posted by ptown_trojans_1

Yeah, at least for the short term, it looks like now the price of gas will be the federal gas tax plus whatever is your state and local gas tax.

Plus the actual cost of production.  Still costs money to refine into gasoline and ship it to the station.  I can't remember how the taxes work - I think some are fixed and others are a % of price.

posted by O-Trap

 I always thought it correlated to something in an objective way.

Yes, it definitely does.  Supply and demand, along with complex valuation models.  People have different estimates for the unknowns, and that's what creates a trading market.  There are many valuation methods, obviously none are perfect but discounted cash flow models are most common.  That's not an arbitrary thing, beyond making assumptions about what those future cash flows project to.

posted by gut

Yes, it definitely does.  Supply and demand, along with complex valuation models.  People have different estimates for the unknowns, and that's what creates a trading market.  There are many valuation methods, obviously none are perfect but discounted cash flow models are most common.  That's not an arbitrary thing, beyond making assumptions about what those future cash flows project to.

Arbitrary in the sense of how the cost of crude futures can go negative. Obviously the price they trade on is not picked out of thin air, but a measure of their data. 

posted by SportsAndLady

I love DO. I have a bit too much of them, lol. 
They have enough cash to last, and just restructured their debt. If oil comes back, which it should once we reopen and planes can start flying again, I should get paid out nicely on that one. 

Interesting.  I still think it's an implicit bet on the future price of oil, which would actually be an implicit bet on economic growth.  Future prices are $30-$35 by end of summer, so I think that looks like some degree of recession priced in but impossible for me to say.

I don't mess around with individual names because I don't even know what growth assumption is baked in to bet on.  If I look at the broad overall market right now, I have no idea.  I don't think 20% off highs reflects the uncertainty and risk still out there, but it might if you factor in dropping $6T from a helicopter.

posted by gut

Yes, it definitely does.  Supply and demand, along with complex valuation models.  People have different estimates for the unknowns, and that's what creates a trading market.  There are many valuation methods, obviously none are perfect but discounted cash flow models are most common.  That's not an arbitrary thing, beyond making assumptions about what those future cash flows project to.

Okay, good.  Truthfully, it wouldn't surprise me for something like that to be less objective, which is why I didn't buck it much.  I prefer knowing this, though.

posted by O-Trap

Okay, good.  Truthfully, it wouldn't surprise me for something like that to be less objective, which is why I didn't buck it much.  I prefer knowing this, though.

Depends on what your definition of objective is.  It's all based on estimates, but money managers are probably the most objective people on the planet, because stock prices don't give a shit about your politics.

I gave up on individual names because prices are basically set by people who spend all day digesting everything they can on a sector.  They study earnings reports like auditors with OCD.  They've thought thru every scenario and built it into their models.  I take a seat at that table and I know I'm the sucker.  You can have a great thesis, and even convince yourself it's brilliant and not a guess....I've had a few of those, but the truth is even the professionals struggle to beat the market.

The only proven strategy to beat the market is insider information.  I stick with ETF's and try to focus on macro issues.  And the hardest thing for most people trading individual names is being able to give up on a loser.

posted by SportsAndLady

I love DO. I have a bit too much of them, lol. 
They have enough cash to last, and just restructured their debt. If oil comes back, which it should once we reopen and planes can start flying again, I should get paid out nicely on that one. 

Welp, this looks like a loser. Down 60% premarket today after a chapter 11 was filed. It’s a bit odd, to be honest, since chapter 11 was always going to happen when they missed their debt payment 10 days ago. Sounds like it’s a simple debt restructuring, but maybe it’s more than that with the 60% sell off.
Either way, that sucks. 

I read JC Penney is probably going to file too. I could see more dept stores following,

posted by iclfan2

I read JC Penney is probably going to file too. I could see more dept stores following,

Kind of shocked that JC Penny is still open.

posted by SportsAndLady

Welp, this looks like a loser. Down 60% premarket today after a chapter 11 was filed. It’s a bit odd, to be honest, since chapter 11 was always going to happen when they missed their debt payment 10 days ago. Sounds like it’s a simple debt restructuring, but maybe it’s more than that with the 60% sell off.
Either way, that sucks. 

The common stock will most likely be worthless.