Biggest crash in stock market history?

pkovo

Well-Known Member
Exactly. The whole thing is a nightmare. SEP/Simple-IRA/Solo-401k/401k/IRAs

They really should just drop the whole aspect of it being tied to the employer, and increase the IRA limits to the 401k limits. It loses out on the matching and the taxes are paid in the paycheck, but given back after filing.

What would be the benefit to this? All I see is from that would be a HUGE amount of employer contributions that are made for people's retirement would no longer be provided. I see zero upside to eliminating 401(k) plans in favor of a high limit IRAs and a lot of downside. What am I missing here?

Increase limits on IRAs in addition to 401(k) plans being offered, sure that's fine I suppose. It might decrease the number of employer sponsored plans which wouldn't be ideal, but it would give more options to those without access to an employer plan. But replacing 401(k) with just IRAs instead just seems like a huge step backwards in my opinion.

Why is any of this a nightmare? Aren't you getting an extra 4% in the form of a SH match from your company that you wouldn't otherwise be getting in a high limit IRA?

If something better than a 401(k) plan is established, I'm all ears, but that's not an IRA in my opinion. Recent legislation passed o allow a lot more in regards to multiple employer plans, which is supposed to leverage economies of scale to reduce costs of offering a plan to employers, but too soon to tell if how that will work out.

I'm in agreement with most of Rick's points on this subject Did I just say that :)
 

rick81721

Lothar
Sounds like you want to keep the asset, you just would prefer it in a Roth IRA instead of a traditional IRA? You can do one Traditional to Roth conversion each year. The entire amount converted is taxable; you have no basis in your IRA. Thus the optimal time to convert is during a crash: prices are temporarily low, which means the taxes will be lower. Like having a sale on taxes. The second best time to convert is before the end of the year, as we can only do one conversion per year, so use it or lose it.

So once retired and income is stable (pension + SS), what benefit is there to a roth conversion? Do a conversion now (which bumps to a higher tax bracket), pay the tax or wait five years, withdraw the same amount and pay the same tax rate then (assuming no tax rate change)? I guess you could "hope" tax rates would go up in the future??
 

Santapez

Well-Known Member
Team MTBNJ Halter's
What would be the benefit to this? All I see is from that would be a HUGE amount of employer contributions that are made for people's retirement would no longer be provided. I see zero upside to eliminating 401(k) plans in favor of a high limit IRAs and a lot of downside. What am I missing here?

Increase limits on IRAs in addition to 401(k) plans being offered, sure that's fine I suppose. It might decrease the number of employer sponsored plans which wouldn't be ideal, but it would give more options to those without access to an employer plan. But replacing 401(k) with just IRAs instead just seems like a huge step backwards in my opinion.

Why is any of this a nightmare? Aren't you getting an extra 4% in the form of a SH match from your company that you wouldn't otherwise be getting in a high limit IRA?

If something better than a 401(k) plan is established, I'm all ears, but that's not an IRA in my opinion. Recent legislation passed o allow a lot more in regards to multiple employer plans, which is supposed to leverage economies of scale to reduce costs of offering a plan to employers, but too soon to tell if how that will work out.

I'm in agreement with most of Rick's points on this subject Did I just say that :)
I'm saying that makes sense from a "Fair governmental design" not as what benefits me as a white collar worker with a 401k and 4% match.

The point I was making before was the 401k is GREAT...if your company has it and there's a match. If you work for all of those other employers, or yourself, it's something out of reach. And then you're stuck with a 6k IRA.

It's a nightmare of anyone actually trying to run a 401k program. An employee just sees minor paperwork, but it's a huge expensive both in time and money for most employers. Most small companies do not have 401ks so that's millions of people left out.
 

Santapez

Well-Known Member
Team MTBNJ Halter's
So once retired and income is stable (pension + SS), what benefit is there to a roth conversion? Do a conversion now (which bumps to a higher tax bracket), pay the tax or wait five years, withdraw the same amount and pay the same tax rate then (assuming no tax rate change)? I guess you could "hope" tax rates would go up in the future??
There may be years where it makes sense. IE, early to mid 60s way before collecting SS. Pulling cash out of accounts, high-basis investments (IE, you bought them at a similar price to what it is), or dividends/interest is coming in. The tax rate in that case would be very low so may as well convert from Traditional to Roth.

There's also the possibility of years of loss of unemployment. This was probably a prime year where people lost their jobs for most of 2020 due to the industry they were in (travel/food/etc) and their income was incredibly low, so therefore a Roth conversion may make sense. The deduction was done in a prior year while they were in a higher bracket, but this year they are in a lower bracket.
 

rick81721

Lothar
There may be years where it makes sense. IE, early to mid 60s way before collecting SS. Pulling cash out of accounts, high-basis investments (IE, you bought them at a similar price to what it is), or dividends/interest is coming in. The tax rate in that case would be very low so may as well convert from Traditional to Roth.

There's also the possibility of years of loss of unemployment. This was probably a prime year where people lost their jobs for most of 2020 due to the industry they were in (travel/food/etc) and their income was incredibly low, so therefore a Roth conversion may make sense. The deduction was done in a prior year while they were in a higher bracket, but this year they are in a lower bracket.

I was asking about my case specifically, it looks to me like the answer is don't bother.
 

Dave Taylor

Rex kwan Do
@alexharfouche1
ex-GS Head of Trading desk / ENS / Delta / ScPo / Maths / Econometrics

TSLA am not an expert on shorting stocks, just your average Joe with a Casio calculator. But for the 1st time ever, the time looks ripe for a short. Let me elaborate. To start, if you read my previous post, it established a troubling fact pattern that is a good premise. (1/N)
Let’s clear one basic thing first. The issue that I raised in my previous thread would be unnoticeable if it wasn’t coming on the back of one of the most grossly overvalued stocks EVER. Let the numbers speak for themselves. (2/N) Image
If I was to highlight one number everyone should be focusing on, it’s FY21 EV/Sales against street’s uber-bullish 19-22 CAGR est. That multiple was in the high teens at 900, in-line with the CAGR regression for tech, auto and clean energy. Except, margin est. are going ⬇️ (3/N)
So it might have grown quickly but top $ is already being paid while estimates are uber-bullish and about to roll-down. That said, focusing on valuation is lame, and this was never neither a growth nor a multiples story. (4/N)
The reality is that TSLA was the mother of all delta squeezes and thanks to the idiocy of index committee members, it passed from the options bubble to the passive bubble through S&P inclusion. As such it sits at the core of not 1 but 2 reflexivity loops. (5/N)
As late as early January, options ADV notional was over 300% of underlying shares, up by 150% yoy for a total daily traded notional of circa $ 140 bn. This ladies and gents made it this bubble’s Nr 1 Yolo stock. But these were not RH basement traders. This was coordinated. (6/N)
Led by large funds. Proof? I had run a screen on small size contracts trades (that were as high as 95% of total daily notional on some names) and TSLA was nowhere to be found. Ok, how is that relevant? Why the delta squeeze on the way up through MM hedging works both ways (7/N)
And surprise surprise, after the index inclusion, and against the overall market trend, option positioning flipped very bearish. And if TSLA is probably a fraud, this fact pattern of ramping the stock up, passing it over at $ 800 bn. to the Vanguard moms and pops (8//N)
Then shorting it big time is no less criminal. So what kind of numbers are we talking about? There is currently circa $ 190 bn of calls OI and over $ 250 bn of puts OI, that’s a staggering $ 60 bn of put skew. It’s a massive position. (9/N)
To put it in context it is equal to the combined AAPL and AMZN bullish skew or if you’d rather to the combined BABA, FB, MSFT, GOOG and WMT combined. Now obviously some of the OI and the put skew will unwind on the 19th OpEx but far from all.
(10/N)
As some of this bearish position transpired yesterday, those who looked carefully would have seen that the deep OTM puts were populated across maturities and not concentrated on Feb. here is the Vol surface showing the skew.
(11/N) Image
Now why is this alarming? Well, first it’s clearly an idiosyncratic view, because the overall market positioning is getting increasingly skewed towards calls, on higher volumes (now over 120% of cash volumes) but also because the Vanna effect that squeezes on the way up
(12/N)
Works exactly the same in reverse. All it needs is a catalyst and the inferno machine of MM gamma-driven hedging will go in full gear. As OTM puts gets less OTM they will need to be increasingly hedged. It doesn’t stop here, for there will not be only 1, but 2 doom loops.
13/N)
The 2nd one being passive funds that are now dominant. Since the inclusion, active managers have been net sellers and passive have ramped-up in the shareholding register. Here is a summary of the largest reported moves.
(14/N) Image
What is the passive doom loop? Many have covered this, none as extensively or better than @profplum99 , but a simple way of understanding how it’s relevant to TSLA is that these strategies are momentum auto-pilot like. In technical terms negative gamme like.
(15/N)
Passive funds are divergent in that they profit from price continuation. If there is a reversal and the weight of the stock in the index goes down, they will be sellers. The more it goes down, the more they will sell. That applies not only to TSLA but the market overall
(16/N)
The important part of @profplum99 analysis is his work on the multiplier effect. In simple terms, as index funds have to buy immediately and on cap-weighted terms and stocks have limited floats (80% in case of TSLA) their effect on the share price is convex.
(17/N)
If that was not bad enough, I am sorry to say that it does not stop here. As the two doom loops are inter-connected. Academic studies have shown a clear relationship between high passive ownership and higher volatility/mediocre liquidity, just as MM might ⬆️ put hedging.
(18/N)
But what about a potential short squeeze? Well just as the yolo call delta hedging is done and has reversed, passive funds are done buying, it is all too obvious that shorts are cleaned and it will take a mere day to cover what is out there
(20/N) Image
To conclude, the very last chapter of this scam seems to be going to press as I type. Now that the bag holders are Vanguard pops and moms, that the positions with acceleration mechanisms are in place, all was left to find was the final liquidity providers for a final trap
(21/N)
It looks like they were found this morning, as r/wsb boards were seeded with some TSLA pump chatter. Needless to say, the same playbook that was used to manipulate SLV and GME is being used...again.
(22/N)
Well some smart hands seem to have connected all these dots as it escaped no one that a large staggered maturity deeply OTM cluster of puts was planted yesterday. An intuition tells me that whoever is behind that bet, is not only smart, but prolly good looking too.
 

Bike N Gear

Shop: Bike N Gear
Shop Keep
@alexharfouche1
ex-GS Head of Trading desk / ENS / Delta / ScPo / Maths / Econometrics

TSLA am not an expert on shorting stocks, just your average Joe with a Casio calculator. But for the 1st time ever, the time looks ripe for a short. Let me elaborate. To start, if you read my previous post, it established a troubling fact pattern that is a good premise. (1/N)
Let’s clear one basic thing first. The issue that I raised in my previous thread would be unnoticeable if it wasn’t coming on the back of one of the most grossly overvalued stocks EVER. Let the numbers speak for themselves. (2/N) Image
If I was to highlight one number everyone should be focusing on, it’s FY21 EV/Sales against street’s uber-bullish 19-22 CAGR est. That multiple was in the high teens at 900, in-line with the CAGR regression for tech, auto and clean energy. Except, margin est. are going ⬇️ (3/N)
So it might have grown quickly but top $ is already being paid while estimates are uber-bullish and about to roll-down. That said, focusing on valuation is lame, and this was never neither a growth nor a multiples story. (4/N)
The reality is that TSLA was the mother of all delta squeezes and thanks to the idiocy of index committee members, it passed from the options bubble to the passive bubble through S&P inclusion. As such it sits at the core of not 1 but 2 reflexivity loops. (5/N)
As late as early January, options ADV notional was over 300% of underlying shares, up by 150% yoy for a total daily traded notional of circa $ 140 bn. This ladies and gents made it this bubble’s Nr 1 Yolo stock. But these were not RH basement traders. This was coordinated. (6/N)
Led by large funds. Proof? I had run a screen on small size contracts trades (that were as high as 95% of total daily notional on some names) and TSLA was nowhere to be found. Ok, how is that relevant? Why the delta squeeze on the way up through MM hedging works both ways (7/N)
And surprise surprise, after the index inclusion, and against the overall market trend, option positioning flipped very bearish. And if TSLA is probably a fraud, this fact pattern of ramping the stock up, passing it over at $ 800 bn. to the Vanguard moms and pops (8//N)
Then shorting it big time is no less criminal. So what kind of numbers are we talking about? There is currently circa $ 190 bn of calls OI and over $ 250 bn of puts OI, that’s a staggering $ 60 bn of put skew. It’s a massive position. (9/N)
To put it in context it is equal to the combined AAPL and AMZN bullish skew or if you’d rather to the combined BABA, FB, MSFT, GOOG and WMT combined. Now obviously some of the OI and the put skew will unwind on the 19th OpEx but far from all.
(10/N)
As some of this bearish position transpired yesterday, those who looked carefully would have seen that the deep OTM puts were populated across maturities and not concentrated on Feb. here is the Vol surface showing the skew.
(11/N) Image
Now why is this alarming? Well, first it’s clearly an idiosyncratic view, because the overall market positioning is getting increasingly skewed towards calls, on higher volumes (now over 120% of cash volumes) but also because the Vanna effect that squeezes on the way up
(12/N)
Works exactly the same in reverse. All it needs is a catalyst and the inferno machine of MM gamma-driven hedging will go in full gear. As OTM puts gets less OTM they will need to be increasingly hedged. It doesn’t stop here, for there will not be only 1, but 2 doom loops.
13/N)
The 2nd one being passive funds that are now dominant. Since the inclusion, active managers have been net sellers and passive have ramped-up in the shareholding register. Here is a summary of the largest reported moves.
(14/N) Image
What is the passive doom loop? Many have covered this, none as extensively or better than @profplum99 , but a simple way of understanding how it’s relevant to TSLA is that these strategies are momentum auto-pilot like. In technical terms negative gamme like.
(15/N)
Passive funds are divergent in that they profit from price continuation. If there is a reversal and the weight of the stock in the index goes down, they will be sellers. The more it goes down, the more they will sell. That applies not only to TSLA but the market overall
(16/N)
The important part of @profplum99 analysis is his work on the multiplier effect. In simple terms, as index funds have to buy immediately and on cap-weighted terms and stocks have limited floats (80% in case of TSLA) their effect on the share price is convex.
(17/N)
If that was not bad enough, I am sorry to say that it does not stop here. As the two doom loops are inter-connected. Academic studies have shown a clear relationship between high passive ownership and higher volatility/mediocre liquidity, just as MM might ⬆️ put hedging.
(18/N)
But what about a potential short squeeze? Well just as the yolo call delta hedging is done and has reversed, passive funds are done buying, it is all too obvious that shorts are cleaned and it will take a mere day to cover what is out there
(20/N) Image
To conclude, the very last chapter of this scam seems to be going to press as I type. Now that the bag holders are Vanguard pops and moms, that the positions with acceleration mechanisms are in place, all was left to find was the final liquidity providers for a final trap
(21/N)
It looks like they were found this morning, as r/wsb boards were seeded with some TSLA pump chatter. Needless to say, the same playbook that was used to manipulate SLV and GME is being used...again.
(22/N)
Well some smart hands seem to have connected all these dots as it escaped no one that a large staggered maturity deeply OTM cluster of puts was planted yesterday. An intuition tells me that whoever is behind that bet, is not only smart, but prolly good looking too.

TLDR. Should I be selling before it hits $1000?
 

Jmann

Well-Known Member
So researching why my “pot” stocks were skyrocketing, I found out it was WSB, who turned their attention to cannibis. I also found out that the stocks being traded are actually Canadian, so aren’t directly related to whether it gets legalized in the US.
Needless to say I closed all my positions this morning expecting it to not last. When things settle down I might get back in.
 

Fire Lord Jim

Well-Known Member
So once retired and income is stable (pension + SS), what benefit is there to a roth conversion? Do a conversion now (which bumps to a higher tax bracket), pay the tax or wait five years, withdraw the same amount and pay the same tax rate then (assuming no tax rate change)? I guess you could "hope" tax rates would go up in the future??
The strategy works best in years when you're no longer working, but not yet collecting SocSecurity. You size the conversion to the tax rate you are willing to pay. Last year I sized it to 14% tax, keeping the conversion smaller to fit within NJ retirement income exclusion. I'm on schedule to do one each year until age 70, when claiming SocSecurity will push all income into higher brackets.
 

THATmanMANNY

Well-Known Member
@Jmann i wish WSB didn’t touch that shit. I planned to be in it for 5+ years and before the pop off. Now it’s all thrown off. Still in and ahead.

Yo, but that’s what the media wants you to believe. They are Canadian companies that are beginning to establish a foothold in US and with various cannabis products.

the measley gain now don’t mean anything to me at least. I’m looking for that 1000%+ gain over 10 years. Let it ride. That’s every investment I take on. Again, only trade what you can lose.

if something pops 200% in days of course it’s going to pull back
 
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Jmann

Well-Known Member
@Jmann i wish WSB didn’t touch that shit. I planned to be in it for 5+ years and before the pop off. Now it’s all thrown off. Still in and ahead.

Yo, but that’s what the media wants you to believe. They are Canadian companies that are beginning to establish a foothold in US and with various cannabis products.

the measley gain now don’t mean anything to me at least. I’m looking for that 1000%+ gain over 10 years. Let it ride. That’s every investment I take on. Again, only trade what you can lose.

if something pops 200% in days of course it’s going to pull back
Yeah, I had thought it was up for legitimate reasons, not meme hype, wasn’t happy to trace it back to wsb.
I got out because I’m guessing it’s going to drop considerably enough to reinvest with what I got out at. I tripled my investment so I’m fine with it.
 

THATmanMANNY

Well-Known Member
I obviously don't have a subscription to business insider but I'd be interested to read if anyone does and copy/paste.
It's real scary that people hope to get rich quick and follow the herd and unfortunately, learn the hard way.

Business Insider
"A schoolteacher from California wiped out $70,000 in savings trading on Robinhood. Here's his message to first-time investors."
 

cassinonorth

Well-Known Member
Here's some loss porn for ya'll.


l2iqys88ahh61.jpg
 

THATmanMANNY

Well-Known Member
I'm not active on WSB but I was listening to the indicator podcast where they interviewed someone. WHAT DUMMIES. They brag about being down on their life savings and say "I will still hold". Obviously, what f'ing choice do you have!
 

Over the Bars

Well-Known Member
Bit coin broke 50k today. I bought a small amount earlier in the week and sold right before the big self off started again. At least I got some lunch money for today and tomorrow 😂
 
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