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When should we get greedy?

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

#350855

Postby TheMotorcycleBoy » October 26th, 2020, 7:01 pm

Adamski wrote:
TheMotorcycleBoy wrote:I don't do options, and look only for buy-in-the-dip long opportunities. The SP500 seems to be drifting down gradually from the Sept peak, and the FTSE350 from 3625 in June 5th.


So we could be in the dip now, and looking at the chart we've had two weeks of downside, this could now be a buy-in-the-dip opportunity, before the election in one week. Looks like we've had two weeks of pull back due to the uncertainty, and shortly should go up? Qualification - I've made prophetic announcements before which have been wrong!

I know what you mean.

Perhaps a small buy this week, but keep some ammo around in case of the contested result possibility.

Though the markets aint that low to have any FOMO if hold the cash currently.

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Re: When should we get greedy?

#350932

Postby Adamski » October 27th, 2020, 8:22 am

TheMotorcycleBoy wrote:Perhaps a small buy this week, but keep some ammo around in case of the contested result possibility.

Though the markets aint that low to have any FOMO if hold the cash currently.


S&P dropped 1.9% yesterday. My prediction of imminent bounce back was premature. Think with the surge of CV cases and election uncertainty, safe havens will do well next few days. If get contested result could get another hit. If Biden win and Dems shake magic money tree, S&P will go on another run, rebound to market high or breakthrough.

TheMotorcycleBoy
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Re: When should we get greedy?

#351118

Postby TheMotorcycleBoy » October 27th, 2020, 5:25 pm

Well I snagged me a nice one this morning. I set up a set of limit orders first thing. The ULVR one fired and I got 'em at 4619p at 8.25am.

Then as the day progressed we got this RNS:

https://www.investegate.co.uk/unilever- ... 15013804D/

Got to save myself till next month now me thinks.

TheMotorcycleBoy
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Re: When should we get greedy?

#351200

Postby TheMotorcycleBoy » October 28th, 2020, 4:57 am


johnhemming
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Re: When should we get greedy?

#351202

Postby johnhemming » October 28th, 2020, 6:38 am

I think the UK is undervalued and tech in the US overvalued. I don't know about the rest of the US.

TheMotorcycleBoy
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Re: When should we get greedy?

#351212

Postby TheMotorcycleBoy » October 28th, 2020, 7:18 am

johnhemming wrote:I think the UK is undervalued and tech in the US overvalued. I don't know about the rest of the US.

Hmm...

I'd say that several UK firms are hilariously overvalued myself.

Renishaw is sitting at PE 14,000 currently on reported earnings. (And at least 100 PE by their own "underlying" figures).
https://www.google.com/search?channel=f ... hare+price

Focusrite is at PE 79. A good firm yes, but 30-40 tends to be the average in the four years prior to covid.

XPP has come down from 4900p it is still at PE 43.

I currently find it very hard to find decent value in the UK, as opposed to firms like RDSB, LLOY, CPG, which may be viewed right now as "Value share" candidates, they would all appear to have dubious medium term growth prospect, and pay precious little divs (were you to buy all 3) currently "while you wait" for market reappraisal.

Matt

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Re: When should we get greedy?

#351215

Postby johnhemming » October 28th, 2020, 7:26 am

TheMotorcycleBoy wrote:I currently find it very hard to find decent value in the UK, as opposed to firms like RDSB, LLOY, CPG, which may be viewed right now as "Value share" candidates, they would all appear to have dubious medium term growth prospect, and pay precious little divs (were you to buy all 3) currently "while you wait" for market reappraisal.


I make two assumptions
a) That the covid-19 issue will come to some form of resolution where we end up living with the virus. The uncertainty I see is how many silly things the government do in the mean time.
b) That some form of resolution will occur in terms of Brexit.

That will have quite a bit of an effect on a number of companies not just those in the sectors directly affected by covid (travel/hospitality etc).

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Re: When should we get greedy?

#351233

Postby TheMotorcycleBoy » October 28th, 2020, 8:00 am

johnhemming wrote:
TheMotorcycleBoy wrote:I currently find it very hard to find decent value in the UK, as opposed to firms like RDSB, LLOY, CPG, which may be viewed right now as "Value share" candidates, they would all appear to have dubious medium term growth prospect, and pay precious little divs (were you to buy all 3) currently "while you wait" for market reappraisal.


I make two assumptions
a) That the covid-19 issue will come to some form of resolution where we end up living with the virus. The uncertainty I see is how many silly things the government do in the mean time.
b) That some form of resolution will occur in terms of Brexit.

That will have quite a bit of an effect on a number of companies not just those in the sectors directly affected by covid (travel/hospitality etc).

I hear what you've said, but I'd add the assumption that covid (and one or two other things, e.g. MMT and climate issues) is resulting in a sea change. Just focusing on the 3 stocks I mentioned:

CPG Big firms are shifting towards WFH as being key post covid to cost savings. This is a fact. So staff canteens will decline.
LLOY Banks can't grow profits in environments with 0% bank rates.
RDSB The shift away from fossil fuels has accelerated (see WFH assumption post covid). Others have seized the zero carbon initiative. Oilies are too late for the party.

But that's my take, and there are many variables to consider, and potential Black swans ahead.

Matt

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Re: When should we get greedy?

#351235

Postby johnhemming » October 28th, 2020, 8:07 am

I think we will see a different perspective on fossil fuels when the price goes up because people start travelling more. There will be a continuing pressure towards renewables, but the price does make a difference.

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Re: When should we get greedy?

#351239

Postby TheMotorcycleBoy » October 28th, 2020, 8:28 am

I do think that some of the UK shares are reasonably priced currently, e.g. REL, WPP, DGE, LGEN, ULVR, GSK

Out of interest John, which of the UK shares do you see as undervalued?

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Re: When should we get greedy?

#351272

Postby johnhemming » October 28th, 2020, 10:44 am

Today I bought some NAH. I hold quite a few that I think will increase in value (eg LLOY).

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Re: When should we get greedy?

#351301

Postby vrdiver » October 28th, 2020, 11:54 am

johnhemming wrote:Today I bought some NAH.

I had a quick look at their fundamentals and confess saw only a stagnating company operating in, amongst other areas, a dubious (Personal Injury) sector.
https://www.londonstockexchange.com/stock/NAH/nahl-group-plc/fundamentals

Would you mind sharing your logic for your purchase, as my own stock picking is, at best, "average", so would be happy to learn what I missed!

VRD

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Re: When should we get greedy?

#351315

Postby johnhemming » October 28th, 2020, 12:25 pm

vrdiver wrote:I had a quick look at their fundamentals and confess saw only a stagnating company operating in, amongst other areas, a dubious (Personal Injury)

The question for any business (for my strategy) is whether the share price is below what the company is logically worth. This particular business has has to change its business model. As part of that it has invested further in various sorts of legal services. If you consider first the question as to whether people will stop having accidents. The answer in the short term is "no" as there will continue to be accidents and consequential PI claims (the business also does conveyancing - which does depend on turnover in the property market) and Critical care which depends upon people being ill.

At the moment there is a negotiation going on as to an all share offer from Frenkel who have an argument about synergy. It is likely that any agreed takeover will get majority support from NAH shareholders as there are some substantial institutional holders who are probably driving this.

Hence you need also to consider where that may be placed although that also is not certain.

Ignoring that, however, we have a business which is running on a forecast PE of about 4 with a NAV of about £1.20.

As I see it that gives a number of opportunities for up side. Although the economy in its current state is not that good for them they are coping with the situation.

I tend to think the best assumption is to accept the takeover from Frenkel as long as it is reasonably priced and then hold for the medium to long term as the market more generally picks up.

TheMotorcycleBoy
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Re: When should we get greedy?

#351353

Postby TheMotorcycleBoy » October 28th, 2020, 2:20 pm

vrdiver wrote:
johnhemming wrote:Today I bought some NAH.

I had a quick look at their fundamentals and confess saw only a stagnating company operating in, amongst other areas, a dubious (Personal Injury) sector.
https://www.londonstockexchange.com/stock/NAH/nahl-group-plc/fundamentals

Would you mind sharing your logic for your purchase, as my own stock picking is, at best, "average", so would be happy to learn what I missed!

VRD

I guessed earlier on, that John's a "value investor".

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Re: When should we get greedy?

#351373

Postby redsturgeon » October 28th, 2020, 3:09 pm

My only problem now, with my double short FTSE ETF having gone up over 7% today, should I sell or hold?

John

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Re: When should we get greedy?

#351397

Postby TheMotorcycleBoy » October 28th, 2020, 3:40 pm

redsturgeon wrote:My only problem now, with my double short FTSE ETF having gone up over 7% today, should I sell or hold?

John

Ha ha! It's certainly starting to look as if the four horsemen of the apocalypse are back upon us. I was going to say "hold on tight John", but refrained as I surmised you could take that too literally. Instead I'll urge you to keep your eyes peeled, and your fingers on the trigger.

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Re: When should we get greedy?

#351399

Postby GoSeigen » October 28th, 2020, 3:53 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
Sorry, haven't updated for a while. Basically, with elevated VIX and steep term structure I had kept writing straddles and strangles. [All positions in S&P 500 index] With the recent steeper rise in the S&P I first wrote some calls, then got busy closing out the short put leg of the Aug expiries; by yesterday they were all gone, so this option trading portfolio remains overwhelmingly short calls now, all of them ITM to various extents.

A short-term big drop would be nice to close out the Aug calls but somehow this market looks like it's going up. With the modest drop yesterday I've maintained my discipline and opened a few more Sep short straddles. If the market does continue rising until expiration I'll accept being assigned on the short calls (actually will run on as short index futures).

GS


VIX is still high and so I continue to write options. Aug expiration ended with several calls ITM, I rolled those positions to Sep short strangles. Also opened a short Nov call around 1 Sep which looked foolish for a few days but is now well OTM and I wrote a short Nov put against the call to complete the strangle.

Sep expiration was very good with practically every position closing out of the money. Used part of the freed margin to open an Oct short strangle.

As has been the case for months, I don't have the ability to call direction in the short term and have actually been surprised at the speed and relentlessness of the bull run since March. Thus with elevated implied volatility I am happy to keep making these non-directional trades in the US market and to stock pick in the UK market.

GS


Oct expiration was fairly uneventful for me, breakeven on the Oct strangle. I was left with a few remaining short Nov strangles; with the renewed volatility curve inversion last week I bought Jun S&P straddles for the first time in months. Today the VIX is up and vol curve more inverted. Tempted to buy more straddles but will see how the day's trading goes: I'll buy more if last week's position is in profit and I have sufficient margin.

GS
P.S. Still hold a few ITM short Dec S&P calls which I'll cover if we get a decent market fall.


VIX term structure still inverted and VIX is rising. My previous Jun straddles are in profit so I doubled up today. That leaves me roughly neutral in terms of market exposure on my options (equal long/short positions), but the longs are Jun and shorts are Nov contracts. So I will use sharp underlying movements to take profit on the Nov contracts if possible.

GS

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Re: When should we get greedy?

#351434

Postby zico » October 28th, 2020, 5:35 pm

I really don't understand this market at all. It's been pretty clear for the last month or so that there'd be a second wave over the winter, and blindingly obvious to anyone over the last 2 weeks. So why does the market only take fright now?

TheMotorcycleBoy
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Re: When should we get greedy?

#351444

Postby TheMotorcycleBoy » October 28th, 2020, 6:15 pm

zico wrote:I really don't understand this market at all. It's been pretty clear for the last month or so that there'd be a second wave over the winter, and blindingly obvious to anyone over the last 2 weeks. So why does the market only take fright now?

Probably because of the US election, meaning uncertainty over the timing and amount of the next financial stimulus.

And of course because its Halloween. Well thereabouts!

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Re: When should we get greedy?

#351614

Postby redsturgeon » October 29th, 2020, 10:13 am

The market does what the market does, when it wants to do it. Any attempts to discover the whys and wherefores seem to lie in the realm of post rationalisation.

John


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