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securitiesNfinances - mostly equity/bonds/Taxes/Investments talk

  • Post #1
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  • First Post: Mar 19, 2020 3:04am Mar 19, 2020 3:04am
Hey wanted to make another thread in contrast to the futuresNoptions thread for discussing more broad portfolio plannings/allocation, taxes, overall investment direction/goals and equity market interactive long term trading.

Short version; Talk in here about long term investment goals and how not to get fucked less hard through taxes on your aggressive futures churning and intraday puts/calls and where you believe the safest and most ideal place to put your gains from aggressive moves.
I'm a US trader so this isn't going to be applicable to everyone, but here are a few things I've picked up over the years on tax minimization:

  1. Use an IRA or ROTH IRA in addition to your regular trading account. You'll never pay taxes on the ROTH and you don't pay until you withdraw on the regular IRA so its probably too far out for you to really care about it... These funds are tied down until you hit retirement age so it's a great strategy to maximize your net worth, but only use them if you don't need the money for X number of years. You can withdraw early under certain circumstances, or you can withdraw anytime you want for a hefty fee if you really need to.
  2. HSAs are worth looking into in some cases. They'll shelter you from some taxes, but I think your investment options are limited.
  3. Solo-401Ks are another possible way to minimize taxes, but I've not tried this one. You technically need to operate a company but that's very easy to do legally.
  4. Use futures to when your trade has under a 1y holding period. Equities/ETFs held under a year are taxed at your normal income rate, whereas futures are taxed lower.
  5. Avoid shorting ETFs, buying an inverse ETF is almost always better. When you short something, the IRS sees the holding period as 1 day because you buy-to-cover at the end so you're always stuck with short term cap gains regardless of how long you're actually short. Inverse ETFs allow you to go long instead so you'd have a normal holding period. They're also better in the sense that your max loss isn't unlimited when you're long.
  6. Avoid ETFs that issue K1s because they just complicate everything.

Self-sufficiency is the greatest of all wealth. - Epicurus
  • Post #3
  • Quote
  • Edited 11:00am Mar 27, 2020 7:33am | Edited 11:00am
Quoting EF5
Inverse ETFs allow you to go long instead so you'd have a normal holding period. They're also better in the sense that your max loss isn't unlimited when you're long. Avoid ETFs that issue K1s because they just complicate everything.
ill do the research but curious if this applies to derivatives on the ETFs and if it would be worth the risk of less volume for an inversed index etf that you plan on writing puts/calls on

Regardless honestly didnt even know that at all or HSAs at all either so appreciate the post

Honestly just surprised this thread got any discussion since most people want to talk only active trading and less goal-related stuff.
Investment pitch 1

Energy

Covid 19, the Saudia and Russian price war took it's toll on the energy market and is still far from over. Effecting both supply and demand the situation has created the perfect storm for a downfall in Energy. I don't know long it will last but eventually we will print higher numbers. As always timing is crucial with these type of investments.


Long term investment ideas:

Equity OIL Mayors
The Good: High dividend yield
The Bad: Energy transition, stock buy back programs are being halted and dividend might be lowered
Returns: if bought at low price 20% YTD for a few years


Short term investment ideas:

NG Futures

NG or Natural Gas is a byproduct from pumping oil. We all know when oil hit low prices wells get shutdown -> limiting production = less supply (https://www.energyexch.com/showthrea...0#post12843310).
Compared to OIL the demand for Natural Gas hasn't much been effected by Covid19 as people still need it (https://seekingalpha.com/article/433...avirus-concern).


CL Futures

OIL has been hit hard with the Covid19 were several countries are in lockdown (India for example were 1/6 of the world population lives) smashing global demand. On top of that the OPEC+ fell apart starting a price war giving huge discounts on their premium brands. The OPEC+ agreement (regarding quotas) is still respected as far as i know but will eventually stop at the end of this month. Starting of April 1 (not a joke ) OPEC+ members are not bound to their quotas and will likely start pumping oil (like Russia and Saudi Arabia mentioned) creating a massive glut of supply.

In my personal believe the price of WTI will eventually go below $20 a barrel if nothing will happen. This situation creates an opportunity for traders like us. Eventually these low prices aren't sustainable and production will be cut down further creating more balance between supply and demand resulting in higher prices.




Buy Low Sell High
persistence and determination alone are omnipotent
Quoting renNstimpy
{quote} ill do the research but curious if this applies to derivatives on the ETFs and if it would be worth the risk of less volume for an inversed index etf that you plan on writing puts/calls on
I'm curious too now that you bring it up. I've never held options for over a year so it's always been short term gains (or losses lol) for me.
Quoting renNstimpy
Regardless honestly didnt even know that at all or HSAs at all either so appreciate the post Honestly just surprised this thread got any discussion since most people want to talk only active trading and less goal-related stuff.
This is a great and often underappreciated topic for discussion.
Self-sufficiency is the greatest of all wealth. - Epicurus
Quoting Ll1979
This situation creates an opportunity for traders like us. Eventually these low prices aren't sustainable and production will be cut down further creating more balance between supply and demand resulting in higher prices.
That's an astute point you bring up. Long term the excessive supply we're seeing could reduce production capacity and will certainly reduce investment so it does reason that down the road we might actually have a big run-up in oil prices.

In practice, I'm not sure how to actually take advantage of this. It seems too risky to bet on an oil company that may or may not survive. Betting on a distant CL contract might work depending on what contango is like.
Self-sufficiency is the greatest of all wealth. - Epicurus
Quoting EF5
{quote} That's an astute point you bring up. Long term the excessive supply we're seeing could reduce production capacity and will certainly reduce investment so it does reason that down the road we might actually have a big run-up in oil prices. In practice, I'm not sure how to actually take advantage of this. It seems too risky to bet on an oil company that may or may not survive. Betting on a distant CL contract might work depending on what contango is like.
I actually can see some oil companies getting bailouts and are insanely undervalued at the moment I would be cautious but yeah.

The same goes for a few others sectors. I think we'll still see abit more red on spx, but in my opinion there are many sectors are that are extremely discount.

For liquidity and active trading though CL futures is the best for risk-reward I think atleast.
Quoting EF5
{quote} That's an astute point you bring up. Long term the excessive supply we're seeing could reduce production capacity and will certainly reduce investment so it does reason that down the road we might actually have a big run-up in oil prices. In practice, I'm not sure how to actually take advantage of this. It seems too risky to bet on an oil company that may or may not survive. Betting on a distant CL contract might work depending on what contango is like.
I agree small oil companies will likely not survive if the current market conditions will last another year. That's why i consider buying some stocks in an international oil mayor like Royal Dutch Shell for example with a strong balance sheet. I expect an annual return of 20% excluding dividend for the next few years.
persistence and determination alone are omnipotent
Quoting Ll1979
{quote} I agree small oil companies will likely not survive if the current market conditions will last another year. That's why i consider buying some stocks in an international oil mayor like Royal Dutch Shell for example with a strong balance sheet. I expect an annual return of 20% excluding dividend for the next few years.
Well said, current plan as I said on other board is just to slowly get more and more into equity while active trading.

I cant time /es for shit anymore since fed started printing, some commodities have been nice trading. But yeah, considering looking to treasury futures as well but in smaller amounts since I never got too deep into trading treasury futures
Quoting renNstimpy
{quote} Well said, current plan as I said on other board is just to slowly get more and more into equity while active trading. I cant time /es for shit anymore since fed started printing, some commodities have been nice trading. But yeah, considering looking to treasury futures as well but in smaller amounts since I never got too deep into trading treasury futures
I understand the problems your facing with /es hope we get another dip to load some stocks. Current stock price levels aren't that high but corona is far from over yet so not buying at the moment although i might regret it.
persistence and determination alone are omnipotent
Quoting Ll1979
{quote} I understand the problems your facing with /es hope we get another dip to load some stocks. Current stock price levels aren't that high but corona is far from over yet so not buying at the moment although i might regret it.
I’m right there with you. The odds strongly favor at least a retest and I plan on putting some big trades on when it happens.
Self-sufficiency is the greatest of all wealth. - Epicurus
Quoting EF5
{quote} I’m right there with you. The odds strongly favor at least a retest and I plan on putting some big trades on when it happens.
Yeah rough at times like this, hate just sitting here with massive uncertainty and liquid. Anxious as fuck lol

Just gonna think outloud for a second and not rush a trade dont mind me

Most people are chasing that catalyst movement and prefer discussing that topic because its the faster opportunity maker.

But wanted to atleast try to start some discussion about longterm in terms of general market predictions and what the best course of action would be

The more data I look at the more I consider the idea that we are currently in 1-2 possibilities and would love to hear in each scenario what everyone would be speculating on.


1. 08 Was the start of a global depression that we are currently still in.

I would cite unemployment, social and political division. Unemployment, standards of living, birth rates, alcohol/drugs related mortality rates, wealth gaps mainly between 60%/40% households.

These are all standards of a depression, and while so many people cling to the idea that "its gonna be like that"

Few people realize that its never an overnight event, times progressively get worse and worse. And with all the advancements in technology and standards of living, just like the depressions before the 1930s had been much more extreme. This is the face of a depression currently.

In this scenario; I would hedge extremely allocated positions on essential sectors that have above average p/e

Certain sectors would be considered a obvious bubble in retrospect years later, sectors where the p/e is more tame would in theory if im not mistaken?

Equity/Assets are senior to currency.

2. 08's bear market was fucking crazy and future bear market predictions cannot be properly weighted to 08

When I think back to around 08 it absolutely blows my mind how bearish some of those drops on a grand scale were in retrospect.

- Interest rates hitting 0
- SPX bottoms at -50% value on a DXY at 88
- Home foreclosures, bankruptcy filings, the list goes on and on

I wasnt trading around that time frequently, so its hard to say how I would react to some of that. Because I cant honestly say but even making that same prediction argument on these next few months would seem like level 15 - gold bug fear mongering.

This scenario would have bears in for red since 08 would leave peoples target disproportionate as many people still cite 08 as main data for speculating bottoms.

Which makes sense since the further back you go the less relevant data becomes with modern means and globalization

Doomsayers would get crumbs as large cap that brings international revenue recover much faster than pessimism speculated on

In this event, the people citing old data wouldnt prove to much use since alot of historical data is weighted with currencies that didn't have the same values as the dollar.

Currency is senior to equity/assets.
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Quoting renNstimpy
{quote} Yeah rough at times like this, hate just sitting here with massive uncertainty and liquid. Anxious as fuck lol Just gonna think outloud for a second and not rush a trade dont mind me Most people are chasing that catalyst movement and prefer discussing that topic because its the faster opportunity maker. But wanted to atleast try to start some discussion about longterm in terms of general market predictions and what the best course of action would be The more data I look at the more I consider the idea that we are currently in 1-2 possibilities...
1. I really don't see 2008 as the start of a global depression. Markets and GDP have all done fantastic since then and I just don't see 2008 as connected to this.

2. 2008 seems to be the best historical model since the price moves were somewhat similar, the economy was damaged (unlike 1987), and there was competent leadership then (unlike 1929.) Its not a good fit, but its about the best we've got right now.

I was trading back then and I'll tell you this time doesn't seem remotely similar, yet. In March 2009 the prices were just unbelievably low. There were companies I followed that were trading down over 90% so to see something that was at $50 now trading at $5 was just crazy. Its not like it was one stock either, there were a long list of them like that. You could say we're kind of like that now with hospitality, oil, or even bonds, but realistically the same amount of pain just hasn't been inflicted. At our 2020 low, the S&P was trading at prices not seen since... 2017. Not that long ago. In 2009 the market was trading at 1996 levels by comparison. I would walk outside after the Dow was down 700pts (used to be a lot) and be like, "Why's the sky still blue? Don't those birds chirping know the world is coming to an end?" I'm still writing off losses from that year, but I was fairly new to trading back then and the education we get in the markets isn't free!
Self-sufficiency is the greatest of all wealth. - Epicurus
Quoting EF5
{quote} 1. I really don't see 2008 as the start of a global depression. Markets and GDP have all done fantastic since then and I just don't see 2008 as connected to this. 2. 2008 seems to be the best historical model since the price moves were somewhat similar, the economy was damaged (unlike 1987), and there was competent leadership then (unlike 1929.) Its not a good fit, but its about the best we've got right now. I was trading back then and I'll tell you this time doesn't seem remotely similar, yet. In March 2009 the prices were just unbelievably...
Agree with you that 08 is the best template for a modern recession but Ill say rough template at best. Especially when using it to navigate what is currently happening. 08 could be worse, or maybe just the start who knows with this virus shit and unemployment claims

Still just planning on doing what I pm'd you with awhile back

Wild market, goodluck!
Quoting renNstimpy
{quote} Agree with you that 08 is the best template for a modern recession but Ill say rough template at best. Especially when using it to navigate what is currently happening. 08 could be worse, or maybe just the start who knows with this virus shit and unemployment claims Still just planning on doing what I pm'd you with awhile back Wild market, goodluck!
I remember back in 2008/2009 AAPL was a special case that traders kept propping up. No matter how bad the news got, the market just wouldn't let it go down and everybody was watching it. This actually is a common phenomenon for everybody to watch one stock and vigorously defend it. When I was researching the Kennedy Slide back in 1962 the stock everybody was watching then was AT&T... My point is, I'm looking for a stock like that to emerge this time around because they're usually a good stock to buy.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • Post #16
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  • Edited 5:07am Apr 10, 2020 4:21am | Edited 5:07am
21 was amazing buying range, wish I went deeper.

Well enjoy your weekend everyone, im gonna do absolutely nothing at all
Quoting renNstimpy
21 was amazing buying range, wish I went deeper. Well enjoy your weekend everyone, im gonna do absolutely nothing at all
Have a great weekend renNstimpy!
Self-sufficiency is the greatest of all wealth. - Epicurus
  • Post #18
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  • Last Post: Apr 10, 2020 10:40pm Apr 10, 2020 10:40pm
Quoting EF5
{quote} Have a great weekend renNstimpy!
monday please just hurry up and get here, actually depressing how empty life is when the market is closed.

All work and no play? No social life? Who knows who cares, weekends fucking suck
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