I wouldn't risk my retirement account on any put plays, especially naked puts. Covered calls would be my retirement play. Covered calls can really juice up the returns.

Naked options are for play money.

Ask him:
Hedge Fund manager James Cordier apologizes after losing almost all of his clients money - YouTube

Or her:
Karen The Supertrader from Tastytrade: Is Karen Bruton the Supertrader a FRAUD? - YouTube

Ouch! Permanent loss of Capital is real and VERY difficult to overcome. That's why I'm attracted to Value investing which has you investing with a Margin of Safety.



Sent from my SM-N986U using Tapatalk

Aside from SKYW, I recently sold all my airline stocks as they are trading near their intrinsic value and I was sitting on 90%+ gains. Mr. Market is an emotional rollercoaster. Priced airlines for bankruptcy in late Spring now has them fully valued and might ever go higher in the midst of the winter COVID spike.

Side note: Be careful out there folks, market as a whole is priced at eyewatering valuations. https://uploads.tapatalk-cdn.com/202...3a0c0f7bf9.jpg

Sent from my SM-N986U using Tapatalk

I cashed out Delta a week ago for some nice mullah. I’m making a little on American right now, bought at $9ish. Keep thinking it’ll go up more but maybe I’m being greedy.

Had royal Caribbean stock I bought at the low and made good money on. Sold that a month ago.

Im not as smart as Tegridy but his PLUG tip has netted me a few hundred bucks this week. Thanks!

PEs are too high. Unless earnings come roaring back, hang on for the ride downhill. When throwing darts on the wall works for too many Joe 6packs, it’s time to be leery.

I’m not sure I agree that naked puts “risk your retirement account”. Several reasons;

1-They’re going to have to be cash secured. MAX loss is if you get assigned shares and the company goes to $0 and....
2-You shouldn’t write naked puts on anything you don’t want to own. If I can get 100 shares of a company I love and want more shares of, the cash used to secure the position will simply buy me 100 more shares at a lower cost basis. And then, I sit on my hands.

If it expires OTM, I keep the premium and repeat on the same great company I want more shares of.

You should never be able to write naked puts for more than the cash you have available. That being said if you have 350k in cash and you write a put on AMZN and you don’t want the shares, you maybe shouldn’t have done it in the first place.

I maintain that naked calls are much riskier. If you throw $350k down on an AMZN call gamble and it expires worthless, you took a dumb risk to being with (unless you have $350k you want to burn and it’s an inconsequential amount).

Now, the next part of the discussion is if writing cash covered puts is an efficient use of capital or not. I think not; which is why I tend to only write puts in my Margin account.

these types of metrics are what keep people from market and building wealth. People always find silly metrics to not get in and time when to get out. I would be much MUCH further behind in my retirement savings right now if I’d followed these mainstream institutional type things. TSLA, SHOP, MELI, AMZN to name a few I would have missed out on 10-20x returns on.

Find excellence, buy excellence, buy more excellence, sit on hands. Most importantly, do whatever makes you sleep easy at night.

Selling cash-secured puts on companies one wants to own, compared to naked puts on the SPX (what Karen was doing), are two different animals.

Sure, unless this run up lasts another two years and then just goes side ways for another two years. Then what? You lose out on another 30%? And what are you going to do with your money for 5 years waiting for the next correction?

I already made that distinction. There are many traders who would advise against buying companies that are down in "attractive" areas of price but YMMV.

I trade cash settled options and futures so always protecting the down side. You can get hurt badly in the market so I always advise people I don't know to be very careful.

yes and the other thing is that, the way Karen trades SPX is actually very conservative. If you watch her interviews and read about how she does it, you’ll see it’s not as risky as you think.

I've never messed with options before. I've strictly been a long-term investor focused on good ETFs and a few individual stocks (~40 years until retirement).

How did you guys learn about options? Any recommended reading/videos? I'm planning on continuing my long-term plan but would like to throw some "fun money" into something else.

Really? Thanks for the info. I’ll call fidelity Monday.

Perhaps consider a tastyworks account; initially fund it with a little bit that you can spare to lose. Then follow tastytrade (the media arm of tastyworks). Lots of live on air programming and educational material. By far the best education out there. Their platform is nice as everybody that works there and is “on air” posts their trades to the platform. You can see what they’re doing and follow if you do choose. Having tried all the platforms I give Tastyworks my vote!

I started reading books about options back in the 90’s. I’ve read a lot of books on the subject...a LOT. What I’ve found is that 90% of the books out there contain the same basic information with examples made to look favorable to their system, if they have one. They almost always are hoping after reading their book that you want more, and guess what, they have a service that you can subscribe to. Every author is trying to sell more than their book, so you won’t learn everything you need in one single book. But you can learn all the basics and quite a bit about the 4-5 core options trading strategies, buying calls and puts, buying debit spreads, buying credit spreads, and selling naked options for premium. I’ve actually watched some pretty good YouTube videos about the subject too. Search SMB Capital on Youtube. They have pretty good content about the subject and you can learn a lot in a 10-15 minute video, vs spending a week reading a book. If you don’t understand what they’re talking about, search for basic option information on YouTube. You can learn a lot right there on your phone or iPad.

And as misspoken mentioned, a site like tasty trade, if you want to immerse yourself in it. I had heard of tastytrade but never used them. After misspoken mentioned them, I went to their site and it looks like a great place to learn and trade at the same time.

Good luck.

Last year Tom Sosnoff (founder of TW) did a series with one of his employees who had zero knowledge of options, just a desire. It’s interesting because you can see how the way he explains something makes no sense, they bicker about it, and eventually she figures out how to understand it. Short segments, but this girl posts some great trades on the TW platform now. She trades a very small account (I think started at $5k) and she’s made some good pocket change.

https://www.tastytrade.com/tt/shows/...7918701&page=5

+1 to Tastytrade for the educational pieces to help get ya started.

Thanks guys, will look into those suggestions.

You can't be serious. She was charged with fraud and kicked out of the business for losing her client's money and hiding the losses. She lost millions.

not exactly true. What Karen did was legitimate. What her accounts did was not exactly transparent. She created fortunes with her trading and ultimately the SEC never convicted her of anything. She paid a $1 mil and change fine. She’s still in good standing with the tastyworks and I’ve seen her speak as recently as last summer at one of their events.

all that aside; her method of trading SPX spreads conservatively works. She may have lost millions but she made hundreds of millions.

Telling you—RMG before close today if you can. Will be $28+ by 12/28 when the merger is complete.

Agree with you 1,000%.

P/E is a ratio. That is all it is. In some industries stock trade at different multiples. P/E ratio is one part of an assessment. P/E ratio is an indication of health and the future. Has nothing to do with when to buy.

Look at TSLA. TSLA trades at a P/E ratio of 98. Which indicates that investors think the best is yet to come. The company will perform better in the future.

Compare TSLA to the entire domestic automotive industry which has a P/E ratio (or multiple) of 28 or so. Indicating that TSLA is perceived to be best in breed.

Comparing DAL and BA P/E ratio—you get vastly different numbers.

Alright, I’m taking investment advice from a pilot. I’m all in with my fun money account.

I like Tesla and Amazon as companies, but I don’t like them at their current price. When speaking of PEs I mean it on a macro level. It’s broadly too high across the entire spectrum of stocks. There is nowhere else: CDs, Bonds, Money market, etc to put money, so everybody is piling into the stock market trying to get some yield. I think the market is propped up by low interest rates, the fed, and NAI No Alternative Investment. At some point (and I think sooner rather than later) we are going to see a crash because there just aren’t earnings to support the exorbitant prices. RCCL as an example is entirely a hope on future earnings. I’m not a gold guy, I’ll just wait for a better day to fish.
I continue to meter money into index funds for long range money, but in my mad money account I’m in a lot of cash and will wait for better opportunity.

https://www.multpl.com/s-p-500-pe-ratio

https://money.cnn.com/data/fear-and-greed/

totally get what you’re saying. I can see how someone would think companies are expensive at the moment. I have become very comfortable accepting that not only do I not know anything, neither does anyone else. Including the inventor of the PE ratio, Jim Cramer, anyone on CNBC and so on. When I buy excellent companies like TSLA and AMZN (even at today’s price) I think about the future potential. Amazon is just getting started, Tesla is has so many levers it’s unreal. They’re a $5 trillion company in the making.

I’ll say it one last time; if I tried to put a valuation on Amazon, Tesla, Netflix, Apple et al back in the day, I would have talked myself out of millions. Yes. Millions.

Attempting to value a company is a dead end from the start. Invest in the visionary founders like Musk, Bezos, Cook and watch the magic happen.

I can’t take credit for the returns I’ve seen. I started following the Motley Fool decades ago; I devoted a lot of time to watching what they did, listening to what they said, conversing with their community on their website much like we do here. It take a lot of time and up and down cycles. All I can say is that it’s worked incredibly well for me. I’ve conditioned myself to ignore all metrics and news with the exception of fraud or a company making a complete 180 from say making electric cars to mousetraps. Barring news like that, I. Just. Keep. Buying. (And most importantly, holding).

sorry if that sounded soap boxy. Not my intent and I’m just reflecting here on what has worked so well for me.

I will second Motley Fool! The picks of theirs I’ve bought in the last 1.5 years (that’s when I signed up) have been phenomenal. SHOP, AMZN TSLA, TTD, OKTA, the list goes on but I can’t remember anymore off the top of my head.

Your post about PEs being too high reminded me of this tweethttps://uploads.tapatalk-cdn.com/202...ed2c1eaa84.jpg

Sent from my SM-N986U using Tapatalk

This is getting further from the side hustle discussion; but the Tesla bears are not visionaries (and they’ve never been right thus far). Musk is the visionary and the Wall Street talking heads are the ones that love their metrics and can’t see the potential. Electric vehicles are a small part of what they will do in the future. Solar, storage, space, internet, HVAC and don’t forget about their subscription model for adding features to your Tesla. The thing with taking a negative stance and outlook is that it usually is the smarter SOUNDING argument. Those of us who believe in the future of Tesla and what Elon is doing are “just crazy dreamers”, but Elon is the ultimate capitalist. The talking heads just cannot see it. Tesla is the most misunderstood company on the planet IMO.

The same goes for the state of the market in general. “We are due for a correction” (which implies the market is currently incorrect?), yes it’s a foregone conclusion. The market will go down. Maybe violently. It happens; but boy do the people that “called it” feel smart. Meanwhile; if I went from 100 back down to 75, the pessimist that started calling “the top” at 25 missed out on a gain of 50. But again, they sure sound smart!

One of my favorite articles on the subject of pessimism, in general, is by Morgan Housel who got his start at The Motley Fool. Worth a read! He does a good job of exploring the psychology of investing.

https://www.collaborativefund.com/bl...-of-pessimism/

AMZN and APPL both traded at reasonable valuations for a while. Microsoft too. Apple has actually been a value stock until recently. Even Buffet bought Apple and its now his largest holding(44% of his stock portfolio!) . AMZN while their PE was high always traded at decent Price to Free Cash Flow. NFLX and TSLA for the most part have traded at "hopes and dreams" valuations.

The price of a stock is it's future free cash flows discounted the present value. TSLA and NFLX is very unlikely to give you the free cash flows to justify its current price in the next 100 years, let alone 10 or 20. TSLA specifically, IMO, is in the realm of irrational exuberance. PE of 1147. EV/EBIT (Enterprise Value to Operational Cash flow) of 358. Nosebleed prices would be an understatement. I commend those who have made alot of money off the Greater Fool Theory. Would I short Tesla? Absolutely not. The market can remain irrational longer than I can remain solvent :) https://uploads.tapatalk-cdn.com/202...919532e49f.jpg

Sent from my SM-N986U using Tapatalk

I LOVE TSLA the company. I own a Model S. I believe in its future. But as great as the company is, they'll need to have a cure for cancer to justify the current price. Folks have gone overboard on the Tesla story. We've seen this before with story stocks. 2000s investors went overboard with internet stocks. The Nifty 50 in the 60s folks thought you can buy great companies at any price. Then you have the Tulip mania in the 1600s where irrational prices drove one of the biggest asset bubbles in history.

On the other hand, I prefer to invest towards safety, or invest with a Margin of Safety to be specific. A good example of this is Fiat-Chrysler(FCAU). Strong balance sheet, positive cash flow from operations, plenty of spare cash yet priced for liquidation in March despite all this information clearly available on their financial statements. Up 115% since then and still trading below its intrinsic value based on worse case future free cashflows.

Again I comend all the folks that have made substantial gains from stocks like TSLA, NFLX, Pelaton etc. It's better to be lucky than good. Just a friendly reminder that history shows that with stocks trading at extremely high valuations, when the music stops, an eyewatering, vomit inducing fall in pricing happens shortly thereafter :)

Sent from my SM-N986U using Tapatalk

This is just a fundamental difference in investing styles. To say that a company is overvalued is to say you know what a company’s value is based on their future endeavors, so what is a fair value of it? You can definitely cite some “widely accepted metric” but it just doesn’t work for technology companies. The reality is that no one, especially us, know none these things. First rule in investing NKA, nobody knows anything.

To me, the internal combustion engine and fossil fuels are soon to be a footnote in history. As will auto manufactures as we know it. Some will remain in name only. No one is anywhere near Tesla in technological advancements. It’s a $650 billion company based on
market cap; you are saying it can’t or SHOULDNT be worth more than that. Why?

PE on a high growth company is useless; if a company is focused on growth there should be no “E” in PE as all of their money should be reinvested to pay for that growth. This is just one example of why traditional metrics don’t work on companies like Tesla.

I’ve heard these arguments many times for various companies; AMZN who was just a book seller, made no money, cash burn through the roof etc. Who would have thought they’d be what they are today?

Amazon, the online book retailer?
Apple, the Mac computer company?
Adobe the photo shop company?
Disney the theme park company?
Google the search engine company?
PayPal the eBay payment company?

Who would have thought these companies would have morphed into what they are today.

I do not dispute that highly valued companies don’t have a violent reaction to market movements and news; I live it several times a year. Hell I’ve lost more than 1/2 a years salary in one day. The point is if you continue to buy and hold, you reach a point where the chances of you giving all of that back are virtually nil. Time is the most valuable asset when investing. The possibility remains, but it’s remote.

Here’s the thing, I love that there are two sides to these investment theories; that’s what makes a market and that’s what has gotten to me to where I, financially speaking.

I thoroughly enjoy these discussions!

Indeed an excellent discussion about two different investing styles. I'm glad you mentioned companies like Apple and Amazon. Contrary to popular opinion, companies like Apple and Amazon didn't burn thru a staggering amount of cash in its early days:


It turns out the assumption that successful tech companies burned lots of cash in their youth isn’t merely wrong—it’s staggeringly wrong. Look closely at the early days of the giants—the Fab Four, as we’ll call Amazon, Apple, Facebook, and Google (now Alphabet), and you’ll see that they were models of frugality compared with the new wave (which we’ll dub the Breakneck Burners: Tesla, Uber, Lyft, and Snap).

It’s true that in the dotcom frenzy of the early 2000s, many tech companies posted losses while devouring new funding. But the ones that burned piles of cash were such failures as Webvan and eToys.com, not winners like Google. Today, says accounting expert Jack Ciesielski, “you’ve got these companies chewing through mountains of cash, and investors are comparing them not with the failures of the dotcom era but with the survivors.”


https://fortune.com/2019/06/20/cash-...ber-lyft-snap/

Sent from my SM-N986U using Tapatalk

One of the best APC threads ever.

I agree. I actually look forward to seeing if there are any new posts here from day to day. Great discussions, everyone. I hope it keeps up.

Enjoying this thread as well. Any direction for learning about crypto currency’s? Been wanting to understand it better. It’s a new enough topic that I didn’t want to read old advice on a new market.

My measly contribution: I subscribed to Barron's a few weeks ago.

I started my own "mutual fund" via a Brokerage link and transferred in some play money.

So far I have not even come close to the S&P, but it's only been 3 weeks.

I intend to sit on my hands and read more Baron's and free advice here.

As a personal preference, I don’t use accountants to guide my investing.

As for burning through cash; if that’s a concern at this phase in their growth, consider they expect to be FCF positive for all of 2020. Think about how quickly they came from their nearly fatal balance sheet to where they are now. They’re just getting started.

As for the reason for the cash burn; look at where that cash is going....the development of the S, X, 3, Y and Cybertruck? Battery development? Built out of
factories (both for autos and batteries)? Build out of supercharger network? Build out of mobile
support fleet? Self driving software? Software beyond self driving? Build out of salesforce?

They’re investing, it’s not as if Elon is just taking this cash and buying pot :-)

We are in a new era of companies; I’m not sure if I’ve said it yet (haha) but traditional metrics used by academia and talking heads are utterly useless.

Look at the gross margins of these SaaS companies. Who's had those types of margins
in the past? Nobody.

Look at how easy it is to scale now - compared to the past. Takes very little capital and very few boots on the ground. Was it like that in the past where everything was physical?

Look at subscriptions? That revenue and whatever you retain largely goes right to the bottom line. And it is repeatable.

With Tesla, what is the #1 car company, the #1 power company and tons of subscription possibilities (self driving taxi fleet, software updates, etc....) worth? Much more than looking at historical data ratios. It will take a lot to get there, but I can see that path.

What is Fiat-Chrysler spending their FCF on? Advertising? Auto manufactures as they exist are dead.

Keep the thoughts rolling! Lots of good things to reflect on in this thread. Ultimately we all want the same thing: $$$$$$$$ :-)

I'm a Barron's subscriber as well. Comparing returns after 3 weeks, heck even 1 year is like comparing football teams two plays into the game. With that said it's quite difficult for the individual investor to beat the S&P 500 using similar large cap picks from Barron's. Individual investor better off brushing up on basic financial statement analysis skills and going small cap and lower and/or Global(Foreign Developed and Emerging Markets, avoid Frontier Markets)

Sent from my SM-N986U using Tapatalk

If that statement was not bs’ing, I’d assume he or she uses the 2 and 20 model (which is a no-go for me) probably has the Bloomberg Terminal as a setup.

Here’s some advice. Since I’ve mentioned RMG in this thread a few times I will take you through what I do in my due diligence phase.
1. Find a company/industry/sector that I like.
2. Learn about the components of that sector or industry. In other words—what are the driving factors behind the successful companies and products in the industry.
3. Find the best in breed in that industry or sector.
4. I have an account on Stocktwits (free) and sometimes I will scour their message boards there. A lot of garbage on that app, but there is also some good info/perspective.
5. Invest.

Here is an example of my investing strategy. Say you have $10,000. Don’t shoot your wad all at once. Take DAL for example. On profit sharing day let’s say you had $10,000 to invest in DAL. If it were me and I wanted to invest in an airline I would have invested $5,000 of it on that day. Owning a whopping 83 shares for $5,000.

Then literally one week after I started that position the bottom fell out. 2-24-20 that was $45.03 at its low. Not a good look in my portfolio. But you realize the environment. Panic selling. The market. Pandemic. Then you get excited because there is starting to be some major value here but you need to wait until this thing finds support and isn’t in a total free fall. Then on March 30th you see $22 and you know that is a sale price. So you buy. $2500 worth. 113 shares + your original 83 = 196 shares.

Then on May 11th you buy your last $2500 worth at $19. 131 shares. Add this up to your already 196 shares and you have 327 shares of DAL with an average cost of $30.58.

In this example you just went to the depths of hell and back. But your strategy which mirrors Tegridys strategy is to be disciplined, split up investments leaving yourself the opportunity to average up—or average down. If you’re consistent and disciplined you can make even a bad situation like this example work out okay. Buying at the high, buying more on a dip, and buying the last allotment on another dip.

$10,000 invested in DAL. $30.58 average. 327 shares.

As of 12/18/20 at close—DAL is $40.68 and now you can start thinking about your exit strategy! Your $10,000 is $13,302.

So having said that I always start off with investor presentations. Read, educate, decipher, dig, and formulate an opinion. Good luck deltoids. Example: https://romeopower.com/RomeoPowerInvestorPresentation_November2020.pdf