Overlords Investment Conclave [OIC] Recruitment Thread

[LawBeefaroni]

I sell credit spreads in SPX and RUT for a hedge fund. Obviously, the market downturn and added volatility created an excellent day and pay off for us.

I'm curious who here is into similar strategies, and/or the like? What are you doing to offset risk? I'd love to hear of others who are successfully navigating the summer (slight VIX) swings.

Thanks.

Very short term trades in SQQQ options and VXX. Strangles.


But I'm not sold that it's going to turn just yet. My parents/in-laws haven't started asking about stocks they saw on CNBC and cab drivers haven't started asking if it's good time to get into the market.

[stessier]

Hey pr0ner,

What do you think about the KMP deal? I'm trying to find more information, but right now I know

KMP unitholders will receive 2.1931 KMI shares and $10.77 in cash for each KMP unit. This results in a price of $89.98 per unit, a 12 percent premium based on the Aug. 8, 2014, closing prices. This is a premium of 11.4 percent based on the July 16 closing price reference date used by the parties during the negotiation of the transaction.

KMI doesn't look like it is a partnership - just a regular stock. Does that seem right to you? That would be nice for tax filing reasons.

[pr0ner]

Yep, KMI is a regular stock and not a partnership; however, they don't pay qualified dividends if that means anything to you or not.

[nasai]

I sell credit spreads in SPX and RUT for a hedge fund. Obviously, the market downturn and added volatility created an excellent day and pay off for us.

I'm curious who here is into similar strategies, and/or the like? What are you doing to offset risk? I'd love to hear of others who are successfully navigating the summer (slight VIX) swings.

Thanks.

Very short term trades in SQQQ options and VXX. Strangles.


But I'm not sold that it's going to turn just yet. My parents/in-laws haven't started asking about stocks they saw on CNBC and cab drivers haven't started asking if it's good time to get into the market.

Just saw this, but thanks! I've never traded SQQQ, so per your point, I'll check it out. We've turned a mighty profit these past 2 weeks, playing both sides. I've easily kept my Delta right where I want it, so that's always comforting.... Thank God for IV.

Rock on.

[LawBeefaroni]

Sold some Aug DIS $86 calls right around open this morning. Left some money on the table ($25/contract as I'm typing) but averaged from around $1.60 to around $2.25. Been a lot more conservative on the long side lately and happy to take anything positive in a what was an 8 or 9 day trade.

Have some ORCL $44 calls that are going to expire worthless tomorrow. Small position and a small bet but it seemed like a good idea back in June.

A friend of mine had an Aug XONE bullish put spread on. I encouraged him to cover yesterday, cost him $400 but would have been a loss of 2 or 3 grand today.




On to the next one.

[GreenGoo]

Here's as good a place as any.

Burger King and Tim Horton's (a big deal up here in the snow zone) are in talks, with Burger King (~9 billion market cap) looking to acquire Tim Horton's (~8 billion market cap) which would put them in 3rd place over all in the quick service market I believe.

Timmy's (as it is called sometimes up here) has an order of magnitude more restaurants in Canada than it does in the US, and Burger King is lookng to help Tim Horton's go international.

We'll see.

It's a bit of a cultural icon up here, so without that recognition and appeal, I'm not so sure it will find international success, but hey, have at it.

[Vorret]

Yeah, I was a bit surprised when I read that this morning, plus BK would become a Canadian Company.
I'm not a big fan of timmy's coffee but it sure is popular.

[Pyperkub]

Sold some Aug DIS $86 calls right around open this morning. Left some money on the table ($25/contract as I'm typing) but averaged from around $1.60 to around $2.25. Been a lot more conservative on the long side lately and happy to take anything positive in a what was an 8 or 9 day trade.

Have some ORCL $44 calls that are going to expire worthless tomorrow. Small position and a small bet but it seemed like a good idea back in June.

A friend of mine had an Aug XONE bullish put spread on. I encouraged him to cover yesterday, cost him $400 but would have been a loss of 2 or 3 grand today.




On to the next one.

DIS is interesting. I've been holding them ever since they bought Pixar. I liked Pixar back in the day and figured that it would be a nice, safe place for my Pixar gains to add wealth. It's been bery bery good to me.

Funny thing is, back in '79 or '80 - 7th/8th grade I think - we had a math(?) class where they were teaching us about stocks and the stock market, and we had to pick a stock to track,chart, etc. for a month. I chose Disney and it was one of only 2 stocks in the entire class which went up for the month.

Had to be an omen, sign from the future - right?

[Carpet_pissr]

From what I understand, the deal was done primarily as a vehicle for tax inversion.

[GreenGoo]

From what I understand, the deal was done primarily as a vehicle for tax inversion.

That's the plan.

They have similar market caps. They must be offering something to Tim Horton's for them to be interested though.

[El Guapo]

From what I understand, the deal was done primarily as a vehicle for tax inversion.

That's the plan.

They have similar market caps. They must be offering something to Tim Horton's for them to be interested though.

There's some political risk in that plan, I imagine. Tax inversion rules are already attracting political heat. BK's such a big company and so branded with America that if they do this and their tax bill is slashed dramatically it could lead to a pushback against current tax inversion rules.

Though unless the IRS can undo that via regulation (which I doubt) that would require Congress to pass a law, which it doesn't enjoy doing these days.

[LordMortis]

Here's as good a place as any.

Burger King and Tim Horton's (a big deal up here in the snow zone) are in talks, with Burger King (~9 billion market cap) looking to acquire Tim Horton's (~8 billion market cap) which would put them in 3rd place over all in the quick service market I believe.

Timmy's (as it is called sometimes up here) has an order of magnitude more restaurants in Canada than it does in the US, and Burger King is lookng to help Tim Horton's go international.

We'll see.

It's a bit of a cultural icon up here, so without that recognition and appeal, I'm not so sure it will find international success, but hey, have at it.

In the last 20 years they come on huge around here. In 1988, I heard commercials from some crazy Scottish guy screaming "Roll up the Rim to win" like a psychotic killer and had literally never seen a Tim Horton's. Now a days there's on attached to nearly half the Wendy's out there. There's one attached to most Amaco(? I think it's Amaco. One of the Red White and Blue) gas station and there's one where every Hardee's used to be back in the day. And then there are some actual ones the got built all on their own. They are by far the biggest coffee seller here and if you were to compare them to fast food joints, I'd say there are more locations than McDonald's, Taco Bell, or Little Caesar's. And that's impressive and again it's been done in only about a 20 year time frame. I think I've been to there all of twice.

[LawBeefaroni]

DIS is interesting. I've been holding them ever since they bought Pixar. I liked Pixar back in the day and figured that it would be a nice, safe place for my Pixar gains to add wealth. It's been bery bery good to me.

I started buying DIS for a friend's kid when you could still buy the paper shares. His M-I-L is a huge Disney fan (she moved to Oralando to be by the park!) so it seemed appropriate. Worst case, they'd have some interesting wallpaper. When my kiddo came a long, I kept buying them for her (shares, not paper). Eases a bit of the pain every time I have to hear/see Nemo/Cars/Frozen/etc yet again.

Funny thing is, back in '79 or '80 - 7th/8th grade I think - we had a math(?) class where they were teaching us about stocks and the stock market, and we had to pick a stock to track,chart, etc. for a month. I chose Disney and it was one of only 2 stocks in the entire class which went up for the month.

Had to be an omen, sign from the future - right?

We did that back then too. I picked IBM. The kid who won picked Upjohn.

[Pyperkub]

On the Flip side, whenever an Avengers or Guardians of the Galaxy comes out...

[Vorret]

Deal is done

http://money.cnn.com/2014/08/26/news/co ... ahoo_quote

[LawBeefaroni]

Amazon bought Twitch for $950M or so.

[noxiousdog]

From what I understand, the deal was done primarily as a vehicle for tax inversion.

That's the plan.

They have similar market caps. They must be offering something to Tim Horton's for them to be interested though.

There's some political risk in that plan, I imagine. Tax inversion rules are already attracting political heat. BK's such a big company and so branded with America that if they do this and their tax bill is slashed dramatically it could lead to a pushback against current tax inversion rules.

Though unless the IRS can undo that via regulation (which I doubt) that would require Congress to pass a law, which it doesn't enjoy doing these days.

Apparently the tax inversion story just makes a good story.

It seems very unlikely that inversion turns out to be an important or even meaningful part of this deal, though it will be probably be an important part of the narrative.

Some things to note: Inversion does not allow companies like Burger King (or Tim Horton's) to avoid taxes on their US operations, even if they are headquartered in another country. Admittedly, they can try fancy tricks to increase foreign earnings (for example, selling the Burger King trade name to a subsidiary in Bermuda). But they can try this with or without inversion. Neither BK nor THI actually does as best I can tell.

Also, BKC today has about 50% of its operations outside the US. It currently already pays lower foreign tax rates on those operations, not US tax rates. It must, however, pay repatriations taxes if it wants to bring those profits back home. The only thing inversion does for BKC is eliminate that potential future repatriation liability. But Burger King does not actually have a big build up of foreign cash awaiting repatriations. Therefore, its actual tax payments already look extremely similar to the same BKC that was headquartered in, say, Canada.

Tim Horton's has 80-85% of its operations in Canada. If it was acquired by BK and suddenly had its headquarters in the US, those Canadian profits would suddenly have a deferred repatriation liability attached to them for US taxes. That seems a little strange. The only other country in the world besides the US where that situation would apply is...Eritrea. The combined BKC/THI would have more than 50% of its earnings and operations outside of the US. The word inversion has a particular connotation.

Burger King's effective tax rate prior to the merger has recently been running at 25.6%. Tim Horton's effective tax rate prior to the merger has been running...28.5%! Canada has a low federal tax rate but very high provincial taxes that are more difficult to avoid than US state taxes.

This is almost certainly not a tax deal in any important sense. But let the music play.

[Carpet_pissr]

Nice! I love a good debunking counter!

[GreenGoo]

Nice! I love a good debunking counter!

First, I'm not well versed on tax law, let alone corporate tax law. That said, reading the debunk, it seems like the points he makes would apply to pretty much any tax inversion situation. I.e. if this debunk is true, wouldn't it mean that any attempt at tax inversion would suffer the same consequences as outlined above? If there are repatriation "fees/taxes", wouldn't any attempt to bring the profit back into the US be met with the same profit eating fees/taxes?

I guess I'm asking, if inversion doesn't work in this case, what case would it work for?

[GreenGoo]

Burger King's effective tax rate prior to the merger has recently been running at 25.6%. Tim Horton's effective tax rate prior to the merger has been running...28.5%! Canada has a low federal tax rate but very high provincial taxes that are more difficult to avoid than US state taxes.

This is almost certainly not a tax deal in any important sense. But let the music play.

Alberta's corporate tax rate is 10%, while Ontario's is 11.5% (I don't know the rates of other provinces off the top of my head). Federal corporate tax rate is 15%, so typical tax rates are around 25-28% I think, as compared to the US's 35% I guess it is?

I'm lot at all surprised to hear that Tim Horton's operates almost entirely within Canada, but I am a little surprised to hear that Burger King has 50% of it's business outside of the US.

I fully admit that I am only learning about this due to this story so I am completely uneducated in this area.

[LawBeefaroni]

Nice! I love a good debunking counter!

First, I'm not well versed on tax law, let alone corporate tax law. That said, reading the debunk, it seems like the points he makes would apply to pretty much any tax inversion situation. I.e. if this debunk is true, wouldn't it mean that any attempt at tax inversion would suffer the same consequences as outlined above? If there are repatriation "fees/taxes", wouldn't any attempt to bring the profit back into the US be met with the same profit eating fees/taxes?

Yes. But I think the point is that for the small tax savings in this specfic case (US/CAN, BK/THI), the repatriation taxes woudn't be worth it.

I guess I'm asking, if inversion doesn't work in this case, what case would it work for?

It works when corporations end up paying virtually zero tax. They can worry about the repatriation later. See Double Irish or Dutch Sandwich. Note that recent laws have made these arrangements much more difficult and/or much less attractive, however. Companies have responded with more complex arrangements and obfuscation.

[xwraith]

*Eyes AAPL*

Down off its highs. Some risk going forward if the product announcements aren't received well and there are Q4 earnings at the end of October. I'm thinking there is a good chance of a 5% rise in price by Jan 2015 though. I can do covered calls as well, looking at mid-October with a max 5% return if the stock strikes over $101. Thoughts?

[LawBeefaroni]

*Eyes AAPL*

Down off its highs. Some risk going forward if the product announcements aren't received well and there are Q4 earnings at the end of October. I'm thinking there is a good chance of a 5% rise in price by Jan 2015 though. I can do covered calls as well, looking at mid-October with a max 5% return if the stock strikes over $101. Thoughts?

If you're thinking it is going to hit $101, why would you sell covered calls? Wouldn't you be better off buying calls in addition to your shares and getting a >5% return? Or simply buying shares and getting the same return as you would with covered calls but with greater upside?

[xwraith]

Eh, they won't let me. (I only have access to CCs in this account)

I was okay with the 5% if it bounced up, but yes you're right. The more I think about it there seems the better strategy is just buy on this (small) dip and hold.

Sometimes you just need to write it out and get some feedback, thanks!

[LawBeefaroni]

Well, I had $82.50 September calls in NKE last week. Figures that a week later it explodes to $88+. If I bought weeklies for earnings instead of sticking to monthlies, my $300 would probably be worth somewhere around $2200 instead of zero.

Coulda, shoulda, would, fuck. Ah well.

[LordMortis]

Got my $5500 marked for my first ever Roth IRA ready for tax year 2014. Went to my CU to start preparations. I said I'd like to see what he had available in index funds. He told me Index funds have been on an unrealistic ride for three years running and they are terrible idea right now. And then nothing.

... So Scottarde it will be. Let the learning begin. Maybe in 2015 I'll be on target to learn how to play games like ally'all do. I figure before then, it will be tucking away another $5500 for the 2015 tax year and probably building enough savings to pay cash for a new car and still have a year's worth of "oops, I'm unemployed" lifestyle. I guess that will be when I break down and justify getting a smart phone. My current projection is November 2015... Though by then I'll want to put away another $5500 for tax year 2016...

So anyhow, I figure the first $5500 goes to an Index Fund, though don't know which one yet and I don't even yet know what's available through Scottrade.

I still haven't figured out how to figure out what investor to use. So I ultimately just decided Scottrade, on a referral from my father so he can get 10 free trades or some such thing. Probably not the best way to choose but such is life.

/wonders how much money he's going to lose through a learning curve.

[noxiousdog]

/wonders how much money he's going to lose through a learning curve.

None. Buy SPY and forget about it for 20 years.

[LordMortis]

/wonders how much money he's going to lose through a learning curve.

None. Buy SPY and forget about it for 20 years.

That's pretty much the goal (except I dream of retiring in 11 to 13 years and I think I might be able to make it happen if I'm not stupid with my money and the world doesn't crash around me. With no mortgage I am in the position to save two years of living expenses for every year that I don't have crazy high expenses right now. If I can invest majority of that at 5% on average, that's more than enough to live my life at) That was why I was annoyed when the CU guy shut me down.

[Zaxxon]

That CU dude be crayzee.

[noxiousdog]

/wonders how much money he's going to lose through a learning curve.

None. Buy SPY and forget about it for 20 years.

That's pretty much the goal (except I dream of retiring in 11 to 13 years and I think I might be able to make it happen if I'm not stupid with my money and the world doesn't crash around me.

Even if that's the case, you're still planning on living 20 years, I hope

[LordMortis]

Even if that's the case, you're still planning on living 20 years, I hope

Planning for, yes. Planning on, not really. Quite frankly my 401k probably already would have enough in it to cover me until I die at "young" age if it weren't bend you over pentalties for withdrawing before the age of 57. I don't see me making it to 65 with my health as it is but I will try to create something where I can pretty much live off of normal economy grow or die interest/dividends. That's one of the reasons why I want to retire as early as reasonable. I'm too young to be this old and fricken tired.

[Pyperkub]

Here it comes, or so sayeth the teeth

[LordMortis]

I should be happy I haven't set up my IRA yet, even if I apparently picked the July market peak to max my 401k contributions.

I spoke to my old man this weekend and we discussed gas falling below $3 a gallon for the first time since Obama took office. He informed me that ISIS is funding their war by selling oil on the cheap and Europe is buying it like mad driving the price of oil through the ground. I was under the impression (from OO or perhaps GG) that the cost of oil has little to do with how much is mined but rather the world's capacity to refine oil and the investment cost and time it would take to increase refining capacities. I was also under the impression that instability in the middle east drives oil prices up.

Any how. Kinda something not sure what how gas retail prices get slashed by 25% in less than a month and my portfolio takes a 12% hit when it was already slowly bleeding in that same time.

In the mean time, all of the large investors seem to be turning themselves liquid at the expense of the 401k investors, who auto contributed during this "overvalue" time. Man, the game is rigged. I have to keep telling myself, when this bounces back I'm now contributing money that will be more valuable later, right? Right.

I also love how the investment companies show you are making money before they take their vigs... um commissions... um brokerage fees. So in a year when when you make 5% and they take their 1% (or whatever it is), you actually make less than 4%. In a year where you lose 8%, you actually lose closer to 9%. If they're so damned good, why aren't their fees based on how much you make, rather then how much you have invested?

<harumph>

Investing is so not for me and yet you pretty much have to do it once you get so far in life.

When I get a smart phone explicitly to start building and managing a portfolio, can I write it off?

[LawBeefaroni]

I should be happy I haven't set up my IRA yet, even if I apparently picked the July market peak to max my 401k contributions.

I spoke to my old man this weekend and we discussed gas falling below $3 a gallon for the first time since Obama took office. He informed me that ISIS is funding their war by selling oil on the cheap and Europe is buying it like mad driving the price of oil through the ground. I was under the impression (from OO or perhaps GG) that the cost of oil has little to do with how much is mined but rather the world's capacity to refine oil and the investment cost and time it would take to increase refining capacities. I was also under the impression that instability in the middle east drives oil prices up.

Any how. Kinda something not sure what how gas retail prices get slashed by 25% in less than a month and my portfolio takes a 12% hit when it was already slowly bleeding in that same time.

If it makes you feel any better, I just paid $3.85/gal on my last fill up on Friday.

In the mean time, all of the large investors seem to be turning themselves liquid at the expense of the 401k investors, who auto contributed during this "overvalue" time. Man, the game is rigged. I have to keep telling myself, when this bounces back I'm now contributing money that will be more valuable later, right? Right.

I shorted silver last week, hasn't worked out so well for me so far.

From what I've been watching, institutions have basically been "buying the dips" meaning they invest on every drop and sell when they've made money. Not a whole lot of confidence for the long haul but making money all the way up. Both in regular stocks and eminis, SPY, QQQ, etc. I almost went back into SQQQ last week. But I didn't. Dammit.

I also love how the investment companies show you are making money before they take their vigs... um commissions... um brokerage fees. So in a year when when you make 5% and they take their 1% (or whatever it is), you actually make less than 4%. In a year where you lose 8%, you actually lose closer to 9%. If they're so damned good, why aren't their fees based on how much you make, rather then how much you have invested?

It depends on what you invest in. If you have a discout brokerage, they just make commission on each trade of straight up stock regardless of how it works out for you. You could buy $500, $5000, or $500,000 in LMT and pay $5. If you buy a mutual fund or an ETF, then yes, you'll pay a management fee on top of brokerage commission.

I pay that piper in my 401K but in my Roth and regular account I just buy stocks. For those, my commission is between $5 and $10 per non-option trade, depending on the account.

[noxiousdog]

I should be happy I haven't set up my IRA yet, even if I apparently picked the July market peak to max my 401k contributions.

I spoke to my old man this weekend and we discussed gas falling below $3 a gallon for the first time since Obama took office. He informed me that ISIS is funding their war by selling oil on the cheap and Europe is buying it like mad driving the price of oil through the ground. I was under the impression (from OO or perhaps GG) that the cost of oil has little to do with how much is mined but rather the world's capacity to refine oil and the investment cost and time it would take to increase refining capacities. I was also under the impression that instability in the middle east drives oil prices up.

Oil is almost all demand side related at this point. The recession, fuel efficiency gains, oil shales and the natural gas glut has dramatically reduced the amount of oil that the US needs to import. Keep in mind even 1% is significant.

[Carpet_pissr]

Market, you so CRAZY.

[xwraith]

Ow.

On the other hand, are there any deals to be found? I've been sitting on some cash just for this eventuality.

[Isgrimnur]

Looks like the S&P 500 and the NASDAQ are trending up today. The DJIA took a ~100 pt. hit on opening and hasn't quite recovered it all yet. Blame IBM:

Stocks are mixed Monday, with the Dow dinged by a big profit miss from IBM.

As of 1:20 p.m. ET the Dow Jones industrial average is off 0.2%, a loss of 24 points. The blue-chip index dove about 100 points just after the 9:30 a.m. opening bell, with Dow component IBM alone accounting for around 85 points of that early plunge.

[LordMortis]

I know IBM just sold off their servers market to Lenovo, so now they don't make machines at all any more, do they? International Business...???

[Isgrimnur]

These days, it's all about buzzword bingo. This tells me that over half of their revenue comes from Global Services:

Global Services has two major divisions: Global Business Services (GBS) and Global Technology Services (GTS).
...
IBM Global Business Services (GBS) is the professional services arm of Global Services, including management consulting, systems integration, and application management services. Revenues from the Global Business Services were $18.6 billion, down 4 percent in 2012 compared with 2011.
...
IBM Global Technology Services (GTS) primarily reflects infrastructure services. It includes outsourcing services, business continuity and resilience, Integrated Technology Services, and Maintenance. Revenues from the Global Technology Services segment in 2012 totaled $40.2 billion, a decrease of 2 percent compared with 2011.

Software is over another 25%. We're running AIX, so I assume some of our money, either directly or routed through Jack Henry ends up in their coffers.