Uccmal Posted March 17, 2020 Share Posted March 17, 2020 thanks LC. I was just toying with it in my US Margin account. Uncovered Calls were costing me the Entire cost of an equal amount of stock in Margin room. The riskiness is relatively low but the amount of margin I will eat up constrains me in other ways. I just needed the reminder of why I don’t do this. It’s been 11.5 years. I got caught in the Fall 2008 crash after selling uncovered puts. I had to sit on the phone for an hour with my broker ( they loaned me the extra money for a few minutes) unwinding the puts to get me out of a margin call situation. Obviously, everything worked out ultimately but I learned not to go uncovered. I don’t hold enough of any US stock position to make it worthwhile to try and go covered. Good strategy for the way these markets are whipsawing. Thanks, A Addendum: All of my put positions are in significant profit positions, even today. I bought them Friday: V, MA, Low (poor quality proxy for HD); Goog, and FB. And my BAm puts from three weeks ago are up 15 x - still not selling though. Looking for 28x to 30 in the next few days on these. Link to comment Share on other sites More sharing options...
kab60 Posted March 17, 2020 Share Posted March 17, 2020 Ulta Beauty... And a bit of ADS (almost puked when I did that) Link to comment Share on other sites More sharing options...
LC Posted March 17, 2020 Share Posted March 17, 2020 Addendum: All of my out positions are in significant profit positions, even today. I bought them Friday: V, MA, Low (poor quality proxy for HD); Goog, and FB. And my BAm puts from three weeks ago are up 15 x - still not selling though. Looking for 28x to 30 in the next few days on these. Many ways to skin a cat! Congrats :) Link to comment Share on other sites More sharing options...
longlake95 Posted March 17, 2020 Share Posted March 17, 2020 HTL Link to comment Share on other sites More sharing options...
Kaegi2011 Posted March 17, 2020 Share Posted March 17, 2020 Bought DNKN, SBUX, NKE, MA, GOOGL, W, ANET, CME, EYE, GOOS, MCO, MSFT, NVR, YETI. Not huge positions but so far the IRR is insane! Link to comment Share on other sites More sharing options...
gjangal Posted March 17, 2020 Share Posted March 17, 2020 Buying V at a forward pe of 20. For all those who have been waiting for V , this looks like a good chance. Once the case curve flattens, economic activity should return to normal slowly. Given where rates are , this seems like an good price for a good company Where are you getting the forward earnings #? Is that consensus earnings? Your estimate of future earnings? Analyst estimates for 2021 before this corona virus situation. In my view next year earnings may be impaired but earning power is not. Betting this will be the first ones to recover when things go back to normal. I see this and MA as a royalty on GDP and Inflation. Terminal growth is nominal GDP + any pricing power they may want to exert Link to comment Share on other sites More sharing options...
gjangal Posted March 17, 2020 Share Posted March 17, 2020 And I should add very low investment need for future growth if the duopoly persists Link to comment Share on other sites More sharing options...
Stuart D Posted March 17, 2020 Share Posted March 17, 2020 Buying V at a forward pe of 20. For all those who have been waiting for V , this looks like a good chance. Once the case curve flattens, economic activity should return to normal slowly. Given where rates are , this seems like an good price for a good company Where are you getting the forward earnings #? Is that consensus earnings? Your estimate of future earnings? Analyst estimates for 2021 before this corona virus situation. In my view next year earnings may be impaired but earning power is not. Betting this will be the first ones to recover when things go back to normal. I see this and MA as a royalty on GDP and Inflation. Terminal growth is nominal GDP + any pricing power they may want to exert Love the business but struggle with pe=20. If I paid the $340b market cap today, I’d be waiting until 2040 to get my investment back in earnings. Will visa be around in 2040? and will they have averaged $17b/yr (for 20yrs) in earnings? Maybe yes, maybe no. It’s a tough one for me... Link to comment Share on other sites More sharing options...
coc Posted March 17, 2020 Share Posted March 17, 2020 Love the business but struggle with pe=20. If I paid the $340b market cap today, I’d be waiting until 2040 to get my investment back in earnings. Will visa be around in 2040? and will they have averaged $17b/yr (for 20yrs) in earnings? Maybe yes, maybe no. It’s a tough one for me... Can you walk us through your math there? Do you believe Visa's earnings will always be $17 billion? Link to comment Share on other sites More sharing options...
Stuart D Posted March 17, 2020 Share Posted March 17, 2020 Very simplistic, low-iq analysis here. Just taking the forward pe (mentioned in the other comments above) and saying if there was no decline/growth it would be a 20yr wait to get the market cap back in earnings. I’m not smart enough to know if the earnings will grow, decline or flatline so V is in the too hard basket for me. Link to comment Share on other sites More sharing options...
gary17 Posted March 17, 2020 Share Posted March 17, 2020 risk is relative risk free government bond - 10 year at sub 1% with no earning power increase for 10 years. Gary Link to comment Share on other sites More sharing options...
longlake95 Posted March 17, 2020 Share Posted March 17, 2020 Very simplistic, low-iq analysis here. Just taking the forward pe (mentioned in the other comments above) and saying if there was no decline/growth it would be a 20yr wait to get the market cap back in earnings. I’m not smart enough to know if the earnings will grow, decline or flatline so V is in the too hard basket for me. I'm not that smart on macro, but I figure earnings have grown for 150 years or more, with occasional earnings compression every 7-10 years as the world "naturally" resets. The world is not linear. But earnings will be higher 5 years from now. Link to comment Share on other sites More sharing options...
Kaegi2011 Posted March 17, 2020 Share Posted March 17, 2020 Very simplistic, low-iq analysis here. Just taking the forward pe (mentioned in the other comments above) and saying if there was no decline/growth it would be a 20yr wait to get the market cap back in earnings. I’m not smart enough to know if the earnings will grow, decline or flatline so V is in the too hard basket for me. What is in the not too hard bucket for you? Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 17, 2020 Share Posted March 17, 2020 everything would be in the too hard bucket for me if I had to forecast earnings. why not find a great business (V qualifies) at a discount to recent price, and say that is good enough analysis to pull trigger? Link to comment Share on other sites More sharing options...
nspo Posted March 18, 2020 Share Posted March 18, 2020 You also have to consider the compounding of reinvested earnings. The 20PE doesn't live in a vacuum. I have NO idea what the numbers actually are but if they retain 20% and earn 20% on those earnings than they're growing 4%. Then, you have to add in a portion for organic growth. Let's say you're fairly confident that V will grow at GDP. So 4%+3%, you get 7% growth. What's a 20% roic and 3% organic growth worth with an extremely defensible business model? Not sure, but you get 7% for growth, and a cash yield of (20PE =5% yield) 5% yield *80% payout= 4% cash yield. So 7% in growth, 4% in buyback and divs. 11% compounded? Not the worst Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 18, 2020 Share Posted March 18, 2020 You also have to consider the compounding of reinvested earnings. The 20PE doesn't live in a vacuum. I have NO idea what the numbers actually are but if they retain 20% and earn 20% on those earnings than they're growing 4%. Then, you have to add in a portion for organic growth. Let's say you're fairly confident that V will grow at GDP. So 4%+3%, you get 7% growth. What's a 20% roic and 3% organic growth worth with an extremely defensible business model? Not sure, but you get 7% for growth, and a cash yield of (20PE =5% yield) 5% yield *80% payout= 4% cash yield. So 7% in growth, 4% in buyback and divs. 11% compounded? Not the worst way too many numbers. the more numbers you use, the more wrong you can be Link to comment Share on other sites More sharing options...
nspo Posted March 18, 2020 Share Posted March 18, 2020 Yeah, far more numbers than a DCF huh? Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 18, 2020 Share Posted March 18, 2020 Yeah, far more numbers than a DCF huh? yes, Huh! all of your numbers are garbage in. DCF is a model that makes sense if you have reliable data. no prediction of the future results in reliable data. if you cant smell a good business selling at a reasonable price, then you can have your DCF and play with yourself Link to comment Share on other sites More sharing options...
nspo Posted March 18, 2020 Share Posted March 18, 2020 So let me get this clear. You're saying returns on capital, owner's earnings, dividend yield, and retention rates are garbage in? Is there a donkey button on this board?? I hope others don't subject themselves to this "garbage" I'm seeing. Read the numbers, don't take a cursory view and assume you understand what's being said. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 18, 2020 Share Posted March 18, 2020 So let me get this clear. You're saying returns on capital, owner's earnings, dividend yield, and retention rates are garbage in? Is there a donkey button on this board?? I hope others don't subject themselves to this "garbage" I'm seeing. Read the numbers, don't take a cursory view and assume you understand what's being said. no I am saying your estimates of these variables are garbage in. what is your expertise? the street gets these numbers wrong all of the time (mainly because they suck up to management all the time to create their projections). there is a false certainty to numbers that you dont appreciate, because you are asking someone/something to tell you what to do, and numbers are all too suggestive of wisdom. capiche? Link to comment Share on other sites More sharing options...
nspo Posted March 18, 2020 Share Posted March 18, 2020 That's a valid point but these current numbers (and near term estimates thereof)are the best we have to work with. This is why one must be comfortable with the business prospects. The numbers I use assume normalized earnings and work from there. I lost you a little bit in the middle there but I'm Italian so capisco. Link to comment Share on other sites More sharing options...
Uccmal Posted March 18, 2020 Share Posted March 18, 2020 Was doing some ETF research for a friend of mine last night, and it prompted me to put in order for the Vanguard S&p 500 etf Canadian dollar (low ball) as usual. Link to comment Share on other sites More sharing options...
boilermaker75 Posted March 18, 2020 Share Posted March 18, 2020 Wrote GILD 70-strike, Marc 23 expiration puts for $0.51 per share. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 18, 2020 Share Posted March 18, 2020 You also have to consider the compounding of reinvested earnings. The 20PE doesn't live in a vacuum. I have NO idea what the numbers actually are but if they retain 20% and earn 20% on those earnings than they're growing 4%. Then, you have to add in a portion for organic growth. Let's say you're fairly confident that V will grow at GDP. So 4%+3%, you get 7% growth. What's a 20% roic and 3% organic growth worth with an extremely defensible business model? Not sure, but you get 7% for growth, and a cash yield of (20PE =5% yield) 5% yield *80% payout= 4% cash yield. So 7% in growth, 4% in buyback and divs. 11% compounded? Not the worst It’s not a bad idea because to the best of my limited knowledge, the companies LT prospect won’t be impaired by the Covid-19 although short term earnings may suffer. I just don’t think the price is all that attractive. this thing hasn’t even seen its late 2018 lows yet and thr prospect are way worse than they were back then. Still being reasonably sure of no lasting impairment is worth something. We will see a lot of stocks going to zero in the next 12 month. Link to comment Share on other sites More sharing options...
nspo Posted March 18, 2020 Share Posted March 18, 2020 I agree with you. I don't have much of an opinion on their prospects besides having a high level of confidence they'll be larger in 5-10 years. The earnings will, in the short term be impacted and maybe in the medium term revert lower, naturally. Link to comment Share on other sites More sharing options...
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