Stock market tips and experiences

[2000cs]

As an investor I think a buyback signals that management lacks good investments, which implies growth will slow. Thus I generally don’t like them.

There are exceptions, like when management wants to signal that they believe the stock is undervalued. It is tricky to get that signal through, though, given the above, which is a more general sentiment. And, if the stock is undervalued, it is likely other stocks are as well, so why not look at a strategic acquisition instead of buyback.

Another exception is when there is “excess” cash that the board would like to return to shareholders, but they don’t want to establish or increase a dividend (creating expectations for future dividends) and want a tax-advantaged “rifle shot” for shareholders. Excess cash means the business has and makes investments and still has enough left over to do this. Apple would be a current example of excess cash, IMO.

A CFO I used to work for liked to say “Cash has a P/E of one”, meaning it is good to get it invested and bad to hold it if you’re trying to grow your stock price.

[antzcrashing]

Doubled down on SNAP today

[Chick Webb]

Originally Posted by 2000cs

There are exceptions, like when management wants to signal that they believe the stock is undervalued. It is tricky to get that signal through, though, given the above, which is a more general sentiment. And, if the stock is undervalued, it is likely other stocks are as well, so why not look at a strategic acquisition instead of buyback.

I work for a mid-size company that excels in a small niche of the semiconductor space. We typically spin off 25% of sales in cash each quarter. And that's while fully investing in R&D and treating the employees pretty well. That cash has gotta go somewhere and frankly there's no way we could use it up on acquisitions - though we have done some strategic ones - as management is pretty conservative. Which is not a bad thing in a boom-bust industry, but it does mean we don't grow as fast as some. We are often undervalued (in our own opinions) as a result. And, let's face it, our management team and employees own a sh*t-ton of our stock, so we benefit directly.

Originally Posted by 2000cs

Another exception is when there is “excess” cash that the board would like to return to shareholders, but they don’t want to establish or increase a dividend (creating expectations for future dividends) and want a tax-advantaged “rifle shot” for shareholders. Excess cash means the business has and makes investments and still has enough left over to do this. Apple would be a current example of excess cash, IMO.

Profits are potentially one-time events, and it's never smart to use one-time cash to make long-term committments like hiring or jacking up the dividend. Our company is unique in that we are one of the only semiconductors companies with y-o-y double-digit growth that pays a dividend. It's not a lot, but it's a little icing on the cake. It may get bigger, though, thanks to the current Administration and their 1% tax on buy backs that takes effect on 1/1/23. That's going to push a lot of companies to think of other ways to reward shareholders and dividends are going to be one of those, I think.

[2008M36MT]

I sold my position in AAPL ahead of MSFT and GOOG earnings, so the rest of you can expect it to go up, I have the worst timing. Still made $6/sh so that's ok.

[Chick Webb]

Originally Posted by 2008M36MT

I sold my position in AAPL ahead of MSFT and GOOG earnings, so the rest of you can expect it to go up, I have the worst timing. Still made $6/sh so that's ok.

There are other ways to hedge than bail. Let's say you owned 100 shares of AAPL, which closed today at $150 or so. For $1 you could have purchased 1 Oct 28 PUT contract (1 contract=100 shares) at a strike price of $145. It would have cost $100, plus commissions.

PUTs give you the right to sell those shares at the strike price. So, between now and the end of the week, that would ensure that if the price went to $144 (apparently your cost basis, since you said you made $6/share), you would be able to sell your shares and be even, and if it went down more than that you'd profit, as those PUTs get more valuable as the share price drops further below the strike price. And, if it went up, you'd still be in the position, at a cost of only $100 (0.7% of your position, and only 1/6 of your un-realized gain). In the worst case, the stock stays between $150 and $145 (your new cost basis, since $144+1=$145), the option expires, and you're out $100. That's pretty cheap insurance.

[Tyga11]

Chick Webb

I just stopped looking at my account seems like the Nasdaq is going to be just be trading within this $10,300-$11,000 range for a while. Tomorrow will give up all the gains from today.

It's just pointless at this point unless you're trading

[2000cs]

Originally Posted by Chick Webb

There are other ways to hedge than bail. Let's say you owned 100 shares of AAPL, which closed today at $150 or so. For $1 you could have purchased 1 Oct 28 PUT contract (1 contract=100 shares) at a strike price of $145. It would have cost $100, plus commissions.

PUTs give you the right to sell those shares at the strike price. So, between now and the end of the week, that would ensure that if the price went to $144 (apparently your cost basis, since you said you made $6/share), you would be able to sell your shares and be even, and if it went down more than that you'd profit, as those PUTs get more valuable as the share price drops further below the strike price. And, if it went up, you'd still be in the position, at a cost of only $100 (0.7% of your position, and only 1/6 of your un-realized gain). In the worst case, the stock stays between $150 and $145 (your new cost basis, since $144+1=$145), the option expires, and you're out $100. That's pretty cheap insurance.

If you’re trading then options are a good strategy, but if you’re a long-term holder they effectively turn long term capital gains into ordinary income, assuming you’re on the right side of the trades.

I write some out-of-the-money calls on a few of my stocks now and then, to generate a little more cash. The calls have to be pretty liquid for a writing strategy, but they typically are better in that regard than puts. Call profit is limited to the write price, of course, while put profit is theoretically nearly unlimited.

[2000cs]

Originally Posted by Tyga11

Chick Webb

I just stopped looking at my account seems like the Nasdaq is going to be just be trading within this $10,300-$11,000 range for a while. Tomorrow will give up all the gains from today.

It's just pointless at this point unless you're trading

That’s what I’m hearing from “experts” too. S&P500 is now range bound lacking a catalyst to break out. Bull break would be FED pivot, maybe front-run by some bad employment and good inflation news. Bear break would be the opposite economic news or worse oil/natgas/war news.

[Tyga11]

Originally Posted by 2000cs

That’s what I’m hearing from “experts” too. S&P500 is now range bound lacking a catalyst to break out. Bull break would be FED pivot, maybe front-run by some bad employment and good inflation news. Bear break would be the opposite economic news or worse oil/natgas/war news.

I'm going to take a shot and buy META calls...earnings today. You with me?

[dangerus_car]

Originally Posted by dangerus_car

did i tell you to buy NKE on the day it dropped after earnings? see where NKE is now, it's filling up the gap yes, some of the move is due to overall market direction, but still... like today, most stock took a dive in the AM before recovering, as of NKE, it went up since the day started

just wanna follow up on my NKE

[Tyga11]

Burned yet again. I thought this thing couldn't go lower no matter how bad earnings but I was wrong. I'm never trading again

[2008M36MT]

Originally Posted by Tyga11

Burned yet again. I thought this thing couldn't go lower no matter how bad earnings but I was wrong. I'm never trading again

You'll recover the AH loss. I think it's as much an indictment on their arrogant POS CEO as it is about the value proposition. God I despise his face and ideology, and his direction for us as people. Would never invest in FB on principle.

[2008M36MT]

Originally Posted by Chick Webb

There are other ways to hedge than bail. Let's say you owned 100 shares of AAPL, which closed today at $150 or so. For $1 you could have purchased 1 Oct 28 PUT contract (1 contract=100 shares) at a strike price of $145. It would have cost $100, plus commissions.

PUTs give you the right to sell those shares at the strike price. So, between now and the end of the week, that would ensure that if the price went to $144 (apparently your cost basis, since you said you made $6/share), you would be able to sell your shares and be even, and if it went down more than that you'd profit, as those PUTs get more valuable as the share price drops further below the strike price. And, if it went up, you'd still be in the position, at a cost of only $100 (0.7% of your position, and only 1/6 of your un-realized gain). In the worst case, the stock stays between $150 and $145 (your new cost basis, since $144+1=$145), the option expires, and you're out $100. That's pretty cheap insurance.

Great advice, thank you!

[Tyga11]

Originally Posted by 2008M36MT

You'll recover the AH loss. I think it's as much an indictment on their arrogant POS CEO as it is about the value proposition. God I despise his face and ideology, and his direction for us as people. Would never invest in FB on principle.

Naw my calls are done for sure. Same thing happened with snap last week. Currently down almost 20% AH lol

[2008M36MT]

Originally Posted by Tyga11

Naw my calls are done for sure. Same thing happened with snap last week. Currently down almost 20% AH lol

Ouch, I know you disagree based on your posts in this thread, but I'd be worried about TSLA. There was no reason for it to have gone up as much as it did since 2020. It will give up market share as competition and competitor quality improves.perhaps good news for you today is that Ford shut down it's L4 autonomous driving division today. Still though, I am a possible market entrant for an EV dd and cross shopping the mustang EV with a model 3 and quite honestly am more likely to go with the former, it's just a nicer package. Never thought that would happen 2 years ago, I was Tesla all the way.

[chassis]

Interesting that Ford shut down the L4 division- MBLY IPO today. Should be interesting. I hold neither F nor MBLY.

TSLA will be left behind when the majors get their EV portfolios in full production. TSLA simply can’t self fund or raise enough capital to invest in more products and factories to avoid falling behind. It’s a capitalist arms race.

[Tyga11]

Originally Posted by 2008M36MT

Ouch, I know you disagree based on your posts in this thread, but I'd be worried about TSLA. There was no reason for it to have gone up as much as it did since 2020. It will give up market share as competition and competitor quality improves.perhaps good news for you today is that Ford shut down it's L4 autonomous driving division today. Still though, I am a possible market entrant for an EV dd and cross shopping the mustang EV with a model 3 and quite honestly am more likely to go with the former, it's just a nicer package. Never thought that would happen 2 years ago, I was Tesla all the way.

It's a brand thing. I would never buy a TESLA either but people are obsessed with them and they are status symbols. I think the Model 3 is the ugliest thing on the road.

No one is catching Tesla for awhile either...they have such a huge head start. Their biggest competition rn are the Chinese EV makers. That could impact the stock but there is no domestic competition and won't be for years.

[antzcrashing]

Meta is so overhated it's not even funny.

[Tyga11]

Originally Posted by antzcrashing

Meta is so overhated it's not even funny.

If it's anything like SNAP it should go up huge in the next few days...

[antzcrashing]

Originally Posted by Tyga11

If it's anything like SNAP it should go up huge in the next few days...

It may even go up before market open. Being way down below pre-Covid levels and Covid lows is silly.

[Tyga11]

Originally Posted by antzcrashing

It may even go up before market open. Being way down below pre-Covid levels and Covid lows is silly.

It's down to 2016 lows lol.

I'm buying tomorrow. You with me? I'm in for $10k

[dangerus_car]

Originally Posted by Tyga11

It's down to 2016 lows lol.

I'm buying tomorrow. You with me? I'm in for $10k

you can buy a long dated call option like in 2024 or 2025 for $10k, by then metaverse may be mature enough and if the stock bounce just 50%, you will get a lot of money, lol