complain about missing out on sports that the local school offers.

 

You can’t have the cake and eat it too.

 

Those figures for health care costs in Czech republic sound way off base. Have you had a chance to verify that somehow.  Keep in mind anecdotal evidence from taxpayers is not always true.  For example, I cant count how many people I have met that dont understand fundamental personal finance stuff like marginal tax rates.

[RuleNumberOne]

Curiously European pension funds all prefer US stocks over European ones. Look at the holdings of Norway's sovereign wealth fund.

 

On top of this the US taxpayer also pays for European defense via NATO! Trump asked them to "pay their fair share" and they have only spewed hate against Trump ever since.

 

I travel to Germany about 3 month total including Prague, Costa Rica, and Mexico for work. I work daily with many people from these countries and the ones who are here in the US on work visa beg and moan and cry not to go back when their visas come up for expiration (and I wish they didn’t have to go). They ALL want to have their visas extended. Not to mention that 80% of them have kids while they’re here. I was talking with a coworker Standa a little bit ago. He said he loves the US health insurance. He pays $80 a month company pays like $200ish where as in Prague he said he was paying 10k a year through taxes etc.

Now Germany and Prague are not terrible in any sense. Beautiful countries. But the idea or argument that “oh well, the worst we can be is like so and so.” Is completely counterintuitive. Why does the US exist in the first place? It certainly doesn’t exist to be like Europe. If you all like Europe so much then why choose to live in the US? You sound like the homeschool kids who complain about missing out on sports that the local school offers.

 

You can’t have the cake and eat it too.

[Castanza]

I travel to Germany about 3 month total including Prague, Costa Rica, and Mexico for work. I work daily with many people from these countries and the ones who are here in the US on work visa beg and moan and cry not to go back when their visas come up for expiration (and I wish they didn’t have to go). They ALL want to have their visas extended. Not to mention that 80% of them have kids while they’re here. I was talking with a coworker Standa a little bit ago. He said he loves the US health insurance. He pays $80 a month company pays like $200ish where as in Prague he said he was paying 10k a year through taxes etc.

Now Germany and Prague are not terrible in any sense. Beautiful countries. But the idea or argument that “oh well, the worst we can be is like so and so.” Is completely counterintuitive. Why does the US exist in the first place? It certainly doesn’t exist to be like Europe. If you all like Europe so much then why choose to live in the US? You sound like the homeschool kids who complain about missing out on sports that the local school offers.

 

You can’t have the cake and eat it too.

 

Those figures for health care costs in Czech republic sound way off base. Have you had a chance to verify that somehow.  Keep in mind anecdotal evidence from taxpayers is not always true.  For example, I cant count how many people I have met that dont understand fundamental personal finance stuff like marginal tax rates.

 

Certainly! I generally take everything with a grain of salt. But I know about 20ish people who live here currently and only 1 of them seems to have an issue with the insurance. $80/m 1k deductible 3k max oop and $20 copay (none for preventative). For healthy people this is no expensive by any means. And I definitely don’t have the best insurance around.

[Castanza]

I'm not sure about Germany but the Nordic countries havhaved a very different taxation policy than what Warren is proposing. Their corporate tax rates are comparable to the US but personal tax is much higher in particular for the middle class. So Warren will reference these countries when it suits her but ignore the details she doesn't care for.

 

I think this Nordic model makes more sense. You want health care?  No problem but you are gonna pay via your taxes.  There needs to be some more personal responsibility, you can't just push it all in business. Why would anyone want to start a business, why would they want to ramp up hiring?

 

It’s similar in Germany, corporate taxes aren’t much higher there than in the US. Also, health care isn’t free either, it’s paid for in taxes, which is a capped tax of 15.5%, 8.2% paid by the insured and 7.3% is paid by the employer. It’s not free by any means.

 

 

Then what’s the benefit? Because rough math for someone earning 65k a year would be 5,330 (-960, -1k, -3k) and you’re basically at my insurance except I’d have $370 less. Make more pay more. I know my coworker makes somewhere between 100-120k usd so that would put him close to 10k costs in healthcare using the numbers you provided.

 

It’s similar in Germany, corporate taxes aren’t much higher there than in the US. Also, health care isn’t free either, it’s paid for in taxes, which is a capped tax of 15.5%, 8.2% paid by the insured and 7.3% is paid by the employer. It’s not free by any means.

 

[SharperDingaan]

This is a very 'amusing' discussion ...

 

According to odds.watch, Warren has a 19% chance of winning the 2020 Presidential Election. And is down 10 points in < 1 month!

Even 'Trump will leave office early', clocks in with higher odds - 21% as at current time.

https://odds.watch/elizabeth-warren-2020

 

Of course, no one wants to believe a betting shop's odds ....

Yet the 'investment's' results - will be based on potential gain/loss x the prob. of occurrence (betting shop odds)

I like the 'Trump will be impeached' at 74%, and rising  ;D

 

SD

 

 

 

 

 

[Gregmal]

Was Trump winning the Presidency not a ~20% event, THE NIGHT BEFORE? Let alone a year plus prior?

 

I see no harm in communal brainstorming and speculating. Personally, the best ideas are the ones that overlap many scenarios in the proverbial Venn diagram. They hedge my risks and present me as many ways to win as possible. Always be on the lookout for those.

[cubsfan]

The NYT poll had Trump at 15% chance of winning the night before the election. Most polls were in that 10-20% odds for Trump.

 

https://www.nytimes.com/interactive/2016/upshot/presidential-polls-forecast.html

 

CNN Poll - Trump chances = 9%

 

https://www.cnn.com/2016/11/07/politics/political-prediction-market-hillary-clinton-donald-trump/

 

Such is the out of touch media --- totally clueless on Trump's election chances........totally clueless on Russian/Trump collusion.

Hell, for 3 YEARS - the Media has been totally clueless and totally partisan.

 

Why in the world would you assign them ANY credibility now??

 

And now we are supposed to believe the media about the Ukrainian Hoax?? 

 

Try 0 for 3 - and the Media is done...

[SharperDingaan]

Polls are political creations. Phrase the question, and target specific 'markets', to get the result you want.

Betting shop odds are just supply/demand, balanced net of handicapping. Real transactions, harder to manipulate, and mostly live time.

They are not the same things.

 

To speculate, you need a hypothesis ... 'Trump will leave office early'

The 'something' to speculate on; be it occurrence, time frame, impact of change, trade strategy/how-to, etc.

No hypothesis - and you've just a political discussion trying to look like something else.

 

SD

 

 

 

[Spekulatius]

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[cubsfan]

The main point you might have missed is the clueless/partisan Mainstream Media - so out of touch with America.

 

Anyone that trusts them, like we used to in the old days, is fooling themselves.

 

My "speculation" is that Trump will be impeached, but the real damage will be to the Media once again, when he is re-elected.

 

The damage to the media is permanent and long-lasting - as it will be to the Democratic Party until they fix themselves.

 

Including the credibility of those suffering from Trump Derangement Syndrome, like some on this thread.