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Stock-Age: Stocks, Options and Dividends oh my!

GHG

Member
I wonder if it’s smart or dumb money behind this rally. I don’t really hear anyone at work or in my friend circle talking about the stock market like they all were during the post-Covid run up. regardless, for sure there will be a significant pull back. The question is when. I think we run up for a few more weeks and have a correction by mid February or early March

Been watching the order book since the open and there's been a LOT of retail participation, that's been increasing since the start of the year.

When the market is rallying hard but the VIX and VXN are refusing to fall (or are also rising in tandem) then its a bad sign, lots of hedging activity going on in the background. To make matters worse the dollar is also up today.

Ya, I was going to say the same thing. I missed all month to jump back into tech stocks.

I'm itching now. Maybe Monday.

I did buy some HIMX a week or so ago and up a modest 5%. But been on the sidelines for a good half a year.

I'm not jumping into anything personally. The recent moves have been irrational and considering the way big tech has guided along with Jerome Powell's comments the other day I'm starting to think there's something bigger at play in the background. Someone wants or needs these markets to remain propped up for a while, I'm starting to wonder if it's geopolitical in nature.

All of the macro data under the hood along with the fundamentals still continue to get worse.
 

Raven117

Member
Don't see how this doesn't all end in tears.
Yup. This feels like a true up bear trap. The dumb money is going to push it a bit higher, but the smart money right now is already looking for the exit to take the rip. Nothing is supporting this rally other than...some folks wanted a rally...and the Fed only raised a quarter point.

We know that companies are missing projections...labor market is still very tight...Fed isn't dropping any time soon to keep the lid on all this.

I totally agree with you GHG.
 
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dem

Member
Absolutely not touching this. Like.. how is Apple up?
I actually didn't bother to read the earnings report.... but the headlines were pretty dire.

I feel bad not getting back into Meta when they were at absurd levels.
 
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GHG

Member
Just going to leave this here as an example of what's going on in the background:

06wFMLv.jpg


I feel bad not getting back into Meta when they were at absurd levels.

This is also my only regret but if I had done I'd be offloading right about now. Their ER wasn't even good either.

Edit: it's also important to note that this can go on longer than many think. Anyone looking to purchase puts as a short position or in order to hedge make sure you buy yourself time, I'm talking Q3/Q4 of this year if necessary.

The next FMOC isn't until March, there's a possibility we continue to edge higher until then unless the next CPI reading comes in hot (Feb 14th).

Timing the exact top will be impossible but all of the risk is heavily skewed to the downside right now.
 
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Fools idol

Banned
Yep the mania is back. AMZN, AAPL and GOOGL all miss. Market up.

Don't see how this doesn't all end in tears.

The fed bluff gave funds what they needed - an excuse to buy. How long it lasts who can say but I think its a good few months of rally before we see meaningful pullback now. All the big tech earnings are out the way.
 
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Fools idol

Banned
For new investors, especially if you are young, the following strategy is a lot more favourable than pure index funding.

1. Pay off all debts excluding mortgage (assuming your rate is pretty low)

2. Secure a 6-12 month 100% cash emergency fund to safeguard yourself and your family from any income tragedy that may render you unable to remain invested.

3. Dollar cost average into 10-15 dividend growth stocks (at least some of these should be from the Dividend Aristocrats and / or Dividend Kings lists.

4. Continually add to your positions evenly with new cash each month and when the dividends come in, use them to buy more shares of the higher yielding stocks.

5. Wait, and enjoy your life on this earth.

This method is fool proof and guaranteed you $1m retirement at the very least, if you are consistent with deposits and don't panic during downturns, your snowball of ever growing dividends will make you disgustingly rich very quickly. I have a friend in the marines who has been following this strategy on a $36k a year and he's almost at the point where his dividends cover 100% of his living costs 7 years in. By the time he is out of the marines he will be financially free.
 

GHG

Member
For new investors, especially if you are young, the following strategy is a lot more favourable than pure index funding.

1. Pay off all debts excluding mortgage (assuming your rate is pretty low)

2. Secure a 6-12 month 100% cash emergency fund to safeguard yourself and your family from any income tragedy that may render you unable to remain invested.

3. Dollar cost average into 10-15 dividend growth stocks (at least some of these should be from the Dividend Aristocrats and / or Dividend Kings lists.

4. Continually add to your positions evenly with new cash each month and when the dividends come in, use them to buy more shares of the higher yielding stocks.

5. Wait, and enjoy your life on this earth.

This method is fool proof and guaranteed you $1m retirement at the very least, if you are consistent with deposits and don't panic during downturns, your snowball of ever growing dividends will make you disgustingly rich very quickly. I have a friend in the marines who has been following this strategy on a $36k a year and he's almost at the point where his dividends cover 100% of his living costs 7 years in. By the time he is out of the marines he will be financially free.

Yep dividend snowballing is powerful.

If people don't want to pick individual names for this strategy then the likes of JEPI and SPHD will do the job.
 
For new investors, especially if you are young, the following strategy is a lot more favourable than pure index funding.

1. Pay off all debts excluding mortgage (assuming your rate is pretty low)

2. Secure a 6-12 month 100% cash emergency fund to safeguard yourself and your family from any income tragedy that may render you unable to remain invested.

3. Dollar cost average into 10-15 dividend growth stocks (at least some of these should be from the Dividend Aristocrats and / or Dividend Kings lists.

4. Continually add to your positions evenly with new cash each month and when the dividends come in, use them to buy more shares of the higher yielding stocks.

5. Wait, and enjoy your life on this earth.

This method is fool proof and guaranteed you $1m retirement at the very least, if you are consistent with deposits and don't panic during downturns, your snowball of ever growing dividends will make you disgustingly rich very quickly. I have a friend in the marines who has been following this strategy on a $36k a year and he's almost at the point where his dividends cover 100% of his living costs 7 years in. By the time he is out of the marines he will be financially free.

Dividend investing is a farce. You pay more in taxes. The stock price goes down proportionately when dividends are paid out. Higher yield means higher risk and less growth.

Just invest in VOO. The yield is 1.6% which is high enough. 10 year average annual return is almost 12%.
 
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Revoh

Member
the dividend-only portfolio I set up for my 4 year old daughter reached a milestone today... $10,000 per year in dividend income. Thanks to recent dividend hikes from $LOW, $TGT and $SQM (12% starting yield when I loaded a few weeks back!).

The actual overall return thus far is down -16% total thanks to the shitty year we just had but the dividend keep rolling in and increasing.

it pays out $2.5k or so every 3 months, give or take a few dollars depending on further raises this year. It has been set to fully reinvest all dividends and I automated a $1k deposit to go in every month from now. Purchases made every 2 months to reduce fees and dollar cost average. I am hoping by the time she turns 18 it will be churning out at least $75k a year so she can pursue whatever she wants in life.i

This sounds amazing. Is there a ELI5 post on how to achieve this?
 

Revoh

Member
Yes, have enough money to put $1k per month into this scheme.

I do. Currently about to hit my target for saving for my 6 months emergency funds. I'm also investing in real state but I want to branch out to stocks. I put some play money in crypto but it's not really my thing. I prefer something more traditional
 
For new investors, especially if you are young, the following strategy is a lot more favourable than pure index funding.

1. Pay off all debts excluding mortgage (assuming your rate is pretty low)

2. Secure a 6-12 month 100% cash emergency fund to safeguard yourself and your family from any income tragedy that may render you unable to remain invested.

3. Dollar cost average into 10-15 dividend growth stocks (at least some of these should be from the Dividend Aristocrats and / or Dividend Kings lists.

4. Continually add to your positions evenly with new cash each month and when the dividends come in, use them to buy more shares of the higher yielding stocks.

5. Wait, and enjoy your life on this earth.

This method is fool proof and guaranteed you $1m retirement at the very least, if you are consistent with deposits and don't panic during downturns, your snowball of ever growing dividends will make you disgustingly rich very quickly. I have a friend in the marines who has been following this strategy on a $36k a year and he's almost at the point where his dividends cover 100% of his living costs 7 years in. By the time he is out of the marines he will be financially free.
yep, been rocking with Dividend Growth Investor for several years now, no joke the best way to secure a retirement. It's a sleepy strategy, so doesn't get the hype train behind it, but the real way to build wealth and a passive income for the patient. There's a couple of way to tighten up the strat (don't overpay, don't fall into yield trap, etc), but is the only way i invest now.

https://www.dividendgrowthinvestor.com/
 
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Dividend investing is a farce. You pay more in taxes. The stock price goes down proportionately when dividends are paid out. Higher yield means higher risk and less growth.

Just invest in VOO. The yield is 1.6% which is high enough. 10 year average annual return is almost 12%.
incorrect, you don't pay on divs in Roth in US. Additionally, div tax lower than cap gains tax and income tax. Can keep divy payers in tax free account and growth holdings in taxable account.
 
incorrect, you don't pay on divs in Roth in US. Additionally, div tax lower than cap gains tax and income tax. Can keep divy payers in tax free account and growth holdings in taxable account.

While true, I’m just saying it’s not a good idea to chase dividend yield. I would rather invest in a company with no dividend as that means they are investing all of their profits back into the company. A company with a dividend means they literally don’t know what to do with that money so they just give it back to investors because there’s no other use for it. I would also prefer them to do buybacks instead of dividend because of the tax implications.
 
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Ellery

Member
we dont pay div tax in ISA accounts here in the UK either. I haven't and wont pay a penny tax on my investments for the next 50 years

Any good plays for today? Maybe forex or something

I feel like being active with a bit of spare money outside of my long term investment portfolio.
 

Raven117

Member
Yup. This feels like a true up bear trap. The dumb money is going to push it a bit higher, but the smart money right now is already looking for the exit to take the rip. Nothing is supporting this rally other than...some folks wanted a rally...and the Fed only raised a quarter point.

We know that companies are missing projections...labor market is still very tight...Fed isn't dropping any time soon to keep the lid on all this.

I totally agree with you GHG.
I just want to quote myself (and GHG) for accuracy.
 
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StreetsofBeige

Gold Member
SVB Silicon Valley Bank just dropped from about $270 to $110 on bad numbers and needing to issue more shares. It actually hit $100 flat at one point.

Never herd of them but they have to do with finance tech start ups. And with interest rates rising and their bonds losing value, they had to dump a bunch of securities for a major loss valued more than their market cap.

Crazy shit.
 

Fools idol

Banned
SVB could be a Lehman moment. Very bad situation out there.

Silverbank, credit suisse, deutcshe bank also in trouble. Splash damage all over....

I am stil short ES Futures as a hedge.

Only US longs I have are $NET and $S.
 

Fools idol

Banned
With SVB going under everyone is expected shit to really hit the fan on Monday. Why is that?

bank failures cause huge ripples. Laege investors from other banks suddenly start to panic about exposure and all want to get their money out at the same time, causing bank runs. More often than not, banks do not hold sufficient funds to cover huge withdrawals and that is just how the cookie crumbles.

Not only that but it also just causes general panic. They start dumping all liquid assets (stocks etc) without discrimination which in turn causes huge volatility, and stop losses get triggered further causing chaos.

The last time this happened was Lehman Brothers bank in 2008, and we all know what happened next.

also this is hilarious:



I'm starting to think this was no coincidence at all.

also this:


hold on to your butts.
 

Fools idol

Banned
I thought there were rules in place to prevent Executives from selling large amounts of shares at once. I guess not lol.

ahahahahha, dont make me laugh right 🤣🤣

it's one rule for them, one rule for us. SEC is quite a joke these days.

There is so much corruption at the market infrastructure level that a service like Unusual Whales can help you piggyback on insider trading. Says it all, really. I set up an account using their premium alerts and put 10k into it for fun more than anything, and blindly followed the 'unusual' activity trades. The account had win after win consecutively, I was up something like 500% in about 6 weeks at one point.

at one point las weeks, a company called Stratasys, ticker SSYS, a trader out of nowhere purchased 12 million dollars worth of short dated calls.I followed the trade but with a small amount cause I figured, fuck, someone must know something is up. a few days passed, nothing. Then right before the expiry, boom, news that a buyout offer was in for .$18 a share. the stock moved 25% in a single day. I just wish I had put in more. The guy who put in $12m must have made a fortune.
 
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GHG

Member
With SVB going under everyone is expected shit to really hit the fan on Monday. Why is that?

If everyone expects something it usually doesn't transpire that way. So Monday is most likely not the day.

That said, this could be be the first domino of many to fall. I will use every green day to increase my short exposure.
 
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ahahahahha, dont make me laugh right 🤣🤣

it's one rule for them, one rule for us. SEC is quite a joke these days.

There is so much corruption at the market infrastructure level that a service like Unusual Whales can help you piggyback on insider trading. Says it all, really. I set up an account using their premium alerts and put 10k into it for fun more than anything, and blindly followed the 'unusual' activity trades. The account had win after win consecutively, I was up something like 500% in about 6 weeks at one point.
Jesus, I just thought that after what happened in 2008 that they would have safeguards in place to prevent it from happening again. I mean in this kind of economy a top 20 bank shouldn't go under in 48 hours.
 

Raven117

Member
SVB isn’t exactly LB. It’s closer to Washington Mutual.

That said, while it’s going to be choppy for a bit, I think this mostly stays contained. SVB was basically a tech bank. As we know, tech has been getting crushed (by design…. That whole industry for a decade has been super frothy). Stands to reason a bank will follow.

This is what the fed wants. And it’s going to be a bloody day when the market realizes that and Powell continues to raise rates. He isn’t kidding about this.
 

HoodWinked

Member
Futures were big green but ended slightly less green but still up. All of that gets wiped out and markets opens red... Now back to even. While crypto is up 15%

This is just completely impossible to predict.
 

Raven117

Member
Futures were big green but ended slightly less green but still up. All of that gets wiped out and markets opens red... Now back to even. While crypto is up 15%

This is just completely impossible to predict.
Crypto being up boggles my mind.

I know GS came out saying that they don't think the Fed will increase rates, but I think they will. I think inflation reports come in hot this week...and even with SVB failing...I think the Fed stays the course.
 

Fools idol

Banned
If we assume that the Fed is backstopping a facility which gives banks full collateral credit for unrealized losses due to rate hikes, the Fed is basically saying that this whole QT hiking cycle will reverse and all bonds will eventually trade back to par. I am trying to figure out what Powell's long term plan is here because, I think, It means if the borrowers default they will just hold the collateral to maturity.

I don't think were out of the woods yet. Credit default swaps are getting out of control. I have never in my life seen 15 bank stocks drop 75% in a single day, not even 2008.

Absolutley wild how the index is still green today. Let us not forget the old chestnut that is 'the first market reaction is always the wrong one' lol.

The next few weeks will be critically important for the united states financial system. I don't think people quite realise how perilous the situation is right now.
I don't think were out of the woods yet. Credit default swaps are getting out of control. I have never in my life seen 15 bank stocks drop 75% in a single day, not even 2008.

Absolutley wild how the index is still green today.

If Powell doesn't stay the course and goes full on printing clown car the dollar will be worth nothing in a few years time. The US will literally be Venezuela 2.0
 
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BadBurger

Many “Whelps”! Handle It!
I moved most of my retirement holdings to international stocks over a week ago. The failing of SVB barely affected me, thank God.
 
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GHG

Member
Absolutley wild how the index is still green today. Let us not forget the old chestnut that is 'the first market reaction is always the wrong one' lol.

Oversold technicals + false hope. What's notable to me is that IWM didn't bounce, it lagged the whole session and finished very much in the red. The common theme since December 2021 has been that IWM has always led the way, both on the way down and on the way up (every time a bear market rally has occurred since then). It lagged the bounces today, something is amiss. I'm seeing some people are saying money flowed into "risk on" assets over the last couple of trading sessions, that's not true. "Risk on" is not defined by crypto and crypto alone. Yes money had flowed into crypto in a big way but something different is at play.

So where do we look? Overall all eyes on DXY from here on out for me personally, it's the only thing that matters, my entire wealth depends on it (which it shouldn't, so I need to change that ASAP). DXY also doesn't lie. The FED really are sleepwalking towards a potential catastrophe here. I hope they have good reason to believe saving a bunch of poorly run regional banks is worth risking the integrity of the dollar over. There's been a clear flight to safety towards gold, silver, and bizarrely, crypto (BTC/ETH) of all things in the last 48 hours.

Let's see what CPI brings in the next 12 hours. One day and one datapoint at a time.
 
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