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Bend3r said:   Apple's back on track.
  Barf

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Guess this market ain't falling off a cliff anytime soon. This huge chunk of cash just gonna sit here and wait foreva earnings pennies lame

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I don't know what you mean by a huge chunk of cash, but you are playing a sucker's game if you think you can time the market successfully.

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DavidScubadiver said:   I don't know what you mean by a huge chunk of cash, but you are playing a sucker's game if you think you can time the market successfully.
 
Agree and disagree both.

- It is hard to justify getting into the market at these levels. If you have already made the gains, easy to say, "easy come, easy go". But otherwise it is hard to see your savings wiped out. But at the same time, for now, there seems to be a decent strength in the market - so sitting in the sidelines means you are losing out.

- I think the more interesting thing is that the whole market may not crash but individual securities could. So if you were waiting for a correction, it is here! Eg. ALK air crossed $100 around March and there is no way I was putting money in that stock. But at 85, looks interesting enough. Oil prices are still low and that would help too. There was not a single day event to take it down 15% but market has been chiseling away at its price. So waiting to time and getting in a broad market fund means that you wait for a while but if you are willing to dabble in individual securities, there is enough stuff to go pick up. In fact, I more or less finished deploying all my cash last week. Now, I am rotating - stuff that hasn't done well, shooting it and buying something else.
 

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Individual securities are always much riskier than the whole market. I don't believe there is anything inherently "unjustified" about "the markets" at "these levels". I think you need to be comfortable with an asset allocation and if the market crashes, you buy into it and rebalance your portfolio at some point in time. If one's risk tolerance is, "I can't take risk and I need a huge pile of cash" than that should be the case independent of where the markets are trading. Otherwise, one is engaged in market timing.

If I'm content with a risk tolerance that is 80% stocks and 20% bonds, and the stock market drops and I am now 75% stocks, 25% bonds, I sell 5% of my bonds and buy stocks with the proceeds. It doesn't really matter whether the drop happened 5 days or 5 years after my investment.

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$1T market cap is around... $197 right?

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DavidScubadiver said:   Individual securities are always much riskier than the whole market. I don't believe there is anything inherently "unjustified" about "the markets" at "these levels". I think you need to be comfortable with an asset allocation and if the market crashes, you buy into it and rebalance your portfolio at some point in time. If one's risk tolerance is, "I can't take risk and I need a huge pile of cash" than that should be the case independent of where the markets are trading. Otherwise, one is engaged in market timing.

If I'm content with a risk tolerance that is 80% stocks and 20% bonds, and the stock market drops and I am now 75% stocks, 25% bonds, I sell 5% of my bonds and buy stocks with the proceeds. It doesn't really matter whether the drop happened 5 days or 5 years after my investment.

  
1. Each one has their own strategy. I am comfortable holding certain individual securities because I know  their PE ratios, dividends, historical prices and so on. I don't have the same feel for the market - particularly when the indices are being driven by the same handful of 4-5 stocks.
2. What asset allocation? My goal is always to be 100% stock allocated. But if I don't find values, I will let the cash build up. I did load up on few muni bonds at 5+% but as some of them have been called early, haven't replaced them - just can't justify at current interest rates.
3. Instead of asset allocation, I think of my positions as, A. Buy and hold for long term, B. Buy and hold for 1-2 years with covered calls, C. Outright speculation with long term calls/vertical spreads, and D. Long term puts on some stocks. No fixed allocation but just based on as you saw something which I perceived as good valuation. Only constraint is that D cannot exceed certain % of my portfolio. Do I hit 100% - hell no - but doing reasonably well - "C" really helps and "D" is definitely good for a few % points of gains. 

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Pretty sure that the total market index (VTI's benchmark) is not driven by 4-5 stocks. I could be wrong, but I would be surprised.  I know it is difficult to track returns with money going in and out all of the time, but have you ever tried to track your returns against the total market to see how you are doing compared to a passive approach?

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Tomorrow's opening should be fun.

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ZenNUTS said:   Tomorrow's opening should be fun.
  Why?

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I loaded EA for earnings and unloaded for 10% profit. But what happened it shooted 5% more after i unloaded
Profit and not complained

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dsjd said:   UAL is a sell, not a buy.  The markets have not fully grasped the impact of the damage to the brand and lost future revenue.  It will be a billion plus revenue hit in the next year easy.  I think it will be a decline to the 50s or maybe even 40s over the next several weeks, kind of like CMG last year, as info about the decline in sales comes to light.  There will be knife catchers along the way down.  Do not underestimate the power of a pissed of Asia.  Just look at what China did to tourism in Korea.
  
UAL all time high today.  You could make a fortune shorting it from here.

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KATE is getting bought by COH for $18.50. Its now at ~18.40-18.45. 

Any chance that it may go more than 18.50? Earnings are over, not sure anyone else wants to outbid the current offer, KATE management seems to be OK with the current offer as well.. 

 

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srns said:   KATE is getting bought by COH for $18.50. Its now at ~18.40-18.45. 

Any chance that it may go more than 18.50? Earnings are over, not sure anyone else wants to outbid the current offer, KATE management seems to be OK with the current offer as well.. 

 

  Sounds like you answered your own question.

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I already made the trade and moved on with 100% gain on puts.  Will look at it again closer to next ER.

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dsjd said:   I already made the trade and moved on with 100% gain on puts.  Will look at it again closer to next ER.
  
It fell 8 dollars, not 20 or 30 as you predicted, and is at an all-time high.  You were wrong, which is fine, but don't pretend like this is a win because of some imaginary paper trade you "made" in the first 3 days after it happened after saying your window was several weeks for the stock to fall.

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It will fall but it will take time for the numbers to come out.  You can trade it however you want, I really don't care.  As for me, like I said, I will look at it again closer to next ER.  Every other transpacific airline is packed this summer except United.  Take a look or don't, I don't care.

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jd2010 said:   
srns said:   KATE is getting bought by COH for $18.50. Its now at ~18.40-18.45. 

Any chance that it may go more than 18.50? Earnings are over, not sure anyone else wants to outbid the current offer, KATE management seems to be OK with the current offer as well.. 

 

  Sounds like you answered your own question.

  
Right.. I was thinking aloud, and wanted to hear any other opinions.. Thanks. I will wait just a few more days (in case traders push it up!)  

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is IBM good buy @ 150 . 4% yield and 12 PE sounds good to me .

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DavidScubadiver said:   Pretty sure that the total market index (VTI's benchmark) is not driven by 4-5 stocks. I could be wrong, but I would be surprised.  I know it is difficult to track returns with money going in and out all of the time, but have you ever tried to track your returns against the total market to see how you are doing compared to a passive approach?
 

  
Sorry busy week - didn't mean to go away. I was talking about the indices and initially, the DJI (after Trump election) was mostly driven by GS. And QQQ has AAPL as a big weight. You can for example, plot VTSMX against QQQ for year to date and VTSMX is very much lagging.

This whole idea of trying to compare my returns against total market to see how I am doing is crap. Just to make a point - somebody decides to invest in bonds. He is making 3%. So you don't go around saying that his strategy is crap since it sucks relative to VTI or something. The person is choosing safety over performance - so his return is by definition allowed to be lower. By having my portfolio intentionally invested in stocks that don't make huge moves and by selling covered calls, I am intentionally sabotaging the performance relative to the total market since the total market fund will have GOOGL, FB which I don't own (at least not now - I did have GOOGL calls earlier) since I am after safety. But inspite of a high % of my account with higher "safety" (at least perceived to me), due to the call spreads/puts that I do, I have been beating a fund like FLPSX for last few years. But personally, that is not a good metric either since any scheme that involves options does really well when the market is going up. And it is also a function of how I decide to juice the particular account. As an example, I decide to juiced up my Roth account by doing more spreads and less stocks. I figured that gains are more attractive due to tax free nature. 1/1/14 - account was at 35K and today it is 80K. It would have done really bad if the market had tanked as much as it has gained under Trump.

Yup hard problem to track returns - particularly when credit cards are dipping into my TD account and cash is going into the account whenever I feel like investing. Here is what I do. Let us say, I want to compute average rate of return for 2016.

Final year end value = Sum (deposits * (1.0 + r)^n)          where r is the daily rate of interest and n is the number of days that the deposit has been in the account.  [Daily compounding].  So if you know the final year value, deposits and number of days, solve for "r". Obviously, not a problem for humans to solve but computers can do it very well. But even then keeping track of each deposit is going to be hard.. So I do this:

1/1/2016         Starting value
1/15/2016       Net deposit/withdrawal for Jan
2/15/2016       Net deposit/withdrawal for Feb
....

12/31/2016     Final value

So I basically lump all deposits/withdrawals in the middle of the month instead of each specific date. This information is easy - I can read it off right off my TD statement. Then my program goes and spits out an "average return" for the year. My method is mathematically correct apart from the error of lumping deposits to the middle of the month but the ratio of "total value of account" to "withdrawals/deposits" is lopsided - so I don't worry about that error. So overall, it is not a hard problem for me.

Key thing is that asking for how am I doing relative to market is a bad question - completely ignores the "safety" piece. The reason I do the computations is to make sure that I am not sacrificing a huge % return for safety. And I know that if the market were go to go up 30% in year, my portfolio will have relatively poor rate of return. I also know that when the market is down 8-10%, I will easily beat it. Lot more that, then I will have to see if the puts I have sold wipe out my advantages.

 

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manuvns said:   is IBM good buy @ 150 . 4% yield and 12 PE sounds good to me .
  
I don't think so. I never understood why Buffet stuck with it for so long. There are two basic things that you have to know about IBM:

1. Falling revenue and earnings
2. They make their per-share e.g. earnings look good by reducing the overall share count buying shares.

Happens one time, you understand. But they repeat this crap without fail. I had been advising all my friends to stay away from this piece of garbage but Buffet's investment resulted in a lot of copycats and hence the stock stayed up.

But now that Buffet admits that he sold a bunch at $180 and he said that he will look to sell at similar prices, the stock is dead. People now know that the stock is garbage and will continue to be sold on any upward movement. Cramer was thinking (I seem to recollect) $130 as a entry point.

[One news that may make the stock go up big time is if the board fired the CEO. Change would be perceived as a big catalyst].

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PrincipalMember said:   
DavidScubadiver said:   Pretty sure that the total market index (VTI's benchmark) is not driven by 4-5 stocks. I could be wrong, but I would be surprised.  I know it is difficult to track returns with money going in and out all of the time, but have you ever tried to track your returns against the total market to see how you are doing compared to a passive approach?
  
Sorry busy week - didn't mean to go away. I was talking about the indices and initially, the DJI (after Trump election) was mostly driven by GS. And QQQ has AAPL as a big weight. You can for example, plot VTSMX against QQQ for year to date and VTSMX is very much lagging.

This whole idea of trying to compare my returns against total market to see how I am doing is crap. Just to make a point - somebody decides to invest in bonds. He is making 3%. So you don't go around saying that his strategy is crap since it sucks relative to VTI or something. The person is choosing safety over performance - so his return is by definition allowed to be lower. By having my portfolio intentionally invested in stocks that don't make huge moves and by selling covered calls, I am intentionally sabotaging the performance relative to the total market since the total market fund will have GOOGL, FB which I don't own (at least not now - I did have GOOGL calls earlier) since I am after safety. But inspite of a high % of my account with higher "safety" (at least perceived to me), due to the call spreads/puts that I do, I have been beating a fund like FLPSX for last few years. But personally, that is not a good metric either since any scheme that involves options does really well when the market is going up. And it is also a function of how I decide to juice the particular account. As an example, I decide to juiced up my Roth account by doing more spreads and less stocks. I figured that gains are more attractive due to tax free nature. 1/1/14 - account was at 35K and today it is 80K. It would have done really bad if the market had tanked as much as it has gained under Trump.

Yup hard problem to track returns - particularly when credit cards are dipping into my TD account and cash is going into the account whenever I feel like investing. Here is what I do. Let us say, I want to compute average rate of return for 2016.

Final year end value = Sum (deposits * (1.0 + r)^n)          where r is the daily rate of interest and n is the number of days that the deposit has been in the account.  [Daily compounding].  So if you know the final year value, deposits and number of days, solve for "r". Obviously, not a problem for humans to solve but computers can do it very well. But even then keeping track of each deposit is going to be hard.. So I do this:

1/1/2016         Starting value
1/15/2016       Net deposit/withdrawal for Jan
2/15/2016       Net deposit/withdrawal for Feb
....

12/31/2016     Final value

So I basically lump all deposits/withdrawals in the middle of the month instead of each specific date. This information is easy - I can read it off right off my TD statement. Then my program goes and spits out an "average return" for the year. My method is mathematically correct apart from the error of lumping deposits to the middle of the month but the ratio of "total value of account" to "withdrawals/deposits" is lopsided - so I don't worry about that error. So overall, it is not a hard problem for me.

Key thing is that asking for how am I doing relative to market is a bad question - completely ignores the "safety" piece. The reason I do the computations is to make sure that I am not sacrificing a huge % return for safety. And I know that if the market were go to go up 30% in year, my portfolio will have relatively poor rate of return. I also know that when the market is down 8-10%, I will easily beat it. Lot more that, then I will have to see if the puts I have sold wipe out my advantages.

 

  As  you say, to each his own.  I would only note that your  prior statements do not suggest that the safety piece is terribly important to you.  You indicated that your goal is to be 100% in equities, that you buy and hold individual stocks for the long term, use covered calls, and engage in outright speculation "which really helps". 
 

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DavidScubadiver said:     I would only note that your  prior statements do not suggest that the safety piece is terribly important to you.  You indicated that your goal is to be 100% in equities, that you buy and hold individual stocks for the long term, use covered calls, and engage in outright speculation "which really helps". 
 


- Covered calls is consistent with my "safety" piece. Being short on puts is equivalent. 
- Outright speculation is with "long-term" calls on "reasonable stocks". And I am very likely to do a vertical spread instead or if I didn't start out with a vertical spread, it will end up there. Again I shift most of the risk. I don't engage in weekly calls before earnings - that is pure gambling.

This is an example of my typical option vertical spread:

Long: DIS Jan 19 2018 80 Call
Short: DIS Jan 19 2018 100 Call

My net spend on this trade was: $12.5

But I would NOT do this trade at current DIS stock price. Each to his own - you may consider this risky, but I am very comfortable with such a trade - not much different to me than holding DIS outright. In terms of % loss on capital deployed hugely different - agreed - but if I wanted to invest in 1000 shares of DIS, very similar.

 

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David,
Would you mind telling us your holdings?

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TANKING!!!

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ICMATULKASPRMKY said:   TANKING!!!
  a 1% downward move is considered "TANKING!!!" - wow.

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Just ignore him, he is the worst.

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I just see it as a huge opportunity to buy in my retirement accounts. These are the days where DCAing really pays off.

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I did some swapping today and bought few stocks today.Also moved some cash to Midcap fund in 401k...If market moves up then i will move that back to cash+sp500.
Did one mistake of buying CSCO which tanked 7% after hours.. going to hold that till end of year

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anusha123 said:   I did some swapping today and bought few stocks today.Also moved some cash to Midcap fund in 401k...If market moves up then i will move that back to cash+sp500.
Did one mistake of buying CSCO which tanked 7% after hours.. going to hold that till end of year

  I wouldnt call that a mistake. You flipped a coin by loading before earnings and and the coin landed the other way. Call it bad luck or karma versus mistake.

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MattatUT said:   David,
Would you mind telling us your holdings?

Attached is what I am holding in my brokerage accounts, including IRAs. 
I also have 401k, 403(b) and 529 accounts invested in funds that total 46.5% US Stocks, 51% fixed income

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I just sold out of my NKE position which I have held since 2011. Split the proceeds between VWO and VXUS, reserving $5,500 to pay the capital gains tax. I've never actually reserved anything for the gains before, but it seems like the smart thing to do.

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DavidScubadiver said:   I just sold out of my NKE position which I have held since 2011. Split the proceeds between VWO and VXUS, reserving $5,500 to pay the capital gains tax. I've never actually reserved anything for the gains before, but it seems like the smart thing to do.
  
I don't do any reserving. I always take a look at my things at the end of the year and and try to close out losing positions to offset the gains. Obviously harder to do when you are indexing -but with my covered call scenarios and expiring puts, there is enough to keep me busy. I like this year end discipline - has helped me weed out some real losers which went on to tank further (e.g. M).

The other thing is that taxes are typically in Apr and I generally expect decent cash flow between now and then (including bonus in the beginning of the year). Cash flow mostly very positive due to wages going up 3X over the last 20 years and total cost of living actually going down due to declining mortgage.

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You have a variable rate mortgage?  

And, yes, it is hard to tax-loss harvest when the markets are moving up and you are invested in them.  Knock on wood.

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DavidScubadiver said:   You have a variable rate mortgage?  

And, yes, it is hard to tax-loss harvest when the markets are moving up and you are invested in them.  Knock on wood.

  
I started out with a 7/1 ARM ($1250 payment per month). Refinanced to 5/1 and then have allowed it to float. But after 19 years, the principal balance is not much - like 130K and I can pay off when I feel like it and hence not super concerned about rising rates - particularly since I am making a lot more in the market/few muni bonds that I own. Now I pay $920 per-month - that is why I said cash flow is really nice due to income having gone up 3X.

With regards to tax loss harvesting in upwards moving market, my covered call positions work out really well. In some cases, the stock has appreciated so much that the call that I sold now shows a loss with the stock showing a corresponding gain. So I will take some risk there and carefully tread over wash/sale rules and close out the calll this year.

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Please anyone have opinion on the following two stocks. I own both of them.

LYG
ZTO

Thanks

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Anybody betting on RAD and WBA merger here?

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Ulta did small pop

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