Investing in the stock market - Discussion

[nuckin_futz]

16 hours ago, DeNiro said:

Looks like great deals to be had on Russian energy stocks!

The companies will be bankrupted. The shares will be worthless. Bondholders will get pennies on the dollar. Equity holders will get force fed a s**t sandwich. New equity will be issued and existing shareholders will get none of it. .

 

I am not sure how securities laws work in Russia (or if there are any lol). The way a bankruptcy works in normal countries is ........

 

1) Secured bondholders get paid first.

2) Unsecured bondholders get paid second.

3) Holders of subordinated debt get paid third.

4) Holders of 'preferred' stock get paid fourth.

5) Holders of common stock get paid last with what's left which is always zilch.

 

There are many different types of crude oil. In the last week benchmark WTI (West Texas Intermediate) has skyrocketed from $90/barrel to as high as $117/barrel. I am sure everyone has seen the effect of this at the gas pump. The stuff in Russia is referred to as "Urals" crude. The market/traders is/are dumping it as fast as they can and being forced to buy WTI, Brent etc. Hence the explosion in the spread between Urals vs Brent.

 

 

Edited March 3, 2022 by nuckin_futz

[Russ]

3 hours ago, nuckin_futz said:

The companies will be bankrupted. The shares will be worthless. Bondholders will get pennies on the dollar. Equity holders will get force fed a s**t sandwich. New equity will be issued and existing shareholders will get none of it. .

 

I am not sure how securities laws work in Russia (or if there are any lol). The way a bankruptcy works in normal countries is ........

 

1) Secured bondholders get paid first.

2) Unsecured bondholders get paid second.

3) Holders of subordinated debt get paid third.

4) Holders of 'preferred' stock get paid fourth.

5) Holders of common stock get paid last with what's left which is always zilch.

 

There are many different types of crude oil. In the last week benchmark WTI (West Texas Intermediate) has skyrocketed from $90/barrel to as high as $117/barrel. I am sure everyone has seen the effect of this at the gas pump. The stuff in Russia is referred to as "Urals" crude. The market/traders is/are dumping it as fast as they can and being forced to buy WTI, Brent etc. Hence the explosion in the spread between Urals vs Brent.

 

 

Wow -22 a barrel.  I saw a few of their oil stocks got frozen today as I was watching them drop.

[J-23]

On 2/17/2022 at 8:52 PM, I.Am.Ironman said:

Any one have a good book recommendation on options trading? I'm more interested in setting up some passive income strategies with options on companies that I follow and stay up to date on. I am in a large cap covered call etf but I would like the flexibility to start to do this on my own (covered calls, selling puts, straddles etc).

Have you found anything good?

[Russ]

On 3/1/2022 at 6:37 AM, Warhippy said:

Oooof.

 

 

I was watching Lukoy.  Buddy decided to try and play it for a comeback rebound in a year from now, he's already down massive from the $11 he grabbed it at unless he had a stop loss lol

[I.Am.Ironman]

25 minutes ago, J-23 said:

Have you found anything good?

Haven't received any suggestions. I have this list: https://www.thebalance.com/best-books-on-options-trading-4688908

 

May look at the 'Options Trading Crash Course'

 

[Boudrias]

Upped my energy holdings another 10% this morning. The market hasn’t seen the real flow of dividends that will be coming thru 2022-23 yet. Most producers have committed to returning 50% of earnings to shareholders. I am getting well over 11% yield on my CNQ. Energy should be a 4-5 year play.

[filthycanuck]

On 3/2/2022 at 10:50 PM, DeNiro said:

Looks like great deals to be had on Russian energy stocks!

Which stocks are these? Can we even purchase some since their market is closed since the war?

[nuckin_futz]

 

Neck-breaking stuff, nickel hits $100,000

• What a short squeeze

 

There aren't many words to describe what is happening in certain commodities markets at the moment as the blowout continues at rather neck-breaking speed. Nickel ended trading last Friday with an already big surge targeting $30,000. Today, it has hit $100,000.

 

That despite the LME stepping in to set limits on spreads and even offer up the option to avoid delivery of the metal(s) in question:

 

The Russia-Ukraine situation has exacerbated conditions in the commodities market with plenty of players out there being caught out while liquidity is sapped due to fear and uncertainty. It's a massive short squeeze and a rather unprecedented one to say the least.

 

LME suspends nickel trading for at least the remainder of the day

• Talk about free markets
•  

If even allowing for physical deliveries to be avoided can't help the situation, then might as well stop it entirely.

Welcome to the world of trading - where the rules are made up as you go along the way.

 

******************

 

That move is about 30 Standard Deviations. That is simply jaw dropping.

 

I believe EV manufacturer's are big users of nickel.

 

Edited March 8, 2022 by nuckin_futz

[Russ]

19 hours ago, Boudrias said:

Upped my energy holdings another 10% this morning. The market hasn’t seen the real flow of dividends that will be coming thru 2022-23 yet. Most producers have committed to returning 50% of earnings to shareholders. I am getting well over 11% yield on my CNQ. Energy should be a 4-5 year play.

Dang I wish I had gotten into energy.  I was way to tech heavy the last year and its bit me in the ass lately lol.  

[Boudrias]

2 hours ago, Russ said:

Dang I wish I had gotten into energy.  I was way to tech heavy the last year and its bit me in the ass lately lol.  

I still hold AMZN, GOOGL and MFST. They are taking a hit but all are cash rich so not worried. I'll just keep an eye and possibly add. The downside risk on oils is likely a demand drop if recession happens. There is a real risk of this. 

[KoreanHockeyFan]

Great to see gold finally turnaround - been building that position for over a year.

[Boudrias]

1 hour ago, KoreanHockeyFan said:

Great to see gold finally turnaround - been building that position for over a year.

Finally in the green on AEM. Only other is FNV which is a streamer. I reduced my gold weighting about a year ago and bought oils. I saw more immediate upside and they paid bette4 dividends.

[Warhippy]

8 hours ago, nuckin_futz said:

 

Neck-breaking stuff, nickel hits $100,000

• What a short squeeze

 

There aren't many words to describe what is happening in certain commodities markets at the moment as the blowout continues at rather neck-breaking speed. Nickel ended trading last Friday with an already big surge targeting $30,000. Today, it has hit $100,000.

 

That despite the LME stepping in to set limits on spreads and even offer up the option to avoid delivery of the metal(s) in question:

 

The Russia-Ukraine situation has exacerbated conditions in the commodities market with plenty of players out there being caught out while liquidity is sapped due to fear and uncertainty. It's a massive short squeeze and a rather unprecedented one to say the least.

 

LME suspends nickel trading for at least the remainder of the day

• Talk about free markets
•  

If even allowing for physical deliveries to be avoided can't help the situation, then might as well stop it entirely.

Welcome to the world of trading - where the rules are made up as you go along the way.

 

******************

 

That move is about 30 Standard Deviations. That is simply jaw dropping.

 

I believe EV manufacturer's are big users of nickel.

 

Looking at all of the every day essential items that need nickel in it to be produced.  Kind of thinking that people will be seeing some ugly sticker shock between transport costs and material goods costs increasing the value of things in the very near future

[nuckin_futz]

14 minutes ago, Warhippy said:

Looking at all of the every day essential items that need nickel in it to be produced.  Kind of thinking that people will be seeing some ugly sticker shock between transport costs and material goods costs increasing the value of things in the very near future

Na, it's not like this is a situation of true supply vs demand. It's simply a situation where someone has a MASSIVE short position and due to global events liquidity dried up and the position got blown out. It may take a little while to sort itself out (margin calls etc) but the price of nickel will go back down because there is enough supply to meet demand.

[Warhippy]

1 hour ago, nuckin_futz said:

Na, it's not like this is a situation of true supply vs demand. It's simply a situation where someone has a MASSIVE short position and due to global events liquidity dried up and the position got blown out. It may take a little while to sort itself out (margin calls etc) but the price of nickel will go back down because there is enough supply to meet demand.

You don't think this ridiculous spike will have a negative trickle down effect on prices?

[nuckin_futz]

9 minutes ago, Warhippy said:

You don't think this ridiculous spike will have a negative trickle down effect on prices?

Na, it's a problem if you're short the contract months in question and have margin issues. Then you get reamed. Once the problematic trades are taken off the market will do what it does and find equilibrium.

 

Remember about a year ago when oil hit $-40/barrel? It was only the expiring month's contract that hit a negative price. The forward month contracts while battered were all above water. And look at the price now?

Edited March 8, 2022 by nuckin_futz

[nuckin_futz]

Gold nears the all time high set in 2020 as it races $60 higher

 

Gold is on fire at the moment.

 

The question comes back to government spending. We're clearly headed towards some kind of stagflationary environment where central banks are perpetually behind the curve.

 

I'm sure governments will ramp up spending on:

1. Military
2. Energy
3. Green energy
4. Infrastructure

But will it go beyond that to subsidies for consumers to buy energy, or covid-style supports. It certainly could and in any case, deficits will be out of control.

 

There's also going to be a decided shift in global reserves towards gold as it's effectively sanctions-proof (despite US efforts).

 

Gold touched $2062 but has quickly pulled back to $2042. The 2020 high was $2072. It's a technical trade now.

Edited March 8, 2022 by nuckin_futz

[nuckin_futz]

The nickel market is broken. LME says doesn't anticipate opening before Friday

• Will decide resumption on Thursday at 2 pm London time

I haven't written about nickel today but it's an extremely interesting and serious story that has big implications for commodities and commodity trading going forward.

There were no daily limits on the contract and it doubled and then doubled again today.

 

What metals analyst Mark Thompson reports is that a 'major nickel producer' is the one on the wrong side of the trade.

 

The company saw an opportunity to hedge its production at an average of $21,000 so it did so via futures.

 

The problem is that you need to put up collateral against the trade. Normally, you could meet the margin call because you're hedged, so all you need to do is deliver the goods and the loans pay themselves off.

 

The problem is that at $80,000 there's a mark-to-market loss of $12 billion on a reported 200kt.

 

That's a gigantic margin call for someone to meet on short notice and even if you have a banking relationship, the bank might not be able to come up with that kind of money.

 

There's also talk of mismatches with the grade of nickel from the producer not the same as contracts for delivery, so even if it could be unwound with physical production, there could be a real-market squeeze. That raises the stakes for any company involved.

 

Moreover, it might be through a bank that the nickel company hedge was placed, via some kind of contract. All trades since midnight today have been busted and there's also talk that the last two days of trades could be busted, which would be a huge black eye for the LME.

 

The company is reportedly Tsingshan Holding Group, the world's largest nickel and stainless steel producer. A worst-case scenario is that the company is forced into default and a tight nickel market gets even tighter.

 

In the bigger picture, other companies may see this as a reason not to hedge or to take off hedges. That will make the market even more volatile.

 

And naturally the triple-levered nickel short ETF was wiped out; because triple-levered ETFs are a dumb idea that never should have been approved (and they tell us bitcoin ETFs are too dangerous).

 

*************

 

Adam Button with some good insight on the nickel situation. So the LME (London Metals Exchange) might just bust all the trades? You have got to be kidding me? This isn't some fat finger trade. It's someone who got caught with their pants down. No bailout for them. That's not capitalism, it's not even socialism, it's straight up cheating.

[Warhippy]

2 minutes ago, nuckin_futz said:

The nickel market is broken. LME says doesn't anticipate opening before Friday

• Will decide resumption on Thursday at 2 pm London time

I haven't written about nickel today but it's an extremely interesting and serious story that has big implications for commodities and commodity trading going forward.

There were no daily limits on the contract and it doubled and then doubled again today.

 

What metals analyst Mark Thompson reports is that a 'major nickel producer' is the one on the wrong side of the trade.

 

The company saw an opportunity to hedge its production at an average of $21,000 so it did so via futures.

 

The problem is that you need to put up collateral against the trade. Normally, you could meet the margin call because you're hedged, so all you need to do is deliver the goods and the loans pay themselves off.

 

The problem is that at $80,000 there's a mark-to-market loss of $12 billion on a reported 200kt.

 

That's a gigantic margin call for someone to meet on short notice and even if you have a banking relationship, the bank might not be able to come up with that kind of money.

 

There's also talk of mismatches with the grade of nickel from the producer not the same as contracts for delivery, so even if it could be unwound with physical production, there could be a real-market squeeze. That raises the stakes for any company involved.

 

Moreover, it might be through a bank that the nickel company hedge was placed, via some kind of contract. All trades since midnight today have been busted and there's also talk that the last two days of trades could be busted, which would be a huge black eye for the LME.

 

The company is reportedly Tsingshan Holding Group, the world's largest nickel and stainless steel producer. A worst-case scenario is that the company is forced into default and a tight nickel market gets even tighter.

 

In the bigger picture, other companies may see this as a reason not to hedge or to take off hedges. That will make the market even more volatile.

 

And naturally the triple-levered nickel short ETF was wiped out; because triple-levered ETFs are a dumb idea that never should have been approved (and they tell us bitcoin ETFs are too dangerous).

 

*************

 

Adam Button with some good insight on the nickel situation. So the LME (London Metals Exchange) might just bust all the trades? You have got to be kidding me? This isn't some fat finger trade. It's someone who got caught with their pants down. No bailout for them. That's not capitalism, it's not even socialism, it's straight up cheating.

Rules for thee, not for me

[nuckin_futz]

Global events seem to be wreaking havoc in commodity markets. Today it was Oil's turn.

 

 

That is at one point a $23 dollar/barrel intraday drop. At one point it fell $11 in under 7 minutes. If you had bought just 1 contract at $115 you would have been down $11,000 in no time. So strange to see oil go essentially 'no bid'. It may be the biggest intraday drop ever. I've certainly never seen one that big.

 

 

Edited March 10, 2022 by nuckin_futz