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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?

#295130

Postby TheMotorcycleBoy » March 28th, 2020, 3:22 pm

JDot wrote:
dealtn wrote:
JDot wrote: And how they may be used to build wealth?


...and destroy wealth...

:lol:
Thanks for that Dealth

As I've probably pointed out already, I'm a newbie too. Well - investing for 2 years exactly now.

The point is, given what both GS and dealtn have said, is that options are definitely for a very experienced type of investor, IMHO. I've certainly read lot about, and can honestly state that right now, I have zero interest in them. In my opinion, if you do wish to include "different asset classes" to your portfolio, my advice would be stick to with either funds, investment trusts, or shares in firms you really have some conviction in, or corporate bonds.

As for getting greedy, yes the indexes are down, hence "buy low", but given they may keep falling, so be prepared for some losses (hopefully temporarily) and don't spend all your cash at once!

Matt

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Re: When should we get greedy?

#298489

Postby tikunetih » April 7th, 2020, 12:43 am

tikunetih wrote:...but there's a new account with a lump sum to invest.

The lump was divided into four tranches, with a calendar schedule agreed to get it invested; the schedule will be followed unless in the meantime certain target index (S&P500) levels are reached due to further sharp falls, in which case the calendar schedule is accelerated. The first tranche was invested a couple of days ago. I'm hopeful that in the next few days we might reach the first index trigger level to accelerate the next purchase, and potentially the second even lower trigger level.

This account has a balanced risk remit, with an investment horizon of 15-35 years.


Update: This relative I mentioned who had a lump sum to invest as of a month or so ago is ~75% invested now. After the initial couple of tranches the remainder was split into smaller chunks to be invested on a schedule with the aim to complete by June-ish. A chunk of the cash remaining is tax relief yet to be received, which determines the schedule and timeframe to some extent.

NB it's psychologically "easier" to regularly invest a slice of salary via regular monthly purchases over a working life than to bung a big lump sum in during extreme volatility and a global pandemic(!), but it's a lump sum that arrived so that's the way it was; a plan was formed, much of it's done, with the rest to follow over the next couple of months or so.

If the market takes out the lows to-date and goes significantly lower, akin to Oct-08 to Mar-09, after they've finished deploying the remaining ~25%, then it's c'est la vie. Or, perhaps the future path looks akin to the Aug-11 to Oct-11 period with just a retest. Or maybe it turns out the lows are already in. Or much worse than that, with a multi-year bear market and dramatically lower prices to look forward to. Or something else again. Etc etc. We all have opinions, but nobody knows.

"Hindsight is always 20-20" but it's never around when you need it.

However it goes for them in the nearer term, over the intended 15-35yr investment horizon I suspect their returns will be quite satisfactory. No guarantees! Holding these investments for a few decades as planned, they'll encounter multiple periods of high volatility and a bunch of bear markets along the way - they've simply had an early taste of what it can be like. Lucky to be granted some early practice.

TheMotorcycleBoy
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Re: When should we get greedy?

#298513

Postby TheMotorcycleBoy » April 7th, 2020, 8:12 am

tikunetih wrote:
tikunetih wrote:...but there's a new account with a lump sum to invest.

The lump was divided into four tranches, with a calendar schedule agreed to get it invested; the schedule will be followed unless in the meantime certain target index (S&P500) levels are reached due to further sharp falls, in which case the calendar schedule is accelerated. The first tranche was invested a couple of days ago. I'm hopeful that in the next few days we might reach the first index trigger level to accelerate the next purchase, and potentially the second even lower trigger level.

This account has a balanced risk remit, with an investment horizon of 15-35 years.


Update: This relative I mentioned who had a lump sum to invest as of a month or so ago is ~75% invested now. After the initial couple of tranches the remainder was split into smaller chunks to be invested on a schedule with the aim to complete by June-ish. A chunk of the cash remaining is tax relief yet to be received, which determines the schedule and timeframe to some extent.

NB it's psychologically "easier" to regularly invest a slice of salary via regular monthly purchases over a working life than to bung a big lump sum in during extreme volatility and a global pandemic(!), but it's a lump sum that arrived so that's the way it was; a plan was formed, much of it's done, with the rest to follow over the next couple of months or so.

If the market takes out the lows to-date and goes significantly lower, akin to Oct-08 to Mar-09, after they've finished deploying the remaining ~25%, then it's c'est la vie. Or, perhaps the future path looks akin to the Aug-11 to Oct-11 period with just a retest. Or maybe it turns out the lows are already in. Or much worse than that, with a multi-year bear market and dramatically lower prices to look forward to. Or something else again. Etc etc. We all have opinions, but nobody knows.

"Hindsight is always 20-20" but it's never around when you need it.

However it goes for them in the nearer term, over the intended 15-35yr investment horizon I suspect their returns will be quite satisfactory. No guarantees! Holding these investments for a few decades as planned, they'll encounter multiple periods of high volatility and a bunch of bear markets along the way - they've simply had an early taste of what it can be like. Lucky to be granted some early practice.

Similarly my eldest (turned 18yrs in Feb), cashed in about half of the mature NS&I bonds, which her Grandad has gifted her since she was a tot, and about a fortnight ago invested them into the Fidelity World Equity Index P ACC fund. I'm not sure when she'll cash in the remainder, but we both believe that splitting the investment inputs is sensible.

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Re: When should we get greedy?

#298831

Postby GoSeigen » April 8th, 2020, 8:49 am

GoSeigen wrote:
bungeejumper wrote:What the heck, I'm probably 30 years older than you. :lol: Can't afford to go large on once-in-a-generation trades. Good luck, and maybe we'll compare notes in the autumn?


I'd very much like to compare notes later but will probably forget -- so maybe not that much younger than you... (have similar issues watering the compost heap too!)


I'm trying to use options trades as a discipline to avoid trading too early in the underlying. Can't say I've made much on the options over the past couple of years, but it's educational and entertaining.

The Sep straddles I opened recently would in most circumstances immediately start losing money. Two days later they've barely moved, with VIX still high and an inverted term structure. So I've doubled the position today, may add more if the trade keeps moving favourably.


This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS

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Re: When should we get greedy?

#298844

Postby TheMotorcycleBoy » April 8th, 2020, 9:23 am

GoSeigen wrote:VIX still elevated with inverted term structure

GS, though options don't interest me as such, could you be briefly describe what you mean by "inverted term structure" please?

I've heard the "term structure" terminology mentioned before, but I believe it was in reference to interest rates.

thanks Matt

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Re: When should we get greedy?

#298974

Postby GoSeigen » April 8th, 2020, 1:27 pm

TheMotorcycleBoy wrote:
GoSeigen wrote:VIX still elevated with inverted term structure

GS, though options don't interest me as such, could you be briefly describe what you mean by "inverted term structure" please?

I've heard the "term structure" terminology mentioned before, but I believe it was in reference to interest rates.

thanks Matt


Usually near-dated options are cheaper (lower implied volatility) than longer-dated ones. When the term structure is inverted then the opposite is true: longer expiration dates have lower IV. Inversion is usually interpreted as an expectation in the market of near-term volatility in the underlying.

The term structure of S&P options can be viewed here:

http://www.cboe.com/trading-tools/strat ... cture-data

The inversion is clear in the negative (downward) slope of the curve.

GS

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Re: When should we get greedy?

#299021

Postby TheMotorcycleBoy » April 8th, 2020, 4:02 pm

GoSeigen wrote:
TheMotorcycleBoy wrote:
GoSeigen wrote:VIX still elevated with inverted term structure

GS, though options don't interest me as such, could you be briefly describe what you mean by "inverted term structure" please?

I've heard the "term structure" terminology mentioned before, but I believe it was in reference to interest rates.

thanks Matt


Usually near-dated options are cheaper (lower implied volatility) than longer-dated ones. When the term structure is inverted then the opposite is true: longer expiration dates have lower IV. Inversion is usually interpreted as an expectation in the market of near-term volatility in the underlying.

The term structure of S&P options can be viewed here:

http://www.cboe.com/trading-tools/strat ... cture-data

The inversion is clear in the negative (downward) slope of the curve.

GS

Thanks mate,

I just found this https://www.investopedia.com/terms/t/termstructure.asp which now, armed your words, gives me a full understanding of the concept.

M

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Re: When should we get greedy?

#299740

Postby JDot » April 10th, 2020, 11:18 pm

Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?


https://www.zerohedge.com/markets/here- ... al-reserve

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Re: When should we get greedy?

#299750

Postby TheMotorcycleBoy » April 11th, 2020, 7:37 am

JDot wrote:Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?


https://www.zerohedge.com/markets/here- ... al-reserve

There's no such thing as a free lunch.

Matt

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Re: When should we get greedy?

#299754

Postby GoSeigen » April 11th, 2020, 8:27 am

JDot wrote:Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?

https://www.zerohedge.com/markets/here- ... al-reserve


Yes, that article is a goldmine. Make sure you jump in the moment markets open for the chance of a mutli-bagger, if you're not quick everyone else will get there first and drive the prices right up.


Good luck!

GS

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Re: When should we get greedy?

#299806

Postby JDot » April 11th, 2020, 10:57 am

GoSeigen wrote:
JDot wrote:Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?

https://www.zerohedge.com/markets/here- ... al-reserve


Yes, that article is a goldmine. Make sure you jump in the moment markets open for the chance of a mutli-bagger, if you're not quick everyone else will get there first and drive the prices right up.




FOMO right? :D

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Re: When should we get greedy?

#299809

Postby JDot » April 11th, 2020, 11:21 am

TheMotorcycleBoy wrote:
JDot wrote:Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?


https://www.zerohedge.com/markets/here- ... al-reserve

There's no such thing as a free lunch.

Matt


Thanks Matt

Point noted!

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Re: When should we get greedy?

#299879

Postby TheMotorcycleBoy » April 11th, 2020, 2:15 pm

JDot wrote:
TheMotorcycleBoy wrote:
JDot wrote:Just come across this article intended for a US audience, in which is claimed a list of ETF's the US Fed will be buying in the near future. can anyone give any advice as to if this info would be correct or not?

Can we trust this kind of info to make a profit, or is a lot of this stuff fake news?


https://www.zerohedge.com/markets/here- ... al-reserve

There's no such thing as a free lunch.

Matt


Thanks Matt

Point noted!

Hi JDot,

Sorry I shouldn't have fobbed you off like that. What I should have said is that there are loads of articles like that. You have to be very careful in what you read and listen to. I had a very quick at it, and the only thing that was clear to me is that obviously the owners of the site and author have an agenda and that is to make $$$ from the advertising space at the side of the text.

We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many. Personally I found the derision a little nasty - but anyway people are people aren't they. However, in my opinion he has actually a fairly shrewd guy. A remember there was a post of his, and he was, I can't quite remember, either giving advice or sharing his investment philosophy. Anyway one thing he said which resonated in me, was "Never trust anyone". My take from that is always do you own research and only buy something for which you have a strong conviction. So regards those ETFs - I really know nowt, but presumably your broker/platform provider will have some pukka information on them, or maybe "MorningStar" has likewise. Also I note that on this place we have A Passive Investing board on which ppl chat about ETFs and other such. My advice would be for you to pick one or two ETFs that you like and perhaps post a well worded topic up there and see if anyone else has additional knowledge.

A couple of other investment idioms which I have picked up from folk here, which you might find interesting, and I'll share, are:

From GoSeigen, I don't remember his exact words but it was essentially "Balance risk and reward". That is, there's no free lunch, or that a strong return will/might imply a high risk. GS said this in the context of these mini-bonds Mel and I had spotted that offered, IDK, 7%-10% annual return. However, after further consideration I realised that there was considerable risk associated, i.e. money tied up for 3-5 years, no FSCS, fly-by-night firm etc. So given the risk 40% return would have been more appropriate!!

From TJH: "the time to buy is now". Now I don't take that as meaning, spend all your money now, but rather the importance of realising that i) the highs and lows of today will even out/disappear over a long enough time frame and ii) timing the market is futile/impossible/stressful.

Anyway, apologies for my earlier flippancy. All I can suggest is that you take time figuring out an investment strategy that suits you, do plenty of research (try to find pukka onlines sites, or at least search for countering arguments when you see something that seems "too good to be true") and if you have specific question (e.g. shares, bonds, ITs, ETS, analysis etc.) try to write a really concise thread and post to the right board on the site. If are stuck on "which board?" then post to the Biscuit Bar first to ask for posting/board advice.

HTH, Matt

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Re: When should we get greedy?

#299890

Postby tramrider » April 11th, 2020, 2:51 pm

TheMotorcycleBoy wrote:From TJH: "the time to buy is now". Now I don't take that as meaning, spend all your money now, but rather the importance of realising that i) the highs and lows of today will even out/disappear over a long enough time frame and ii) timing the market is futile/impossible/stressful.


"The time to buy is now" may not be true of the next few minutes or hours, but I suspect it will be strongly true sometime this month, compared with how prices will have risen by the end of the year. ;)

Tramrider

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Re: When should we get greedy?

#299917

Postby tjh290633 » April 11th, 2020, 4:30 pm

TheMotorcycleBoy wrote:We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many.

He turned up on ADVFN on various boards, but got universally filtered by most of the participants. He has obviously moved on elsewhere, where he wasn't talking to himself.

TJH

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Re: When should we get greedy?

#299918

Postby TheMotorcycleBoy » April 11th, 2020, 4:34 pm

tjh290633 wrote:
TheMotorcycleBoy wrote:We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many.

He turned up on ADVFN on various boards, but got universally filtered by most of the participants. He has obviously moved on elsewhere, where he wasn't talking to himself.

TJH

Poor chap. I do think his "Never trust anyone" statement, makes a bit of sense in the investment world, though. In other words, the buck stops with yourself.

Matt

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Re: When should we get greedy?

#299924

Postby TUK020 » April 11th, 2020, 4:58 pm

TheMotorcycleBoy wrote:
JDot wrote:
TheMotorcycleBoy wrote:There's no such thing as a free lunch.

Matt


Thanks Matt

Point noted!

Hi JDot,

Sorry I shouldn't have fobbed you off like that. What I should have said is that there are loads of articles like that. You have to be very careful in what you read and listen to. I had a very quick at it, and the only thing that was clear to me is that obviously the owners of the site and author have an agenda and that is to make $$$ from the advertising space at the side of the text.

We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many. Personally I found the derision a little nasty - but anyway people are people aren't they. However, in my opinion he has actually a fairly shrewd guy. A remember there was a post of his, and he was, I can't quite remember, either giving advice or sharing his investment philosophy. Anyway one thing he said which resonated in me, was "Never trust anyone". My take from that is always do you own research and only buy something for which you have a strong conviction. So regards those ETFs - I really know nowt, but presumably your broker/platform provider will have some pukka information on them, or maybe "MorningStar" has likewise. Also I note that on this place we have A Passive Investing board on which ppl chat about ETFs and other such. My advice would be for you to pick one or two ETFs that you like and perhaps post a well worded topic up there and see if anyone else has additional knowledge.

A couple of other investment idioms which I have picked up from folk here, which you might find interesting, and I'll share, are:

From GoSeigen, I don't remember his exact words but it was essentially "Balance risk and reward". That is, there's no free lunch, or that a strong return will/might imply a high risk. GS said this in the context of these mini-bonds Mel and I had spotted that offered, IDK, 7%-10% annual return. However, after further consideration I realised that there was considerable risk associated, i.e. money tied up for 3-5 years, no FSCS, fly-by-night firm etc. So given the risk 40% return would have been more appropriate!!

From TJH: "the time to buy is now". Now I don't take that as meaning, spend all your money now, but rather the importance of realising that i) the highs and lows of today will even out/disappear over a long enough time frame and ii) timing the market is futile/impossible/stressful.

Anyway, apologies for my earlier flippancy. All I can suggest is that you take time figuring out an investment strategy that suits you, do plenty of research (try to find pukka onlines sites, or at least search for countering arguments when you see something that seems "too good to be true") and if you have specific question (e.g. shares, bonds, ITs, ETS, analysis etc.) try to write a really concise thread and post to the right board on the site. If are stuck on "which board?" then post to the Biscuit Bar first to ask for posting/board advice.

HTH, Matt


Another poster who got a lot of flack on TMF was Munroman, however he did post some gems, amongst them:

There are only a few rules in finance.
Markets are volatile, get used to it.
No one really knows what is going on, so join the club.
Dividends keep companies a bit more honest.
Compound interest works.
Diversification reduces risk.


You could say that the free lunches are:
- diversification
- compound interest
- dividends
all of which are at the core of HYP

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Re: When should we get greedy?

#300004

Postby BobGe » April 12th, 2020, 4:01 am

tjh290633 wrote:
TheMotorcycleBoy wrote:We on TLF used to have a member (called "SentimentRules") here who unfortunately posted far too obsessively and was generally derided by many.

He turned up on ADVFN on various boards, but got universally filtered by most of the participants. He has obviously moved on elsewhere, where he wasn't talking to himself.TJH

Still there, plus an alias or two.

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Re: When should we get greedy?

#302715

Postby GoSeigen » April 23rd, 2020, 3:43 pm

GoSeigen wrote:
GoSeigen wrote:
bungeejumper wrote:What the heck, I'm probably 30 years older than you. :lol: Can't afford to go large on once-in-a-generation trades. Good luck, and maybe we'll compare notes in the autumn?


I'd very much like to compare notes later but will probably forget -- so maybe not that much younger than you... (have similar issues watering the compost heap too!)


I'm trying to use options trades as a discipline to avoid trading too early in the underlying. Can't say I've made much on the options over the past couple of years, but it's educational and entertaining.

The Sep straddles I opened recently would in most circumstances immediately start losing money. Two days later they've barely moved, with VIX still high and an inverted term structure. So I've doubled the position today, may add more if the trade keeps moving favourably.


This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS


Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS

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Re: When should we get greedy?

#304160

Postby GoSeigen » April 29th, 2020, 3:06 pm

GoSeigen wrote:
GoSeigen wrote:
GoSeigen wrote:
I'd very much like to compare notes later but will probably forget -- so maybe not that much younger than you... (have similar issues watering the compost heap too!)


I'm trying to use options trades as a discipline to avoid trading too early in the underlying. Can't say I've made much on the options over the past couple of years, but it's educational and entertaining.

The Sep straddles I opened recently would in most circumstances immediately start losing money. Two days later they've barely moved, with VIX still high and an inverted term structure. So I've doubled the position today, may add more if the trade keeps moving favourably.


This position is still practically at break-even and VIX still elevated with inverted term structure. Earlier this week I increased exposure with some Dec S&P straddles. The plan is to write shorter-dated and/or OTM options against the position when the term structure normalises, or close my S&P short futures if and when there's another severe market drop.

GS


Sep and Dec straddles are comfortably in profit, the S&P term structure is now roughly flat so I have cautiously started writing Jun straddles against the long Sep and Dec positions.

GS


Options curve still busy righting itself. I continue to write options. Today wrote a few S&P Dec 2300 puts and 3225 calls.

GS


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