This market is brutal. been getting chopped up swinging. Today we had a panicy chopfest and the VIX went DOWN. Doesn't make any sense especially if we go down from here which it looks like. A bull trap and bear trap in one day. I've still got a lot of those puts but I'm done holding new positions overnight for awhile. VIX is supposed to be only calculated from options data right? Could it be kept down by big institutions? Guess it doesn't really matter just wondering if it's an overcrowded trade that could blow up.

VIX is calculated purely using SPX options weighted to be 30 days expiry from today. The VIX cannot be directly traded at all, so it cannot be an overcrowded trade.*

VIX and SPX go in the same direction about 20% of the time, so today was far from out of the ordinary.

A VIX of ~16 implies 1% average daily moves (interday, not intraday) are expected over the next 30 days. We dropped by a paltry 0.07% today, which makes (if we only take today into account) the VIX far too high, so it dropped. I wasn't paying attention, but at a glance it looked like the low of the day for SPX was about 1% down, which still would make the VIX too high.** Daily volatility has been dropping recently and have dropped more quickly than the VIX has.

Also, a bunch of earnings hit. Implied volatility (which is what VIX measures) nearly always drops when news has occurred.

So, it did make sense.

*VIX futures can be traded, but they cannot be hedged using spot VIX, so the relationship is usually very unidirectional - under most circumstances, spot VIX moves the futures much more than the futures move spot VIX.*** Manipulating the VIX would be prohibitively complicated and expensive.

**This is a gross oversimplification. Options are forward looking, not present looking things.

***The normal relationship did break down on February 5th, 2018 because there was a massive overcrowded short short-term VIX futures trade through SVXY and XIV.

Nailed the call but traded like ****

Over the next 2 months I'm in the sell camp.



The US dollar looks like it could have a bounce to the upside. I'm interpreting this as people buying dollars as a safe heaven in the face of aggressive selling.



Also the VIX is at 18.5 it's been a very good sell indicator over the course of this bear market



When you look at the recent rally it's mostly speculative names that have gone up. Ark, Bitcoin, Tesla, Gamestop, et al, all the names which have been sold the most in the bear market.

My feeling is traders will be taking profits soon and heavy selling will continue

I got some March CANO 1.50 calls and might buy some more if it's still below 1.50 this week. I am gonna just keep nibbling at monthlies. The stock is around $1.40 and had a buyout offer from CVS for aprox $8-$9 a share before they backed out. Apparently Humana was interested in them too. I'm kinda baffled nobody picked them up yet. Unless I'm missing some hidden poison pill.

CANO is a primary care provider with over a hundred locations. They've grown revenue over 100% yoy in 2021 and the same in 2020!! lol what. It's price to sales ratio is 0.26 atm. In the last quarter they grew EBITA over 200%. If the fair value is somewhere around or even way under the CVS price it just seems like good risk/reward. I don't think this company should be a penny stock. They have raised through offerings in the past and I just expect them to put out a press release someday to get the stock up at the least to raise. current ratio is ok and I don't think cash burn is an immediate problem. It's a turnaround play and buyout spec so I'm sizing according to the risk but it seems like good enough risk reward. Technically it's trying to bottom and if it goes to 1.52 a bottom is confirmed.

https://www.marketbeat.com/originals...cent-sell-off/

The sense I got of what fueled the turnaround today was Powell's underlying theme that things seem to be under control. The market took that and ran with it for a 2% upswing.

I expect some revisions to that thinking over the next couple days, as a lot of shorts got shaken out today.

Powell spoke Tuesday. I listened to the Powell interview twice and in the first 11 minutes he said we are at the beginning of disinflation about 3 or 4 times. Because it's interview style it seemed like he had a Freudian slip near the end when asked about employment. Interviewer kept pushing him on what he thinks of all the jobs added. Powell's comment on the recent labor market strength. "We do expect that it will soften." Then he jumped into a more scripted answer as if he slipped on that first statement. He was asked about employment twice before and gave the correct FED speak rhetoric but the interviewer kept going back to it.

Powell says he likes to read as a hobby. I think he's been reading up on Paul Volcker. I wouldn't be surprised at all if they raise .50 next meeting. He stressed staying the course. If there's not a flash crash or shock they should be going up all year it looks like.

Not sure what you mean by Freudian slip. He has been saying that he expects the labor market to soften as interest rates rise and inflation decreases for a while now. It is pretty standard economic theory. When he has been talking about "pain" it is the same thing.

He probably was not implying that the labor market is a penis.

Oh. And I'd expect (but am not betting on) a pullback. Yesterday's moves looked a lot like unwinding of short positions. I guess some money expected his comments to be significantly more hawkish and had bet on it. I can't imagine anyone taking on new long positions on his comments - those who would have gone long on his comments would have already done so before yesterday.

Anyone like GOOG below $100?

Been awhile since I looked at large tech. The growth looks fairly priced with a PEG ratio of only 1.4 or so. It was 1.25 a year ago. Kicker though. They've missed earnings estimates 4 quarters in a row and they are lowering guidance constantly the last month. Last quarter EPS was 34% lower. I see guidance dropped from 1.16 to 1.08 now. Not good. If they can get a surprise earnings report that beats estimates it might be worth a look at a PEG less than or right at 1. It just seems more likely the trend of earnings disappointments will continue. To me if I had to buy a $1.3 or whatever trillion dollar company it's best to wait for major drop from a company miss step so you can really get a margin of safety. Recent one I can think of is when Johnson and Johnson had that talc baby powder disaster a couple years back. Stock got beat down but of course they recovered.

I think they are going to lose some amount of share in search due to this ChatGPT buzz, the question is how much share are they going to lose.

For example, Meta could install chatgpt or their own AI search Bot into Whats App and Messenger and other Apps could do the same.

Right now they are doing 282 billion in annual revenue and usually report profit margins off around 20 percent a year, so you are talking about 60 billion in net income, that they can use to buy back their shares every year.

Given their market cap is 1.2 trillion that gives the company a pe of 20 or a 5 percent annual yield, which is okay value for a quality company, but not a bargain by any means, especially if it takes them a few years to get back to growth.

I liked it more in the $80s than in the $90s

Appreciate all the insight, thanks

PE can be incredibly misleading with companies like this. They have huge expenses in Waymo and other projects that won't materialize for years. Very hard to do a valuation just based off current numbers need to do at least some insight into direction of the company/long term projects.

I always liked Google. It's kinda unlike any other company in that each division is more or less autonomous. I think it's undervalued for many reasons but mainly if it did ever spin off youtube and search would be worth more than a trillion alone.

I think it's fairly valued, of course others will disagree and that's fine.

Google services includes ads, android, YouTube, Chrome, Hardware and maps under the revenue line and pulled in 67 billion last quarter, with net income of 21 billion. The 4th quarter is always the best quarter, due to higher sales over the holidays.

Losses in other bets rose in the quarter in 2022 to 1.6 billion from a loss of 1.4 billion last quarter and only pulls in revenue of 226 million. The segment loses more and more money every year and is a disaster.

At a pe of 20 that's a 5 percent yield and if you assume inflation will be low at Powel's objective of 2 percent and you pay taxes on any gain that you make you are standing still.

Once a company like Google starts making 60 billion a year, Apple 90 billion, it becomes much harder to start compounding your money. Net income has to jump at Google from 60 billion to 120 billion to cut the pe in half. The companies become a victim of their own success for shareholders, due to the law of large numbers.

The economy is only so big. No company can grow forever. Coca Colas revenues haven't grown in over a decade, because coca cola is already in every store around the world.

Google and Apple shares are up ten times in the last decade and now their revenues aren't growing anymore. Everyone knows about the companies. The upside is priced in. If you want to make big gains you have to find value elsewhere, outside of these names that everyone has already bought and whose upside is already priced in.

To be clear Google is a fabulous company and if you own it I think you will do okay over ten years, all I'm saying is that it's not a bargain.

Kind of ironically you want to be buying tech companies when their pes are high. Googles revenues were only up 1 percent last quarter. The street is starting to come to terms with the fact that these tech companies are now so big that they can't grow revenues like they used to and the pes are coming down to reflect slower growth.

They are all firing their staff for a reason.

Not sure why you didn't look at full year but ok going by your logic net income of google services is 91.855 billion last year * 20 PE multiplier = 1.837 trillion market cap. Google is a @ 1.2 trillion market cap at the moment.

This is all based off information I looked at long ago so might not be entirely accurate and some of it was second hand. Search is like 60% of revenue I believe so like 150 billion a year and like 60-70% margins I think so 90-105 billion earnings. Maybe some corporate costs for services that it needs but is not included but would be somewhat minor. At 20* multiple its worth like 2 trillion. Its very comparable to facebook in my understanding (not a lot of growth upside pretty much saturated) so usually like 15x multiple (trading like 20x now but thats due to AI valuation I think historically 15xish) so worth 1.5 trillionish IMO. Youtube is like 25 billion revenue and a money loser I think but based off valuations of growth/revenue etc its worth a lot to most analysts. Cloud is like 20billion revenue and a money loser but all cloud services are unprofitable except amazon (and maybe microsoft at this point??? haven't looked in a while) so valuations would still be high. Waymo has like 20+billion invested in it directly from google and is the leader in autonomous driving and the best poised for implementation due to the integration with maps from every1 I talked to in the space so I imagine it's worth a lot. Everything else loses money is speculative investments and unprofitable subsidized by search profits is my understanding. It's debatable whether they could even survive on their own with few exceptions.

Looking at tech and just doing a blanket pe analysis towards it is not a good way to analyze companies IMO. Saying Youtube is worth 20* negative whatever or negative money is idiotic. Same with Waymo/Cloud etc. Saying search with a deteriorating revenue and macro dependent revenue (recessions cause ad revenue to drop dramatically even fears of one) is worth the same multiplier as other tech companies which have lots of growth but are unprofitable/barely profitable is not realistic.

Honestly haven't looked at numbers in great detail or talked to anyone who works there in a good amount of time so my information could be outdated/incorrect but the whole process of how you derive valuations is limited IMO. Honestly everyone believes the whole market is overvalued and economy will constrict heavily 2nd half of the year so singling out google is kinda weird.

You can save time by just looking up the p/e instead of calculating it.

Not really. What about if a company had to pay a fine in the quarter and the earnings go way down.

Also, company's such as Berkshire and Amazon that have large stock portfolios, have realised gains or losses that have to be reported in the quarter in the p and l, which completely distort the p/e.

Anyways, who even cares what the P/E is once this bear market rally is over the market is just going to fall. It's priced for zero percent interest rates not 5 percent interest rates.

The last time interest rates were at 5 percent that caused the dot com crash. Then the housing market crash. Once the rate hikes work their way through the system and everyone realises how horrible the economy is everyone is just going to sell.

They left interest rates at zero for 12 years to create a phony recovery after the housing market crash to push peoples stocks and real estate up so they would start spending again in the economy. But, in the process they released inflation.

Well now if they are raising rates the phony growth is going to disapear. These stocks and housing prices are going to come crashing down.

So, use this rally to to get out. You'll get to buy back in much lower.

Trump told the truth.

Hilary Clinton wanted to fool the people into thinking that she was Santa Clause.

https://www.youtube.com/watch?v=4xn9...bergTelevision

Extraordinary items that affect the p/e affect the p/e.

Stock holdings and other marketable securities are marked to market regardless of whether they are held or sold, so I am not sure what you are on about there. Knowing facts about how earnings are calculated should be required before attempting to calculate earnings or price to earnings.

In either case, amateur p/e calculating is amateur. You'd be better off using forward p/e from analysts as they at least have a job title that implies that they do some sort of analysis. Presumably they know things about securities being market to market at least.

I don't know why people are getting so obsessed about the pe. It's very easy to calculate. You just look at the revenue the company is generating and you you multiply it by their profit margin and divide the result by the market cap and there you have it.

You say `You'd be better off using forward p/e from analysts as they at least have a job title that implies that they do some sort of analysis'.

That's very silly because they are all trying to sell you something.

They are trying to sell you a stock or they are over or under exagerating to try to get attention and make a sale.

For example,

'After a horrific 2022 for Bitcoin, Cathie Wood's firm is sticking to one of its boldest predictions yet: that the price of the cryptocurrency will exceed $1 million in the next decade'.

Anyways, have a good day.

It directly says they have to report unrealized gains as profit or loss. That means, for those who don't know the meaning of words, **** that they haven't sold. Reading is hard.

'Amateur p/e calculating is amateur'.

'**** that they haven't sold'.

You can't even write a coherent sentence.

Besides there are a million other examples that I could give.

In 2021 Googles net income was higher than usual because they hadn't upgraded their servers during the pandemic.

I'm only replying back because you went up against me saying 'Amateur p/e calculating is amateur'.

I know Google very well. I've been following the company for years and years.

Have a nice day.