Interim Update Dec 19, 2022

[Yodean]

Yodean "to accumulate intelligently" - I do have a general now plan for myself to limit my invests to Primary Greens only from here in. Do ur words include for now for me a low risk investor of a senior senior age, to buy to average down on some of my riskier past investments well in the red to attempt to try to save their asses?

-the problem with investors determining their own risk tolerance is that it's generally not very accurate; near the top of bull markets, almost every investor is a badass in her own eyes, with "high risk tolerance"; near interim bottoms, a lot of investors suddenly become "low risk investors"; in its own way, this serves as a decent sentiment indicator for the individual investor;

-i can't tell you what to do exactly, as every suggestion will contain some element of risk; with that said, some of the following may be helpful:

1) investors tend to hold too many positions in too many different assets; this drains cognitive energy, etc.; i've read some research that says the optimum number of assets to hold is around 20 or so; less, and you lose the potential benefits of intelligent diversification, and more, you start to enter "di-worsification" territory;

1a) one path to take is to sell all your stocks/options etc. in a certain asset class - let's say tech. - take the proceeds, and consolidate into one ETF in that sector - let's say qqq or tqqq - and sell covered calls on that position on up days; and you can do the same with stocks in other sectors; this would also give you the benefits of tax-loss harvesting;

1b) as the neonatal bull grows, you can start selling bits of the etf in question, and take the proceeds to deploy in certain stocks/leaps in that sector that you think will outperform the etf;

2) don't try "save the asses" of crappy investments - some investments are stillborn ... performing endless CPR on them won't help - send them to the wonderful life-affirming Canadian MAID (Medical Assistance In Dying) program! take the losses like a non-transitioning man that you are, and deploy the proceeds as per #1a-b above;

3) DCA'ing is a good idea during certain times (imo, now) - so if you think we're transitioning into a bull market as i do, you can deploy set amounts of capital on dips into the etfs in question (per above); slowly, carefully, but firmly ...

Fortune rewards the bold.

[SOL]

The second leg came and went when TI stated that the easy trade was over, the Dow mounted a strong rally from the end of Sept to early December. I was on away and most of my orders to take profit were filled (all in the black), still have positions in the red, but I am in a much better position than I was In July to the last week of September.

Volume is very thin as most big players have left for the holidays , so manipulation will be rampant until they come back

Question, what does all in the black mean? I can't find anything online, I assume it's better than in the red. So red<black(even)<green?

The normal saying is in the black, I think DOD just modified it. It refers to being net- net positive. It's the same as green

The phrase “in the black” refers to being financially solvent or profitable, or sometimes more generally, just not in debt. A business that is “in the black” is usually making a profit or, at the very least, making enough to get by without having to worry about going bankrupt.

https://www.burrlawoffice.com/what-does ... 20bankrupt.

[deepthinker]

Yodean "to accumulate intelligently" - I do have a general now plan for myself to limit my invests to Primary Greens only from here in. Do ur words include for now for me a low risk investor of a senior senior age, to buy to average down on some of my riskier past investments well in the red to attempt to try to save their asses?

-the problem with investors determining their own risk tolerance is that it's generally not very accurate; near the top of bull markets, almost every investor is a badass in her own eyes, with "high risk tolerance"; near interim bottoms, a lot of investors suddenly become "low risk investors"; in its own way, this serves as a decent sentiment indicator for the individual investor;

-i can't tell you what to do exactly, as every suggestion will contain some element of risk; with that said, some of the following may be helpful:

1) investors tend to hold too many positions in too many different assets; this drains cognitive energy, etc.; i've read some research that says the optimum number of assets to hold is around 20 or so; less, and you lose the potential benefits of intelligent diversification, and more, you start to enter "di-worsification" territory;

1a) one path to take is to sell all your stocks/options etc. in a certain asset class - let's say tech. - take the proceeds, and consolidate into one ETF in that sector - let's say qqq or tqqq - and sell covered calls on that position on up days; and you can do the same with stocks in other sectors; this would also give you the benefits of tax-loss harvesting;

1b) as the neonatal bull grows, you can start selling bits of the etf in question, and take the proceeds to deploy in certain stocks/leaps in that sector that you think will outperform the etf;

2) don't try "save the asses" of crappy investments - some investments are stillborn ... performing endless CPR on them won't help - send them to the wonderful life-affirming Canadian MAID (Medical Assistance In Dying) program! take the losses like a non-transitioning man that you are, and deploy the proceeds as per #1a-b above;

3) DCA'ing is a good idea during certain times (imo, now) - so if you think we're transitioning into a bull market as i do, you can deploy set amounts of capital on dips into the etfs in question (per above); slowly, carefully, but firmly ...

Fortune rewards the bold.

I keep my list to 20 stocks or less, usually 15 unless there are some really compelling plays. More than 20 and you start (or at least I start) to suffer from cognitive dissonance
I stick to a given strategy until it stops working and one cycle does not imply the strategy does not work. One cycle in this case would mean the current downturn that started around March of 2022.
I generally focus on extreme type situations. I got a bit too greedy or ballsy in 2022. Should have taken more off the table but as Yodean states its water under the bridge. But the rally that ended in Dec provided me with a decent chance to close many positions that were in the red for a profit. Now I have about 30% in cash, which will soon rise to 35% based on the monthly cash infusions. I allocate a certain amount of cash every month to the markets

Mistakes I made during this correction that I don't intend to repeat

When you start to get too confident sell more and buy less. I made two mistakes this year. I got too arrogant and I did not follow my standard script of taking a certain amount of money off the table after stated profit targets were hit.

The other mistake I made was to add more when my monthly charts were already trading in the highly overbought ranges. Predicting tops is hard and if I look at my history, 9 out of 10 times I got out too early. But it has paid off as I usually buy in close to the low (pure luck).

One thing I will never do is follow what another person does blindly. I did that 10 years ago and the results were horrible. There is no such thing as a" one fit strategy". What works for Yodean might be terrible strategy for someone else. You can't trade like him if you don't have his risk profile and his style of thinking. He can take the risk he does because he see's a pattern that he is comfortable with. If you just follow his or anyone else's style of trading but don't see what they do, you are asking for trouble.

This year taught me a lot, it made me realize that the end of the day I still have a lot to learn.

My biggest sin this year, was being too confident/arrogant.

[bpcw]

The markets go down over the past week and bullish sentiment increases, some weird MP or manipulation?

That's according to AAII.

[SOL]

The markets go down over the past week and bullish sentiment increases, some weird MP or manipulation?

That's according to AAII.

I will post part of what I posted in another thread on this forum. The big players (at least one segment of them, there is a war of attrition going on amongst them) goal is to induce a state of mental paralysis, AKA learned helplessness.

• VIX is being manipulated
  BLS is screwing with the unemployment data; they make things look rosy when they are not
  Sentiment data is definitely being mishandled; Bullish sentiment has always traded to or past its historical average when the markets experienced a strong counter-rally. In this case, the counter-rally from Sept to early Dec had a minuscule effect on bullish sentiment.
  Creating shortages first via supply chain screwups and then by controlling the supply of the goods. In both instances, demand was never the issue. Demand did not soar, but supplies were cut. In the first case, by destroying supply chains and, in the second instance, by imposing sanctions that would disrupt the energy markets.

I think it was Milton freedman who stated that if you want to create inflation, just start adding price caps to things; for example, add a price cap to the price of bread, and you will have inflation.

In terms of the financial markets, every extreme reaction results in an even more extreme reaction in the opposite direction. So this massive deviation from the norm in so many areas (TA, sentiment, etc.) could very well create a bull that lasts a decade, albeit an extremely volatile and cranky.

[bpcw]

Cheers Sol!

[gnosis12]

What do you guys make of this



Unusually high option volume all around. Could it be the headless chicken theory in play. The masses are running all over the place but getting nowhere.

[Yodean]

Unusually high option volume all around. Could it be the headless chicken theory in play. The masses are running all over the place but getting nowhere.

I think it's a bit more nuanced than that. There's a lot of money on the sidelines, for one, so both retail/institutions/PTBs have a lot more chips to play with. Options are high risk, high reward ... fast money in both directions. So if you have a ton more money in the system, it's to be expected that options' volume will rise.

Also, around this time, institutions/funds/rich often buy deep ITM puts on their stock holdings as a hedge. They don't want to sell their profitable positions outright - that will trigger taxable capital gains - so they buy these deep ITM puts, usually expiring early in '23. The math works out to be almost like selling a portion of their stocks, without the tax consequences.

[chippermon]

Unusually high option volume all around. Could it be the headless chicken theory in play. The masses are running all over the place but getting nowhere.

I think it's a bit more nuanced than that. There's a lot of money on the sidelines, for one, so both retail/institutions/PTBs have a lot more chips to play with. Options are high risk, high reward ... fast money in both directions. So if you have a ton more money in the system, it's to be expected that options' volume will rise.

Also, around this time, institutions/funds/rich often buy deep ITM puts on their stock holdings as a hedge. They don't want to sell their profitable positions outright - that will trigger taxable capital gains - so they buy these deep ITM puts, usually expiring early in '23. The math works out to be almost like selling a portion of their stocks, without the tax consequences.

Yep, more money. Look how the graph shows it take off when governments start making it rain cash. Working from home, no supervision, extra dough. Of course it all trickled up to the PTB as well.

[chippermon]

Unusually high option volume all around. Could it be the headless chicken theory in play. The masses are running all over the place but getting nowhere.

I think it's a bit more nuanced than that. There's a lot of money on the sidelines, for one, so both retail/institutions/PTBs have a lot more chips to play with. Options are high risk, high reward ... fast money in both directions. So if you have a ton more money in the system, it's to be expected that options' volume will rise.

Also, around this time, institutions/funds/rich often buy deep ITM puts on their stock holdings as a hedge. They don't want to sell their profitable positions outright - that will trigger taxable capital gains - so they buy these deep ITM puts, usually expiring early in '23. The math works out to be almost like selling a portion of their stocks, without the tax consequences.

Here's an interesting chart. Zero days to expiry options have increased huge. it has become very popular not just with small players but the big guys too. Making huge bets on extremely low deltas. Almost like they are waiting on some big event to happen and take advantage of it. Also, for the big players, they can get around reporting requirements if they are out at the end of the day.

[SOL]

Here's an interesting chart. Zero days to expiry options have increased huge. it has become very popular not just with small players but the big guys too. Making huge bets on extremely low deltas. Almost like they are waiting on some big event to happen and take advantage of it. Also, for the big players, they can get around reporting requirements if they are out at the end of the day.

It's part of the WOKE get everything for nothing mentality. Also known as go big or get blown out of the water. Most are going to get blown out of the water. Dire straits song comes to mind money for nothing and chicks for free.

https://youtu.be/wTP2RUD_cL0

This get as much as you can attitude, even if you don't need it, has surged, and it won't end well for the majority. Over 10K to 100K have to lose for every person that hits the back jackpot. Since big keeps getting bigger, the number is probably closer to 100K

[jonnyfrank]

Here's an interesting chart. Zero days to expiry options have increased huge. it has become very popular not just with small players but the big guys too. Making huge bets on extremely low deltas. Almost like they are waiting on some big event to happen and take advantage of it. Also, for the big players, they can get around reporting requirements if they are out at the end of the day.

It's part of the WOKE get everything for nothing mentality. Also known as go big or get blown out of the water. Most are going to get blown out of the water. Dire straits song comes to mind money for nothing and chicks for free.

https://youtu.be/wTP2RUD_cL0

This get as much as you can attitude, even if you don't need it, has surged, and it won't end well for the majority. Over 10K to 100K have to lose for every person that hits the back jackpot. Since big keeps getting bigger, the number is probably closer to 100K

SOL,

But yet, you are not a fan of shorting the markets? I did well with my shorts this year. If one had purchased SQQQ on Jan 1 2022 and rode it out to yesterday....In at around 29 out at around 54....close to100% gain. Now, if one had bought TQQQ in at 83, out at 17. 17. People have been talking about buying TQQQ here. If the PTB are that greedy, they can certainly make plenty of money shorting the market and be patient while the average 401k investor loses their shirt, with no options inside most plans to invest in shorting, gold, bitcoin, or REITs. In my journal, I have reflected on the possibilities of "bad news" vs "good news", and it seems like 2023 could be a potent bad news year, especially with America's obsession with Ukraine and what appears to be a belief my the madness in the west that a nuclear conflict is a possible winning scenario. I will be shorting in 2023, probably even more than in 2022. Yes, I can miss the "explosive move up", but there were 5 devastating explosive moves down in 2023, and applying the 50% loss requires a 100% gain model, it makes sense to short. Convince us otherwise, especially since you have said that recent movements make a bigger decline more likely.

[Yodean]

I will be shorting in 2023, probably even more than in 2022. Yes, I can miss the "explosive move up", but there were 5 devastating explosive moves down in 2023, and applying the 50% loss requires a 100% gain model, it makes sense to short.

Bro, stocks goin' up.

Bears gonna feel the slay soon, as stocks go to the moon.

Hindsight's 20/20.

"If" ... gonna get you in trouble.

I'm quite bullish on '23.

[Yodean]

Almost like they are waiting on some big event to happen and take advantage of it. Also, for the big players, they can get around reporting requirements if they are out at the end of the day.

Yeh, there's some weird stuff always going on in the options market.

I'm not really sure how to use this type of information consistently effectively.

Small example: I had sold some tmf 0217123-12calls previously ... yesterday, they went up 40%+ even though tmf dropped 3.3% to 7.62.

Kinda weird, tmf has low options volume/liquidity, so there's that ... or the options market could be pricing in higher long U.S. bond prices in the near future ... maybe a bit of both.

[chippermon]

SOL,

But yet, you are not a fan of shorting the markets? I did well with my shorts this year. If one had purchased SQQQ on Jan 1 2022 and rode it out to yesterday....In at around 29 out at around 54....close to100% gain. Now, if one had bought TQQQ in at 83, out at 17. 17. People have been talking about buying TQQQ here. If the PTB are that greedy, they can certainly make plenty of money shorting the market and be patient while the average 401k investor loses their shirt, with no options inside most plans to invest in shorting, gold, bitcoin, or REITs. In my journal, I have reflected on the possibilities of "bad news" vs "good news", and it seems like 2023 could be a potent bad news year, especially with America's obsession with Ukraine and what appears to be a belief my the madness in the west that a nuclear conflict is a possible winning scenario. I will be shorting in 2023, probably even more than in 2022. Yes, I can miss the "explosive move up", but there were 5 devastating explosive moves down in 2023, and applying the 50% loss requires a 100% gain model, it makes sense to short. Convince us otherwise, especially since you have said that recent movements make a bigger decline more likely.

To be fair, we don't actually know what Sol does with his own account. When you are running an investing newsletter you have a whole lot of different people to cater to. Look at how much trouble it has been explaining everything to everyone, all the time. It's tough. Imagine throwing shorts in there. You have to be nimble. Time is of the essence. You can't do that with a newsletter.

You have done well this year. Awesome. Some others have too. I really love the forum for seeing all of the different styles of trading and investing. You can't get this anywhere else. Not of this caliber.

Hindsight is 20/20. "If" is a bad word in my vocabulary. By the way, I always appreciate your input in the mix.