TCCoA Forums banner

621 - 640 of 664 Posts

·
Registered
Joined
·
3,389 Posts

·
Registered
Joined
·
3,389 Posts
Fed Reserve Chair J Powell warns congress that mortgage defaults and evictions will increase if more fiscal aid isn't forthcoming. This is to help bend the bottom half of the K leg upward.

REITs aren't happy

Note: eviction moratoriums for non-payment of rent isn't the solution. Where are the landlords supposed to get the money to cover the rental property's mortgage. Apparently 1/3 of residential landlords make <$90K/yr.

---
We've discussed stocks as assets which could grow in the face of inflation, I think we briefly touched on gold/silver/crypto as well.

I think a lot of folks here are homeowners. If not, I suspect Q1 might be a good time to get in as rates will still be low. For those of you who already have primary homes, I think land/rental property is a diversification play worth considering if you have the funds and the energy to deal with them.
It seems like home sales are up now but in talking to some real estate friends, a lot of it stems from deferred transactions from Q1-Q2 2020 (people weren't buying or selling then). I suspect there will be a shakeout soon -- esp if some landlords are overleveraged and their income falls. I'd personally only consider places where I know someone who could manage it -- maybe SFH or college areas where you KNOW demand will eventually return.
 

·
Super Moderator
Joined
·
13,029 Posts
What? And become one of those landlords who make < 90k a year who can't get the money to cover the rental property's mortgage because of eviction moratoriums . I don't see myself picking up any rental properties anytime soon.

I am with you on a shakeout though.
 

·
Registered
Joined
·
3,389 Posts
What? And become one of those landlords who make < 90k a year who can't get the money to cover the rental property's mortgage because of eviction moratoriums . I don't see myself picking up any rental properties anytime soon.
I think you travel too much away from home to take something like this on your own BUT there are developers who will sell stakes in development projects with minimum stakes I've seen ranging from $30K-250K. Depending on the kind of deal, that can be all you risk.

General terms (every deal is different):
  • The developer discloses their plans, projected cash flows, terms, etc. Let's say you buy in and become an investor.
  • The developer puts money in on the management AND the investor side (skin in the game). The pool of money raised covers the property acquisition, remodel of said property, and a cushion.
  • Developer might take a fee for finding the deal, a percentage of the remodel for management, a fee for making the guarantees on the property, and a property management fee once the place is rented.
  • Ownership of the LLC is divided between the investors and the developers. I've seen developers take 15-30% of the equity. They did find the property and come up with the plan, after all.
  • Of the net profits that come in, a 6-8% preferred rate is given to the investors until they are paid back their principal. With depreciation, the business typically runs at a "loss" on paper (not necessarily cashflow wise) so all shareholders get a K1 with a passive loss which can be used to offset other passive income (but not stock capital gains, sadly)
  • Depending on the developer's plans, the property is either held for cashflow generation purposes and REFI'd a few years in the future OR sold off as a package deal. When the property is sold, everyone gets their money back and the losses from previous years offset the capital gains.
  • Typical deals I've seen seem to target IRR (think of this as your annual yield) including the capital gains return to be ~14-25%. It's not a liquid asset since its' tying up your chunk of money but it requires very little effort on the investors part (other than doing your due dilligence before plonking your money down).
  • Some deals involve the potential for a capital call (meaning something bad happens and they need to go back to the investors for more money) but this is where the track record of the developer comes into play.
I've known several engineers who went from engineering to doing these kind of property deals for a living. It will be interesting to see how these guys fare through this downturn and what deals they might come up with during these times. From what I understand, a lot of money which once went into commercial RE development is now flooding into multi-family homes -- driving up costs and potentially lowering possible returns. The idea of building a concrete box and then being able to rent it out to Walgreens, Autozone, etc is not as secure a way to make money work for you as it once was a few years ago.
 

·
Super Moderator
Joined
·
13,029 Posts
Thanks Gunn. I'll check that out.

Now that TSLA's battery day has had time to shake out and everyone is so ho hum on it given that it's got about a two year time horizon I'd like to say thank you for keeping the stock price down! I'll be accumulating more TSLA along the way as they become another trillion dollar company.

This commentary in this video at 9:00 where Sandy Munro is talking about the TSLA chip compared to NVDA is most exciting.

"They're not a car company... they're like Edison's lab or something; it's totally different for me." - Sandy Munro

 

·
Registered
Joined
·
3,389 Posts
Latest from my favorite dumpster fire: NKLA sued TSLA for $2B (because they need money) claiming design patent infringement on the Semi that they rolled down a hill. TSLA responds by saying that NKLA stole the design cues from RIMAC (the Croatian electric company guys who supply the battery packs to Koeniggsegg and made an EV supercar that Richard Hammond drove off the road).

This write up is hilarious.

ps. I will likely own TSLA one of these days; I'm just not going to buy anywhere near this pricing.
 

·
Super Moderator
Joined
·
13,029 Posts
Latest from my favorite dumpster fire: NKLA sued TSLA for $2B (because they need money) claiming design patent infringement on the Semi that they rolled down a hill. TSLA responds by saying that NKLA stole the design cues from RIMAC (the Croatian electric company guys who supply the battery packs to Koeniggsegg and made an EV supercar that Richard Hammond drove off the road).

This write up is hilarious.

ps. I will likely own TSLA one of these days; I'm just not going to buy anywhere near this pricing.
I was watching a TSLA review today by an analyst, he recommended waiting until after the election (NOV 4 to NOV 6 timeframe) with a target price of about $250.
 

·
Registered
Joined
·
3,389 Posts
I was watching a TSLA review today by an analyst, he recommended waiting until after the election (NOV 4 to NOV 6 timeframe) with a target price of about $250.
Let's say you want to buy at the analysts suggestion and are willing to commit the cash $250 x 100 = $25K TODAY.

One quick I've learned is that not all options available for purchase on eTrade from various exchanges are visible in all tools OR offer all prices.
You can't even sell PUTs cheaper than $300 on Nov 6. The exchange won't let you.

For Nov 20th expiration, you can sell a put for Nov 25th expiration and pocket $5.70/share. That would be $570 in your pocket for laying out $25K or 15% APY.
If the price drops below $250 by Nov 6th, the buyer of the contract will assign it to you so you'll get to own the stock at that price AND you will have kept that extra $570.

Since you are long term bullish, another way to think of it is that by committing TODAY to buy 100 shares @ $250, someone will give you 2 shares of the stock if the price falls to $250 within the contracted period.

-g
 

·
Super Moderator
Joined
·
13,029 Posts
Okay, Are you suggesting I trade options or just explaining options theory to me?

Here an interesting theory on Battery Day that makes sense. The theory is "Elon / TESLA are sandbagging." on the improvements so as not to impact current sales. The advances and timeline are better and further along than was indicated on Battery Day.

 

·
Registered
Joined
·
3,389 Posts
Okay, Are you suggesting I trade options or just explaining options theory to me?

Here an interesting theory on Battery Day that makes sense. The theory is "Elon / TESLA are sandbagging." on the improvements so as not to impact current sales. The advances and timeline are better and further along than was indicated on Battery Day.

I'm suggesting that if you really want to expand your position in TSLA, here's a way to do it and make more money while you wait.
 

·
Super Moderator
Joined
·
13,029 Posts
Ok. I really need to dig into and understand options. I take it you're a very active options trader. Thanks so much for taking the time to explain this stuff to me.
 
  • Like
Reactions: CDsDontBurn

·
Registered
Joined
·
3,389 Posts
Ok. I really need to dig into and understand options. I take it you're a very active options trader. Thanks so much for taking the time to explain this stuff to me.
I wouldn't say I'm an active trader because I'm not buying and selling contracts as a way to multiply the amount of stock my money could control. IMO, that's speculation.

Instead, I'm using this as a tool to sell insurance, or make traps, by trading off flexibility and a commitment to do something I was planning to do anyway in exchange for cash.
The most speculative actions I take would be selling some contracts at strike prices that are higher than I would normally take for crazy juicy premiums. These are for very short time-frames (1-2 weeks to expiration) so I'm betting that they won't crash by that point. If they do, I'm buying into a stock at a higher price that I want BUT this is a small chunk of my money tied in options so it's play money.
The best part is I do some research up front, set bids, and if they happen, they happen. If they don't, I don't worry about it. If I do sell the contracts, I trust my strike price and just wait for the other party to decide if they will exercise or not.

My alternative, which approx 50% of my investment net worth is doing, is sitting as cash or in bonds waiting for the next dip. All of the puts I've sold only total up to currently <10% of our net worth. At most, when I had sold puts on TSLA for Nov before the Sept puts had expired, I had maybe 13% of our net worth committed.

We've covered the academics of options several times but when you gave a concrete timeframe and a concrete strike price that you sounded excited about for TSLA, I wanted to translate that for you into a specific action you could take.
 

·
Registered
Joined
·
3,389 Posts
1) Lately (last 2-3 weeks), I've sold a few options for income with close days to expiration (DTE). The idea here is that even if the strike price is higher than I necessarily want, at least for the next two weeks I don't expect things to crash so the premiums collected are juicy enough to entice me out of my bunker. Even if I do get assigned, well, it won't be the end of the world as they are on stocks I want to own eventually and I'll still get a discount from today's pricing. Call it impatience waiting for the next correction.

2) I did find one interesting thing this weekend that I actually took advantage of this morning.
People are buying/selling stock options for TSLA with a strike price of $1 with June 17, 2022 expiration.


- I think it's pretty unrealistic to expect TSLA to EVER crash to $1 (the carcass is worth far more because they have actual tech) so there must be some kind of "managing" risk play for big companies to justify their purchase. Or, you have some real bears buying this crap just to have something "fun" in their portfolio. I have no idea why.

- However, as a seller of such options, you'd essentially pocket $3.35 ($4-contract commission) for every $100 committed for 2 years.
Q: Why should you care? That's the APY equivalent of 1.97%. Considering a 2 yr CD pays at best 1.15% and HYS accts pay less than 1% now, it's not the WORST place to park your money.
Over time, that options contract value will decay (theta decay) to 1c so you could buy back the option and free your money if so desired.

June and Sept 2021 $1 strike price currently have people making offers so in a year, you could probably buy to close your contract and pocket the difference... netting you a little more than 2% APY without having to wait until 2022 to free your money.
 

·
Registered
Joined
·
3,054 Posts
Discussion Starter #635 (Edited)
October and early November are dividends season! I can't wait to use that dividend income to further fuel my dividend holdings!

They're not going to be much, but it's definitely something. And I'll be getting enough to make my holdings little bit wider.
 

·
Super Moderator
Joined
·
13,029 Posts

·
Registered
Joined
·
3,054 Posts
Discussion Starter #637
Tesla will for sure be the first company to have a semi truck product out to market before anyone else. Others will have a product out, eventually, but Tesla is light years ahead of Tesla.
 

·
Registered
Joined
·
3,389 Posts
So my bet on FIT is inching closer to paying off.


I bought them back when they were $3.50ish udner the idea that the carcass of FIT was worth more than their current valuation.
Then GOOG tendered an offer for $7.35
They popped to $7.26. I should have sold all of it then and walked away with the 2x gain but I decided to hold onto it. When the drama about whether or not GOOG should get FIT's biometric data came into play, the price settled down to $6.35-6.55 (a discount reflecting potential regulator disproval of the deal).

Now, it seems that FIT has gotten approval from the Europeans so the price is now trading @ $7.

This wasn't a big position for me so I basically decided to let it ride until close. I've gone "all-in" and also sold Calls on all my shares (basically selling contracts to geniuses who think that somehow, either 1- someone will offer MORE than GOOGLE for FITBIT or 2- the deal will get cancelled and THEN FITBIT will miraculously recover above google's $7.35 offer).

As mentioned a few months ago, I thought that at $6.35 the ~15% discount from GOOG's offer was worth dropping money in and letting it ride for 2020. However, now, you can decide if the risk is worth the current 5% discount.
 

·
Registered
Joined
·
3,389 Posts
A friend passed these two articles to me that I wanted to share:
basic gist - more detailed explanation on how Softbank used their billions to buy calls on the stock market on all the popular 2020 meme stocks and drove up the prices on their existing holdings. Essentially, they were a PE fund acting like a retail RH investor

Less technical, easier to read

Goes into the underlying activity. Even if you don't want to read it, take a look at the pretty charts :)

I had heard about SB acting like a whale in the options market (normally quieter in the summer). What was news to me was that options trading this summer in the big meme stocks (TSLA, AMZN, FB, AAPL, NFLX) exceeded that of retail investors.

What goes up well beyond the underlying value.....
 

·
Registered
Joined
·
3,389 Posts
Interesting article I found today
US personal savings rates (aka how much of your gross do you save away) has historically been between 6.5 - 8% for quite a few years. This is a good deal less than previous generations
In the middle of the first lock down, it spiked to 33% as people curbed spending and hoarded cash.
As of Aug (latest data), its still far above average at 14.5%.

For comparison its 47% in China, 37% in Ireland, and places like Norway, Sweden, Netherlands, and Switzerland all are in the 30s.
We spend a LOT more money than in other countries.
Clearly, we aren't spending as much now.
How much will this affect our recovery?
 
621 - 640 of 664 Posts
Top