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Tough day for the stonks.
I don’t even get out of bed for a 2% dip these days after the excitement in March or whenever it was that we were ripping off 8% days in both directions for weeks at a time.
My tech analysis guy, who recently sent me the Plandemic video, currently has 2 algorithms auto-trading futures. One of them brilliantly shorted the S&P today! But it went short at almost the absolute low, so it found a way to lose $600 shorting on a -2% day lol. He says the “Magic Hand” (the Fed) intervened starting at 3:30. He’s been ranting about the Magic Hand a lot the past two years.
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ask him about the PPT
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So for simplicity’s sake let’s say that I have 100 units of dry powder available to invest, 50 are in a tax-advantaged IRA account, and 50 are not.
If we start crashing again and I start working money back in, my current thought is that I’m better off working the IRA stuff in first, because it has about 25-30 years to grow, so if it goes in at S&P 2700 and it keeps dropping and takes a long time to recover, it’ll still be very profitable in the long run. The other money I would then work in if it kept dropping even farther and/or once we’re in the clear on COVID-19 one way or another, because I’m more likely to need that money in the next 3-5 years for a down payment on a house, for a business investment if live poker doesn’t come back, etc… So it’s more important to get that money in closer to the bottom, or to avoid the higher risk that comes with buying higher.
Agree/disagree?
I’ll just give you just a couple of things to think more about:
- You shouldn’t be investing money you think you may need in 3-5 yrs in stonks.
- You can’t tax loss harvest in an IRA.
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Regarding #1, I currently have less than 30% of my net worth invested. So I feel like it’s ok here. That said, about 55-60% of my net worth is basically working capital for my business (poker). It’s not like I have been house hunting, though, I’m just thinking that there could be good opportunities in the next couple of years.
Regarding #2 currently all of my investments are in IRAs. So tax loss harvesting isn’t really a factor unless I have multiple non-IRA investments right?
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It’s hard for me to say without knowing a lot more detail, but as you’ve considered this and are comfortable with your allocations, then I think you’re fine.
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When you said “50 are not”, I was assuming that it was in a regular taxable, non-retirement account. If all of your investments are in IRAs, then you can’t tax loss harvest. At least not by any method I’ve heard of.
Right, right now the 50 non-IRA units in the example are just sitting in the bank. So it’s a matter of putting them to work here in the coming months - but there will be nothing to tax loss harvest against just yet.
Basically, I just passed the threshold where I felt like I had all my working capital covered to be very secure at the highest stakes I’ll be playing for the foreseeable future, and thus a lot of my profits from the last 6-8 months are available to be invested.
You don’t need anything to harvest “against” right now per se. You can carry the loss forward to future years and you can always do $3000/yr IIRC against earned income.
If you are sitting with your IRA in cash now I think you have to be waiting for a better entry point than 2700
Oh ok, I didn’t know that. I guess I need to do some research - can you carry it forward indefinitely?
I’m working out the plan, basically on the way down I worked about half the dry powder in my IRA in, starting from about 2,700 and breaking it up into pieces that went in every 2-3% drop from ATH. I was prepared for a lower bottom, hence having about half the dry powder still available. I have accumulated additional dry powder that won’t be able to go into the IRA, so I’m basically thinking of following a similar plan starting from about 2,700 again - covering my bases so I’m getting exposure the more it drops, the question is just which account to start buying from first.
I would be inclined to agree that 2,700 is not a great entry point, but I think the Fed and Congress are going to start firing away again if it starts really plummeting, so it’s hard to start guessing how big they’ll fire and when, and pricing that in seems impossibly difficult.
Grunching, but one thing to consider is that regardless of the pandemic, there are a number of industries that aren’t going to go back to business as usual, because this has shown just how feasible WFH is. So you will likely see many industries like law shift to do more wfh and less chained to you desk in a n office. Not only will your employees like this, but also it will reduce overhead by cutting down the need for a ton of expensive office space. So, if you think that shift is likely, what will that do you all the businesses that cater to office workers in cities? They are going to take a huge hit.
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Lol wtf happened to stonks during the day?
What did his algorithm predict for today?
Initial fall came as unemployment numbers were worse than predicted (usually that has caused a rise) unsure what happened after … I guess just optimism? I fully expect this week’s losses to be pared back next week or tomorrow
Me too. I sold 50% of my puts yesterday to prepare to buy them back with later expiration on the next move up.
Yes, you can carry forward indefinitely (99% sure without looking it up). I suppose tax laws could change, but even then I’d expect them to be grandfathered in.
That algo did nothing today. It only trades s&p (ES), only between 2-4pm, and makes like 2 trades per month. Its entry signal is so simple it would be nuts if it had an edge.
His other algo trades 4 instruments around the clock. It’s in two positions at the moment: long 30yr T-bond futures as of 2 days ago, and short soybeans as of yesterday. I will say the bonds trade is crushing. This algo just waits for a directional trend to develop, then rides along hoping it will continue (under the belief that price movement isn’t statistically independent).
He has a 3rd algo in the making that’s backtesting like God (meaning curve-fitting, most likely). Whereas the other two are lagging indicators and always late to the party, this one tries to predict reversals. When it starts trading it might be fun to track.
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