@placidsound
I've been delving into options math since 2018; I thought there would be a reasonable way to extract market sentiment from options prices as an input for the asset allocation we do at an RIA I cofounded. Eager to share my perspectives on options investing.
Financial advice, like health advice, should be recipient specific. Otherwise, we wouldnt need financial advisors - we would all just put our money into the same funds and with the same allocation.
The risk here is that people pile their wants into the need category and then use that to explain why they cannot save. The most important number in the rule is the 20% save percentage. Do that first and then however you divvy up the remaining 80% doesn't matter too much.
The challenge here is defining the line between needs and wants. Food and shelter would normally be defined as needs, but do you need the fancy apartment and do you need to do takeout three nights a week? How about transport. You need it to get to work. But did you need to lease a new car?
I just published a book "Unmonetized Collateral" on Amazon. Id be happy to send you the pdf if you DM me. Honest feedback welcome.
Just read this from a paper from Clif Asness. Organizations aiming for a 5% real return are in a difficult position now. Traditional diversified portfolios of equities and bonds are not positioned to get you there. You need something different, less explored, to get to that target return.
90% of traders underperform their benchmarks. How do the algorithms do against the relevant benchmark?
Note, this article is not actually about doubling your returns. Its just a simple article that says that if you stay invested, returns compound. If you are a student of #personalfinance, you know this already.
But if you look at the graph, their EBITDA was very small. Amazon barely earned anything. They all appear to have invested significantly in Australia.
Shorten the timeframe and the bullish pattern becomes bearish and the bearish pattern becomes bullish.
Of course, if you retire earlier you would expect to spend more time in retirement and thus would want to work longer, investment appreciation matters, inflation is real, etc. But the point is the same. There is a double impact from learning to live on less.
#personalfinance #f.i.r.e. #fire
But now let us say you only spend $50k of that $150k. Now you are saving $100k a year instead of $50k a year. And 2o years of retirement living is only $1 million, not $2 million. So that would only take you 10 years to save that amount! You just shaved off 30 years of working!!!
Let us say you earn $150k after taxes and spend $100k after taxes. Ignoring inflation and return on investments (I encourage you to create a spreadsheet to analyze this which does include these factors), it would take you 40 years to save up enough for 20 years of life in retirement (that is $2mil).
Learning to live on less has a double impact on your retirement savings. It increases your savings rate, helping you get to your retirement goal faster, but if you carry forward those learnings into retirement, it reduces what you need to save. Let's consider a simple example...
The fact this isnt relevant news is what makes the news relevant. It is not clear we have made any progress with Europe and China. The administration's efforts have only been effective dealing with small, poor economies that are not going to buy US manufactured goods.
These are good points.
If you are invested in an ETF, finding a similar replacement is fairly easy, but individual stocks move on company specific factors that are hard to gain exposure to through other stocks.
Still, investors should know the rules. Thank you for informing us.
I calculate options-implied market expected 3-month forward returns of major equity indices each month, most recently end of day yesterday. That also demonstrated muted to weak expectations from investors on equity returns over the coming months.
#options #optionstrading #investmentsignals
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#options #optionstrading #marketforecasts #signals
One way is options implied equity forecasts. I publish 3-month forward implied returns once a month. I just sent out the latest calculations through my newsletter. I will post them here later this week. To receive this measure of sentiment before it is available here, please subscribe:
Investor sentiment is negatively correlated with future returns. Market sentiment seems to have a regression to the mean tendency. If the market is bearish today, the chance that sentiment will improve in the next month is greater than the chance it will decline. How can you keep track of sentiment?
One way is options implied equity forecasts. I publish 3-month forward implied returns once a month. I just just sent out the latest calculations through my newsletter. I will post them here later this week. To receive this measure of sentiment before it is available here, please subscribe:
It doesnt cost $80k a year to educate a college kid. We have to figure out how to offer affordable education to the next generation.
When you cancel debt, the next generation of students expect their debt to be cancelled, so they will be more willing to take on debt to go to college. That increased demand for debt just results in colleges increasing tuition.
We need to do something about the cost of education. But cancelling student debt is not the answer, certainly not the first step.
Did these tools help automate data pulling or do you still have to download and insert the raw data into your tracker?
Both are true for some portion of the market, but there are plenty of people who do not fit into either bucket. And for them, lower housing costs are beneficial.
I assume you are saying either a) due to inflation and slow wage growth, potential buyers have not been able to save or b) home buyers would be selling their existing home to buy a new home and that existing home is now worth less.
Ultimately, we should be maximizing welfare. And if we were to check, there are probably a lot of low cost things that bring us joy and a number of high cost things that don't really bring us joy. Realigning our expenses for joy makes a lot of sense.
To see this for yourself, create a 100x11 matrix of random numbers, one column for your "dependent" variable and 10 for your independent variables. Now do some linear regressions, removing some variables and adding others, until you find a really nice fit. But you know there is no relationship!
I truly believe supporting rank choice voting will make third parties more viable, giving us a centrist option in more elections. No more choosing between crazy this way or crazy that way, we can have a rational middle ground. Support rank choice voting if its on the ballot in your state.