Stock Market 2022 except we just talk about stocks

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www.cnbc.com

Dow closes at its lowest level of 2022 so far, S&P 500 drops further into correction territory

Stocks fell sharply once again Wednesday, as escalating tensions between Russia and Ukraine push the major averages to fresh lows for the year so far.
www.cnbc.com www.cnbc.com


S and P 500 of 4200 or less remains the target to buy if we get another shot at equities at great prices. I remain a buyer below 4200 and so should you if you believe in the US stock market longer term.
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I have no idea where stocks end the year for 2022. What I do know is that the odds heavily favor a 10-15% increase on the S and P 500 from these levels over the next 2 years. Do you have other investments likely to make that level of return over 2 years? Gold? Crypto? Real estate? All of them are riskier than the S and P 500 with only Crypto being your "lottery ticket" to wealth. Inflation is likely to exceed 5-6% over the next 2 years so CDs/Cash are money losers leaving the S and P 500 as the investment of choice.

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I'm curious to see how all those option traders have been doing these days, especially that psychiatry attending that was here earlier.
 
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I think this is a good lesson on how difficult it is to time market. Gotta get it right twice.
 
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I've been selling covered calls and closing with profits. (I'm a MS. Hopefully you all are ok with me posting here.)
 
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A recession is always a possibility in the future. But, they are just temporary setbacks so buying stocks "cheaply", below 4200, makes good fiscal sense.

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linkin06 said:
I think this is a good lesson on how difficult it is to time market. Gotta get it right twice.
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Like I have posted over and over again you set aside a % of your money for pullbacks/bear markets/recessions. You dollar cost average the vast majority of the time. A 80/20 mix or 90/10 mix is appropriate for a young investor. My allocation is much different so I take advantage of these drops which lowers my risk as an investor. Everyone should be deploying available cash when the market tanks if they believe in the USA long term. When the market gets expensive like it did in the Fall of 2021 I went to cash with my new money waiting for a pullback. There is always a pullback when valuations get stretched like they did in 2021. The riskiest assets with little or no earnings were clearly ridiculous in terms of price and when inflation gets factored in to the equation investors came to their senses. This is NOT the case with the best companies in the USA. Those with great earnings and reasonable valuations can be bought when investors throw them out along with the trash.

Things move very fast day these days. What used to take a week or two to play out in the stock market takes hours or a day. For example, on Thursday the extreme bearishness was recognized by investors on the open. They saw the disconnect between earnings and stock prices. Hence, despite the war breaking out they snatched up stocks like a sale on Black Friday. This typically would have taken a day or two at least to play out a few years ago. The opportunity to buy stocks super cheap will only happen briefly (like Thursday) or when the market perceives a true threat to earnings going forward. That means a real recession is happening or going to happen so the earnings for companies will get decimated.

If the Fed tightens by 4% points that could lead to a recession. This would cause several months of pain in the stock market with very low equity prices. BUt, how long until the Fed reverses course and saves the day once again? A week? A month? Recently, the Fed has been very active in propping up stock prices by cutting rates whenever a recession rears its head. This shortens the cycle dramatically and alters investing metrics.

The bottom line is buy stocks of blue chip companies when they go on sale and you will make even more money than simply dollar cost averaging all of your funds. I think an 80/20 ratio is ideal for many of you but ultimately it is your decision.
 
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I'm glad I found this thread. I've been investing in the market since I started medschool, buying high profit companies like apple, msft, etc. I have held on to those in my core portfolio and traded around others. I've had gains of 40-65% annually in my portfolio all 3 years of medschool.

In other posts on SDN, I have advocated to other medstudents to learn and start getting their feet wet by researching how to manage their money so that when they start making attending money they can manage their own money and would not need to shell out financial advisor fees. I have been ridiculed by other posters on those threads for this advice. Oh well.
 
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HopelessMS said:
I'm glad I found this thread. I've been investing in the market since I started medschool, buying high profit companies like apple, msft, etc. I have held on to those in my core portfolio and traded around others. I've had gains of 40-65% annually in my portfolio all 3 years of medschool.

In other posts on SDN, I have advocated to other medstudents to learn and start getting their feet wet by researching how to manage their money so that when they start making attending money they can manage their own money and would not need to shell out financial advisor fees. I have been ridiculed by other posters on those threads for this advice. Oh well.
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Depends on how much you’re allocating to individual stocks; “evidence-based” advice is usually <5% of your total portfolio. More than that is probably okay if you’re a risk taker given our level of job security and income but shouldn’t be regarded as “good” advice. Agreed that financial advisors are predators that prey on willful ignorance.

Also, three years of gains in a bull market is nothing for a 30-year time horizon. Trade with caution. I took my 2800% gains from options trading and invested everything for the long term (>10 year horizon). Haven’t touched options since and will likely never again unless I truly have throwaway money and another inkling of an “edge.”
 
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HopelessMS said:
I'm glad I found this thread. I've been investing in the market since I started medschool, buying high profit companies like apple, msft, etc. I have held on to those in my core portfolio and traded around others. I've had gains of 40-65% annually in my portfolio all 3 years of medschool.

In other posts on SDN, I have advocated to other medstudents to learn and start getting their feet wet by researching how to manage their money so that when they start making attending money they can manage their own money and would not need to shell out financial advisor fees. I have been ridiculed by other posters on those threads for this advice. Oh well.
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Yeah i started a stock game in 2017 and my 500k grew to 2.8 mil by last december from buying stuff like google and apple. Way outperformed my real portfolio. But who knows if the good times will keep rolling?
 
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I agree. I have shifted my strategy to a more conservative approach because of current events resulting in market volatility/uncertainty. I have been selling covered calls on my core holdings to lower my basis while I wait for a clearer outlook.
 
anbuitachi said:
problem with timing the market is you will still be down if it goes below the price point you bought it at. the question is what is your next step? i think timing the market is for traders =\. but i guess if you got 12k to drop on a red day then you probably dont worry about the little things :rofl:
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I have a set amount I plan on investing each year (401k, back door roth and taxable).I was meaning to invest this money at some point in taxable. When the market went temporarily down, I figured I might as well buy at a discount.

But now that it's in, it's not coming out.
 
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HopelessMS said:
I agree. I have shifted my strategy to a more conservative approach because of current events resulting in market volatility/uncertainty. I have been selling covered calls on my core holdings to lower my basis while I wait for a clearer outlook.
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selling covered calls
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anonperson said:
I have a set amount I plan on investing each year (401k, back door roth and taxable).I was meaning to invest this money at some point in taxable. When the market went temporarily down, I figured I might as well buy at a discount.

But now that it's in, it's not coming out.
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I keep plugging into my 401k and other investment accounts like normal. No changes. Just set and forget it. My outlook is gor 30 years into future. Not too worried about the noise.
 
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Well, in the short run, we always note that the price of a stock does not always equal the value of that stock. So again, price can always be influenced by short-term factors. You'll think about things like news flow with Ukraine in the headlines right now and how that impacts market sentiment. But, in our view, we think that stock prices over the long term will always converge toward their intrinsic value. In my mind, the key is really that economic moat and valuation are intertwined. So, firms with an economic moat will have a higher value than those without an economic moat, but the performance will be based on the price you pay today as compared to that intrinsic value of the stock.

That's why you'll also see examples of stocks with a wide moat that might be rated 1 or 2 stars when they're trading too far above their intrinsic value. And sometimes you'll even see a no-moat stock that can trade with 4 or 5 stars, because it's trading at a great enough discount from its fair value. In my mind, I always find that the best investment opportunities are those where you can find that combination of a high-quality business with a wide economic moat that's trading at a discount to its fair value.

www.morningstar.com

Why Are Wide-Moat Stocks Underperforming?

High-quality stocks with competitive advantages should outperform during tough markets. They aren't this year.
www.morningstar.com www.morningstar.com
 
anaesthetic said:
Depends on how much you’re allocating to individual stocks; “evidence-based” advice is usually <5% of your total portfolio. More than that is probably okay if you’re a risk taker given our level of job security and income but shouldn’t be regarded as “good” advice. Agreed that financial advisors are predators that prey on willful ignorance.

Also, three years of gains in a bull market is nothing for a 30-year time horizon. Trade with caution. I took my 2800% gains from options trading and invested everything for the long term (>10 year horizon). Haven’t touched options since and will likely never again unless I truly have throwaway money and another inkling of an “edge.”
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wow thats huge gains! congrats. what options strategies were you using. why not go back to options? even if you dont get 2800% gains annually, 100x less is still better than S&P
 
anbuitachi said:
wow thats huge gains! congrats. what options strategies were you using. why not go back to options? even if you dont get 2800% gains annually, 100x less is still better than S&P
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I realized it was all luck. Literally, 100% luck. Read the studies on the illusion of day trading and the history of “legendary” hedge fund managers whose funds cease to exist after a few years of success and many more subsequent years of failing to beat the S&P’s 7-10% over 20 years. I took my money and ran. I can now retire 5-10 years earlier thanks to compound interest, if I’m still alive after WWIII.

I did very short-term options trading with disposable income and came out on top due to pure luck. I also tried covered calls and other options strategies that never really panned out due to the time required to be managing the positions while working full-time (FYI, options trading is not worth it for retail investors).
 
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This is my covered calls strategy. I sell weeklies. I look for Delta <30% and open interests to determine my strike price. After the sale goes through, I place a limit order to close at 70-80% profit. Whether it hits the same day or at day of expiration, I book the profits. Rinse and repeat. Since I moved to this strategy, my ratio of profits to loss is 30 to 2. I had to roll out to the following week once for a loss and the 2nd loss I closed for a loss of <$40.
 
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HopelessMS said:
This is my covered calls strategy. I sell weeklies. I look for Delta <30% and open interests to determine my strike price. After the sale goes through, I place a limit order to close at 70-80% profit. Whether it hits the same day or at day of expiration, I book the profits. Rinse and repeat. Since I moved to this strategy, my ratio of profits to loss is 30 to 2. I had to roll out to the following week once for a loss and the 2nd loss I closed for a loss of <$40.
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Consider the short-term capital gains tax, the effort required to find weeklies that meet those conditions, and then managing those positions… you’re better off holding a broad market index fund long term. I tried CCs as well. Not worth the effort, IMO.
 
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I understand. I'm a medstudent and the hit I take on capital gains is minimal. I don't make attending money yet. 🙂
 
HopelessMS said:
This is my covered calls strategy. I sell weeklies. I look for Delta <30% and open interests to determine my strike price. After the sale goes through, I place a limit order to close at 70-80% profit. Whether it hits the same day or at day of expiration, I book the profits. Rinse and repeat. Since I moved to this strategy, my ratio of profits to loss is 30 to 2. I had to roll out to the following week once for a loss and the 2nd loss I closed for a loss of <$40.
Click to expand...

This looks like english but I don't understand half of what you wrote
 
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If you like, I can PM you a YouTube series from a YouTuber that will show you what I'm talking about...
 
anaesthetic said:
Consider the short-term capital gains tax, the effort required to find weeklies that meet those conditions, and then managing those positions… you’re better off holding a broad market index fund long term. I tried CCs as well. Not worth the effort, IMO.
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I do it in my self-employed 401k. The regular brokerage account I hold ETF or index funds.
 
GassYous said:
I'm just kidding I get the basic concept but not well enough that I think I can make money consistently
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nobody is making money long term with it. The people that think they can do not understand the risks. It's the old you don't know what you don't know problem.
 
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I'm not trying to have a debate on my CC strategy. Everyone here has a strategy they are comfortable with. Implying that I am ignorant is plain incorrect. Having been in the market for over 10+ years, my CC strategy is not to make money. I am using it during these times of uncertainty to lower the basis of my core holdings which I will be holding on until I retire. I am long on the market and also a proponent of buying and holding long term blue chips, and am against day trading or jumping into meme stocks FWIW.
 
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HopelessMS said:
I'm not trying to have a debate on my CC strategy. Everyone here has a strategy they are comfortable with. Implying that I am ignorant is plain incorrect. Having been in the market for over 10+ years, my CC strategy is not to make money. I am using it during these times of uncertainty to lower the basis of my core holdings which I will be holding on until I retire. I am long on the market and also a proponent of buying and holding long term blue chips, and am against day trading or jumping into meme stocks FWIW.
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if you are not investing to make money long term, you might want to change your goals
 
Ruble collapsing. Russia stock ETFs anyone? Long or short?

ERUS, RSX.
 
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HopelessMS said:
I'm not trying to have a debate on my CC strategy. Everyone here has a strategy they are comfortable with. Implying that I am ignorant is plain incorrect. Having been in the market for over 10+ years, my CC strategy is not to make money. I am using it during these times of uncertainty to lower the basis of my core holdings which I will be holding on until I retire. I am long on the market and also a proponent of buying and holding long term blue chips, and am against day trading or jumping into meme stocks FWIW.
Click to expand...

CC is a good strategy IMO. takes a while to master though unless you do it full time
 
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HopelessMS said:
This is my covered calls strategy. I sell weeklies. I look for Delta <30% and open interests to determine my strike price. After the sale goes through, I place a limit order to close at 70-80% profit. Whether it hits the same day or at day of expiration, I book the profits. Rinse and repeat. Since I moved to this strategy, my ratio of profits to loss is 30 to 2. I had to roll out to the following week once for a loss and the 2nd loss I closed for a loss of <$40.
Click to expand...

covered calls on meme stocks? lot of interest
 
HopelessMS said:
This is my covered calls strategy. I sell weeklies. I look for Delta <30% and open interests to determine my strike price. After the sale goes through, I place a limit order to close at 70-80% profit. Whether it hits the same day or at day of expiration, I book the profits. Rinse and repeat. Since I moved to this strategy, my ratio of profits to loss is 30 to 2. I had to roll out to the following week once for a loss and the 2nd loss I closed for a loss of <$40.
Click to expand...
My strategy is similar to this except I look for a delta that is just a little bit lower, also do weeklies because that delicious decay is so high. If it's above my strike Friday afternoon, I'll just buy to close so I don't get hit with short term capital gains on the long position. Has worked out pretty well over the past several years adding an extra 10-15% on my long positions without that much work. Always better to be the house instead of the gambler when it comes to options IMHO (of course, unless you're extremely lucky like a prev poster stated, or buying LEAPs to control more shares). I might start placing that limit order to close after hitting a profit goal, that's a great idea.

If there's a position I want to add to and wouldn't mind being assigned, I'll also sell cash secured puts. Of course, that's kind of a gross oversimplification.
 
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OTCAwesome said:
My strategy is similar to this except I look for a delta that is just a little bit lower, also do weeklies because that delicious decay is so high. If it's above my strike Friday afternoon, I'll just buy to close so I don't get hit with short term capital gains on the long position. Has worked out pretty well over the past several years adding an extra 10-15% on my long positions without that much work. Always better to be the house instead of the gambler when it comes to options IMHO (of course, unless you're extremely lucky like a prev poster stated, or buying LEAPs to control more shares). I might start placing that limit order to close after hitting a profit goal, that's a great idea.

If there's a position I want to add to and wouldn't mind being assigned, I'll also sell cash secured puts. Of course, that's kind of a gross oversimplification.
Click to expand...

i dont understand why cash secured puts if you dont mind being assigned. just buy those back if you dont want to be assigned?
 
anbuitachi said:
wait, a med student has enough money to cover call on APPLE? that means you got tens of thousands at least. i cant even afford that as an attending lol
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Hahaha. I've been in the market accumulating apple for quite some time. It also helps when apple splits 😉
 
OTCAwesome said:
My strategy is similar to this except I look for a delta that is just a little bit lower, also do weeklies because that delicious decay is so high. If it's above my strike Friday afternoon, I'll just buy to close so I don't get hit with short term capital gains on the long position. Has worked out pretty well over the past several years adding an extra 10-15% on my long positions without that much work. Always better to be the house instead of the gambler when it comes to options IMHO (of course, unless you're extremely lucky like a prev poster stated, or buying LEAPs to control more shares). I might start placing that limit order to close after hitting a profit goal, that's a great idea.

If there's a position I want to add to and wouldn't mind being assigned, I'll also sell cash secured puts. Of course, that's kind of a gross oversimplification.
Click to expand...
Love the theta decay on weeklies!!
 
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anbuitachi said:
other thing can do is straight up sell calls in strong companies. sell calls with low deltas. that way, you increase your profit.
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I don't have the appetite to sell naked calls. I told myself to stay away from margins.
 
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Mman said:
nobody is making money long term with it. The people that think they can do not understand the risks. It's the old you don't know what you don't know problem.
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In a decade-plus bull market it's (almost) impossible to lose money no matter what you do. Even crazy risks pay off.

The worrisome part is that lots of the people making money taking crazy risks think they're making money because they're smart.
 
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pgg said:
In a decade-plus bull market it's (almost) impossible to lose money no matter what you do. Even crazy risks pay off.

The worrisome part is that lots of the people making money taking crazy risks think they're making money because they're smart.
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i lost a lot of money in the past decade despite SP getting massive gains .. my porfolio is down ~30%
 
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