Today Market

Have you looked at savings data? There is no saver class. It’s investor class and debtor class.

Why is that a fed function? It’s not part of their mandate, so I’m not sure why you think it’s their function. If they do their job and keep unemployment low, then there will be inflation. That’s because companies can only hire by paying people more than their current job does. That’s inflationary.

If productivity increaes wages can rise without sparking inflation. The longest sustained expansion in the US was the so-called “Gilded Age.” I say so-called because more Americans rose from poverty to a middle class existence than at any time prior or since. And it happened without inflation. Or central banking.

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World About to Learn If $1 Trillion Tech Rally Was a Good Idea

Apple will release quarterly figures on Tuesday, and analysts are focused on how the firm fared during the holiday season and dealt with uncertainty around tariffs. Microsoft, up 62% since the start of 2019, reports Wednesday. Investors will see whether the demand for its cloud-computing programs remains strong.

Exciting week. What will Mr Market do? Kickstart a correction?

Maybe just punish Apple for its poor performance? :thinking:

That would kickstart a correction.

China has put the novel Coronavirus in the SARS category because it is a new strain that have not been identified before and hence has no curing drug and patients are treated symptoms only. WHO has not declared it as a global emergency because cases are mostly limited to China, and only isolated cases elsewhere. Btw, common flu is a Coronavirus and while the new strain is…

…mysterious, so far its impact pales in comparison to the common flu virus, which has already killed between 8,200 and 20,000 Americans this winter, according to the U.S. Centers for Disease Control.

Is why Jim Cramer and @Jil are confident that WS is exploiting the event to take down the weak hands. US economy is strong and the bull market is based on real fundamentals and not vapors as in 1999.

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Stocks were UP (at exuberantly) with year-end Santa-Clause Rally for a longer time expecting trade deal to come which was signed Jan 15th.

Market makers were waiting for some opportunity to correct either 3% or 10% (which I do not know at this stage) and they need a scapegoat which will be Coronavirus.

Stocks work sinusoidal ways, UPs and Downs, market makers must bring down suddenly (or slowly) without a hint to retail investors. Suddenly will normally happen within 3 days, slowly may happen within a month.

At this stage, all stocks, including AAPL is priced in with refinitiv consensus estimate, but they do not know what is the future growth rates. This will only be known during results time and prices will react based on future growth potential.

Since US economy is strong with indirect QE (FED pumping REPO $100 billion/month) is effective, we do not foresee any big fall until election results. Trump has the lucky star to continue the stock growth !

Market makers (Mainly WS/big banks/funds) must bring down so that they gain and retail investors lose money. It is a typical gambling happens in stock market. We see this twice (easily) or thrice in a year.

Remember Ray Dalio hedge against market fall so that he protects hedge fund net worth !

BTW: I do not know what will happen tomorrow !

I may be right or wrong, viewers must do their own analysis.

This is a pretty good summary.
I heard from one person a long ago that thing in the favor of small investors is that they can come in and out of the market without affecting the market price. Big players cannot do that without causing a visible price move. Big investors takes months to do what retail will do in a day. It will be interesting to see how it pans out.

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100% correct.

If a big player, like WB (or mutual funds/Hedge funds) needs to buy $5B worth of AAPL, his brokers (multiple) need to slowly accumulate the shares for many days. The brokers(or BRK) hedge with calls(buy side)/puts(sell side) first to lock the rate and then exercise the option. The option premium is tiny compared to the stock price move. This is handled by broker’s trading desk.

As investment worth increases, it is hard to handle the investment and esp outsmart S&P. We need to know more about what we are buying/holding/selling.

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Exactly why it gets harder and harder for Buffet to beat the market. He’s admitted as much over recent years.

It also why some people just screen for unusual options activity and piggy back in those trades. It’s not insider trading, since the trades are public knowledge.

Wells said. In other words, Warren Buffet himself is the market because he gets to choose the price. So, if WB has to beat market, he has to beat himself.

Now for practical skills. How do you track unusual option activity?

I said that first :slight_smile: echo chamber repeated it till even I am told about this!

Also need to negotiate with market makers. Another way to accumulate large block is to buy from another big guy.

I piggyback2 if I detect those activities :slight_smile: Work most of the time.

You think owning a stock is speculating, and trading options based on unusual activity is fine?

The quickest way is look at top options activity and compare it to the average for that option. Some will pop with at least 10x normal activity.

Did I say owning a stock is a speculation?

Anything (even the safest asset) can be speculation or an investment depending upon the understanding of two things:

  1. Safety of Principal
  2. Rewards/Risk Ratio

Speculating or investment is not the character of an asset but of the thinking that goes behind the money paid in to acquire that asset.

For example, if 9/10 startups fail, can investing in a startup be a speculation? But, it can also be rewarding. Can it be investing then?

What about the options? What about the penny stocks? What about the junk bonds?

Position sizing is important in situations like these. The amount and possibility of risk (loss) vs the amount and possibility of the gain.

Now you’re just going in circles contradicting yourself back and forth.

Baupost group (seth klarman) 4Q letter
Baupost 2019 Letter.pdf (248.3 KB)

Enjoy

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Screen Shot 2020-01-28 at 3.09.28 AM

We’re already bouncing back. That was quick.

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How long do you want? Coronavirus scare is BS. Director CDC thinks China is overdoing it, so far it doesn’t seem any worse than common flu. Probably just err on the safe side since it is unknown, behavior and effect are yet to be determined. Better safe than sorry.

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Question for all the Chinese folks here. This started as an animal virus spread under the filthy conditions in “bush meat” markets. Same as SARS. The economic damage to China is substantial - in fact at least one source I read indicated it had already eclipsed the damage caused by Trump’s tariff war.
In a totalitarian state with the power to imprison and harvest the organs of political dissidents how hard can it be to put a stop to those filthy markets? The ruling elite are educated people. They know you can’t cure cancer or impotence or protect yourself from all the diseases in red light districts with pangolin scales, rhino horn, bat soup or cobra gall bladder shooters. Herbal medicine has it’s place - but not “medicine” based on animal parts. This is the 21st century. With the risk already known how hard is it to just put a stop to those markets? What they are doing is already in many cases illegal since the SARS problem. Just raid them, put a few violators up against the wall and televise their executions. It’s a police state. Why is it so impossible to get a handle on this? This is the one sort of thing police states are good for.

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