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FEATURED! The Coming Recession (2018-2019?)

Discussion in 'Investing/Trading/Cryptocurrency/Altcoins' started by JScott, May 27, 2018.

  1. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Just an FYI, I'm still invested in my theory and will continue to do so probably up until the week of November 5th.

    After then, I will go back to business as usual.

    The market action still hasn't given me any reason to believe I am wrong.
     
    Nigel B, edward ace, Xeon and 6 others like this.
  2. GoGetter24
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    GoGetter24 Silver Contributor Speedway Pass

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    It's fine, I only need a year.
    Europe's been a continuing basket case since 2009 and very little has tangibly happened yet. The currencies of the US, the EU, and Japan are all fiscally nonsense currencies and have been for a long time, and yet they hold their value and gold is stagnant. China has been a real estate bubble in the making for over a decade now, and it still carries on as usual.
    Macro guys like Dalio can see all of that and they're factoring it in to their predictions, so that gauge will have to do.
     
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  3. socaldude
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    socaldude Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    That little rally we saw this week is what I was waiting for.

    Did buy some SPX puts at 17.5 VIX as much as I didn't want to haha.

    Good to see we saw some downside today hopefully tomorrow is much worse haha.

    :blush:
     
  4. Jaden Jones
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    Jaden Jones Igloo Builder Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    The indexes appear to forming a floor, I dont think we will see too much down side right away. If the recession is actually starting we should see it come up and form a lower high and then come down again. Im selling some Put spreads on the index for next Friday based on this belief.

    Here is my actual trade on the Russell (RUT)
    Sell Vertical Put spread 1505/1500 Strike For Oct 26th Expiry.
    The spread paid $0.63
    Total risk capital: $4.37

    100 contracts pays $6300
    Minus fees of $6.95 plus $.75 per contract Total $82

    Total Risk Capital $43700
    Total Paid $6218

    Heres how it plays out:
    RUT goes up: I keep the money
    RUT stays the Same: I keep the money
    RUT drops to 1506: I keep the money
    RUT drops below 1505: MY losses are exponential here, honestly I would probably exit if it got close to 1520 or so, I would probably pay $20000 or so to buy it back.
     
    Last edited: Oct 19, 2018
  5. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I'm not really playing the "recession" -- I'm playing that there will be a calamitous financial event before the elections. And we've already seen a couple of "interesting" moves.

    Good luck, that's the type of play I'd make if I wasn't sold on my theory.
     
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  6. Jaden Jones
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    Jaden Jones Igloo Builder Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    I probably wont do this trade again next week for that reason, who knows what is going to happen the next few weeks. Id love to see a big drop so I can short the index though.
     
  7. socaldude
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    socaldude Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Glad I bought some puts last week, futures are down. Could reverse of course.

    Do wanna buy some more puts but would probably be SPY instead of SPX so I can but more quantities.
     
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  8. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    SPX is taxed differently, and at much better rates. INDEXES enjoy a 60/40 long short cap gains, SPY is all short.
     
  9. Holdy
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    Holdy New Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    How far OTM are you going with this latest round of puts? I'm intrigued at taking more advantage out of the next volatility spike.

    Thanks in advance for the help!
     
  10. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Here's more info on what I posted yesterday, didn't have a link handy...

    How to Trade Index Spreads with Tax Advantage | PowerOptions Web Log

    Because SPX is such a large product, a gain on 1 SPX contract VS 10 SPY contracts could be a significant tax savings.
     
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  11. levijean
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    levijean Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    SPX is much better for commissions too.

    If you need a lower contract size but want the better tax treatment, options on futures is worth looking at.
     
  12. Nigel B
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    Nigel B Life Long Learner Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Almost gave up on my catch up on this thread as it got derailed by laziness for a page - but really pleased it's got back on track. Thanks esp. to @MJ DeMarco for raising the tax points on SPX vs SPY - you only 'know' what you take action on - and while I was aware of this (at some point), I was not acting on it! Thanks for the reminder!
     
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  13. Jaden Jones
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    Jaden Jones Igloo Builder Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    I think were gonna see a drop today, not the recovery I was hoping for, might be a sign that things are turning.
     
  14. socaldude
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    Damn, futures down again -40 on sp500. -400 on dow. VIX up.

    This is pretty hard stuff in terms of decision making. I'm constantly asking myself "hmm what should I do here". How do I balance risk/return. Definitely a learning experience for sure as a newb.

    I get the feeling there are a lot of sophisticated ways to play these kinds of volatility expansion and market corrections that most investors are not aware of but professionals and institutions play.

    I'm gonna be glued to my brokerage account in the days leading up to the election. It seems like the perfect storm. It's like the starts are aligning haha. Something is gonna happen it feels like.
     
    Last edited: Oct 23, 2018
  15. JScott
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    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Keep your eye on some of the big companies reporting this week...
     
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  16. Telamon25346
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    I wouldnt say its the government that hasn't learned. More of the federal reserve's doing. When the president of the fed lowered the interest rate on loans right before 2008 that's what set things off. Only a matter of time before something similar happens
     
  17. Holdy
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    CAT and 3M earnings largely driving the overnight drop... especially in the Dow.

    Then again, with this market, any rally is guilty until proven innocent. Stay short or in puts for the time being, my friends!
     
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  18. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Suzanne Bazemore and Xeon like this.
  19. JScott
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  20. MJ DeMarco
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    Had someone done as I cited here just last month they should have tripled (300%) to quintupled (500%) their money at this point in the game.

    I took a lot of profits today but still have some long puts running.

    Think we have further to go, might get a little reversion short term (Ill probably buy more) and then another bigger move down.

    Not withstanding some of the macroeconomic indicators, the end game is to shake economic confidence, enough so that it becomes a media narrative and influential in the election.
     
  21. MoreValue
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    Damn, I thought I was thinking I had the luxury to take some time off work.. Down $22k in portfolio. Got to pick up more work.

    Things just get worse and worse. Never seen such a spot on prediction. I will need capital to take advantage. Been shopping for houses/duplexes so I can rent out, but everything is just too expensive. Hopefully this dips.
     
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  22. MoreValue
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    I should have followed this thread earlier... A little late to be buying puts I feel
     
  23. MJ DeMarco
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    Yea, way too late. The big money is made on the volatility expansion, not the down move. The VIX > 25. You should have bought when it was less than 14.
     
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  24. exclusives88
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    With VIX this high, what do you think of selling SPX calls?
     
  25. Deleted58904
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    This is either a big correction or crash. The 20 SMA's below the 50 SMA and both are sloping down. SPY is below the 200 SMA. It's broken a support line on finviz. We've been due for a crash. I'm not sure what the crash/correction is for, but this is bad. I feel sorry for near-retirees if this is a crash, but it is their fault they decided to invest.
     
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