Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[TwistedChief]

Originally Posted by ChiefRocka

Via infamous bailouts funded with American taxpayer dollars

It's a bailout to provide insurance for a fee? I guess.

Your job that I presume you have right now wouldn't exist if the government hadn't taken those steps. Insured depositors in those same banks wouldn't have been made whole if the government hadn't taken those steps.

[Infidel Goat]

Twisted,

I assume you are talking about funds like VMRXX, VMFXX, or VUSXX. Is that right or is there something else that you'd recommend parking extra cash in with Vanguard?

And if it is funds like that trio, is there one that you recommend over the other?

Thanks.

[TwistedChief]

Originally Posted by Infidel Goat

Twisted,

I assume you are talking about funds like VMRXX, VMFXX, or VUSXX. Is that right or is there something else that you'd recommend parking extra cash in with Vanguard?

And if it is funds like that trio, is there one that you recommend over the other?

Thanks.

Hey, man - I'm not necessarily recommending anything, but those do a pretty good job of replicating true risk free USD short rates and have risk to nothing aside from the US government.

And yes, those funds.

By virtue of my job I tend to keep more in cash than what anyone would recommend, and 4.5-5% seems delightful relative to some riskier things that I get pitched with IRRs maybe 2x that.

[TwistedChief]

In any case, government stepped in to make uninsured depositors in SVB whole. If the government loses money, they essentially tax the banks.

Fed comes out strong providing liquidity to other banks who may experience outflows. Outflows will happen but this is still best case scenario for weaker banks.

I'm sure this story will still percolate and simmer but the tail risks meaningfully reduced in my mind.

[Infidel Goat]

Originally Posted by TwistedChief

Hey, man - I'm not necessarily recommending anything, but those do a pretty good job of replicating true risk free USD short rates and have risk to nothing aside from the US government.

And yes, those funds.

By virtue of my job I tend to keep more in cash than what anyone would recommend, and 4.5-5% seems delightful relative to some riskier things that I get pitched with IRRs maybe 2x that.

Thanks, man. I just wanted to make sure I was on the right track (and definitely not holding you to anything if we somehow discover that John Bogle had the biggest pyramid scheme of all time). I've been meaning to shift some cash from my low-interest-bearing account in a credit union for a few months. I already have an account with Vanguard with a total market index fund, so this will be easy. Appreciate you!

[Rain Man]

I've got a big clump of money in one private online broker, which makes me a little nervous. It just kind of happened for various reasons. I keep pondering whether I should move some to another broker just to be sure no catastrophe strikes. Should I? It sounds like I shouldn't be worried that one of the big mainstream brokers will suddenly go belly up.

I would have never used the words "CDs" and "bold" in the same sentence before, but I'm making a bold move into CDs. I've been buying them on 1-5 year time frames with the plan that inflation will go down and I'll end up with CDs that are beating inflation. I think it's a reasonable bet, and my goal is just to match or beat inflation at this point. I think rates are still going up, so I'm buying into them somewhat slowly right now. I'm not putting anywhere near $250k into any one CD, but they're mostly going through the one brokerage, so I hope that's not a risk.

[TwistedChief]

Originally Posted by Rain Man

I've got a big clump of money in one private online broker, which makes me a little nervous. It just kind of happened for various reasons. I keep pondering whether I should move some to another broker just to be sure no catastrophe strikes. Should I? It sounds like I shouldn't be worried that one of the big mainstream brokers will suddenly go belly up.

I would have never used the words "CDs" and "bold" in the same sentence before, but I'm making a bold move into CDs. I've been buying them on 1-5 year time frames with the plan that inflation will go down and I'll end up with CDs that are beating inflation. I think it's a reasonable bet, and my goal is just to match or beat inflation at this point. I think rates are still going up, so I'm buying into them somewhat slowly right now. I'm not putting anywhere near $250k into any one CD, but they're mostly going through the one brokerage, so I hope that's not a risk.

Curious. What rate are you getting on those bank CDs? And how does that compare with US Treasury yields?

[Rain Man]

Originally Posted by TwistedChief

Curious. What rate are you getting on those bank CDs? And how does that compare with US Treasury yields?

I started doing my CD laddering at around 4.8 percent. The last one I bought was 5.4 percent for a 2-year CD. I'm not famiilar with the banks offering them, but the brokerage is saying that they're FDIC-insured. See the first photo below toward the right side. This is a search that I just did for 2-year CDs.

I keep looking at Treasuries, but I don't know enough about them. The second photo is what I see when I do a search. I used 2-year Treasuries to be consistent across both pictures.

I don't understand what the variables are. I tried looking them up, and the key to me seemed like the "Yield to Worst", which was explained as the worst-case scenario yield. But that implies that there are situations where I can do better than that. And the Coupon seems important because I read that that's the nominal rate, but they're all over the board and I don't know what that means. Why would I be expecting a 4.679+ return off of a bond that has a 1.125 percent nominal rate? I'm sure I'm misunderstanding something.

What I see is that the CD rates are higher and I understand them, so that's what I've been buying. Can you explain why Treasuries should be considered when looking at the two pictures below? Thanks in advance.

[Rain Man]

Here's something I find kind of humorous. I saw that 5-year CDs were being offered up to 5.4 percent, so I looked at them. The top offerer is the "Bank of Bird-in-Hand".

Does that sound scammy or what? So I looked up this bank, and it turns out that it's a small bank that's located in the town of Bird-In-Hand, Pennsylvania. It caters mostly to Amish people, and in fact their drive-through window is designed to accommodate horses and buggies.

I might have to put a little money into this Amish bank's 5.4 percent rate.

[Jenson71]

I would go with that bank. After all, it's better to have an account with Bank of Bird-in-Hand than two at Bank of Bird-in-Bush.

[Rain Man]

Originally Posted by Jenson71

I would go with that bank. After all, it's better to have an account with Bank of Bird-in-Hand than two at Bank of Bird-in-Bush.

The Bank of Bird-In-Bush seems too good to be true. I'm wary.

I wonder if the Bank of Bird-In-Hand will give me my monthly dividend in $20 gold pieces. Because that would be kind of cool.

[Rain Man]

Originally Posted by Hog's Gone Fishin

My BIL was telling me he invested in some I-bonds that paid 10% around 3 months ago.

Yeah, I've been buying those. I'd buy them all day except there's an annual purchase limit that's pretty low.

[Buehler445]

Originally Posted by TwistedChief

Of course you should. Absolutely. Though if you choose to do it, you’re likely safer with a Chase, Citi, or BOA.

And guys, re: the 1.3%. You do realize that during the largest financial crisis of our lives no depositors whether insured or uninsured lost money, right? Despite several hundred bank failures? There are assets against these bank deposits. And banks are so much more heavily regulated now than they had been (though a former unnamed president watered down regulations for smaller banks).

This SVB situation is super niche. They just did every stupid thing you could’ve done given their structure. Total mismanagement.

Am I understanding it right that they had a pissload of capital tied up in long term bonds that when the interest rate rose they lost value? Then they needed to raise capital and that's when the VC's all told their clients to GTFO and started the run on the bank?

It seems weird to me that a bank of all placed would tie up capital for the long term. I know that when interest rates didn't move for basically 20 years, it would be easy to get out of them, but as inflation poked up on the horizon (long before rates took off) that they would have unwound them, at least some of them.

I'm an idiot, but that's the way I see it.

[JohnnyHammersticks]

I know this dude pretty well. We had the same mentor (Tim Sykes) and started in his program at almost exactly the same time. Jack started late 2016, I started early 2017. He's taken it a little further than me at this point, but I'm hot on his heels.

https://www.businessinsider.com/stoc...-4-2023-3?r=rr



A 24-year-old stock trader who made over $8 million in 2 years shares the 4 indicators he uses as his guides to buy and sell
Laila Maidan Mar 12, 2023, 2:00 AM

• One of Jack Kellogg's main indicators is the volume-weighted average price (VWAP).
• This shows the average price paid for shares and helps him gauge sentiment.
• He only uses indicators as a t=rough guide but never trades solely on them, he noted.
• Jack Kellogg began trading stocks right out of high school in 2017.

Five years into his craft, he has already been exposed to various types of market conditions, including the stock market crash of 2020, the raging bull rallies of 2021, and the bear market of 2022. One thing he has learned through it all is to keep things simple and remain flexible.

"There's this acronym: KISS, keep it simple stupid. I don't think people need super fancy indicators to make money trading. I'm just using basic trend lines, support, resistance, volume, and those are all my indicators," Kellogg said. "I think if you overcomplicate the indicators, it will actually throw off your trading because then you're trading more on the indicators than the actual price action."

Spoiler!

This attitude has allowed him to become a versatile trader who takes both long and short positions when appropriate, which helped him to continue trading throughout the bear market of 2022. His tax returns, viewed by Insider, showed that he reported over $8 million in gains from day trading in 2020 and 2021. His returns gained momentum in 2020 when he had a total income of $1.6 million. In 2021, that amount grew to a total income of $6.5 million.

Kellogg has come a long way since starting off with $7,500 which is what he initially deposited when he started trading. His road to success wasn't a straight line. When he first attempted to trade, he was down a few hundred dollars. This led him to realize that he didn't know what he was doing.

So his next moves included switching off real trading and testing his skills through paper trading. Then, he signed up for an online course his parents helped pay for. The program, which was created by Timothy Sykes, a trading teacher and former penny-stock trader known for claiming to flip his bar mitzvah cash gift into over $1 million in gains, helped him develop the skills and patience he then used to craft his skill.

By the time the stock market began to rally hard in 2020, he was ready to ride the upwards wave. In 2022, when the market slowed, he continued to reel in profits by betting on popular stocks like Bed Bath and Beyond (BBBY) and AMC (AMC), the latter of which banked him $60,000, according to a screenshot of his E-Trade brokerage account. He also traded a few small-cap stocks and saw large wins on single trades like Intelligent Living Application Group Inc. (ILAG) which earned him over $91,000, according to screenshots of his Guardian account.

His top 4 indicators
The first indicator he uses as a sentiment guide is the volume-weighted average price (VWAP), which shows the average price paid for shares through all trading adjusted for volume. He uses it on the daily chart as a guide to determine a good buy-in price for the stock he's trading. This keeps him from being a chaser, the term popularly used for those who enter a position too late or after a stock begins to rally.

If the goal is to buy low and sell high, you don't want to pay more than what the average buyer paid, he noted. Therefore, Kellogg won't enter a position if the price is above the VWAP line. The opposite is true if he's shorting a stock: if the price is beneath the VWAP, he generally won't short the stock.

Oftentimes, he'll use this indicator to also determine when to exit his position because that point can sometimes indicate where a stock's price will begin to drop off. The same is also true in reverse: he'll sometimes use the VWAP to determine the price point where he'll cover his position. Therefore, if he shorted a stock at $9 and the VWAP is at $7.50, he'll use that price as a point to lock in profits.

For example, on January 5, he took a short position on ticker AMTD at $2.50. VWAP's center line was trending at around $2.22. So Kellogg covered his position at $2.25 and made a 10% profit.

The next indicator is linear regression, which shows the direction price is trending and when it may change its direction. They are three lines that overlay the candles. The lower and upper lines are the ranges of price movements or volatility, while the center line indicates the average between the two. Price action above the top line signals an overbought stock, and below the bottom line, an oversold stock.

"So the better a stock is respecting the lines of the channel that's created, the more predictable I think the stock's going to be," Kellogg said. This gives him a better sense that the stock's price action will trend according to his thesis.

The next indicator is volume which shows the number of shares being traded at any moment in time. Kellogg mainly uses volume as a potential indicator that a stock may reverse.

"Seeing big volume go through, I know that potentially a lot of people are on the wrong side. So if a big volume spike goes through near the high of the day, it's possible that a lot of people are buying the stock and a lot of people are chasing," Kellogg said.

Finally, he keeps his eye on the support and resistance lines, the former being where the price tends to hold and the latter where it tends to sell off. The levels change throughout the day. Kellogg tries to find the key levels by looking for a parallel increase in volume in those areas. He also pays attention to how many times and for how long a price level holds to determine how strong that point is. While it's not an exact science, general areas where the price hoovers for 30 minutes to an hour are the strongest, he said.

"Eventually, you'll see a bouncing ball-type price action if the stock is going to go lower," Kellogg said. "So you see it bounce from $7 to $8, then bounce again from $7.30 to $7.50, and then bounce from $7.40 to $7.10, then bounce from $7.20 and eventually cracks the support below $7. And then the question is, is it going to create a resistance level at $7 and continue to head lower?"

At the end of the day, price action is king, Kellogg noted. Even if you have a thesis about why a stock's price can move in a certain direction, if the price is moving differently, you need to cut losses.

"I don't ever just base my entire decision off an indicator. So if an indicator isn't agreeing with the trade thesis, then I simply will cut my losses," Kellogg said. "So I've never ever blamed any of my losses ever on an indicator because I don't let it get to that point. If the price action is continuing down, then I will cut my losses or if the price action is continuing up, then I'll cover my short positioning."

Everyone has access and can view the same data — it's really about what you do with that data, he said. Where most traders struggle is with the psychology of trading. You can have the best strategy and indicators, but if you don't have the discipline to stick to it, then you will constantly find yourself in a bad situation. Most people don't put in enough effort to master their emotions, he said.

[ChiefRocka]

Originally Posted by JohnnyHammersticks

Five years into his craft, he has already been exposed to various types of market conditions, including the stock market crash of 2020

WAT?!?