Markets taking a beating: time to buy?

[ChaharMahal]

They did not have even have to lend back to normal people.

they could just borrow money at 0% using the discount window turn around and buy 1,2,10 year treasuries depending on their risk appetite.

by the way the QE and interest rates are related but they are not the same. QE was sort of unprecedented Fed Action Similar to TARP which was unprecedented (at that scale) for treasury to do.

 

[Bache Tehroon]

Looks like it's bouncing back at this point. I didn't put my money where my mouth is this time. I didn't buy shit

 

[ME]

Looks like it's bouncing back at this point. I didn't put my money where my mouth is this time. I didn't buy shit

IMO your money is safer this way. This market will take time to recover. Your best bet is investing on individual companies that you predict they will beat the market. I sold everything I had except select companies 2 weeks ago and will not buy before the mid Esat, and ebola issues are settled and before hearing good news on retail this holiday season. There will be bad weeks to follow.

 

[Dr Strangemoosh]

Some people are making a wad of money from these stock market fucktuations.

 

[ChaharMahal]

Some people are making a wad of money from these stock market fucktuations.

don't be fooled. those by in large professional hedge-funders.

you will never be able to have that success. and if you do please rest assured that you were just lucky.

 

[Bache Tehroon]

Some people are making a wad of money from these stock market fucktuations.

The average investor has no shot at timing these things. Best bet is to ride the waves and look for unfounded panics.

Oil for example is too cheap right now. There is no way oil will remain below $100 in the next 5 years. There is no replacement for it (not by a long shot). The world economy can easily handle oil at $200 if push comes to shove.

 

[Playboy]

luck has very little to do with making money in the markets.what you
need is a deep understanding of the markets and all the instruments
available to you to make money in a bull or a bear market.like every other
line of work if you work hard you will get rewarded.most iranians want to
make money the easy way and do not put it the hard work needed to
research and screen stocks to find good value.so when they lose in the
market they blame luck.here is an example you can trade right now.
gpro is a hot stock that is trading in the low 70s today.it is very volatile
which means you get good premiums on it's options.but it is a good long term
stock to own since they got a very hot product.the simple way is to go and
either short or buy the stock and depend on 'luck' to make money.the sophisticated
way is to play it through options.i want to own this stock but i think it is too high.
so what i can do is to sell some put options.for example i can sell jan15 $50 put
options for about $6 a contract right now.let's say i sell 10 of these contracts that
means i get $6000 right now.if by jan15 gpro stock price is above $50 the options
expire and i have made $6000.if the price is below $50 then i have to buy 1000 shares
at what ever price it's t but i get $6 discount even on that price since i already got $6000.
so if gpro is at $45 i am effectively buying it at $45-6=$39 a share.this is how you go
about buying a stock you want to buy but do not know when to buy it since it might
fall further.it sure beats buying gpro at $70 right now and then blame 'luck' for the loss
if the price falls to $50 next year.

 

[ChaharMahal]

oh thank you for making it sounds so simple. now every dude off the street can go out and do this.
I am assuming you are talking about naked puts.
in which case you are subject to Margin calls, Fed calls and load of other regulations you would not be aware of.

and if you are talking a covered put then I am putting forward 300K which means you made 2% in three month and 8% on an annualized basis.
That's of course assuming go pro is around come January.

 

[Playboy]

oh thank you for making it sounds so simple. now every dude off the street can go out and do this.
I am assuming you are talking about naked puts.
in which case you are subject to Margin calls, Fed calls and load of other regulations you would not be aware of.

and if you are talking a covered put then I am putting forward 300K which means you made 2% in three month and 8% on an annualized basis.
That's of course assuming go pro is around come January.

no.you need to educate yourself about options.first of all you need to be qualified by
your broker to trade options.they usually let you do covered or naked calls easy.next you
need to be qualified by them to sell puts.that requires a few years of trading experience.
as far as margin goes,they would probably not let you sell puts on margin anyway.they
require cash for that.finally you do not need $300k to do the trade i mentioned.you need
only enough cash to cover the strike price in this case only $50k.i leave as an exercise
for you to do the rest of the math and figure out how much you make.you are typical of
most iranians who insist on not learning the tricks of the trade because it is complicated and
requires paying some attention but it is ok i am just trying to show the folks here on how
the pros do trading.maybe a few will pay attention.

 

[ChaharMahal]

i got the math wrong; my bad.

I have actually sold plenty of covered puts for banks.

but the point still remains you are not selling puts on Johnson and Johnson here.

you are selling puts on a company with no past and one that has no clear future.

the risk premium is there for a very good reason. remember black berry the charlatan cramer used to call it
the four horseman of tech back 6 years ago.

writing put options is indeed very dangerous only less dangerous than shorting and writing long options.

 

[Playboy]

i got the math wrong; my bad.

I have actually sold plenty of covered puts for banks.

but the point still remains you are not selling puts on Johnson and Johnson here.

you are selling puts on a company with no past and one that has no clear future.

the risk premium is there for a very good reason. remember black berry the charlatan cramer used to call it
the four horseman of tech back 6 years ago.

writing put options is indeed very dangerous only less dangerous than shorting and writing long options.

yes i understand the risk factor.but this trade is for those who want to buy gpro and are looking
for an entry point.since gpro is risky and the market is funky these days it is a lot riskier to buy
gpro outright at this point.with this trade you give the stock until jan17,2015 to evolve.if it keeps
going up you made some money.if it goes down then you have bought it at a much lower price
than you would have bought now and saved a bundle.the point is if you want to buy a stock that
you think have a good future ahead of it in a volatile market it is a lot less riskier to sell the put
than to buy it at current prices.

 

[Bache Tehroon]

yes i understand the risk factor.but this trade is for those who want to buy gpro and are looking
for an entry point.since gpro is risky and the market is funky these days it is a lot riskier to buy
gpro outright at this point.with this trade you give the stock until jan17,2015 to evolve.if it keeps
going up you made some money.if it goes down then you have bought it at a much lower price
than you would have bought now and saved a bundle.the point is if you want to buy a stock that
you think have a good future ahead of it in a volatile market it is a lot less riskier to sell the put
than to buy it at current prices.

I understand your point about entry points, but just for the sake of presenting an opposing view, isn't the "want" in your context associated with "now"?

On Jan 17, 2015, if GoPro has indeed dropped below $50, chances are it's become quite a downward mess. It might be worth $20 and yes you will end up buying it for $14, but at that point that's a totally "unwanted" asset.

In contrast, someone who has been waiting for an entry point on GoPro, would probably drop the idea altogether if the stock was facing a downward trend like that.

Overall, I agree that this is a better strategy than buying outright when it comes to most stable stocks.

 

[Playboy]

I understand your point about entry points, but just for the sake of presenting an opposing view, isn't the "want" in your context associated with "now"?

On Jan 17, 2015, if GoPro has indeed dropped below $50, chances are it's become quite a downward mess. It might be worth $20 and yes you will end up buying it for $14, but at that point that's a totally "unwanted" asset.

In contrast, someone who has been waiting for an entry point on GoPro, would probably drop the idea altogether if the stock was facing a downward trend like that.

Overall, I agree that this is a better strategy than buying outright when it comes to most stable stocks.

yes i want to buy gpro but i think it is overvalued now and i think $50 a share is a more
reasonable valuation for it as things stands.hence the selling put strategy.of course you
have had to do your research and convince yourself that gpro is something you want to
own in your portfolio otherwise why even bother.the point is if i am wrong and gpro keeps
going up i make some money to ease the pain.and if i get to buy it then i buy it at a price
that my research tells me is a good price.and btw you won't get that level of premium
for a 'stable' stock.for example aapl jan15 put option for strike price of $77 will get you only
50 cents per contract.it is now trading at $97.

 

[ChaharMahal]

The Markets are taking a dump on Amazon once again.

if you have some money you can forget about for ten years. 270ish is not bad entry points

for a two trick pony. Big Worldwide retailer. A play into cloud computing.

The downside being That cloud alone will take 4-5 billion worth of investment annually.
that is not to mention all the investments into the e-commerce business.

so this company will likely never be cash flow positive for another 10 years.

 

[Bache Tehroon]

Amazon is ripe for a take over. I don't know who will do it, but someone should. Walmart?

If Alibaba wasn't such a shady company, I would say they're the natural predator for Amazon.

 

[ChaharMahal]

the company is too large for any takeover. any takeover will likely have to pay 250 billion for it.
and no body has that kind of money lying around.

as far merger goes it won't work with a retailer because only walmart is big enough to digest Amazon.
and justice department won't allow that.

as for tech merger goes. Only Microsoft, Apple, Google have the kind of Balance sheet that would allow such a merger
but justice department will likely block that as well.

merger with Ebay. No No Justice will block that.

I can't see Bazoz selling the company. but even if the offer was sweet enough justice department will force them
to divest of one of the business they are in.

 

[spinhead]

Is there anywhere one can download historical stock market prices data for free? I am interested in doing some time-series and correlation analysis on them. I bet one can identify features that can be exploited to predict future trends. For example, one may postulate that when oil companies stocks drop to due drop in oil prices, airlines stocks would go up because their main cost is fuel. I would like to be able to test these things.

 

[Bache Tehroon]

Is there anywhere one can download historical stock market prices data for free? I am interested in doing some time-series and correlation analysis on them. I bet one can identify features that can be exploited to predict future trends. For example, one may postulate that when oil companies stocks drop to due drop in oil prices, airlines stocks would go up because their main cost is fuel. I would like to be able to test these things.

There are thousands of companies that do just that and not a single one of them has been able to properly exploit the technical aspect on a consistent basis. If they could, they would be famous.

Heck I've been doing it on a single stock that has existed for 30 years and I know the company very well and out of 10 predictions my model makes, 5 turn out to be false!

You'd spend your time much more wisely if you simply diversified your money among all sectors.

Years ago, I wrote a very well-thought-out script for Canadian$/U$ exchange rate fluctuations and applied to automatic forex trades. It did well for a few days and then it didn't. I know of some scripts that have been consistently producing profits for months, but I wouldn't invest a single penny in any of them because they could collapse within minutes if something goes wrong with the markets (and it does quite often).

 

[spinhead]

There are thousands of companies that do just that and not a single one of them has been able to properly exploit the technical aspect on a consistent basis. If they could, they would be famous.

Heck I've been doing it on a single stock that has existed for 30 years and I know the company very well and out of 10 predictions my model makes, 5 turn out to be false!

You'd spend your time much more wisely if you simply diversified your money among all sectors.

Years ago, I wrote a very well-thought-out script for Canadian$/U$ exchange rate fluctuations and applied to automatic forex trades. It did well for a few days and then it didn't. I know of some scripts that have been consistently producing profits for months, but I wouldn't invest a single penny in any of them because they could collapse within minutes if something goes wrong with the markets (and it does quite often).

Yes I know a lot of people do this. I believe data mining is the mathematical basis for algorithms used by robot traders. The proper way to test scripts would by cross-validation where you split you data say into 10 parts and use 9 parts to predict the 10th part to prove that you have do significantly better than chance (50%) and also estimate your variance.

My question was do you know where I can get download some of this historical data for free?

 

[ChaharMahal]

I am not sure what sort of data you are referring to.
if you mean equity prices for stocks at the end of day.

I am pretty sure that can be obtained for free or nominal price from a provider.

however I believe what you point to for robots is far more complicated.
They have written millions of lines code to take multitude of variables into account.

Macro picture things like Prime interest rate,inflation, monthly department of labor job data,census data, real estate prices, commodity prices
more obscure things like weather, Risk index
Historical prices.
current stuff: volume, news release,...

and usually the system does not take action based on machine learning. it takes actions based on thesis input into the system.