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Markets still falling like whoa

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1 minute ago, Storm the Field said:

He's gonna really have to tighten his belt. 

Alimony ain't cheap

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https://www.bbc.com/news/business-51441344

“Nissan is the latest car maker to temporarily shut one of its factories as it can't get parts from China.

The firm will halt production for two days at a plant in Japan which makes the Serena and X-Trail models.

Global car brands are facing similar disruptions as much of China's manufacturing sector remains locked down due to the deadly coronavirus.

Hyundai temporarily closed its factories in South Korea last week due to a shortage of Chinese parts.

In fact, many of the world's biggest car makers are dealing with dwindling supplies as factories across China remain closed.

China is the world's manufacturing powerhouse and a major part of the global supply chain for the automotive industry, making key parts and components. Hubei, where the coronavirus outbreak first started, is a major car manufacturing hub.”

———-

Another week and things get really interesting.   

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So China shutting down their economy...no biggie?  I don't get it.

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1 hour ago, WBT said:

So China shutting down their economy...no biggie?  I don't get it.

Yeah, kinda big.  And Foxconn just shot down a Reuter’s report about them restarting everything this month.  

https://www.reuters.com/article/us-china-health-foxconn/foxconn-says-recent-reuters-reports-on-factory-resumption-in-china-were-not-factual-idUSKBN20704F

Quote

Taiwan’s Foxconn said on Thursday that recent Reuters reports on its plant resumption plans in China were not factual.

Quote

“Recently, Reuters reports on the group’s overall resumption schedule for the mainland China plants are not factual, and Hon Hai hereby clarifies it,” Foxconn said in the statement. 

“In the past, the aforementioned media’s reports related to the group’s mainland China plants resumption are mostly not factual,” it said, adding that the reports have caused “misunderstandings and difficulties for employees, investors and the general public.”

Even if they got the workers into the barracks/dorms/whatever, they have to go through a 14-day quarantine process before they can be on the production line.    March sounds like the earliest they can be up and running.  And that’s assuming more cities don’t go under martial law, and folks aren’t restricted to their homes.  

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A financial advisory firm of a relative has a hedge in place to protect downside movement of the market when it is greater than a 20% drop. I think they said they are buying out of the money puts?

I asked them to send me details on how the hedge is constructed and how it starts working only after 20% down. Anyone have any idea?

If I wanted to hedge, is the simplest way just to buy out of the money puts on the S&P 500? I understand options but have never actually traded them except for some long term calls I’ve bought in the past.

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They are starting to completely lock down entire cities in China - no more “one family member can visit stores every other day”. You will be arrested if you leave your home, etc. and now companies that rely on China are starting to say “yeah, going forward to March and beyond, things might be bad for us.”

And the new rules going into effect last night and this morning are going to prevent a shitload of people from even making it to the factories.  

Edited by atomheartbevo

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3 hours ago, atomheartbevo said:

They are starting to completely lock down entire cities in China - no more “one family member can visit stores every other day”. You will be arrested if you leave your home, etc. and now companies that rely on China are starting to say “yeah, going forward to March and beyond, things might be bad for us.”

And the new rules going into effect last night and this morning are going to prevent a shitload of people from even making it to the factories.  

The supply chain risk hasn't been priced in.  Chinese imports have long lead times.  They're producing toys for the Christmas season right now.  If that shuts down, Q4 risk is YUGE.

Isaac Larian is a toy guy and he's been screaming about this all over the Twitter machine:

 

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4 hours ago, Aqua Buddha said:

The supply chain risk hasn't been priced in.  Chinese imports have long lead times.  They're producing toys for the Christmas season right now.  If that shuts down, Q4 risk is YUGE.

Apple has supposedly been shuffling the March/April launches to Taiwan and India, but those are on a smaller scale, and the engineering prep work is done, and the production has started.

Apple  hasn’t been able to send design and engineering people to China to prep for the iPhone 11 successor launching in September, as well as Macs, iPads, etc..  Another month or two of delays, not even talking about actual production ramping up, and Apple’s fall launches get pushed into 2021.  

But wait, there’s more!   The auto production problems are apparently really about to kick in, and that could shut down autos coming into the US, as well as domestic.    It won’t just be Nissan either   

It’s easy to focus on phones and computers, but it doesn’t take many imported auto parts drying up to shut down a lot of production lines around the world.   

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10 hours ago, Dbeasy said:

A financial advisory firm of a relative has a hedge in place to protect downside movement of the market when it is greater than a 20% drop. I think they said they are buying out of the money puts?

I asked them to send me details on how the hedge is constructed and how it starts working only after 20% down. Anyone have any idea?

Pretty simple -- buy puts with a strike price 20% below current market/stock price.  Puts will expire worthless if the underlying instrument hasn't dropped 20% or more at expiry.  (Technically, 20% plus the price of the put.)  In the meantime, the value of the puts will probably ebb and flow, climbing on down days, dropping on up days.  The overall trend will be towards zero unless the underlying tanks.

My experience with hedging has always been difficult at best.  You're trying to protect an investment, so even when the hedge starts to pay off, it's difficult to decide when to take profit (on the hedge).  Obviously, once you sell those puts, your long investment is no longer protected.  Some would suggest taking profits and buying new puts another X% below current market price.

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This advisor said the hedge reduces annual returns 2-3% in exchange for the protection over a 20% drop. Worth it if you are in retirement?

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For anybody keeping track, Shanghai is starting to build temporary hospitals.  I hear Shanghai is kinda important in the finance world.  

Edited by atomheartbevo

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25 minutes ago, HRSchenker said:

Oil stocks getting crushed lately. BP and RDS.A both down but that dividend looks sweet

It's a trap.

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18 hours ago, atomheartbevo said:

For anybody keeping track, Shanghai is starting to build temporary hospitals.  I hear Shanghai is kinda important in the finance world.  

Also the site of Tesla's gigafactory, but the stock still over $800 because of paradigm shifts and whatnot. 

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1 hour ago, HRSchenker said:

Oil stocks getting crushed lately. BP and RDS.A both down but that dividend looks sweet

BP's dividend is fairly certain as many UK pensioners rely on it so they have immense govt pressure to get it steady. They still haven't grown it back to the level pre-spill but it was probably close to unsustainable at that point anyway.

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On 2/13/2020 at 1:11 PM, workswithseed said:

Well your answer did clear something up.

The "greater fool theory" is that there is always someone with less information than you to whom you can sell a shitty stock or security.  That person is the greater fool.

When things get priced so high that it seems there is nowhere to go but down, a rational person begins to wonder where is the greater fool to whom I can sell out of this market on the way down.

It's kind of like, meet one asshole, you met an asshole; meet assholes all day, you're the asshole.

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2 hours ago, Colonel Sanders said:

Also the site of Tesla's gigafactory, but the stock still over $800 because of paradigm shifts and whatnot. 

Tesla just announced a recall for early Model X's . Better up that price to $900.

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5 hours ago, Tailgate said:

SPCE FTW

Up 21% today.

 

49 minutes ago, TwiceHorn said:

The "greater fool theory" is that there is always someone with less information than you to whom you can sell a shitty stock or security.  That person is the greater fool.

When things get priced so high that it seems there is nowhere to go but down, a rational person begins to wonder where is the greater fool to whom I can sell out of this market on the way down.

It's kind of like, meet one asshole, you met an asshole; meet assholes all day, you're the asshole.

Thank you.

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21 hours ago, Dbeasy said:

This advisor said the hedge reduces annual returns 2-3% in exchange for the protection over a 20% drop. Worth it if you are in retirement?

Sounds like a low cost, but I may have numbers in mind related to hedging a 10% drop, not a 20% drop.

It's absolutely true that hedging costs money most of the time.  If you implement a straddle (long call plus long put, both at the money), which pays a profit if the underlying moves EITHER way greater than a certain amount, then you can generate a net profit.  Hedging a long stock/ETF position to generate a pseudo-straddle would presumably require 2 puts per 100 shares, purchased at the money.  Such a position will typically lose money in a sideways or churning market, but if it's put in place before a rocketship move one way or the other, then yay, profit.  If that rocketship is "up", you would have been better off not purchasing the puts.  If it's "down", then good for you, your hedge worked out well.

Edited by jimmyjazz

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7 hours ago, Colonel Sanders said:

Also the site of Tesla's gigafactory, but the stock still over $800 because of paradigm shifts and whatnot. 

Couple of more cities in Hubei province just went on lockdown.   Things ain’t getting better.    Will be interesting to see how the auto and electronics stocks do next week.   

Edited by atomheartbevo

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7 hours ago, TwiceHorn said:

It's kind of like, meet one asshole, you met an asshole; meet assholes all day, you're the asshole.

Nominated for board motto. 

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1 hour ago, atomheartbevo said:

Couple of more cities in Hubei province just went on lockdown.   Things ain’t getting better.    Will be interesting to see how the auto and electronics stocks do next week.   

Long weekend makes me nervous. Tried to move some stuff but couldn’t connect during trading hours. 

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Looks like the vaccine has been developed - couple of reputable sources for the news. At least that’s good news coming out of the weekend.

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Anyone here using Webull? I had been using Robinhood for several years but just got on Webull a couple of weeks ago and it makes a nice companion to Robinhood and allows margin trading but not options at this time. It seems to have more analytical information available quickly but not as quick to submit a trade. It also seems to be a bit ahead of Robinhood on pricing most of the time, when I have them both open looking at same the stock the price is most always closer to real time on webull.

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3 hours ago, troph said:

Looks like the vaccine has been developed - couple of reputable sources for the news. At least that’s good news coming out of the weekend.

So how long until it's deployed?

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2 hours ago, Parliament said:

So how long until it's deployed?

Microsoft, Sony, and Apple are all probably sweating a little bit over it.  Surprised they aren’t dumping a shitload of money into any company that could potentially produce a vaccine/treatment.   Apple has the iPhone 12 and a bunch of other devices launching this fall, and Sony and Microsoft are launching new versions of the PlayStation and XBox later this year.   I imagine that if those slipped a few months into 2021, a few people might lose some money.  

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7 hours ago, Parliament said:

So how long until it's deployed?

I think I read already in human trials but I would expect weeks.  And then it’s needed in the hundreds of thousands of dosages count. 

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29 minutes ago, troph said:

I think I read already in human trials but I would expect weeks.  And then it’s needed in the hundreds of thousands of dosages count. 

If a vaccine is developed, it will take a year to be released. NIH Dir. of Allergy and Infectious Disease says a vaccine against the coronavirus would be the fastest approval ever but they do not want to cut corners. From what I recall about the development of a SARS and MERS vaccine, the choices would be live attenuated, dead, and peptide. I assume there would be a recombinant vaccine as well. Safety of a live attenuated virus is a concern as is the efficacy of dead virus, peptide and recombinant vaccine.

Edited by Bevo

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If a vaccine is developed, it will take a year to be released. NIH Dir. of Allergy and Infectious Disease says a vaccine against the coronavirus would be the fastest approval ever but they do not want to cut corners. From what I recall about the development of a SARS and MERS vaccine, the choices would be live attenuated, dead, and peptide. I assume there would be a recombinant vaccine as well. Safety of a live attenuated virus is a concern as is the efficacy of dead virus, peptide and recombinant vaccine.

Yeah I wouldn’t know. I just guessed as if I didn’t know anything.

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