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Strategies & Market Trends : (Buying) Options -- Ignore unavailable to you. Want to Upgrade?

To: JohnyP who wrote (242)	7/26/2022 5:40:14 PM
From: petal	Respond to of 249

Yes – if you're going to short, rather be "too late" than too early... It's sorta like trend following, in a way; but you want to recognize the absurdity that's going on while it's going on, and then have enough patience to wait until 51 % of "investors" have realized that it's absurdity. Times don't really get less exciting, do they; a year ago, it was fairly obvious what was going to happen, sooner or later – mania always ends with disillusion. But now, it's all up in the air and very complex indeed. The unusualness of highly negative real rates is obvious. But most other signs are most contradictory. I am very agnostic, and have no macro-economic opinions whatsoever. But I do observe that many people are dystopically bearish, the way I used to be when everyone was a supercharged bull. I'm no real bull right now, however – I'm glad to have a pretty large cash reserve while having most of my money in cheap productive companies. The spread between rates and inflation is worrying. Inflation might well come down – and in the longer run, I do feel like there's a ton of disinflationary "megatrends" – but OTOH we have f'ed up our central bank policies so much, so who the hell knows what is up and what is down anymore. If inflation should stay high or go even higher, rates must come down eventually – and then stocks have a looong way to go. Down, that is. I do have this unsettling "Great Depression feeling", although I have that like 50 % of the time. I was always a bear at heart, and it doesn't take much for my true nature to come out once again. But it really does seem to me – it always did – that this period of excessive wealth (fake wealth) was always weird, and that we have had an unnaturally long period of peace and prosperity – and that a very harsh comedown is in the cards. Myself, I have some oil co.'s, some gambling co.'s, and some strong consumer product brand name co.'s. Also some a couple of polymer/material producers. I've stopped buying bad businesses – it's not worth the trouble, I find. It's like buying something short term and then becoming stuck with it, when the price falls – I rather buy something at P/E 13, which I'd gladly keep for 5 years, and double down on several times over if it keeps falling, than buy shite at P/E 8, and then own a diversified portfolio of deteriorating shit which I can only get out of at a shit price. That being said, I prefer buying at around P/E of 10, ideally lower if I can find it. Since I can buy gambling co.'s with margins & return on money of ~20% at < P/E 10, I'm not too worried. AFA I'm concerned, it's wonderful companies in wonderful businesses (economically speaking) at wonderful prices. When I can combined Fisher and Graham, I am of course delighted.

To: JohnyP who wrote (242)	7/27/2022 12:27:19 AM
From: petal	Read Replies (1) \| Respond to of 249

PS. With hindsight, I should have just gone short ARKK – it peaked just about when I bought my index puts, in Feb of '21...! One thing I've learned about buying puts – you really have to see it as a cost. You have to 100% expect to lose 100% of the option. And you need to be prepared to roll them once they expire worthless. One should see them as insurance also in the sense that you pay a premium, monthly, quarterly or whatever. It's just an expense that you pay regularly (if you decide to pursue this strategy, that is; if you want to have an insurance policy in place). Myself, I have decided to just keep cash instead, and then put it at play in undervalued situations when they present themselves. It suits my temperament better, I have found. I hate losing money permanently too much to do options... I have, however, started shorting the stocks of some individual companies through (unlevered) certificates. The good thing about these are that they don't go to zero as quickly as OTM puts do – you don't have that time decay which I so dread. But OTOH they don't have the exponentiality on the upside, so risk/reward-wise they are an inherently inferior product. The main problem, as I see it, with index puts, is that they are so expensive. Even very OTM puts cost a lot (for a thin wallet) if you want to have long duration ones. And short duration ones require a lot of upkeep – rolling them, etc. I have just found that options aren't worth the trouble – for me. I'm not interested enough to learn enough about them. They're really complicated, to me anyway.