***Official*** 2016 Stock Market Thread

[FelixDeCat]

My question is, will speculators speculate on the price of stocks, commodities and other instruments so close to a federal holiday? I've been off this week so its all good to me!

 

[Imp]

Today's magic number is 1850.

1850

1850 job cuts planned at Bank of Montreal:
http://www.cbc.ca/news/canada/montreal/bmo-job-cuits-1.3600534

1850 job cuts planned at Microsoft (there be a VIDEO, yo):
http://www.reuters.com/article/us-microsoft-phones-idUSKCN0YG0XV

One's a drop in the bucket in a huge country, the other is one of the big 5-ish banks in the country and a likely sign of what may be coming with the others -- they've all been cutting for years.

 

[edro]

What is the point of Bond Funds in retirement accounts?

For instance, most that I see barely have higher returns than their expense ratio, meaning they are essentially flat.
Historically, have bond funds ever performed higher than ~2% (or inflation)?
Or are they always low, but stable ("stable income")?

Are they just a hedge against the stock market dropping?
That seems obvious, so I guess I just answered my own question...

 

[JEDI]

What is the point of Bond Funds in retirement accounts?

For instance, most that I see barely have higher returns than their expense ratio, meaning they are essentially flat.
Historically, have bond funds ever performed higher than ~2% (or inflation)?
Or are they always low, but stable ("stable income")?

Are they just a hedge against the stock market dropping?
That seems obvious, so I guess I just answered my own question...

yes, hedge vs market drop.
bonds pay better interest than banks.

but it's not risk free. bonds can go negative, like they did last year (I think)

 

[Charmonium]

My high yield fund is still doing pretty good. But if you're in a situation where you need triple or double A debentures in your fund and interest rates are effectively negative, then yeah, the only reason to hold them is security.

I don't think all funds have such high expense ratios though. I'm sure many do but there are many like Vanguard where you're paying a couple tenths of a percent.

 

[edro]

bonds pay better interest than banks.

I understand the premise, but looking at the bond funds available in my 401k:

FAGIX - FID CAPITAL & INCOME - .72% ER, -3.05% 1yr = -3.77% Return
OIBIX - OPPHMR INTL BOND I - .57% ER, 2.00% 1yr = 1.43% Return
PTTRX - PIM TOTAL RT INST - .46% ER, 1.34% 1yr = 0.88 Return
VFIRX - VANG ST TREASURY ADM - .10% ER, 1.18% 1yr = 1.08% Return
MIP CL Stable Value - .78% ER, 1.19% = 0.41% Return

Yet many online savings accounts give 1% FDIC.
What exactly is "stable" or "income" about the above?

Is it just a bad time in the market for Bond Funds, since the last 5 years have been great on stocks?

I guess my questions is, economically or through regulations, are Bond Funds virtually capped at ~2%?
5yr and 10yr show higher returns, so I guess bond funds can increase higher than ~2%.

 

[dullard]

What exactly is "stable" or "income" about the above?

Is it just a bad time in the market for Bond Funds, since the last 5 years have been great on stocks?

Bonds are a tricky beast. For example municipal bonds (or any bond with tax benefits) don't belong in a retirement account. You are getting less return for that tax benefit, but you don't need that tax benefit in a retirement account that already give you tax benefits. The reverse is true in taxable accounts. Why pay bond fund fees when you can just buy the treasury bonds directly with no fee? So, first you need to be very clear which bond fund is right for which type of account you are using.

Secondly, bond funds can lose money. Individual bonds do not lose money, unless the company/government you lent the money to goes bankrupt. It is inflation dependent though. A bond that pays 2% when inflation is 3% is actually a net loss for you. So, you need to be careful of whether or not you want to buy individual bonds or a bond fund.

Finally, you need to look at the actual individual holdings and not the type of holdings. A bond fund with a lot of 2% bonds in a 3% inflation world is terrible--while a very similar looking bond fund which happens to hold 4% bonds since they bought at a slightly better time is great. Those two bond funds may claim to buy the same types of bonds, but the timing was slightly different.

And most importantly, we are in a low interest rate period. Bond returns are low for that reason. But that isn't likely to last. Bond returns will probably creep up with interest rates. Thus yes, the last few years have been harder on bonds.

 

[Imp]

Woohoo, 3% down mortgage in the US of A. And it's "low risk."

Auto-play video:
http://www.cnbc.com/2016/05/26/wells-fargo-launches-3-down-payment-mortgage.html

Good times ahead!

 

[Artdeco]

Holy shit, Google won the Oracle lawsuit. (Of course it'll be appealed, but who cares)

<----Strips off clothes and dances naked.

I mindlessly bought 100 shares on Tues, couldn't sell till tomorrow am without triggering pattern day trading penalty, have been white knuckling it all day...

Had bought back my covered call so I could sell tomorrow am, I just knew they were going to lose.

 

[Imp]

Meanwhile in Australia...

Apartments in Melbourne's Docklands, CBD and Southbank are being resold up to 24 per cent below their previous off-the-plan purchase price...

http://www.afr.com/real-estate/resi...-prices-tumbling-in-melbourne-20160527-gp55xa

Melbourne, so not quite a middle of nowhere boom town... But don't worry, I heard that Australia's house prices went up again after a short stall. And their central bank still has 1.75% before hitting zero. That saved the U.S. a decade ago...

 

[KB]

I understand the premise, but looking at the bond funds available in my 401k:

FAGIX - FID CAPITAL & INCOME - .72% ER, -3.05% 1yr = -3.77% Return
OIBIX - OPPHMR INTL BOND I - .57% ER, 2.00% 1yr = 1.43% Return
PTTRX - PIM TOTAL RT INST - .46% ER, 1.34% 1yr = 0.88 Return
VFIRX - VANG ST TREASURY ADM - .10% ER, 1.18% 1yr = 1.08% Return
MIP CL Stable Value - .78% ER, 1.19% = 0.41% Return

Yet many online savings accounts give 1% FDIC.
What exactly is "stable" or "income" about the above?

Is it just a bad time in the market for Bond Funds, since the last 5 years have been great on stocks?

I guess my questions is, economically or through regulations, are Bond Funds virtually capped at ~2%?
5yr and 10yr show higher returns, so I guess bond funds can increase higher than ~2%.

The interest payment (yield) on a bond doesn't change (2% in your example), but the value of the bond does. Bond values go up when interest rates drop and the reverse is true, bond values shrink when interest rates rise.
The only way rates could drop further would be if we go to negative rates and I don't see that happening. The Fed is saying we will see interest rates rising in the future so expect some more negative returns from those bond funds. The value of a bond fund is only important if you plan to sell it. If you plan to hold it and just to collect interest payments then its value is not important, only the yield is.

http://www.investopedia.com/ask/answers/04/031904.asp

 

[FelixDeCat]

Lending Club is one crazy stock. One fiasco after another has made it fall $20+ to $3. Now back over $4 on news of a big investment from an Asian hedge fund. Their problem is funding however with current lenders (loan funders/ investors) worried they might not receive full payment on existing loans, thus the need to attract more funding to stay in business.

I think they may go bankrupt unless they can find a new source of cash to loan out. If they can, it could go back to $10. I have no current position either way, its just an interesting story to watch. The put writers aren't offering much premium (considering the risks) so they must think LC will survive one way or another.

Ticker: LC

LC up another 25% since this post to $5 on talks from a funding deal with Citigroup.

If a big bank loans the money will they then become a "normal" lender?

 

[dullard]

Holy shit, Google won the Oracle lawsuit. (Of course it'll be appealed, but who cares)

<----Strips off clothes and dances naked.

I haven't followed it too closely, but is this correct?

• Sun provided APIs free of charge to anyone on their website,
• Google used it without payment,
• Oracle bought Sun,
• Oracle sued Google for using it without payment.

If so, that will be a tough argument to make to a jury. Juries have the attitude that once something is free on the internet, it is free and should be free. The letter of the law doesn't really matter to a jury with personal bias like that. A judge would be a whole other story.

But ultimately, I think you are slightly overreacting to a 1% gain.

 

[Charmonium]

LC up another 25% since this post to $5 on talks from a funding deal with Citigroup.

If a big bank loans the money will they then become a "normal" lender?

I think LC was already doing something like that with another bank. But the way it was structured, they managed to avoid the rules that normally govern bank lending. So LC was operating as a thinly veiled front for the banks that were actually financing them. I think they way they did that is by buying the loans that LC originated.

As I understand it, that was the real problem with LC - the legal, or illegal aspect of it.

Now if they change to being a subsidiary of Citigroup so that the loans aren't being back-doored, then I think they have a future, but not as they exist now.

 

[Artdeco]

I haven't followed it too closely, but is this correct?

• Sun provided APIs free of charge to anyone on their website,
• Google used it without payment,
• Oracle bought Sun,
• Oracle sued Google for using it without payment.

If so, that will be a tough argument to make to a jury. Juries have the attitude that once something is free on the internet, it is free and should be free. The letter of the law doesn't really matter to a jury with personal bias like that. A judge would be a whole other story.

But ultimately, I think you are slightly overreacting to a 1% gain.

Yes, you have the facts correct, I didn't care about a 1% gain, Google stock basically goes from the bottom left to the top right on charts, I was concerned with a drop if they lost, Cisco was asking 9 billion in damages.

Nice bump today, sold a CC for next week @ 747.

As far as the 1%, the only thing Cramer says I agree with is that pigs get fat, hogs get slaughtered, I'll take 1% any day

 

[eng2d2]

Looks like sell in may is not happening.

 

[Imp]

Yaaaaaaaaaaaaaaaaaaaaaaaaaaaa.... US GDP for Q1 got revised up!

There be a video:
http://www.cnbc.com/2016/05/27/us-q1-gross-domestic-product-second-estimate.html

From 0.5% to 0.8% annualized. That's a whole 7.5 basis points higher on a quarterly basis!

 

[Imp]

According to mass media, something something because of ease on concerns about China. Well, thank goodness that's over!

The risk of a default chain reaction is looming over the $3.6 trillion market for wealth management products in China.

WMPs, which traditionally funneled money from Chinese individuals into assets from corporate bonds to stocks and derivatives, are now increasingly investing in each other.

Max sound auto-play video:
http://www.bloomberg.com/news/artic...n-reaction-threatens-products-worth-35-of-gdp


Edit: Uh ohs, phone and online polls show a lead in favor of Brexit with only 3 weeks to the vote.

http://www.dailymail.co.uk/news/art...rive-public-fears-numbers-coming-Britain.html

 

[sm625]

It is time. Buying SPY puts, June 10 and June 17. My target is the $SPX 200dma @ 2010.

 

[us3rnotfound]

It is time. Buying SPY puts, June 10 and June 17. My target is the $SPX 200dma @ 2010.

You don't know anything. I'm sending this from my HTC One on Tapatalk by the way.

Sent from my HTC One_M8 using Tapatalk

 

[sm625]

You don't know anything.

I know that I just added June 3rd puts into the close. 2% down move coming within 48 hours, followed by a little rally and then another 4-6% drop next week. That is the bet.

 

[us3rnotfound]

I know that I just added June 3rd puts into the close. 2% down move coming within 48 hours, followed by a little rally and then another 4-6% drop next week. That is the bet.

ABC. Always be closing.

I drove here in an $80,000 BMW. You drive a Hyundai.

Sent from my HTC One_M8 using Tapatalk

 

[Imp]

So, either the market isn't afraid of interest rate rises anymore or they don't believe it's going to happen. On the other hand, the market barely budged in December -- Christmas? -- before tanking hard in January. And Brexit is happening in just over 3 weeks. This gonna be a very exciting month...

And a big bank in Canada is getting scared...

A major bank says it&#8217;s going to back off issuing mortgages in Metro Vancouver over our region&#8217;s housing prices.

http://www.news1130.com/2016/05/31/bank-mortgage-metro-vancouver-scotiabank/

Not in the mood to find an article, but Canada's big banks just reported over the past week or two. Most of them increased their loan-loss provisions significantly. But it's supposedly only for energy sector loans. Good luck on the mortgage and consumer credit ones...

 

[Imp]

Oh, sweet. The St. Louis Fed finally updated their chart for Delinquencies on All Loans and Leases, Commercial and Industrial, All Commercial Banks.

See if you can spot the pattern...

https://research.stlouisfed.org/fred2/series/DALLCIACBEP

 

[Charmonium]

I think I've seen that chart before and it IS ominous. But I really can't see going into anything but maybe a technical recession any time soon.