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When should we get greedy?

Investment discussion for beginners. Why you should invest your money, get help getting started
GoSeigen
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Re: When should we get greedy?

#483398

Postby GoSeigen » February 28th, 2022, 6:03 pm

EthicsGradient wrote:As far as investing in Russia goes, you're taking a big risk at the moment:

The European subsidiary of Russia's biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. Economists warned that the Russian economy could shrink by 5%.

The ruble lost about 20% of its value to trade at 100 to the dollar at 6 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayed, and then canceled entirely, according to a statement from the country's central bank.

https://edition.cnn.com/2022/02/28/busi ... index.html


1. Agree, but I like risk. When everyone is terrified that's a good time to be buying.
2. I step into my risky purchases, I don't rush. So far new Russian exposure is <1% of portfolio value. If I lose it all I'm not going to have a sleepless night. But you have to start somewhere.

GS

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Re: When should we get greedy?

#483660

Postby TheMotorcycleBoy » March 2nd, 2022, 6:22 am

Investor wrote:
GoSeigen wrote:
I've been steadily buying SEP S&P straddles over the past month and now have an uncomfortably large position. If the S&P goes nowhere I'm going to make painful losses on these positions with strikes ranging from 4275 to 4575.

Also been slowly closing some of my leveraged long FTSE stock positions, using the profit to buy stuff that has fallen hard. I think this bull market still has legs so happy to stay bullish.


GS



I'm in a similar boat. I bought heavily in late January thinking the markets didn't have much further to fall. Of course, they have. So I've suffered enormous losses.

Must admit that I overspent in January too. I'm not beating myself up for it, as I don't have a crystal ball.

I still have some cash, and being as me and my wife are fully employed, am continuing to buy dips, though with not as much ammo as I'd have liked.

Yes IMHO things are going to continue to get worse. I don't see the war in Ukraine ending nicely, and the West will be paying for it for possibly years. Easy to picture a protracted guerilla warfare, like the Soviet-Afghan war which took almost a decade before USSR was forced to withdraw - bankrupt. Europe and the US will flood the area with money and arms, and eventually Russia will collapse. Our fuel bills will rocket.

The outliers being 1) Putin (and hopefully Lukashenka) ousted in a coup and 2) Putin nukes us all.

Matt

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Re: When should we get greedy?

#483791

Postby TheMotorcycleBoy » March 2nd, 2022, 12:38 pm

Bouleversee wrote:GoSeigen said: "
Well, BP can not be invested but BP didn't sell their shares to fairies. Someone is still holding them. Every single share issued is still held by someone no matter how many have been sold. That is what I mean when I say it is impossible not to be invested. The question is who holds the shares and at what price."

I thought I had read that BP hadn't actually sold their shares as yet and that they might just have to write them off. Not sure about the mechanics of that if nobody wants to buy them, other than Rosneft (or even Putin) agreeing to take them off BP's hands for zilch, creating a $14bn loss (the carrying value apparently) for BP. Maybe they would have to gift the shares to Rosneft or whoever to create the loss which would leave a bitter taste in many mouths.

Edit: an article in Citywire says the loss may be up to $25bn.
https://citywire.com/funds-insider/news ... +Afternoon

That's a very good point.

Just like when a country defaults on its debt. I don't think the bonds change hand (trying to form an analogy with GS's words), I guess they just vanish. Big losses for businesses, which will be reflected upon consumers/taxpayers.

Matt

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Re: When should we get greedy?

#483859

Postby 88V8 » March 2nd, 2022, 4:50 pm

TheMotorcycleBoy wrote:Just like when a country defaults on its debt. I don't think the bonds change hand (trying to form an analogy with GS's words), I guess they just vanish.

I look at Evraz, but where's the bottom... and if Putin decides to interfere with the share structure, what's to stop him?
I see Abramovich is the largest shareholder, along with other oligarchish names.
Evraz have some $ denominated bonds. The 5.25% 2024 seems to be on offer at c60% which doesn't strike me as particularly attractive just now.

V8

GoSeigen
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Re: When should we get greedy?

#485179

Postby GoSeigen » March 8th, 2022, 3:55 pm

GoSeigen wrote:Further technical breakdown in the S&P500 today. Target looks like 3500 area. VIX is subdued. Little sign of panic. VIX term structure inverted. Have added more straddles.

GS


Well two weeks have passed and not much has really changed! If investors were going to panic they haven't done so yet except in specific markets like Russia. Effects of sanctions are being digested and banks have been hit hard. I've bought back some bank shares where I'd previously taken profit and continued nibbling at Russian shares.

VIX has risen steadily which flatters my long options positions; given the trade seems to have been correct I have continued adding Sep S&P straddles as fast as I can afford. An uncomfortably large position is now becoming reckless. I'm uneasy because it all feels too simple, but this is a trade I'm taking with my head not my heart so hopefully the logic isn't too far wrong.


GS

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Re: When should we get greedy?

#490781

Postby GoSeigen » April 1st, 2022, 9:20 am

GoSeigen wrote:
GoSeigen wrote:Further technical breakdown in the S&P500 today. Target looks like 3500 area. VIX is subdued. Little sign of panic. VIX term structure inverted. Have added more straddles.

GS


Well two weeks have passed and not much has really changed! If investors were going to panic they haven't done so yet except in specific markets like Russia. Effects of sanctions are being digested and banks have been hit hard. I've bought back some bank shares where I'd previously taken profit and continued nibbling at Russian shares.

VIX has risen steadily which flatters my long options positions; given the trade seems to have been correct I have continued adding Sep S&P straddles as fast as I can afford. An uncomfortably large position is now becoming reckless. I'm uneasy because it all feels too simple, but this is a trade I'm taking with my head not my heart so hopefully the logic isn't too far wrong.


GS


Quick update:

1. I was wrong about the Ukraine war being over in a few weeks. The Ukrainian defence has been inspiring.
2. I was also wrong about the S&P dropping to the 3200-3500 area, at least it hasn't done so immediately. Ironically that makes me less bullish than I was and so I'll be taking profit on long positions as prices rise.
3. Given the normalisation in options markets I have reverted to writing S&P options over the past two weeks. This consists of a combination of progressively closing the OTM Sep put and call contracts I already hold and writing new short strangles in Apr and May contracts. Obviously I'm hoping the market will sit in the 4200-4800 range for a period of time. If not, I am protected by the ITM Sep options I already hold. My notional option exposure currently is around 10-20% of net worth.


GS

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Re: When should we get greedy?

#490793

Postby GoSeigen » April 1st, 2022, 10:01 am

As a very rough sanity check I have added up all the gains and losses on my option positions since I entered this thread when COVID was first hitting the UK. The calculation includes all positions closed after 1 Mar 2020 therefore some positions I'd opened before that date, so is really only indicative.


Total net profit over the intervening two years from closed option positions is about 1% of Mar 2020 net worth. However this includes positions in Gold futures and the FTSE100 which have not been the focus of my posts. Excluding those positions my return for S&P options trades alone has been about 0.4% of Mar 2020 net worth.

Obviously this is not spectacular in the context of the entire portfolio (looks much better if measured against the margin utilised), but still, a profit is a profit and it's paid a few months' school fees! Given I have only put up 2% of net worth as margin I guess the exercise has been more a proof of concept than anything else...

GS
EDIT: It occurs to me that the results could also be slightly distorted where I have replaced an option position with a futures position. I can't remember how frequently this occurred, probably just a very few trades.

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Re: When should we get greedy?

#491252

Postby TheMotorcycleBoy » April 3rd, 2022, 2:56 pm

GoSeigen wrote:
EthicsGradient wrote:As far as investing in Russia goes, you're taking a big risk at the moment:

The European subsidiary of Russia's biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. Economists warned that the Russian economy could shrink by 5%.

The ruble lost about 20% of its value to trade at 100 to the dollar at 6 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayed, and then canceled entirely, according to a statement from the country's central bank.

https://edition.cnn.com/2022/02/28/busi ... index.html


1. Agree, but I like risk. When everyone is terrified that's a good time to be buying.
2. I step into my risky purchases, I don't rush. So far new Russian exposure is <1% of portfolio value. If I lose it all I'm not going to have a sleepless night. But you have to start somewhere.

GS

Sorry to sound bitchy but I think you'd be bonkers to invest in Russian assets. From what I've read, Putin is quite content to do things like minimise economic growth (i.e. reduced budget) in order to accrue foreign reserves. Also the country is a kleptocracy, which translates to everyone being on the rob, meaning that companies will permanently see their employees skimming and nicking stuff to keep with the other crooks. And if things couldn't get worse, the country is witnessing a massive brain drain and exodus of most of their young and intelligent population. Sounds like a recipe for disaster. Perhaps it's a short gain, but on the long term seems likely to end in tears.

Matt

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Re: When should we get greedy?

#491498

Postby GoSeigen » April 4th, 2022, 12:57 pm

TheMotorcycleBoy wrote:
GoSeigen wrote:
EthicsGradient wrote:As far as investing in Russia goes, you're taking a big risk at the moment:

The European subsidiary of Russia's biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. Economists warned that the Russian economy could shrink by 5%.

The ruble lost about 20% of its value to trade at 100 to the dollar at 6 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayed, and then canceled entirely, according to a statement from the country's central bank.

https://edition.cnn.com/2022/02/28/busi ... index.html


1. Agree, but I like risk. When everyone is terrified that's a good time to be buying.
2. I step into my risky purchases, I don't rush. So far new Russian exposure is <1% of portfolio value. If I lose it all I'm not going to have a sleepless night. But you have to start somewhere.

GS

Sorry to sound bitchy but I think you'd be bonkers to invest in Russian assets. From what I've read, Putin is quite content to do things like minimise economic growth (i.e. reduced budget) in order to accrue foreign reserves. Also the country is a kleptocracy, which translates to everyone being on the rob, meaning that companies will permanently see their employees skimming and nicking stuff to keep with the other crooks. And if things couldn't get worse, the country is witnessing a massive brain drain and exodus of most of their young and intelligent population. Sounds like a recipe for disaster. Perhaps it's a short gain, but on the long term seems likely to end in tears.

Matt


Many people agree with you, fortunately.

GS

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Re: When should we get greedy?

#492177

Postby TheMotorcycleBoy » April 6th, 2022, 2:04 pm

GoSeigen wrote:
TheMotorcycleBoy wrote:
GoSeigen wrote:
EthicsGradient wrote:As far as investing in Russia goes, you're taking a big risk at the moment:

The European subsidiary of Russia's biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. Economists warned that the Russian economy could shrink by 5%.

The ruble lost about 20% of its value to trade at 100 to the dollar at 6 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayed, and then canceled entirely, according to a statement from the country's central bank.

https://edition.cnn.com/2022/02/28/busi ... index.html


1. Agree, but I like risk. When everyone is terrified that's a good time to be buying.
2. I step into my risky purchases, I don't rush. So far new Russian exposure is <1% of portfolio value. If I lose it all I'm not going to have a sleepless night. But you have to start somewhere.

GS

Sorry to sound bitchy but I think you'd be bonkers to invest in Russian assets. From what I've read, Putin is quite content to do things like minimise economic growth (i.e. reduced budget) in order to accrue foreign reserves. Also the country is a kleptocracy, which translates to everyone being on the rob, meaning that companies will permanently see their employees skimming and nicking stuff to keep with the other crooks. And if things couldn't get worse, the country is witnessing a massive brain drain and exodus of most of their young and intelligent population. Sounds like a recipe for disaster. Perhaps it's a short gain, but on the long term seems likely to end in tears.

Matt


Many people agree with you, fortunately.

GS

So what Russian assets are you targetting? Things like LON:POLY and LON:EVR, or are buying Russian stocks traded on the Moscow exchange?

Matt

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Re: When should we get greedy?

#494221

Postby GoSeigen » April 14th, 2022, 9:39 am

TheMotorcycleBoy wrote:So what Russian assets are you targetting? Things like LON:POLY and LON:EVR, or are buying Russian stocks traded on the Moscow exchange?


Just adding to existing positions in JRS and POG for now.

GS

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Re: When should we get greedy?

#494236

Postby Dod101 » April 14th, 2022, 10:13 am

According to the JRS website, the share price is at a 156% premium to NAV. Nobody accuse GS of not being adventurous and brave.

Dod

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Re: When should we get greedy?

#494245

Postby GoSeigen » April 14th, 2022, 10:31 am

Quick heads up: unusually, options expiration is today, Thursday, due to tomorrow's Good Friday holiday.

I only have one S&P position expiring, with a 4450 strike so a bit of pin risk there. I've been adding to short straddle positions. Market cooperating by continuing it's long consolidation.

GS

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Re: When should we get greedy?

#494249

Postby GoSeigen » April 14th, 2022, 10:46 am

Dod101 wrote:According to the JRS website, the share price is at a 156% premium to NAV. Nobody accuse GS of not being adventurous and brave.

Dod


The NAV is probably meaningless as many Russian stocks still do not have sensible pricing.

This morning I've sold 40% of my main holding in POG given today's announcement that they may sell off assets at firesale prices; this is not really a big deal because I've only bought a few so far, very cautiously (the sale amounts to 10% of the profit I've taken from that same POG holding). I'll probably recycle the proceeds into JRS over time.

GS

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Re: When should we get greedy?

#494481

Postby vand » April 15th, 2022, 11:06 am

vand wrote:Buy when there's - literally - blood on the streets...

I do think that a lot of frothy sentiment has blown off since the start of the year. Today should push the pendulum very much into the fear zone.

Tensions will undoubtedly escalate over the next few days, but wouldn't surprise me if the market tries to rally from today's gap down


We had our bounce to relieve the immediate short term pessimism, but there are still strong headwinds at play for the equity markets here..

High inflation
High valuation
Credit tightening

I've personally lightened up a bit on my global trackers and raised some cash. We are no longer in a strong uptrend, and I think there will be opportunities to redeploy the cash in the relative near term at more favourable price.

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Re: When should we get greedy?

#501618

Postby Tara » Yesterday, 10:31 pm

GoSeigen wrote:
TheMotorcycleBoy wrote:So what Russian assets are you targetting? Things like LON:POLY and LON:EVR, or are buying Russian stocks traded on the Moscow exchange?


Just adding to existing positions in JRS and POG for now.

GS


GS

Interested to see you have been investing in JRS and POG.
Did you ever think of investing POLY? It also looks quite undervalued.

Do you think that JRS will eventually be allowed to sell all of their Russian shares as normal on the Russian stock market?
Do you see any risk of the confiscation/appropriation of the Russian shares owned by JRS?
And do you think it would be possible for JRS to relocate to Russia in order to realise the full 100% value of their Russian shares?

At present JRS are only valuing their Russian holdings at about 1% of Moex market price.

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Re: When should we get greedy?

#501670

Postby GoSeigen » Today, 9:38 am

Tara wrote:
GoSeigen wrote:
TheMotorcycleBoy wrote:So what Russian assets are you targetting? Things like LON:POLY and LON:EVR, or are buying Russian stocks traded on the Moscow exchange?


Just adding to existing positions in JRS and POG for now.

GS


GS

Interested to see you have been investing in JRS and POG.
Did you ever think of investing POLY? It also looks quite undervalued.

Do you think that JRS will eventually be allowed to sell all of their Russian shares as normal on the Russian stock market?
Do you see any risk of the confiscation/appropriation of the Russian shares owned by JRS?
And do you think it would be possible for JRS to relocate to Russia in order to realise the full 100% value of their Russian shares?

At present JRS are only valuing their Russian holdings at about 1% of Moex market price.


Hi Tara, I'm afraid I have no good answers to any of your questions. As everyone knows the whole Russia situation is a huge mess at the moment. I misread the situation badly in the run-up and first few days of the war because I assumed Ukraine would roll over and come to an agreement with Russia to avoid the devastation of war. I also thought the Western reaction would be as insipid as it was following the initial invasion in 2014. I was completely wrong -- the Western reaction has been fierce and Ukraine have put up a very strong defence to the extent that they could even defeat Russia. This would reverse my reasoning in investing there, which was that Russia was growing in confidence, economic and military strength and regional influence and its economy would continue growing strongly. I can only think that defeat in this war would put a huge dent in that scenario. Therefore "Russia is probably not a great investment for ten years or so" is probably my current baseline thinking.

Having said that, everyone likely feels the same, and Russian asset pricing would reflect that negativity. So I think I'll keep accumulating cautiously but only to a rather underweight position compared to my previous expectation, at least until a few years out of the ten have passed.

As I said I have nothing useful to say about JRS, just waiting to see what happens. Do you have any views?

GS

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Re: When should we get greedy?

#501672

Postby GoSeigen » Today, 9:44 am

I also have a problem with my short straddles expiring today. They are far OTM so I don't know what to do: roll or accept assignment. In terms of cashflow it's not a problem as I'm actually long options overall, but the timing is messing with my head because the market is far from where I hoped it would be. Will update later when I've decided what to do!

GS


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