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Toppy Tuesday – S&P 3,950 Again

Billion Dollar Babies: The ultimate tribute to Alice Cooper - Home |  FacebookCommencing year number 59.

It was my Birthday yesterday so I've been contemplating stuff.  For one thing, if I had invested $1 per day in the stock market since the day I was born, today I would have $1,335,799.45.  You know how they tell you to sponsor a kid in Africa for $1/day – why not sponsor your own grandchildren and make sure they will be Millionaires (inflation-adjusted) when they get to your age?  A shortcut for that is to invest the first $3,650 to cover their first 10 years the day they are born and then add another $365 each birthday – you'll actually come out around $3M at 60

That's all it takes to ensure your family's financial security and, if you pick nice dividend-paying stocks like AT&T (T), Pfizer (PFE), Walgreens (WBA), Coca-Cola (KO), IBM (IBM), Cisco (CSCO), 3M (MMM), Proctor and Gamble (PG), JP Morgan (JPM) and McDonalds (MCD) – you'll be nicely divesified in Dow components.   

Reinvesting the dividends is key, by the way.  Without doing that, you'd be at $400,000!  

If your kids, like mine, are already in college and you missed the first 20 years of $1/day, don't despair, you can catch up by calculating how much money there should be using a Compound Rate Calculator and you can see where you should be after so many years by starting with $365 and adding $365 per year for X amount of years.  So, at 20, my kids should have $27,142.60 – if they had saved nothing, that's what we'd need to catch up.  $27,142.60 is the cost of not putting in $1 per day for 20 years ($7,300).

So, Advice #1 from the old man is stop building your wealth so you can "leave it to your children and grandchildren" and start actually doing something for them NOW.  Setting up an account for them and letting them see how savings can make their money grow over the years is a lot more valuable than wrting them a lump-sum check after you're dead. 

I was born in 1963 and the S&P 500 was down 8.81% in 1962 and, although Kennedy was assassinated in November of 1963, the market was up 22.6% that year.  1964 was the beginning of Johnson's "Great Society" and Federal Taxes were cut 20% (Kennedy's plan) and the market popped another 16.4%.

Most market years were good until 1973 when we had Watergate, etc and the market dropped 14.3% – the Dow finished the year at 850 and dropped another 25.9% in 1974 but that's OK, in 1975 and 1976, we had 37% and 23.83% gain.  That's the value of constantly investing – you catch those dips! 

Of course, you have to change with the times.  In 1963, the Dow Jones was almost unrecognizable to kids today as the Dow of 1903 was to us.  Here are the companies that made up the Dow in 1903:

Amalgamated Copper Mining Company Colorado Fuel and Iron Company ↑ The United States Leather Company (Preferred)
American Car and Foundry Company ↑ National Lead Company United States Rubber Company
American Smelting & Refining Company The Peoples Gas Light and Coke Company United States Steel Corporation
The American Sugar Refining Company Tennessee Coal, Iron and Railroad Company United States Steel Corporation (Preferred)

And here's who was in the Dow when I was born, 60 years later:  

Allied Chemical Corporation †
(formerly Allied Chemical and Dye Corporation)
General Electric Company Sears Roebuck & Company
Aluminum Company of America ↑ General Foods Corporation Standard Oil Co. of California
American Can Company General Motors Corporation Standard Oil Co. of New Jersey
American Telephone and Telegraph Company Goodyear Tire and Rubber Company Swift & Company ↑
American Tobacco Company (B shares) International Harvester Company Texaco Incorporated †
(formerly The Texas Company)
Anaconda Copper Mining Company ↑ International Nickel Company, Ltd. Union Carbide Corporation
Bethlehem Steel Corporation International Paper Company United Aircraft Corporation
Chrysler Corporation Johns-Manville Corporation United States Steel Corporation
E.I. du Pont de Nemours & Company Owens-Illinois, Inc. ↑ Westinghouse Electric Corporation
Eastman Kodak Company The Procter & Gamble Company F. W. Woolworth Company

And now we have:

3M Company The Goldman Sachs Group, Inc. Nike, Inc.
American Express Company The Home Depot, Inc. The Procter & Gamble Company
Amgen Inc. ↑ Honeywell International Inc. ↑ salesforce.com, inc. ↑
Apple Inc. Intel Corporation The Travelers Companies, Inc.
The Boeing Company International Business Machines Corporation UnitedHealth Group Incorporated
Caterpillar Inc. Johnson & Johnson Verizon Communications Inc.
Chevron Corporation JPMorgan Chase & Co. Visa Inc.
Cisco Systems, Inc. McDonald's Corporation Walgreens Boots Alliance, Inc.
The Coca-Cola Company Merck & Co., Inc. Walmart Inc.
Dow Inc. Microsoft Corporation The Walt Disney Company

Imagine when our grandchildren are 60 years old, these companies will be as useful to them as The People's Gas Light and Coke Company are today.  This image is the floor of the stock market in 1978 – just 15 years after the above picture.  See how fast things change? 

Of course people still use Leather and Rubber and Steel but they aren't industry leaders anymore – just stuff in the economy so the real value you can give to your grandchildren isn't money and it isn't stock but it's the UNDERSTANDING of how to invest over the long-term. 

Advice #2:  SOMEONE will have to move that money at some point – give your children and grandchildren the tools to make wise decisions – involve them in the process of wealth management NOW – not after you're gone!

20 years later, 1994:

2010:

Today:

What will happen next?  

Who knows?  But that's the fun of it – investing is a constantly evolving puzzle and we never have all the answers – our job is to make sure we have the right tools to make good decisions as we learn.

 


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  1. CHL I see TOS shows a stock value of 0 now. Sure want to show you have no stock, but my short Jan23 Put shows a market value of 50.9!!!! 


  2. Phil/59     Welcome to the party, pal!  :)

    https://www.youtube.com/watch?v=vD94dVu8lqQ


  3. Phil// Archegos Blowout – How does this affect the general market?  Won't there be downward pressure caused by massive liquadiation etc?  Thanks.


  4. We all reach the end at some point. In life, some will take the elevator, others will take the stairs.

     

    My advice is to take the stairs. It's good for your health and more satisfying when reaching that last step….


  5. Good morning!

    Oil came back to near $60 after a fun ride

    Keep an eye on Brent at $65 – that's a tough line to cross so it gives us a shorting signal on /CL

    /NG is crazy too.

    And WTF is this about?

    CHL/Yodi – Any help from support?  Maybe better in Europe?

    59/1020 – Only the first day of my 59th year, 1020 – you're much older than me!

    Archegos/Rookie – Like our last banking crisis, you don't know how deep it goes or if one bank causes a cascading failure with others – you just have to keep your eyes open.  $30Bn is a lot but it was only 10% of their holdings so, for whatever reason, they needed $30Bn fast but it might be a one-time thing or it could be the beginning of the end – very hard to say from a single instance.  

    And, of course, the jackals love to stir up panic:

    Shareholders in the Swiss Bank are bracing for a multibillion-dollar hit from a fire sale of positions held by hedge fund Archegos.

    Speaking of things getting dumped:

    Major companies are looking to unload big blocks of office space, the latest sign that remote work is hurting demand for this pillar of commercial real estate.36

    That can be the beginning of a huge catastrophe if CRE unwinds.

    Ships were again moving slowly through the Suez Canal, hours after engineers freed the Ever Given and cleared the waterway for global traffic.

    As Covid-19 Vaccinations Ramp Up, Hesitancy Wanes

    Stairs/1020 – I plan to teleport by then.  A few quantum entanglements and "POOF"!  


  6. Phil – Who you calling OLD? 

    I'm still in my fifties…. :)


  7. entanglements – sounds painful…. ;)


  8. Phil, Europe does not list CHL. At present still trying for weeks to get my Tax problem resolved with TD Ameritrade. 


  9. Dow 1903     I often drive from Texas to Denver. My route takes me through Pueblo, CO.  In Pueblo, there is a half mile long collection of old rusty, unoccupied industrial buildings.  However the sign is still there:  C F & I     Colorado Fuel and Iron.  


  10. Sorry guys for the basic question — having a busy/bad brain day….

     

    I have two sets of ITM covered calls on T  — currently at 30.56

    The April 16 calls for 30.00 (currently trading at 0.73) — expires in 17 days

    The April 23 calls for 29.50 (currently trading at 1.17) — expires in 23 days

    T goes ex-div on April 8 (0.52) — what are my chances of being called away before April 8?? — not the end of the world if I am but would prefer not.

     

    Thanks


  11. T 30 + .73 = 30.73 – Div .62 = 30.11. Stock is trading at 30.58 So you more than 100 % ITM you will be called for any day.

    April 23 29.50 + 1.17  = 30.67 – .62 Div. = 30.05  stock at 30.58 so same as above if you wish to hold the stock roll to 31 or 32.


  12. jeffl/T – It looks to me like you will get called away on both of the,. My trick is to look at the corresponding puts and compare to the dividend. If the put price is less than the dividend you are likely to get called. In this case, the div. is $0.52 and the April 16 $30 put is about $0.45 (less than the div.) and the April 23 $29.50 put is about the same $0.45 (also less than the div.).

    And what yodi said…


  13. sorry div is .52 but same problem. ROLL


  14. Daveo Don't trust the put simply do the math even if there is a difference of one cent less than the div. you get called.


  15. How the Beginning of the End begins?

    "The psychology of all that leverage with no risk management, it’s almost nihilism."


  16. Entanglements/1020 – They have successfully teleported quarks and the rest will just be refinement and math (and a LOT of data storage and transfer).  Based on Moore's law, we can get there in 100 years or less. 

    For actual teleportation, it is required that an entangled quantum state or Bell state be created for the qubit to be transferred. Entanglement imposes statistical correlations between otherwise distinct physical systems by creating or placing two or more separate particles into a single, shared quantum state. This intermediate state contains two particles whose quantum states are dependent on each other as they form a connection: if one particle is moved, the other particle will move along with it. Any changes that one particle of the entanglement undergoes, the other particle will also undergo that change, causing the entangled particles to act as one quantum state. These correlations hold even when measurements are chosen and performed independently, out of causal contact from one another, as verified in Bell test experiments. Thus, an observation resulting from a measurement choice made at one point in spacetime seems to instantaneously affect outcomes in another region, even though light hasn't yet had time to travel the distance; a conclusion seemingly at odds with special relativity (EPR paradox). However such correlations can never be used to transmit any information faster than the speed of light, a statement encapsulated in the no-communication theorem. Thus, teleportation as a whole can never be superluminal, as a qubit cannot be reconstructed until the accompanying classical information arrives.

    The sender will then prepare the particle (or information) in the qubit and combine with one of the entangled particles of the intermediate state, causing a change of the entangled quantum state. The changed state of the entangled particle is then sent to an analyzer that will measure this change of the entangled state. The "change" measurement will allow the receiver to recreate the original information that the sender had resulting in the information being teleported or carried between two people that have different locations. Since the initial quantum information is "destroyed" as it becomes part of the entanglement state, the no-cloning theorem is maintained as the information is recreated from the entangled state and not copied during teleportation.

    The quantum channel is the communication mechanism that is used for all quantum information transmission and is the channel used for teleportation (relationship of quantum channel to traditional communication channel is akin to the qubit being the quantum analog of the classical bit). However, in addition to the quantum channel, a traditional channel must also be used to accompany a qubit to "preserve" the quantum information. When the change measurement between the original qubit and the entangled particle is made, the measurement result must be carried by a traditional channel so that the quantum information can be reconstructed and the receiver can get the original information. Because of this need for the traditional channel, the speed of teleportation can be no faster than the speed of light (hence the no-communication theorem is not violated). The main advantage with this is that Bell states can be shared using photons from lasers making teleportation achievable through open space having no need to send information through physical cables or optical fibers.

    Quantum states can be encoded in various degrees of freedom of atoms. For example, qubits can be encoded in the degrees of freedom of electrons surrounding the atomic nucleus or in the degrees of freedom of the nucleus itself. Thus, performing this kind of teleportation requires a stock of atoms at the receiving site, available for having qubits imprinted on them.[6]

    As of 2015, the quantum states of single photons, photon modes, single atoms, atomic ensembles, defect centers in solids, single electrons, and superconducting circuits have been employed as information bearers.[7]

    Understanding quantum teleportation requires a good grounding in finite-dimensional linear algebraHilbert spaces and projection matrixes. A qubit is described using a two-dimensional complex number-valued vector space (a Hilbert space), which are the primary basis for the formal manipulations given below. A working knowledge of quantum mechanics is not absolutely required to understand the mathematics of quantum teleportation, although without such acquaintance, the deeper meaning of the equations may remain quite mysterious.

    McCoy hates the transporter | Star trek quotes, Star trek funny, Star trek  charactersAccording to a highly entertaining University of Leicester study into the computing power required to teleport a human being, your cells, broken down into data, equates around 2.6 x 1042 bits, which is 2.6 followed by 42 zeroes.

    To transmit this data, Kaku proposes using x-rays, which have super-short wavelengths and high frequencies that carry 1m times more data than normal optical fibre. Your data would be encrypted and beamed into space, bounced around a satellite network and then beamed to a quantum computer on the other side of the world to unpack. Kaku neglects to say what we would do with the original you, leaving the problem to others, but goes so far as to predict the transport of a simple molecule in the next 10 years, soon to be followed by DNA.

    I love this kind of stuff! 


  17. TD/Yodi – Let us know how it it goes.

    T/Jeff – Not clear but I assume you have the stock, which is at $30.56.  The April 16 calls have a 0.17 premium and the 23 calls have an 0.02 premium and the dividend is 0.50ish so it would be foolish for either one of them NOT to call you away ahead of the dividend, wouldn't it?  This is why, in the Member Portfolios, we don't sell these short-term calls.  Now YOU have to pay a premium (and trading fees) to buy them back and sell something else or risk missing the dividend.  The July $30 calls are $1.32 and those offer MORE than the dividend in premium (so you don't care if they call you away) and almost 5% downside protection – don't those make more sense?  

    And what Yodi said.

    And what Dave said.

    Teleportation or Death? | The Merely Real


  18. "Kaku neglects to say what we would do with the original you…"

    Orignal me would watch a ton of Netflix while new clone me does actual work

    How many of these teleportation clones can I buy!!! :) 

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  19. Thank you all — these kind of snuck up on me 
     

    Guess I Haven't checked the price on T in a few weeks 




  20. Happiest of belated birthdays Phil!   You had written something to that same effect years ago and I followed your lead and have done it ever since.  Now my kids will have 529 college money AND an investment portfolio when they get finished with college (in addition to my youngest lucking out with 4 shares of GameStop).  I sleep well at night knowing those two things and I try to teach them the same, even though they are only 8 and 10, with the expectation they do for their kids and grandchildren the same.

    Hope you did some celebrating, even small, this weekend.  We are heading down to Anna Maria Island for the next week so please keep the weather warm down there.


  21. jeff – T options are extremely liquid and the stock trades between 26 and 40 consistently with a high dividend.  easy to roll forward and carry on.  


  22. Happy Birthday Phil


  23. Phil/IBM

    30 IBM '23 $100c ($27.5)

    -30 IBM '23 $140c ($12)

    -5 IBM APR $125c ($5.2)

    -5 IBM APR $120p ($6.6)

    Would this be a good time to buy back/roll the IBM short APR $125calls?

    THX!


  24. How many/EMike – Good attitude, F that guy!     Although, if they could save a copy of the high-school me who could bench 350 and run 5 miles for fun – that would be nice…

    That's great Rperi – Happy to hear that!  So far, the weather has been tediously gorgeous this spring.  Someone said it might rain on Thursday but then back to boring 80/65 and partly cloudy.  The hard part is deciding which shorts to wear to a restaurant – you don't want to be too casual so it's best to pick the ones with pockets…

    IBM/Wing – Good time to sell more calls.  A bit short-term toppy at $135.  Earnings are the 19th.  You only have a 5/30 cover so I'd roll the 5 April $125s ($9.75) to 10 July $135s at $5.65 – that's better than even and you can sell 5 (not 10) July $130 puts for $5.25 to balance.

    It's not so much about buying back the $125s (but of course you do because they have no premium left to give you), but about taking the opportunity to sell the Julys for a lot of premium (100%).

     

     

     

     

      


  25. Virgin Galactic rolls out latest generation of spaceship


  26. May be an image of text that says 'Pro tip. If you're remodeling your kitchen, put one of these in that empty space in the corner cabinet, for the next guy that remodels in another 10-15 years.'

    I like that one!

    May be an image of text that says 'You may make mistakes, but at least they're usually not "we can see your mistake from space" bad'

    At least they had a backup plan:  

    May be an image of outdoors and text that says 'E tex'

    Whole lotta nothin' going on today.  They are ready to crash the Dollar to dress the windows tomorrow:


  27. OK – hope everyone didn't leave — if so I'll ask tomorrow

    What does the other side of the 'called away to capture dividend trade' look like?  

    What positions does the person who exercises my short ITM calls hold?

    Basically — How can I be that guy?  Just curious because I can't quite figure it out.

     

    Thanks


  28. jeffl 

    Simple answer  Lets take T at the strike price 30 if called you get the cash of 30$ x 100 the amount of stock which is called. The option obligation becames worthless. The caller you sold the option too gets the stock at 30 and receives the div. If you wish to remain with the stock you have to roll the option and you will get the div.


  29. Dividend/Jeff – Simply BUY a call on a stock.  That gives you the right to demand a stock at a certain price over time.  So, for example, if I were to buy the July $29 calls for $1.95 with the stock at $30.70, I'm paying 0.25 premium but I know the dividend is 0.50 so, if the stock is over $30.45 and I take it from you for $29 on ex-dividend day, as long as I sell for $30.50 and collect the 0.50 dividend – that's $31 and there's a profit!


  30. Good morning. Here is the link to today's webinar. 

    https://attendee.gotowebinar.com/register/6888239551389566221