Stock Trading: try to reduce exposure to companies with CEOs who are on ketamine 24/7

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Stock Trading: try to reduce exposure to companies with CEOs who are on ketamine 24/7

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DapperDraculaDeer: Aug 4, 2007; Shut up, Nick! You're not Twilight.

Well, you see their board of directors had some women and a black dude on it so......

# ? Mar 13, 2023 20:46

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# ? Jun 1, 2024 16:26

Hadlock: Nov 9, 2004

Subvisual Haze posted:

Nobody could have predicted that the zero percent interest rates might at some point increase, causing long-duration bonds purchased at zero rates to decrease in value.

# ? Mar 13, 2023 21:05

pmchem: Jan 22, 2010

DapperDraculaDeer posted:

Well, you see their board of directors had some women and a black dude on it so......

before anyone reports this post, I'm gonna assume you're referring to the lovely WSJ op/ed from today that is being widely mocked on twitter

I'll avoid linking it here so that this thread doesn't get too widely derailed into politics. a lil' financial politics chat mid-crisis? ok. racial politics of the WSJ op/ed page? let's move on

# ? Mar 13, 2023 21:05

Agronox: Feb 4, 2005

Yeah! Speaking of trades, did anyone do any bottom fishing this morning?

Customers Bancorp (CUBI) is a mid-size East Coast regional bank that got caught up in the carnage earlier today. They have a 5.375% subordinated bond that trades on the NYSE (CUBB). This morning it was basically trading as if the company will be closed by the FDIC any time now; where I bought it, the straight yield was 13.1%.

The balance sheet seems pretty decent and the deposit base shouldn't be too flighty (43% of them are in accounts under the FDIC limit, as opposed to the 2.7% of SIVB, for example). The CEO bought $500k of the common this morning too.

CUBB closed at 15.75 so it's been a nice trade so far. Though I'll probably get rid of it before too long because it's stressful.

Also, a friend of mine took WAL from $10 to $25, but then got stopped out at the lunchtime slide to $20. Still, a nice double there for something he held for only a few hours...

# ? Mar 13, 2023 21:42

Smashing Link: Jul 8, 2003; I'll keep chucking bombs at you til you fall off that ledge!; Grimey Drawer

Maybe a stupid question but if there is a bank run where does the money end up? Seems like another bank. Where else can you keep a lot of money safely?

# ? Mar 13, 2023 22:19

Bremen: Jul 20, 2006; Our God..... is an awesome God

Smashing Link posted:

Maybe a stupid question but if there is a bank run where does the money end up? Seems like another bank. Where else can you keep a lot of money safely?

Judging by the fact that treasury bill yields are down like a whole percent in the last five days, I'm guessing for a lot of people the answer was there.

# ? Mar 13, 2023 22:31

RacistsSuck: May 3, 2021; by Fluffdaddy

Smashing Link posted:

Maybe a stupid question but if there is a bank run where does the money end up? Seems like another bank. Where else can you keep a lot of money safely?

So you're saying this is good for bitcoin?

# ? Mar 13, 2023 22:31

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

Bremen posted:

Judging by the fact that treasury bill yields are down like a whole percent in the last five days, I'm guessing for a lot of people the answer was there.

Money market funds too, probably. (Which is mostly just t-bills and repo trades collateralized by t-bills, if I'm correctly understanding how they work)

# ? Mar 13, 2023 22:35

Red: Apr 15, 2003; Yeah, great at getting us into Wawa.

Smashing Link posted:

Maybe a stupid question but if there is a bank run where does the money end up? Seems like another bank. Where else can you keep a lot of money safely?

Not a stupid question at all, just a big rabbit hole that's probably scarier than you'd like.

# ? Mar 13, 2023 22:49

Subvisual Haze: Nov 22, 2003; The building was on fire and it wasn't my fault.

Bremen posted:

Judging by the fact that treasury bill yields are down like a whole percent in the last five days, I'm guessing for a lot of people the answer was there.

That was my read too of the quite remarkable change in yields across all treasury durations today. Treasury yields rapidly decreasing means a lot of people are suddenly buying them up. Which is a smart move that probably should have been done several months ago, but nothing like a bankrun to wake the public up.

# ? Mar 13, 2023 23:38

4/20 NEVER FORGET: Dec 2, 2002; NEVER FORGET OK; Fun Shoe

FRC was a scalper's paradise today, made multiple thousands trading the volatility following each halt. Hoping for more of this insanity the rest of the week.

# ? Mar 14, 2023 00:17

Grem: Mar 29, 2004; Can't post for 26 days!

pmchem posted:

thinkin' about investing in IBKR tomorrow, anyone care to make an argument against them?

long thesis: high ROI, low PEG trailing metrics. has perfectly managed duration risk by using t-bills as assets, and been vocal about it in earnings calls, avoiding the trap other financials find themselves in right now. would potentially benefit from any client moves away from scwhab. advertises on bloomberg radio all the time for RIA/institutional clients and it seems to be paying off, with YoY revenues all up despite the opposite happening for retail brokerages like HOOD. it just seems to be a well-managed business that is caught in the wash during this SVB crisis? some daytrader goons have used ibkr.

bear thesis: while it had a recent a recent all time high, it was at 52 in the middle of last year and share count has went up, not down, since then. Chairman continues to sell his massive pile of shares. Recent high margins may not be sustainable. Low dividend, share count not decreasing, basically makes this a bet on a stock market tradin' growth stock going into a recession. some daytrader goons have moved away from ibkr.

someone roast this company

I would stay far away from any company where the owner is selling a massive amount of shares.

# ? Mar 14, 2023 00:51

pmchem: Jan 22, 2010

Grem posted:

I would stay far away from any company where the owner is selling a massive amount of shares.

yeah. in this case, he's 78, retired as CEO in 2019, and filed his first plans to sell shares in 2020. he's been doing a max of 20,000 shares/month since then. basically he's planning for retirement and death.

on the other hand, warren isn't doing that with BRK. but he also tells his heirs to own the S&P

# ? Mar 14, 2023 01:11

cirus: Apr 5, 2011

4/20 NEVER FORGET posted:

FRC was a scalper's paradise today, made multiple thousands trading the volatility following each halt. Hoping for more of this insanity the rest of the week.

Props for serious cojones way too hot for me

# ? Mar 14, 2023 02:15

Red: Apr 15, 2003; Yeah, great at getting us into Wawa.

https://twitter.com/WatcherGuru/status/1635485926779486212

So the big banks are seeing an enormous influx of new customers who are moving away from small regional banks, and trying to figure out how to quickly allow transfers in.

So, basically, the bigger banks are going to come out ahead in the end, and the smaller banks are going to eat poo poo.

# ? Mar 14, 2023 05:10

Baddog: May 12, 2001

Red posted:

So, basically, the bigger banks are going to come out ahead in the end, and the smaller banks are going to eat poo poo.

Yep, all the "screw the fat bankers, we aren't going to bailout banks" rhetoric is just resulting in fatter fat bankers, fewer slightly chunky ones, and less choice. Although I think there will always be new banks springing up to replace the ones that go under. poo poo, I'd like to start a bank. How do we get one rolling?

# ? Mar 14, 2023 05:22

Hadlock: Nov 9, 2004

I think you start off as a regional state bank in a heavily agricultural area and then as soon as you get your banking license, aggressively start buying up other local banks. That seems to be the story for every large regional bank and half of the national level banks

I'll gladly angel invest in your banking startup. Seems like the worst outcome as an early bank investor in a failed regional bank is you get double your money back when it gets bought up by a more successful regional bank

# ? Mar 14, 2023 08:17

DapperDraculaDeer: Aug 4, 2007; Shut up, Nick! You're not Twilight.

pmchem posted:

before anyone reports this post, I'm gonna assume you're referring to the lovely WSJ op/ed from today that is being widely mocked on twitter

I'll avoid linking it here so that this thread doesn't get too widely derailed into politics. a lil' financial politics chat mid-crisis? ok. racial politics of the WSJ op/ed page? let's move on

I wont bring it up again to avoid a derail too, but if anyone thought I was serious about this post and took offense I want you to know Im sorry. That WSJ op/ed was just so outrageously off the wall the urge to be facetious was too strong for me to resist.

# ? Mar 14, 2023 14:05

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

Bremen posted:

Judging by the fact that treasury bill yields are down like a whole percent in the last five days, I'm guessing for a lot of people the answer was there.

I have some extra cash to roll over, and Fidelity just posted the new t-bill auctions. The expected yield of the 4 week bill dropped 25 bps in the like 3 minutes I took me to read over the table and click "preview order". A 4 week bill is now paying like ~5 bps more than SPAXX lol.

# ? Mar 14, 2023 18:09

Bremen: Jul 20, 2006; Our God..... is an awesome God

mrmcd posted:

I have some extra cash to roll over, and Fidelity just posted the new t-bill auctions. The expected yield of the 4 week bill dropped 25 bps in the like 3 minutes I took me to read over the table and click "preview order". A 4 week bill is now paying like ~5 bps more than SPAXX lol.

If you're under the FDIC limit you might want to look at CDs instead. I got a 5.4% Schwab 18 month CD yesterday; treasure bills are looking pretty saturated right now but I think banks are suddenly very desperate for liquidity.

# ? Mar 14, 2023 18:39

lurksion: Mar 21, 2013

Yeah there's a ton of CDs in the 1Y-2Y range coming in at 5.35ish

I see a Barclays 1Y for 5.4 right now

# ? Mar 14, 2023 18:46

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

Yeah there's some 3mo brokered CDs touching 5% so I've been putting in bids on those for new issues. I don't wanna do a full year lockup for personal reasons and brokered CDs carry more interest rate risk because you can only sell them into a very very thin secondary market if you need the cash before maturity.

# ? Mar 14, 2023 19:36

Tokyo Sex Whale: Oct 9, 2012; "My butt smells like vanilla ice cream"

I�m not sure why I�m on a mailing list for these guys but here�s an explanation for why SVB et al aren�t hedging their interest rate risk that I wasn�t aware of. It�s unflattering accounting to hedge your held-to-maturity portfolio.

quote:

The Macro Compass posted:

Banks buy bonds for two main reasons: clipping coupons and regulation.

When you attract deposits and do nothing on the asset side, you are going to accumulate reserves at your domestic Central Bank.

But banks want to make money, and bonds generally yield more than Central Bank reserves (chart below).

Sum up regulation (LCR) forcing large banks to own ~20% of their balance sheet in liquid assets (read: bonds) and there you go: banks have huge investment portfolios to clip coupons and meet regulation.

How do banks approach the risk management of such gigantic portfolios?

A prudent bank hedges most if not all its interest rate risk coming from the securities portfolio with swaps.
The bank buys bonds (receives fixed rate) and pays swaps (pays fixed rate) against them as a hedge.
Banks earn the (credit) spread between bond yields and swap yields, and that�s it.

But now comes the trick: accounting.

Swaps are derivatives, and their standard accounting treatment is to directly hit the P&L of the bank hence causing quite some immediate volatility for the financial results of the bank.

Banks don�t like that at all.

That�s why the regulator allows for something called hedge accounting: if you buy bonds and put them in Available-For-Sale (AFS) and use swaps to hedge the interest rate risk, all that P&L volatility is gone.
The small volatility of offsetting bonds and swaps hits the capital position of the bank.

Easy-peasy, no drama: little volatility as risks are hedged, and friendly accounting treatment (no P&L vol).

But what happens if you book bonds in Held-To-Maturity (HTM) instead?
In the US, once you book bonds in HTM the accounting rules are such that hedging the interest rate risk on these bonds is quite punitive.

Swaps hedging HTM bonds do not receive the friendly accounting treatment and hence hit the P&L of the bank � but bonds don�t, which creates a massively inconvenient asymmetry and P&L vol that banks hate.

The result is that US banks end up NOT hedging the interest risk on HTM bonds.

This is important because the HTM losses accumulated on these bonds can be very large.

Charles Schwab�s HTM bond losses are almost double (!) their capital position, and even for systemically important banks like Bank of America these losses could wipe out half of their capital!

# ? Mar 14, 2023 20:53

pmchem: Jan 22, 2010

bought some citi ($c) and ibkr today. conservatively managed companies with no ugly duration issues and reasonable metrics that were caught in the wash. could also benefit from any clients moving from the companies with bad balance sheets.

ibkr thesis was in prior post. citi has very good p/tbv compared to history, buffett owns it, and it may be restarting buybacks after banamex is sorted out. it�s a bank in transition but i�m rolling with BRK�s dd.

# ? Mar 14, 2023 21:54

pmchem: Jan 22, 2010

also lol sucks to be this guy

https://twitter.com/AlderLaneEggs/status/1635753227852603393?s=20

# ? Mar 14, 2023 22:28

GhostofJohnMuir: Aug 14, 2014; anime is not good

pmchem posted:

also lol sucks to be this guy

https://twitter.com/AlderLaneEggs/status/1635753227852603393?s=20

wait, walk me through this because i don't trade options. did robin hood allow someone to set up a put without owning the underlying shares, presumably paying the associated premiums, but won't let them exercise the option? is trading in sbny completely halted or could they offer to pay someone pennies on the dollar for the necessary shares to exercise the option?

if so, it's wild that robinhood will happily let you place an option that violates their internal rules to exercise

# ? Mar 14, 2023 22:37

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

pmchem posted:

also lol sucks to be this guy

https://twitter.com/AlderLaneEggs/status/1635753227852603393?s=20

My friend ran into a similar issue with puts on a Russian index ETF. Fortunately he sold some of the position (because me and another friend yelled at him to take some profits off the table) before the symbol halted, never to resume. So he only lost about half the profits and still came out ahead, but ate about $30k when they expired.

# ? Mar 14, 2023 22:38

pmchem: Jan 22, 2010

mrmcd posted:

My friend ran into a similar issue with puts on a Russian index ETF. Fortunately he sold some of the position (because me and another friend yelled at him to take some profits off the table) before the symbol halted, never to resume. So he only lost about half the profits and still came out ahead, but ate about $30k when they expired.

what broker?

# ? Mar 14, 2023 22:41

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

GhostofJohnMuir posted:

wait, walk me through this because i don't trade options. did robin hood allow someone to set up a put without owning the underlying shares, presumably paying the associated premiums, but won't let them exercise the option? is trading in sbny completely halted or could they offer to pay someone pennies on the dollar for the necessary shares to exercise the option?

if so, it's wild that robinhood will happily let you place an option that violates their internal rules to exercise

Every broker will let you do that if you're buying options. The standard contract clearly states you have to hold the underlying security to exercise. It's just that in most circumstances people don't bother, you just sell the option because as the expiration date approaches the trading price approaches the intrinsic value. Options market makers are happy to buy an almost expired in the money option (with a small discount for their trouble) and exercise it, so there's always a bid.

The other thing some brokers will do is if you tell them to exercise they will just automatically buy the stock at market price for delivery. This is really just a convenience service for their customers but it doesn't work if the symbol isn't trading. They can't just take another customer's shares and deliver them, hoping to backfill the debt later if it ever trades again.

One of the underappreciated risks of shorting a stock is you can be too correct and not be able to unwind your position and take profits.

# ? Mar 14, 2023 22:48

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

pmchem posted:

what broker?

I don't know exactly, it might've been RH though.

I don't think like, Fidelity or Schwab would be any different here though. They might be nicer in explaining why. The OCC will declare a cash settlement for when shares are cancelled, like in an acquisition or at the end of bankruptcy. That takes some time though and doesn't help you if your contracts are expiring on Friday.

# ? Mar 14, 2023 22:53

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

OCC published this memo for SBNY: https://infomemo.theocc.com/infomemos?number=52110

Aiui:

1) There's no restrictions on settling contracts

2) However NSCC has stopped settlements for this stock so OCC isn't going to be a central clearing house for this. If a broker needs to exercise a contract you have to:
- Ask OCC who their counterparty is.
- Contact that broker and settle the contract, which means swapping stock for cash.

None of this works if you don't actually hold the stock though, which this angry Twitter person does not.

# ? Mar 14, 2023 23:07

shame on an IGA: Apr 8, 2005

lmao somebody mad enough to edit wikipedia

quote:

Options Clearing Corporation (OCC) is a United States clearing house based in Chicago. On March 10th of 2023, they sent a letter to options holders of SVIB stating that they were no longer regulating SVIB right when it came time to pay the shorts involved in the deal, and that broker to broker deals would have to made instead. It specializes in equity derivatives, Clearing (financial)|clearing]], providing central counterparty (CCP) clearing and settlement services to 16 exchanges. Started by Wayne Luthringshausen and carried on by Michael Cahill. Its instruments include options, financial and commodity futures, security futures and securities lending transactions.

# ? Mar 14, 2023 23:26

Baddog: May 12, 2001

Goddamn, that *sucks*

I hadn't thought that you would ever be in a position to either not sell the option or take delivery. If this is true, everyone who is short puts is breathing a massive sigh of relief.

# ? Mar 14, 2023 23:34

DeadFatDuckFat: Oct 29, 2012; This avatar brought to you by the 'save our dead gay forums' foundation.

pmchem posted:

bought some citi ($c)

Same, it looks good to me.

# ? Mar 14, 2023 23:38

GhostofJohnMuir: Aug 14, 2014; anime is not good

this only builds up my naive lay opinion that complex option trades are scary because counter party risks seem to pop up at every turn

# ? Mar 14, 2023 23:40

Shear Modulus: Jun 9, 2010

GhostofJohnMuir posted:

this only builds up my naive lay opinion that complex option trades are scary because counter party risks seem to pop up at every turn

Not having the shares to sell seems more like a self-party risk to me than a counterparty one

# ? Mar 14, 2023 23:52

GramCracker: Oct 8, 2005; beauty by stroll

Toxic Mental posted:

MeetKevin eating good with 6 videos in the last 24 hours alone

Other than looking like a moron in his thumbnail images, what�s the deal with this guy? He just flip flops on his views too much or doesn�t know what he�s actually talking about?

# ? Mar 15, 2023 00:06

Jenkl: Aug 5, 2008; This post needs at least three times more shit!

This looks the same as the stories you see wherr people learn about assignment the hard way.

Actually trading options has details not covered in the textbook that folks don't bother to look into.

# ? Mar 15, 2023 00:11

drk: Jan 16, 2005

I also added more $C to my holdings yesterday in the $45-46 range. I liked it last year at that price, and if anything it looks better now since a lot of large accounts learned this week the risk of banking with a smaller, less regulated bank.

Trading at a sizable discount to tangible book and being #1 in treasury and trade services are pluses as well.

# ? Mar 15, 2023 00:24

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# ? Jun 1, 2024 16:26

Strong Sauce: Jul 2, 2003; You know I am not really your father.

GramCracker posted:

Other than looking like a moron in his thumbnail images, what�s the deal with this guy? He just flip flops on his views too much or doesn�t know what he�s actually talking about?

content

# ? Mar 15, 2023 01:32

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Stock Trading: try to reduce exposure to companies with CEOs who are on ketamine 24/7

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