Sign of the times?

Discussion in 'Investing' started by B Russ, Jul 28, 2020.

  1. B Russ

    B Russ Well-Known Member

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    “Option Trading Volume Higher Than Underlying Stock Volume For First Time Ever
    7/28/20, 4:10 PM
    July 28, 2020 05:10 PM ET (BZ Newswire) -- Analyst Color

    This year has been a year of firsts on Wall Street, and the options market is the latest to register an unprecedented surge in popularity.

    Goldman Sachs has reported that single stock options trading volume has surpassed the daily trading volume of the underlying stocks for the first time in history.

    Option Trading Spike: The graph below shows just how much option volume has skyrocketed relative to stock trading volume in 2020, and some market experts are concerned about how a flood of younger, inexperienced and risk-hungry traders may be impacting the market.“

    the Last paragraph saves me having to reiterate what many here already have. I cant say it better, so will leave this here.
     
  2. The Brontide

    The Brontide Active Member

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    Ahhh,... To be young again, and having the government throwing money at you. You are invincible.


    But one thing you only learn with age and experience,....

     
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  3. TomB16

    TomB16 Well-Known Member

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    For a patient value investor, it isn't difficult and it usually doesn't take all that long to buy a company showing value.

    I only follow a few dozen companies closely. These are companies I like and I follow them even if they don't show value. If they are in the list, I would like to own them at the right price. I have also calculated that price.

    From there, I just wait. Many of the companies never show value but a surprising handful of them do on occasion, even in this pumped up market. A company that is 20% above my value level has a strong chance of showing value if I just wait, even in the absence of any significant news.

    Option traders and algorithms keep the market wonderfully unstable.
     
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  4. B Russ

    B Russ Well-Known Member

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    My headline judgement is that this is a sign that the new money is indeed in the market. Im beginning to view investing progression (based on my and rhetorical) experience, And extremely oversimlified

    Freshman = penny stocks
    Sophmore = options
    Jr = Less risk growth stocks. Swings/daytrading
    Sr yr= blue chips/dividends

    Idk if futures, currencies and commodities are post grad doctrin, or Sr, I havent got that far yet. That or i slept through it somewhere in jr high.

    this post is light hearted btw. If anyone excels in any of these. Kudos! I suck at all except investing....probably that too, but got lucky so far this time around. Though i still meddle in options.
     
  5. TomB16

    TomB16 Well-Known Member

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    For what it's worth, I own a penny stock. It's a junior oil company I have owned for a few years and plan to own for another 5, or so.

    I also sell puts on occasion.

    Many of the companies I own would be considered junk by just about anybody. This includes Tesla. I don't own a company with an A credit rating.

    I don't swing trade, though.
     
  6. B Russ

    B Russ Well-Known Member

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    I always value your input. And respect you as a person and investor. I buy penny stocks too, (Not currently, but not opposed) but consider myself an elementary kid dressed up as a sophomore.

    again, its a quite light hearted evaluation. But as a plethora of new threads will imply, the newest seem to want the willy wonka ticket. From pennies to riches. I know i did. Then i tried options when i realized most pennies were pennies for a reason. Options have a place. Companies with an investment long term plan, was next. (Actually, always my first choice, but thought i could bypass a couple checkpoints to affording them. I was wrong). I always wanted long term companies, but figured i could skip the money earning part to buy them, by winning in pennies or options. Then reality hit me.

    i guess i saw that headline as a (first time ever) thing and thought about my own progression and related it to all the other info we have been digesting since feb.

    i kinda looked at that as a double confirmation to new money, accounting that its behavior and evolution is/was same as mine. That may be a bit shortsighted as well. But if im right, i guess Some will get washed. Some will become valued members. All have money on the poker table.

    But if i am right on the (general) natural progression of traders, it would be another confirmation of a topsy market, considering options have never had more action than shares until now?
     
    #6 B Russ, Jul 29, 2020
    Last edited: Jul 29, 2020
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  7. TomB16

    TomB16 Well-Known Member

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    I was not trying to disagree or undermine your position, B.

    I just thought I'd point out this grumpy old guy who has been exposed to the market since 1983 does some out-of-profile things. The thrust of your idea definitely applies to me, though.


    Here's a quick history of the penny stock. It's a junior oil company. I found it using a screener. After a bunch of reading, researching their two leases, and a couple of months time, I tried to buy $10K of this stock in late 2017 at a nice limit price. It took a couple of weeks but I got a partial fill of about 65%. The rest never filled and the order expired. This stock doesn't trade much at all. Many days the volume is 0.

    The company did a return of capital at the end of 2017 and then again in 18Q2. They literally gave me all of my money back between the two ROCs. By this point, the market cap had more than tripled since I picked it up. From there, it made two small quarterly distributions and looked like they would continue with about a 5% forward yield. It was amazing. I was pretty smug about it, at the time. lol. The price had been coming down and I wasn't in love with it so I tried to sell my stake. I ended up selling about 75% of it at about double what I paid. The rest didn't sell and I still have it. Right after I sold, they announced a discontinuance of the dividend. That caused the share price to tank. It's currently sitting at 35% below what I paid in 2017.

    When I look back, I didn't have sufficient understanding of the company to be able to take credit for any of the positive side of the outcome. I was just playing around with it. I still like it and don't hate that I own it but I look past it when I open that particular account. One day, I'll try to get my last $1200 back. lol!

    I didn't get rich off that stock. If the Saudis and Russians hadn't attacked our economy with their pumps, it would have been a nice company and would probably still be distributing. If that had happened, it would have been luck on my part. This isn't how I do it. I thought I could short circuit the management evaluation because I feel confident in my oil industry knowledge. It was a lesson in the cost of hubris.

    Your profile of investing strategies vs experience is not just a nice slice of reality, it's is my new goal.

    So, back to my stoogie, old man, companies.
     
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  8. B Russ

    B Russ Well-Known Member

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    Haha. Thanks as always. I never took your comment as a jab. More the contrary, after some reflection, wanted to be clear i wasnt trying to belittle anyone else’s stratagies.

    edit. I may also add i am living vicariously through my friend who has left pennies and heavy in the options now.
    :popcorn:
     
    #8 B Russ, Jul 29, 2020
    Last edited: Jul 29, 2020
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  9. TomB16

    TomB16 Well-Known Member

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    When I was at my last contract, Bitcoin was on everyone's lips. We would go down for coffee and every fifth word was "Bitcoin" with the odd guy chiming in with a comment about AMD. I was the oldest guy there, by a margin. They were all trading Bitcoin when they weren't searching for Pokémon Go tokens. One of the guys bought a watch that automatically found Pokémon Go tokens as he walked around, without even having the app open.

    I'm quite private about our holdings. I'm old school, I guess. Still, if I had stepped up and said, "Hey guys, check out this hospital REIT we have owned for 15 years with an average annual return of 15% that pays more dividends than your salary." they probably would have listened politely for about 8 seconds and then returned to their declarations of making 10 million dollars per second with nothing but their phone and three Pokémon coins.

    15 years... lol! That's 14.999 years longer than the attention span of some millennials. No offense. :D
     
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  10. B Russ

    B Russ Well-Known Member

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    Sorry, u were saying? I was distracted:rofl: for real. Im happy to have the emojis back! Good work!
     
  11. A55

    A55 Well-Known Member

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    I know this great stock that pays 1 million a year in dividends. You just have buy 1 billion dollars worth of shares.

    Seriously though. Some of the REIT have great returns. At first, I thought that REIT were scams. Until I learned how an REIT company works.


    Not me, a guy I know, wet his pants a little today. Apparently Anthem Blue Shield was a big winner.
     
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