Hey Mark...as a Mark Meldrum long time subscriber and you could say MM loyalist....cfa, applied series....live Q&A everyweek...also Irish....please dont frown upon us over 1 bad apple...
That's why I love Barrons, they wrote an article where they said : the world has gone bananas. 6.2 M USD for a banana on a wall, like Machiavel said : People are so simple and so inclined to obey immediate needs that a con man will never lack victims for his deceptions! With your analysis, i understand that finance is not so simple and I know nothing
Mark, putting this out there for free? this is a labor of love. I have a question. What would you see as a valid cause for sustained multiple expansion in equities? I've heard analysts mention how investment options are limited compared to global wealth, especially with Russia and China not being what it was prior to 2020. I can see this as a reason pushing equities higher in the short term but it shouldn't explain long term averages.
Mark thanks so much for your analysis. I love your work and I will just say to you what I heard Warren Buffett say earlier this week. "You know people are gambling when they get mad when you criticize the stock. If people really believed in its value, they would want the price to go down so they could buy it cheaper." MSTR and Bitcoin people are the exactly that, they get SO MAD when you point out MSTR is 3x NAV on a asset that is fundamentally worthless. This is a bubble .... and not only a bubble, but a bubble on a fraud asset. I'm gonna keep studying it... but its seems clear as day right now. The key is to find a way to get rich off it.
22:22 Why they took inverted P/E and REAL 10y yield? They should compare nominal 10y yield, right? Unless equities are immune to inflation. Taking nominal 10y yield, ERP is now negative.
Hi Mark, I have just passed L1. I am new to market outlook because I do think I can start applying my knowledge, I am trying to think in your ways and have the following questions: 1. You say ‘deflation/disinflation’ at 6:45. What does ‘deflation’ refer to? The par rates, bond prices or the general price level? Personally, I only see sustained fall in general price level as deflation, but even high-profile employees in workplaces try to mix it up with sustained fall in a particular price of a particular item as deflation or at least disinflation. 2. How does the above ‘disinflation/deflation’ make you become bullish and say something good about the bond markets? Is it because the bond price will rise? You mention lower cost of business leads to disinflation, so I am using the AD-AS mode to analyze (lower costs of business increase SRAS and lower the price level). Is it a necessary coincident to have disinflation/deflation in general price level with the bond price rising? From my shallow point of view, I cannot distinguish why disinflation/deflation alone can make us become bullish, so I made a few more steps of deduction, but failed. I used some other economic tools you taught such as demand-supply model to interpret. A fall in Government spending lowers the budget deficit, hence lowers the supply of government debt, which leads to an increase in bond prices. But then I fail to deduce why an increase in SRAS leads to a rise in bond price, is it because the output level will increase as well hence there will be more debts available? Is my direction correct or can you elaborate more about this? 3. For the Beta part, I cannot understand so much, regarding the implied volatility and the quotation of different ETFs, have I missed any tutorial videos on youtube or are they more of Level 2 stuff? Are you quoting them because these ETF prices are the most representitive figures of how the equity market moves and performs? I also find it difficult to understand the Gamma part because I just have had a high level of view about Gamma in the derivatives section.
One piece of the MSTR puzzle that's missing here is the leveraged ETFs. There has been huge inflows over the past couple of weeks and that might explain, in part, the move higher.
Would love to hear your thoughts on today's announcement (Nov 25th) that Trump intends to impose a 25% tariff on all goods coming from Canada and Mexico until the flow of drugs is stopped. If Trump really does impose a blanket 25% tariff on Canadian imports, what can we expect as an impact to our economy?
Hi Mark, great video. I do not see how long end of the rate curve is coming down any soon unless Fed decides to start QE again and start buying the long end which might be an extreme scenario. You can see that credit spreads as well as credit spread volatility are at multi decade lows at the same time interest rate volatility is higher than pre covid levels. For me this has a lot to do with the structural chang post COVID where US government has become more indebted while corporates are less indebted.
What is the argument for investing in miners rather than the commodity itself? The pure play on commodities should benefit the most as miners will be bogged down by increasing costs
Great vid Mark, but I have a question, when you said at min 43 this is a zero sum game at shareholders expense. Share is up 500%+ this year and convertible oversubscribed? how is that a zero sum game to share holder? Seems that everybody is winning rn, are you considering this is not over and share will collapse by 99%? If Bitcoin stays with the same value, they MSTR can pay the bond holders and will still have a 27B in reserves, so there should be a floor for share price there when mnav=1. Conversion prices are very low, compared to current and dates are way in the future, could it be converted before the expiry date is my understanding. You've got a new follower!
I'm really impressed with your intelligence Mark. So let me get this straight, arb bond shareholders "buy" a free call option contract with 5 year expiration, no theta decay, no downside risk due to capital preservation promise from Saylor, so the worst for them that can happen is getting chewed up by the daily rate on short position (if no volatility present)? If that's true, how long do you think this formula would remain sustainable? Thank you.
Hey Mark, great analysis on OXY in your last positions video. I'm in that similar situation, where my average acquisition cost of OXY is significantly above the current market price. However, my acquisition cost is really high at $65. Would your strategy outlined in the positions video still work, or should I just realize the loss and deploy the capital elsewhere, or just wait for Trump to possibly target Iran's oil infrastructure (or sanctions) which would have a positive impact on oil prices? Also, would it be possible to briefly expand on the OXY strategy a bit further in the next positions video?
Hi Mark , most of the asset classes are making new highs, also we have money at money market funds still increasing; wondering were all the new money is coming from
you may cover this in the applied-level video that gets posted tomorrow (which I absolutely plan to watch) but in any case -- how should one approach profit-taking when executing a gamma-sensitive strategy? if you went long bitcoin and short MSTR (in appropriate proportion), for instance -- how would you manage that trade as it evolves?
sub-question: naturally, gamma (vega) begets exposure to realized (implied) vol; how do you think about the distinction between the two (with respect to speculative trading)?
The way i see it, we have 2 main arguments for long term yields. The government will need lower long term bond yields to keep the debt down, or the government can ignore the bond yields altogether and inflate the debt away. I am presenting an argument from the latter from what the narrative i am reading online is and some of my interpretations of such. The story is behind inflating the debt away because the government will like to spend, we have an economy that is willing to spend, and the impact on markets that rely on long term yield will not be as significant. The only thing i can think of that relies on 10-30 year yields are mortgages. Home buyers will buy if they have money. Otherwise they will continue to rent so the market there won't be affected considering supply issues. If the Fed does QE, it can also be inflationary as companies prefer to pass costs to the consumer but not savings to improve profits. Dumb argument that isn't necessarily correlated: the government wants to see GDP growth so if we project lower inflation, GDP will go down. If we see higher inflation, GDP will go up since our real GDP has been relatively stable recently. A counter argument would be the consumer will get squeezed and spend less, however we can see that there are more jobs and low unemployment. If we have both, then we are expecting a competive job market thus more money for the consumer. We can see employees demanding for higher wages (people are leaving for high paying jobs or unions fight for large wage increase) everywhere to match inflation which encourages more inflation because the companies will have to pass the cost down which creates more demand for higher wages. While companies can do layoffs, the consumer has been willing to spend so they may be willing to match wages instead. Wage inflation is inflationary since the consumer is so willing to spend. A counter argument to productivity would be that it is unable to outpace inflation due to much higher consumer spending. There are also specific inflationary sectors that will never go away such as housing, restaurants (McDonald's/Starbucks), and healthcare/insurance and benefits little from productivity. Lower taxes also mean more consumer money. The government will receive less, however we know their willingness to spend money is unmatched so they will increase debt ceilings and the fed will lower rates. But in a inflationary environment, the fed will be the main willing buyer at lower yields so yields will remain high unless the Fed prints money to buy the bonds which again is inflationary as that dumps more money to go around in the market. Spending less on regulation and other fees does not mean the money cannot be spent on other things such as bonuses or other investments elsewhere. As for one of the two which have to be wrong (tlt vs spy) i would argue that it is priced correctly based on the belief that the environment will be inflationary Note: i am personally in the deflationary camp (long tlt), but i want to present this for you to pick apart. I apologize as this argument may not be very clear since I'm typing this on the go
Hi Mark, is it true that by purchasing a call option on a US dividend-paying stock, a non-U.S. resident can avoid double taxation (due to the fact that the price of the call is already reduced by the amount of the future dividend), as is the case with selling a put option? thank you
If Saylor was M/C, would he be in violation of any of the following Standards? I(B) Independence and Objectivity I(C) Misrepresentation I(D) Misconduct II(B) Market Manipulation III(B) Fair Dealing III(D) Performance Presentation V(A) Diligence and Reasonable Basis V(B) Communication with Clients and Prospective Clients VI(A) Disclosure of Conflicts
Hey Mark, wanted to point out that the date on the par rate table shows 15 Nov which was 10 days ago. Think you meant to write 25 Nov or 22nd if you’re referencing Fridays.
Hi Mark, just to make it clearer, can you comment on what is the MSTR management's angle on this? Why are they doing this exactly? Sales of share compensations? Thank you
Newmont having cost issues. But at its current price it is trading around 5x is 8-year average FCF. Interestingly it was generating more FCF when the price of gold was lower. If they can get their costs and capex under control, they still appear very undervalued at this point. Do you see any reason why they couldn't get this under control? Will capex/opex need to increase to retrieve the higher cost gold?
If the market disagrees with the Fed, then what’s the point of putting stock in what the Fed officials say? Could the market and the Fed stay diverged for months or even years?
Thanks for going into depth about the convertible bonds. Is there a scenario in which Implied Volatility of MSTR can decrease at a gradual enough rate that gamma traders can still stay in the game? Or would even a slow, steady and gradual decrease in IV put an end to their profitability? I'm also curious: since the convertible bonds are long dated, if volatility decreases, it seems the worst that the convertible bond holder loses is the risk free rate. Isn't this a reasonable amount to pay in hopes that volatility would return? Or do you imagine most gamma traders are highly leveraged and would be stuck paying many times the risk free rate.
Hi mark, The short term one month int rate is 4.72 and fed funds is 4.45% , i am struggling to und how is it a 13bps rate cut priced in? Can you please elaborate
Thanks for the great analysis on MSTR. Just my 2 cents. Convertible Arb (buy bond short stock) is essentially a delta neutral gamma positive trade, aka a bet on implied vol continue to rise. However, the implied vol for MSTR is already at historical high (100th percentile). Whoever putting on this trade is still unlikely to make much money in my opinion. For better or worse, a better bet should be against implied vol by selling calls and buy stock. I know this is dangerous, but vol would eventually come down (check VIX). The key is just not to put on too large of a position.
Yes, at this level of vol, entering now will be risky, unless you expect IV to stay here or go higher. Waiting for vol to decrease may provide a better entry point on a gamma play, but where is the bottom on that?
I'm confused about something. In the last video, you mentioned that the shareholders were the beneficiaries of the pyramid scheme at the expense of the bondholders, because every time the issue debt and buy bitcoin, the previus shareholders own more percentaje of the pile of bitcoin. But now you're saying that the bondholders are the beneficiaries at the expense of the shareholders. What am I missing here?
I saw reports that Allianz, one of Europe's largest insurance companies, made up about 25% of the recent convertible offering. If true, would this convertible arb be the game they are playing? If so, why would they as an insurance company? Is it just that it's a relativity small position and the reward is greater than the risk? This is all very intriguing.
Hi Mark, would love to get your thoughts on the Northvolt, the Swedish EV battery maker’s bankruptcy. It seems like it’s a serious blow to Europe’s EV ambitions. Someone must have been sleeping at the wheel…
I spent last week commenting on Saylor's mainstream media interviews ( on YT) linking them to your brilliant breakdown of MSTR i hope you dont mind. I don't think I'll bother doing the same for your convertible arb breakdown as i suspect this will fly over the audiences head.... I wonder if you can dig into the attached options that come with the converts, do these trade on market and do the underlying shares already exist or does MSTR issue them upon exercise? Thanks for it though, really appreciate it.
As smart as this stuff is it doesn't mean stupid money won't come. Look at dogecoin an obvious scam. Obviously everyone buying MSTR after September this year is late.
Higher standard deviation with Trump resuming office. How does volatility play into your strategy heading into 2025 and through his term as president? Ideal situation to be a swing trader?
Hi Mark, Can you provide some detail on the so called Trump trade around banking deregulation? What specific aspects and types of banks will benefit from the change in regulation and how? Thanks
What do you think Trump’s statement will be after next FOMC meeting under each of the 3 policy choices (cut,hold,increase) given Powell’s remarks in the last press conference ? How aggressive do you reckon Trump will be?
Hello Mark, where in the Applied Level can I find material on how to form expectations for the broad equity market? Alternatively, what CFA readings would prepare me for this task? Currently going through the SPY case study in the Long Call video of the Applied Options folder and I would like to know how to form my investment thesis for a broad equity market ETF.
Scott Bessent claims that Yellen manipulated the market by issuing $1 trillion in short-term debt, which helped to hold down long-term interest rates (if I understood that correctly). I couldn’t quite grasp what was being said. Could you please explain this, and what the effects of it might be on the Treasury market and TLT? Thanks btw, since he appears to be the Treasury Secretary, his opinions and actions influence the market, right?
Mark, on gamma trading in the case of an increase in MSTR price - I get that as the price increases, delta increases and the value of call option increases to the owner of the convertible bond and they have some MTM gains while being delta neutral on the short position (plus some yield). How are they actually realizing gains though? Are they selling these convertible bonds during these price spikes? Could you also detail how they realize these gains for a significant drop in prices? Are they closing the short MSTR shares positions at a gain?
Selling on the way up, buying on the way down. Once the price runs up, they need it to come crashing down. Cover the shorts and book the profit. You basically follow a shampoo strategy - wash, rinse, repeat.
Ok so being delta neutral is key, the increase in value of the long bond and call offsets the short stock position and is what allows them to maintain the short. And as you say, ultimately they want the price to move down so they can buy to close the position at a profit while the long bond and call position loss is capped by the value of the bond. Is that more or less it? @@MarkMeldrum
Hi Mark, just to make it clear, if I have subscribed already (long time ago) to all the applied series, does anything change for me? will I get the new content for applied analysis and applied asset management?
Not sure I agree that reducing costs related to adhering to regulations is disinflationary (your comment at 7:10). The newly available capital can be used to improve operating efficiency, additional research and development, or to simply improve the capital structure of the business which would get loaned out by the company's primary financial institution to other entities. Wouldn't the money previously spent adhering to regulatory burdens simply be redirected somewhere else?
I still don't get how these convertible debt investors are trading on volatility and if volatility decreases they lose, wouldn't gamma increase if vol decreases?
What are your thoughts on Department of Govt Efficiency (DOGE) and the 2 people running it.? On one side, there is an argument that there are too many Govt agencies (400+) which impede business, causes waste and redundancies. On the other side there is an argument that this is a ploy by Elon Musk to get rid of the regulations he does not like as there are 22 agencies investigating his companies for various reasons (some of them is just absurd like discrimination in hiring against illegals at SpaceX). My concern is that even if they decide what to cut from govt and the budget, congress has to implement it which is a whole other story.
If target starts to head back down to the $100 level I think it starts to look like a nice target (excuse the pun) to sell some puts on. I know this was put selling target of yours a couple years back.
Check out the Schwab network's interview with Andy Constan, he also breaks down Saylor's gamma hussle. Unfortunately his attitude seems to be if you have buyers then why not sell the crappy product......
I don't think you should entertain those Microstrategy comments. Those people are not your viewers or applied series subscribers, they're from the meme stock crowd.
So think about it.. there is a new cohort of indirect investors (Convertible debt investors) helping to increase the demand for BTC. In addition to the 10 Bitcoin ETFs, new vehicles and derivatives being created for BTC - insatiable demand for BTC, new companies adding BTC to their treasury and nation states buying bitcoin. Coupled with the fact that the emissions is systematically dropping every 4 years and ytd interest expense for the US just passed a Trillion dollars - massive dollar printing and treasury selling . Additionally government policies and cabinet picks are very pro-bitcoin. Very bullish for Bitcoin and MSTR. Bitcoin is one of the very few instruments that demonstrates a smile volatility and if anything is actually more skewed to the upside.. normally volatility increases with asset price drops.. with BTC it is different vol is increasing with BTC going up.
The GM move today seems way overdone, especially considering it's low valuation already. Surely Trump will make significant carve outs for the automakers, considering selling some ITM puts on the big move
Hey Mark...as a Mark Meldrum long time subscriber and you could say MM loyalist....cfa, applied series....live Q&A everyweek...also Irish....please dont frown upon us over 1 bad apple...
I'm so glad I found you three years ago! Since then, my life has improved both financially and personally, thanks to the education you provide.
You are a generous man for making this video. Thank you for the help Mark.
That's why I love Barrons, they wrote an article where they said : the world has gone bananas. 6.2 M USD for a banana on a wall, like Machiavel said : People are so simple and so inclined to obey immediate needs that a con man will never lack victims for his deceptions! With your analysis, i understand that finance is not so simple and I know nothing
The crazy’s are coming after you Mark
Mark the cage rattler at it again 😅
This is genius in ghe midst of all the nonsense....legend MM....
Mark, putting this out there for free? this is a labor of love. I have a question. What would you see as a valid cause for sustained multiple expansion in equities? I've heard analysts mention how investment options are limited compared to global wealth, especially with Russia and China not being what it was prior to 2020. I can see this as a reason pushing equities higher in the short term but it shouldn't explain long term averages.
TAM
Mark thanks so much for your analysis. I love your work and I will just say to you what I heard Warren Buffett say earlier this week. "You know people are gambling when they get mad when you criticize the stock. If people really believed in its value, they would want the price to go down so they could buy it cheaper." MSTR and Bitcoin people are the exactly that, they get SO MAD when you point out MSTR is 3x NAV on a asset that is fundamentally worthless. This is a bubble .... and not only a bubble, but a bubble on a fraud asset. I'm gonna keep studying it... but its seems clear as day right now. The key is to find a way to get rich off it.
22:22 Why they took inverted P/E and REAL 10y yield? They should compare nominal 10y yield, right? Unless equities are immune to inflation. Taking nominal 10y yield, ERP is now negative.
Hi Mark, I have just passed L1. I am new to market outlook because I do think I can start applying my knowledge, I am trying to think in your ways and have the following questions:
1. You say ‘deflation/disinflation’ at 6:45. What does ‘deflation’ refer to? The par rates, bond prices or the general price level? Personally, I only see sustained fall in general price level as deflation, but even high-profile employees in workplaces try to mix it up with sustained fall in a particular price of a particular item as deflation or at least disinflation.
2. How does the above ‘disinflation/deflation’ make you become bullish and say something good about the bond markets? Is it because the bond price will rise? You mention lower cost of business leads to disinflation, so I am using the AD-AS mode to analyze (lower costs of business increase SRAS and lower the price level). Is it a necessary coincident to have disinflation/deflation in general price level with the bond price rising? From my shallow point of view, I cannot distinguish why disinflation/deflation alone can make us become bullish, so I made a few more steps of deduction, but failed. I used some other economic tools you taught such as demand-supply model to interpret. A fall in Government spending lowers the budget deficit, hence lowers the supply of government debt, which leads to an increase in bond prices. But then I fail to deduce why an increase in SRAS leads to a rise in bond price, is it because the output level will increase as well hence there will be more debts available? Is my direction correct or can you elaborate more about this?
3. For the Beta part, I cannot understand so much, regarding the implied volatility and the quotation of different ETFs, have I missed any tutorial videos on youtube or are they more of Level 2 stuff? Are you quoting them because these ETF prices are the most representitive figures of how the equity market moves and performs? I also find it difficult to understand the Gamma part because I just have had a high level of view about Gamma in the derivatives section.
amazing presentation.
thank you!
One piece of the MSTR puzzle that's missing here is the leveraged ETFs. There has been huge inflows over the past couple of weeks and that might explain, in part, the move higher.
Would love to hear your thoughts on today's announcement (Nov 25th) that Trump intends to impose a 25% tariff on all goods coming from Canada and Mexico until the flow of drugs is stopped. If Trump really does impose a blanket 25% tariff on Canadian imports, what can we expect as an impact to our economy?
Hi Mark, great video. I do not see how long end of the rate curve is coming down any soon unless Fed decides to start QE again and start buying the long end which might be an extreme scenario. You can see that credit spreads as well as credit spread volatility are at multi decade lows at the same time interest rate volatility is higher than pre covid levels. For me this has a lot to do with the structural chang post COVID where US government has become more indebted while corporates are less indebted.
Conceptually how would you style a vega trade differently than a gamma trade? Both seem to hinge on volatility of the underlying
Super commentary on MSTR Mark, thank you. Very sharp.
What is the argument for investing in miners rather than the commodity itself? The pure play on commodities should benefit the most as miners will be bogged down by increasing costs
Legend has it Saylor keeps all the Bitcoin on a gold chain that he never takes off.....
Thank you for sharing your knowledge. The video on MSTR was excellent.
Great vid Mark, but I have a question, when you said at min 43 this is a zero sum game at shareholders expense. Share is up 500%+ this year and convertible oversubscribed? how is that a zero sum game to share holder? Seems that everybody is winning rn, are you considering this is not over and share will collapse by 99%? If Bitcoin stays with the same value, they MSTR can pay the bond holders and will still have a 27B in reserves, so there should be a floor for share price there when mnav=1. Conversion prices are very low, compared to current and dates are way in the future, could it be converted before the expiry date is my understanding. You've got a new follower!
I'm really impressed with your intelligence Mark. So let me get this straight, arb bond shareholders "buy" a free call option contract with 5 year expiration, no theta decay, no downside risk due to capital preservation promise from Saylor, so the worst for them that can happen is getting chewed up by the daily rate on short position (if no volatility present)? If that's true, how long do you think this formula would remain sustainable? Thank you.
Hey Mark, great analysis on OXY in your last positions video. I'm in that similar situation, where my average acquisition cost of OXY is significantly above the current market price. However, my acquisition cost is really high at $65. Would your strategy outlined in the positions video still work, or should I just realize the loss and deploy the capital elsewhere, or just wait for Trump to possibly target Iran's oil infrastructure (or sanctions) which would have a positive impact on oil prices? Also, would it be possible to briefly expand on the OXY strategy a bit further in the next positions video?
Hi Mark , most of the asset classes are making new highs, also we have money at money market funds still increasing; wondering were all the new money is coming from
you may cover this in the applied-level video that gets posted tomorrow (which I absolutely plan to watch) but in any case -- how should one approach profit-taking when executing a gamma-sensitive strategy? if you went long bitcoin and short MSTR (in appropriate proportion), for instance -- how would you manage that trade as it evolves?
sub-question: naturally, gamma (vega) begets exposure to realized (implied) vol; how do you think about the distinction between the two (with respect to speculative trading)?
The way i see it, we have 2 main arguments for long term yields. The government will need lower long term bond yields to keep the debt down, or the government can ignore the bond yields altogether and inflate the debt away.
I am presenting an argument from the latter from what the narrative i am reading online is and some of my interpretations of such.
The story is behind inflating the debt away because the government will like to spend, we have an economy that is willing to spend, and the impact on markets that rely on long term yield will not be as significant. The only thing i can think of that relies on 10-30 year yields are mortgages. Home buyers will buy if they have money. Otherwise they will continue to rent so the market there won't be affected considering supply issues.
If the Fed does QE, it can also be inflationary as companies prefer to pass costs to the consumer but not savings to improve profits.
Dumb argument that isn't necessarily correlated: the government wants to see GDP growth so if we project lower inflation, GDP will go down. If we see higher inflation, GDP will go up since our real GDP has been relatively stable recently.
A counter argument would be the consumer will get squeezed and spend less, however we can see that there are more jobs and low unemployment. If we have both, then we are expecting a competive job market thus more money for the consumer. We can see employees demanding for higher wages (people are leaving for high paying jobs or unions fight for large wage increase) everywhere to match inflation which encourages more inflation because the companies will have to pass the cost down which creates more demand for higher wages. While companies can do layoffs, the consumer has been willing to spend so they may be willing to match wages instead. Wage inflation is inflationary since the consumer is so willing to spend.
A counter argument to productivity would be that it is unable to outpace inflation due to much higher consumer spending. There are also specific inflationary sectors that will never go away such as housing, restaurants (McDonald's/Starbucks), and healthcare/insurance and benefits little from productivity.
Lower taxes also mean more consumer money. The government will receive less, however we know their willingness to spend money is unmatched so they will increase debt ceilings and the fed will lower rates. But in a inflationary environment, the fed will be the main willing buyer at lower yields so yields will remain high unless the Fed prints money to buy the bonds which again is inflationary as that dumps more money to go around in the market.
Spending less on regulation and other fees does not mean the money cannot be spent on other things such as bonuses or other investments elsewhere.
As for one of the two which have to be wrong (tlt vs spy) i would argue that it is priced correctly based on the belief that the environment will be inflationary
Note: i am personally in the deflationary camp (long tlt), but i want to present this for you to pick apart. I apologize as this argument may not be very clear since I'm typing this on the go
Mark, your long tire trade is starting to roll!
2025 still has a chance to be a Good Year
Hey Mark. I really appreciated your tutorial video on how to « read » interest rates (market outlook). Do you plan to do more videos in that style?
Hey. Thanks for all your advice over the years. Thoughts on Canadian bonds and yield predictions? Looking to go long bonds through ETFs, thoughts?
Hi Mark, is it true that by purchasing a call option on a US dividend-paying stock, a non-U.S. resident can avoid double taxation (due to the fact that the price of the call is already reduced by the amount of the future dividend), as is the case with selling a put option? thank you
If Saylor was M/C, would he be in violation of any of the following Standards?
I(B) Independence and Objectivity
I(C) Misrepresentation
I(D) Misconduct
II(B) Market Manipulation
III(B) Fair Dealing
III(D) Performance Presentation
V(A) Diligence and Reasonable Basis
V(B) Communication with Clients and Prospective Clients
VI(A) Disclosure of Conflicts
Hey Mark, wanted to point out that the date on the par rate table shows 15 Nov which was 10 days ago. Think you meant to write 25 Nov or 22nd if you’re referencing Fridays.
why is deregulation disinflationary? Would you care to explain more, please?
Hi Mark, just to make it clearer, can you comment on what is the MSTR management's angle on this? Why are they doing this exactly? Sales of share compensations? Thank you
Newmont having cost issues. But at its current price it is trading around 5x is 8-year average FCF. Interestingly it was generating more FCF when the price of gold was lower. If they can get their costs and capex under control, they still appear very undervalued at this point. Do you see any reason why they couldn't get this under control? Will capex/opex need to increase to retrieve the higher cost gold?
What a great video Mark!👏🏼
If the market disagrees with the Fed, then what’s the point of putting stock in what the Fed officials say? Could the market and the Fed stay diverged for months or even years?
Thanks for going into depth about the convertible bonds. Is there a scenario in which Implied Volatility of MSTR can decrease at a gradual enough rate that gamma traders can still stay in the game? Or would even a slow, steady and gradual decrease in IV put an end to their profitability? I'm also curious: since the convertible bonds are long dated, if volatility decreases, it seems the worst that the convertible bond holder loses is the risk free rate. Isn't this a reasonable amount to pay in hopes that volatility would return? Or do you imagine most gamma traders are highly leveraged and would be stuck paying many times the risk free rate.
If the market is wrong about rate cuts and the Fed does cut in Dec, does that push equities even higher since the market will be “surprised?”
Hi mark,
The short term one month int rate is 4.72 and fed funds is 4.45% , i am struggling to und how is it a 13bps rate cut priced in? Can you please elaborate
By the way , Dr meldrum. Do you think that griffin dilemma is still valid for trump policy to put tariffs ? thanks a lot
Hi Mark, thanks for the video. Why short IWM when SPX is expensive and small cap valuation is way below large cap at the moment?
What are the dates listed above par rates under duration page? i.e. 26-may, 28-sep, 6-Oct etc...
Thanks for the great analysis on MSTR. Just my 2 cents. Convertible Arb (buy bond short stock) is essentially a delta neutral gamma positive trade, aka a bet on implied vol continue to rise. However, the implied vol for MSTR is already at historical high (100th percentile). Whoever putting on this trade is still unlikely to make much money in my opinion. For better or worse, a better bet should be against implied vol by selling calls and buy stock. I know this is dangerous, but vol would eventually come down (check VIX). The key is just not to put on too large of a position.
Yes, at this level of vol, entering now will be risky, unless you expect IV to stay here or go higher. Waiting for vol to decrease may provide a better entry point on a gamma play, but where is the bottom on that?
Mark, Thank you for sharing your knowledge. Can you explain TLT’s gap up with the bond market and rates?
Or anyone here in our community!
How big of a correction do you see mark, if you had to put a percentage on
I'm confused about something. In the last video, you mentioned that the shareholders were the beneficiaries of the pyramid scheme at the expense of the bondholders, because every time the issue debt and buy bitcoin, the previus shareholders own more percentaje of the pile of bitcoin. But now you're saying that the bondholders are the beneficiaries at the expense of the shareholders. What am I missing here?
Hi mark, since your 99% confident yields will drop, wouldn’t it make sense to do a call option on tlt etf right before fed meeting on dec 18?
TLT is not the Fed Funds rate. A long position in ZQ may be better for the Fed meeting.
Hi Mark, could you please address the newly announced Trump tariffs on Canada and Mexico and potential implications. Thank you,
I saw reports that Allianz, one of Europe's largest insurance companies, made up about 25% of the recent convertible offering. If true, would this convertible arb be the game they are playing? If so, why would they as an insurance company? Is it just that it's a relativity small position and the reward is greater than the risk? This is all very intriguing.
Hi Mark, would love to get your thoughts on the Northvolt, the Swedish EV battery maker’s bankruptcy. It seems like it’s a serious blow to Europe’s EV ambitions. Someone must have been sleeping at the wheel…
Thoughts on large pharma stocks like GSK, MRNA, PFE given RFK Jr. appointment? Does it even matter that much?
RFK, assuming he is even approved by the Senate, would have zero impact over pharma or the drug approval pipeline.
I spent last week commenting on Saylor's mainstream media interviews ( on YT) linking them to your brilliant breakdown of MSTR i hope you dont mind. I don't think I'll bother doing the same for your convertible arb breakdown as i suspect this will fly over the audiences head.... I wonder if you can dig into the attached options that come with the converts, do these trade on market and do the underlying shares already exist or does MSTR issue them upon exercise? Thanks for it though, really appreciate it.
As smart as this stuff is it doesn't mean stupid money won't come. Look at dogecoin an obvious scam. Obviously everyone buying MSTR after September this year is late.
Higher standard deviation with Trump resuming office. How does volatility play into your strategy heading into 2025 and through his term as president? Ideal situation to be a swing trader?
Hi Mark,
Can you provide some detail on the so called Trump trade around banking deregulation? What specific aspects and types of banks will benefit from the change in regulation and how? Thanks
Very curious on your take on $MARA. They very recently started running the same strategy as MSTR.
What do you think Trump’s statement will be after next FOMC meeting under each of the 3 policy choices (cut,hold,increase) given Powell’s remarks in the last press conference ? How aggressive do you reckon Trump will be?
Hi Mark, sorry that I am a bit lost here, will there be a valuation/DCF that ends the Costco's model series? Or only the REIT tomorrow?
The Valuation part begins Feb.
90% of people would never and will never fully understand your MicroStrategy segment. And this is just a rough and cautious estimate.
Thus microstrategy stock keeps on being bid 😂
I would go for 99
Is your analysis for advanced professionals?
he is one of the most highly regarded people in the CFA community... so yes.
Hello Mark, where in the Applied Level can I find material on how to form expectations for the broad equity market?
Alternatively, what CFA readings would prepare me for this task?
Currently going through the SPY case study in the Long Call video of the Applied Options folder and I would like to know how to form my investment thesis for a broad equity market ETF.
Love these videos. I do have a question - if I purchase the Level 3 + Applied package when does my access to the Applied content expire?
Never
Scott Bessent claims that Yellen manipulated the market by issuing $1 trillion in short-term debt, which helped to hold down long-term interest rates (if I understood that correctly).
I couldn’t quite grasp what was being said. Could you please explain this, and what the effects of it might be on the Treasury market and TLT?
Thanks
btw, since he appears to be the Treasury Secretary, his opinions and actions influence the market, right?
Obligatory babe wake up comment
Mark, on gamma trading in the case of an increase in MSTR price - I get that as the price increases, delta increases and the value of call option increases to the owner of the convertible bond and they have some MTM gains while being delta neutral on the short position (plus some yield). How are they actually realizing gains though? Are they selling these convertible bonds during these price spikes?
Could you also detail how they realize these gains for a significant drop in prices? Are they closing the short MSTR shares positions at a gain?
Selling on the way up, buying on the way down. Once the price runs up, they need it to come crashing down. Cover the shorts and book the profit. You basically follow a shampoo strategy - wash, rinse, repeat.
Ok so being delta neutral is key, the increase in value of the long bond and call offsets the short stock position and is what allows them to maintain the short. And as you say, ultimately they want the price to move down so they can buy to close the position at a profit while the long bond and call position loss is capped by the value of the bond. Is that more or less it? @@MarkMeldrum
Yes, that is is the ballpark. I will explain it more tomorrow in the Applied Level.
Hi Mark, just to make it clear, if I have subscribed already (long time ago) to all the applied series, does anything change for me? will I get the new content for applied analysis and applied asset management?
Nothing changes.
I miss the screen with real and breakeven rates.
I have the apply series. Do you intend to share new positions in the future, or it is in a different series?
You will continue to receive all content, yes.
Not sure I agree that reducing costs related to adhering to regulations is disinflationary (your comment at 7:10). The newly available capital can be used to improve operating efficiency, additional research and development, or to simply improve the capital structure of the business which would get loaned out by the company's primary financial institution to other entities. Wouldn't the money previously spent adhering to regulatory burdens simply be redirected somewhere else?
looking to buy some puts to short Micro, i'd be interested to hear your thoughts about such move ?
The guy just spent 40minutes explaining that this is not a delta play. My gosh.
I still don't get how these convertible debt investors are trading on volatility and if volatility decreases they lose, wouldn't gamma increase if vol decreases?
What are your thoughts on Department of Govt Efficiency (DOGE) and the 2 people running it.? On one side, there is an argument that there are too many Govt agencies (400+) which impede business, causes waste and redundancies. On the other side there is an argument that this is a ploy by Elon Musk to get rid of the regulations he does not like as there are 22 agencies investigating his companies for various reasons (some of them is just absurd like discrimination in hiring against illegals at SpaceX). My concern is that even if they decide what to cut from govt and the budget, congress has to implement it which is a whole other story.
How much more can Saylor pump it before the inevitable drop happens 🤷♂️
So if I have life time subscription for Applied Series, will I get access to Applied Analysis/Applied AM for free? I didn’t fully understand.
That's a good question. I am not sure either.
Yes. For you nothing changes.
If target starts to head back down to the $100 level I think it starts to look like a nice target (excuse the pun) to sell some puts on. I know this was put selling target of yours a couple years back.
Check out the Schwab network's interview with Andy Constan, he also breaks down Saylor's gamma hussle. Unfortunately his attitude seems to be if you have buyers then why not sell the crappy product......
bitcoin could not hit 100k. Is that a sign that bitcoin and mstr soon going to collapse?
superb
Can you have deflation when you're printing money? Equity market celebrates because it's all about asset inflation because boomers own everything.
I don't think you should entertain those Microstrategy comments. Those people are not your viewers or applied series subscribers, they're from the meme stock crowd.
Until they lose money. Then some will decide to inform themselves.
Facts
So think about it.. there is a new cohort of indirect investors (Convertible debt investors) helping to increase the demand for BTC. In addition to the 10 Bitcoin ETFs, new vehicles and derivatives being created for BTC - insatiable demand for BTC, new companies adding BTC to their treasury and nation states buying bitcoin. Coupled with the fact that the emissions is systematically dropping every 4 years and ytd interest expense for the US just passed a Trillion dollars - massive dollar printing and treasury selling . Additionally government policies and cabinet picks are very pro-bitcoin. Very bullish for Bitcoin and MSTR.
Bitcoin is one of the very few instruments that demonstrates a smile volatility and if anything is actually more skewed to the upside.. normally volatility increases with asset price drops.. with BTC it is different vol is increasing with BTC going up.
Great update as usual! I’m looking forward for the new Enron to bust.
The GM move today seems way overdone, especially considering it's low valuation already. Surely Trump will make significant carve outs for the automakers, considering selling some ITM puts on the big move
Ha! MSTR = Enron in 2024. Such a beautiful comparison. Spot on.
so wrong comparison. Enron was manipulating the accounting. MSTR is just drawing a dream and trapping the fools.
first view