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birb_cromble  1mo ago (text post)   1092 thread views

Weekly Finance Thread - 2026-08-08

A weekly thread to discuss financial matters - from personal all the way up to global.

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I’m up about $800 on my NFLX bet. Nothing to write home about, but maybe I’ll write about it in this thread.

My confidence has not yet been vindicated (I don’t plan to exit until 2028), but to extremely briefly explain my gut feeling: I doubted Netflix the first time it puked in 2022. Its subscriber growth slowed, and competition was closing in from all sides (remember CNN+?). I thought maybe it’s the end of an era. Since then, Netflix has remained profitable, and other streamers learned that it’s a tough business. Netflix also realizes that live sports have a future in internet streaming.

So, seeing the price back at levels observed in 2021, I don’t expect investors to allow the price back into its 2022 bear market. Neither do I expect them to replicate their 2023-2025 performance. However, if it at least rhymes I should do okay.

If you are going to explain a trade you should do better. If I am being honest your explanation is basically stupid. That you don’t have the cash. But from what I can tell you seem to have the assets in other things to cover a loss. You own the stock so your risks is substantial.

You can just buy stocks on margin. It’s easy to set-up. A good explanation would explain why a synthetic long was cheaper than buying on margin. In general it’s a negative because you probably getting some slippage execution in the option market which is greater than buying the stock directly. But retail margin accounts are sometimes high. So by doing it synthetically you’re probably getting the financing cheaper from market participants.

A good posts on a trade would go thru all the mechanics of why you structured the trade this way. Other than that you just like the stock but haven’t gone thru the analysis of negative alphas of using leverage in a retail account. I’ve owned Netflix lately. Mostly out of it now.

Ouch!

I’d love to hear what you’re up to.

Not much. The memory trade left a lot of other quality stocks forgotten a few months ago. So pretty much crushed owning a variety of stocks that got cheap - Amzn, CME, NFLX a bunch more. Out of all that now. Now long 50% Tlt and 20% cash. This market should give other opportunities so I feel fine sitting out for now. Hoping rates fall some and I get a spec gain on Tlt. It wouldn’t be awful for me if Tlt crashes and causes a stock market correction.

I don’t plan to exit until 2028

What happens in 2028?

The contracts expire, lol.

It's a synthetic long. I paid $465 net premium to simulate owning 100 shares of Netflix (the entire downside and upside).

At that point, why not just buy the stock?

I ain't got the cash. 😬

The 100 shares would have been somewhere around $7,000. Most is tied up in other positions (predominantly VTI), and what little cash I do have I need in case I get assigned on any of the other options I've sold. I only need the full $7,000 if Netflix goes to literal zero (0) dollars. So I'm happy telling my broker I'll get the money to them if Netflix actually falls that much.

I have a portion of my portfolio that I would like to be highly liquid and effectively zero risk. Currently, my approach is to buy Blackrock money market ETFs, but these present a problem in that a) my broker does not have good tools for daily cash sweeps, so getting compounding interest requires too much micro-managing and b) the gains are subject to income tax.

Do you guys have approaches to the risk-free parts of your portfolios that are brainless and optimized? I'd strongly, strongly prefer for it to be accessible through Merrill so I can keep high status.

I have one more thought on this. If you can afford to lose a little bit I like Tlt a lot here. My guess is a 10% loss would be max. I just checked with grok for some dirty data and that would equal a 70 bps rise in long rates. Inflation seems to be soft. So a lot of it is real yield at current inflation rates. The curve is steep (difference between long-term rates and short term rates). Market seems to be concerned about capex from hyperscalers right now. You get 139 bps more than short term rates. The real reason to do it is to hope for long-term rates to fall and make 10% on the speculative side.

I am wrong all the time. I wouldn’t call it a screaming buy right now but I do think duration risks has value here. It’s not zero risks, but if you can stomache some risks it’s worth considering.

Liquidity would not be an issue. But you would have a risks that could correlate with the stock market.

You would be inclined to bet on long term rates falling right now? I mean, zig when others zag, but Trump/Iran aside, hard to see how that happens in context of US debt levels.

Real rates are high not just nominal. Despite the debt inflation is benign.

Can't get around b, but you can at least hold most of your funds in a state-tax-advantaged fund like TTTXX/GABXX/SGOV/USFR (or a state-specific fund if it exists). You can put the remainder in a HYSA which will not be tax efficient but at least supports ACH transfers. You could also use a vanguard brokerage account with VMFXX as the settlement fund. You can do something similar with SPAXX at fidelity but you lose around 20 bp ATY due to their higher expense ratio. If you want to stay at ML, then buy TTTXX or a tras

Another approach is to set up an M1 account with a few grand in the settlement account and the rest set to smart transfer to USFR/SGOV. You can keep a larger percent of your balance in ETFs compared to the above strategy. Downside is that M1 will charge you a $3/mo fee if you even go below $10k, and M1 may go under at some point and it may take a while for you to access your funds.

Aside from M1, no one offers an automatic investment service because everyone wants to make money off your otherwise-fallow cash.

The short answer is nothing on Merrill I know about. Robinhood doing 3.5% APY on checking and savings is what I'm doing for now.

I have a portion of my portfolio that I would like to be highly liquid and effectively zero risk. Currently, my approach is to buy Blackrock money market ETFs, but these present a problem in that a) my broker does not have good tools for daily cash sweeps, so getting compounding interest requires too much micro-managing and b) the gains are subject to income tax.

Do you guys have approaches to the risk-free parts of your portfolios that are brainless and optimized? I'd strongly, strongly prefer for it to be accessible through Merrill so I can keep high status.

I don't know a thing about Merrill Lynch, but I keep a portion of my portfolio in VMSXX which is the Vanguard Municipal Bond Money Market Fund. From what I understand, they invest only in municipal bonds which are close to maturity. So that the price per share won't change even if interest rates fluctuate. And in fact, if I understand things correctly, VMSXX has traded at $1 per share for many years. I use VMSXX for (1) money I am putting aside for tax payments; (2) an emergency fund of a few hundred thousand dollars.

I am not an expert on taxes, but from what I understand the interest payments are exempt from federal tax. I also read somewhere that if you live in a high tax state like California or New York, there are similar funds which invest only in the municipal bonds of that state, getting you out of state taxes as well.

Also, when I buy into VMSXX, the system asks me if I want to automatically reinvest dividends. Even if your platform doesn't do this, I'm pretty sure the dividends are paid out once a month so it may not be too cumbersome to reinvest manually.

Last, I am able to buy into VMSXX even from other trading platforms. So perhaps it's available from Merrill. Or perhaps Merrill has something similar.

So if you are looking for something which is (1) highly liquid; (2) very low risk; (3) largely tax exempt; and (4) automatically reinvests, I would consider a municipal bond money market fund.

If Merrill has a shitty product why would you stay with Merrill? Just fire them and swap to a better firm.

I am not sure what you mean by “high status”. Non of the wealth management private banks have status anymore.

You get 75% stronger BoA credit card rewards if you have 100k combined assets at BoA/Merrill.

Fuck you on one hand and give you a gift elsewhere.

I would probably keep the bear minimum in Merrill and set it up to be something simple like SPY. Then use a different broker for other accounts. Risks-wise I would de-risks other accounts for cash sweeps etc. Fidelity is simple and I think their gui is easy to understand. Interactive Brokers is considered the best.

Interactive Brokers is considered the best.

I've generally heard them recommended for non-US clients. Are they worth it over Fidelity for US citizens residing in the US?

I use fidelity but that’s kind of evidence of stickiness of financial products because I am use to their gui and can find what I want quicker.

IB has access to more international markets and lower margin rates. They get to the point of being semi-pro and not retail. But when I’ve used them I found the front ends to not be an intuitive.

my broker does not have good tools for daily cash sweeps, so getting compounding interest requires too much micro-managing

I think I'm not fully understanding here -- are you referring to reinvesting dividends automatically, or is it that every time you make a deposit, you want it to automatically be invested in the MMF? If it's the former, I'd have thought for sure Merrill would have that option; if the latter, could you schedule an automatic "buy" that just doesn't execute if there's no cash in the account?

I'd strongly, strongly prefer for it to be accessible through Merrill so I can keep high status.

What benefits does that actually bring, out of curiosity? I've always wondered about that sort of thing.

I'd have thought for sure Merrill would have that option

You'd be surprised how many brokerages don't offer this. They make money by using fallow cash for their own investing, and allowing an automated sweep would kill that resource.

Looks like ML has a cash management account that allows automatic dividend reinvesting, even if nowhere else, so that might be the best option depending on fees.

My brokerage doesn't have an automated cash sweep either. I just go in twice a month and buy a mix of ultra short term treasury funds (like SGOV) and a state municipal bond ETF. Both are tax advantaged and have a post tax return that beats my broker's money market offerings.

It's not 100% brainless, and the duration on the municipals carries some risk, but it's not terrible.

I need $43,200 to pay for yearly expenses. Unemployed, no degree, spent 5 years programming professionally and am utterly burnt out. I've got about a year to figure it out. My current plan is:

  • Work somewhere mentally easy, like a call center or a warehouse. I've done both jobs in the past and really enjoy just putting my brain on autopilot.
  • Study for tests like GMAT, LSAT, etc. and try to become a tutor. This will hopefully take care of my medium- to long-term aspirations whatever I decide to do with my life.
  • Try to write. I've always wanted to but it's tough as I am not yet a good writer. Now, in between mentally demanding jobs, feels like a good time.

Mostly I'm wondering whether anyone has ideas for a potentially better or more braindead job, and the medium-term viability of tutoring provided I can get a 99th percentile score on LSAT/GMAT.

braindead / slacker jobs tend to exist wherever there are stupid rules. They are largely unique to the specific stupid rules, but for example:

  • a company needs to send confidential files to other companies. There are rules about who is allowed to touch the files. The company employs a small team of professional uploaders/downloaders who literally click upload and download on some professional file transfer software, then watch the progress bar, then unpack the files and email someone to tell them it's done.
  • property owner is renting out some property for temporary use. In addition to security, they also hire a representative to be physically present on the property to be the first point of contact for questions or concerns. Job consists of sitting on the property, and maybe once a day answering some questions, or escalating if required. I don't entirely know why these jobs exist, but it's probably because they are making so much money on the rental, it's worth it to them, or possibly some insurance reason.
  • government agency is allotted a yearly budget. If they do not spend this entire budget, it shrinks, and is hard to get back. They hire staff and contractors to fill the budget, even though there's very little actual work to be done, and indeed very little work is allowed to be done. Days mostly consist of going for coffee, applying to get something purchased, and perhaps working on small projects that don't need approval from anyone.

Why not try a different company and continue to code? There are better teams out there if you are tired of the process side rather than actual coding side.

Why I think it’s worth trying is you might want to avoid nuking your lifetime earnings potential

I'm not great at programming and lack credentials and non-crypto experience. Give me a year to hammer out a degree and I think I could get a fine programming job, but I was never able to do programming in a healthy way anyways. When I regain some steam I plan to get a business degree or something.

I'm not fully ruling out programming; it's more that if I'm already starting from scratch anyways I might as well pursue a career in a field that might suit me better. If you're aware of a programming job that offers interviews based solely on IQ tests or leetcode performance, though, sign me up.

Unless you are doing accounting a business degree is fairly worthless. You can just do business and learn as you go.

I want a business job. How else do I get one without a degree or connections? So far I haven't even heard back from entry-level positions I've applied for (e.g. glorified customer service at financial companies).

Maybe it’s useful for showing interests. I don’t think there is a lot of actual learnings in most business programs.

Well I think I just need a degree of some type at least. Business degrees are "worthless" in that business jobs don't necessarily ask for them, but I'm sure they teach more than say a creative writing degree.

I made a fair bit of money tutoring through college. I'm not sure how good of a gig it would be today, but back then the pay was great.

I would not suggest trying to make an income off writing unless you're willing to grind for years at almost zero pay.

If you're American, waiting tables can be surprisingly lucrative if you can find a place with a good clientele. My friends who still do it can walk out the door on a Friday night with $500 in tips.

What about programming burned you out? Having done just about all the jobs you mentioned above, programming has been the least taxing of all of them for me, and I'm interested to understand what was different for you.

Grinding for years without pay is totally fine. The bigger risk is writing never becoming a career at all. I feel I need to give it at least one good try, though, before giving up on the dream.

What about programming burned you out? Having done just about all the jobs you mentioned above, programming has been the least taxing of all of them for me, and I'm interested to understand what was different for you.

I couldn't tell you exactly. I'm quite good at the logic puzzles and algorithm-building. My last job was very technical. I just hate it and can't seem to reliably do more than an hour or two of work, and that only if I set aside 16-18 hours and exert a tremendous amount of effort. Those 5 years (in crypto) aren't really worth much in the broader job market. I don't have the will to go back to college just to get back into a career that never worked for me.

I can't say for sure tutoring will be easier, but warehouse work was good exercise and dull enough that I didn't need to pay attention to what I was doing, which is both inherently enjoyable and I think dovetails nicely with writing when I get home.

I have a friend that works Doordash/Uber eats in a big city as his main source of income. I don't know how much he makes, but it's enough to have a $1900/m apartment, a tesla on a loan, photography as a hobby, a non working girlfriend. He does it 4 times a week, full day morning to night shifts. Specifically targets wealthy high density areas, otherwise income pretty much halves due to less tips.

Tutoring's a great gig, I did it for years. You'd be amazed what you can charge. "First lesson free" is a great strategy when you're well below your target hours/week.

A while ago, I predicted that we would see one modest federal rate increase before the end of the year.

Since then, I've seen evidence for and against that prediction. Evidence in favor of a rate increase is that there were three votes in favor of an increase at the last meeting. Evidence against it is the recent weak jobs report, which pushes on the other side of the Fed's dual mandate.

Overall, I'm starting to lean against even that one token rate increase. What are your predictions?

I'll be surprised if we don't see a 25 bp hike before the end of the year, but the FedWatch probabilities are what they are, and they're confident about a future decision until some report or another is released, and then fed fund futures traders have changed their minds. It's already happened for the September meeting.

This Warsh guy talks like he wants inflation to come down. His emphasis on "price stability," instead of pounding his fists about the 2% target, tells me he may be flexible on it despite knowing it's a terrible idea to ever suggest that in words. He wants the bond market to do the work for him, and it could be working!

Actions speak louder than words, though, and so far he hasn't...done anything. In fact at the press conference, the reporters were kind of confused about this, asking in effect, "Well what are you waiting for?"

To back up a second, I cannot see a way out of the US debt. The US can lower federal spending below tax revenues (lol, lmao even), raise taxes significantly, go into default, or inflate it away.

One of these is much easier than the others. Immense pressure will be put on the Fed to allow inflation to run just hot enough to reduce the burden of the debt in real terms. The interest rate will be kept below the inflation rate (so real rates will be below zero). The Fed's independence is on borrowed time, if it has not already been defeated.

If the Fed does not quietly drop the 2% target, it gets much less boring. I don't know if it will be next year, the year after, or in ten years. I do know that one day no one will be talking about the US debt crisis, and then the next day it will be acknowledged as such. The only way we avoid the inflation route is if the debt causes some other urgent crisis that I can't predict right now and suddenly there's political appetite to tell the elderly, "Sorry, but it was irresponsible of previous governments to promise you all these services, and you really should have prepared for your retirement, and also we sincerely hope you kept a good relationship with your kids."

Immense pressure will be put on the Fed to allow inflation to run just hot enough to reduce the burden of the debt in real terms

I'm pretty sure we're already seeing this happening in real time. It's been a long time since we saw inflation at the 2% target rate.

Just based on my layman's understanding of monetary policy, historical analogues suggest we "should" be at a ~5.5% rate right now. The fact that we are not, and that the nominal rate is almost identical to inflation instead, spooks me.

Supposedly the bond market rates are rising, fed target rates be damned. I've seen predictions that the fed won't raise rates because the bond markets will have defacto raised rates for them anyways. So the question is actually, will the fed launch into more QE to take the edge off the bond market?

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