Creating this thread based off feedback on TF and @Machetephil’s submission in the callouts thread.
The goal is to discuss and brainstorm a game plan for when we hit bottom and the best way to capitalize on the opportunities it may present.
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Personally I am looking to accumulate money with the plan of using Cash Secured Puts to acquire stocks. I think it’s something people should do more, though admittedly I have only theorized and am working on getting there. An example I’ll throw out is CCL which I’ve been eying for awhile, currently is at $6.61. If you take a $7 CSP for 11/25 you can make about $1.00 in premium. This creates a $6.00 cost basis on assignment and I plan on making marks like this where I’m good with being Assigned to start buy and hold positions (though I’ll use CCs as well). You can make more in other ways of course, but I think CSPs are an improved way to buy with slightly ITM or just OTM strikes.
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I have been contemplating this exact same thing. Currently I take my profits out of my account to keep my port the same size what I have been considering doing is if I make 500 for example on a short term trade simply buying leaps on a steady growth stock and forgetting about them. I will use my IRA for the leaps that is on a different platform than I utilize for short term trades. This is as @Machetephil said an opportunity of a lifetime for many of you young folks in this server to make life changing money and I have no doubt with help and teamwork of the server that will happen.
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The real bottom should occur upon any of these, I think:
- Fed pivot into reducing rates.
- Market believes the fed is about to pivot (and then confirmed by the actual pivot of course, otherwise we get the bear market rallies we have been seeing this year).
For either of these to happen, we would need to see core PCE clearly coming down to the target rate of 2%.
For #1, it would be obvious, clear cut. The fed reduces rates. We know they pivoted.
For #2, it is not so obvious, because what if it is just another mistaken bear market rally on fed pivot hopium? How do we know? Well I think that’s where this forum and you (yes you reading) come into play. When the market starts latching onto hope of a pivot, we need to evaluate the macro and discuss/argue/debate/analyze the shit out of it and think about whether the hopium is real or not. Is inflation really achieving the target rate?
Ok, the bottom is in. How to play?
I was thinking of going all in on something like calls in an ETF 3 to 6 months out for a swing play.
I would think that tech and growth would lead the rally, so something like QQQ, SOXL, and ARKK. Maybe individual names such as AAPL or TSLA, the core holdings of institutions and retail.
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Thanks @Conqueror for putting up this thread and @Machetephil for the initial post in the callout thread. This topic is near to my heart as I took everything I had invested in the market earlier this year between $4250-$4500 (401K, IRA’s, and general long term investments) and put them into cash. It’s a decent chunk of my net worth and I had conviction of what was ahead this year especially after I read The Lords of Easy Money in February. I was a passive 401K/IRA and a little general investing with some long term stock buys prior to a few years ago so active investing has been something new to me but so far it’s been my best trade of the year and I’m hopeful to make a life changing swing in my net worth through this market correction and think with all the minds here that a lot of us can do the same.
I’m agree with @Kevin’s points above of what’s going to cause the pivot and think we’ll do a damn good job evaluating when that time comes through this place.
I feel like tech will lead the charge on the recovery but also want to focus on companies that I use long term and plan on using for the rest of my life. I think Kryptek is onto some value with CCL being at the same price as 1993 and cruise lines not going anywhere. I also have DAL (Delta) on my list as I travel a lot I’m an extremely loyal customer and they get it done and feel like they are at a decent value price as they’re about the same as 2013 and also a staple of the worldwide economy.
My 401K doesn’t have a pile of options so it’ll be averaging back into the Vanguard S&P ETF and HNACX as it’s tech heavy.
Definitely a life changing opportunity!
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So after reading the title I thought this was about puts on the £ cause of the recent BOE 3 days to rebalance announcement and rest of UK news!
Totally agree with @Kevin 's point about questioning if it’s a bear rally or not, and is probably my main concern about a play like this. That being said I think if we share things we’re looking out for early, then we can compare conclusions as we examine said things as new info comes out.
While I’m by no means an expert Id presume either ETFs or leveraged ETFs would work. QQQ/TQQQ etc. Presume funds that specialise in tech might get a good uplift. Maybe some of the real techy arkk funds.
Outside of some the obvious single equities, perhaps something like FedEx, as mentioned in House’s Kodiak bear thread, it supplies both consumer and business and if a general turnaround happens, they would stand to benefit from both, while also being a proxy for how well a turnaround might be going.
Some short puts could also be nice if you’re trying to raise some capital and/or get a decent entry in the run up to this.
Edit: Would also be very interested in hearing what people who have a bearish outlook for the next X months have to say both in general and their countercase once(or if) a pivot is predicted.
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Love the thread!
I have been thinking about and researching different companies and strategies when things turn around. I think we are still very early in this downturn but some opportunities will show up earlier than others.
There are a few sectors that seem to move in long duration cycles that I think look the most attractive coming out of this economic environment. Most companies Im looking at are tied to hard assets then consumer staples, from there I may cherry pick a few names depending on where they end up being priced.
And finally, Ill share that I wont really consider any company that isnt financially stable. P/E ratios, balance sheets, and cash flows to me are more important that how much they have declined.
Super stoked to hear everyones ideas here
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I had been 95% cash since SPY 460 and recently began averaging back in when SPY hit 357 a few weeks ago, now I’m only 90% cash. Cant imagine I’ll regret shares of SPY at 357 in a few years. I also picked up QQQ shares at 270. I’m conservative with my boomer money so 65% SPY and 35% QQQ. But I’m intrigued by the idea of some year or two out call options as well as FedEx.
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But my SPY model says it will go up to 3662 by 11/14 so I’m still playing month out calls
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Does anyone have an argument against going in heavy on TQQQ vs something like VTI besides dividends? Obviously you assume more risk but this is for a boomer long account, and when the plan is to buy near bottom (honestly have thought about doing 1/4th or so now as were already at 52 week low) I don’t consider the risk very high.
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I’d read up on this here:
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I know the basis of your strategy is to accumulate shares via CSP’s to ride up on the rebound, but why not sell CSPs at the same strike but for Jan of 2025 as well? Premium is 3x, chances of being assigned are minimal, and surely an opportunity to buy them back for pennies on the dollar will exist in the next two years.
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Talking about Divi stocks on tf tonight which are great for you young folks growth accounts @SuckyMayor shared the link to here in forums if you can buy the dip and get divis it’s a win win.
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Earnings in December, I would want to be out by then. The goal of what I’m saying here is strictly looking at other ways to accumulate shares than just pure buying. I want the shares for long term growth and using them for smart CCs on the way up, so putting up capital for potentially two years isn’t in line with trying to buy in. Might not be a bad idea, but it’s not the thing I’m looking for currently.
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Because selling multiple short termed ones will have higher total premium compared to 1 long termed one over the same period of time.
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