Tariffs Catch-All

  • Thread starter Thread starter BubbaOtis
  • Start date Start date
  • Replies: 4K
  • Views: 135K
  • Politics 
All the MAGAs on social media are claiming victory because the market went up after Trump paused his stupid idea that made it go down in the first place.
 
ChapelHillSooner said:
I still say the use of options as a hedge can be a good strategy.
Click to expand...
This is true, but I was definitely talking about shooting the moon on naked long puts and calls with a the shortest possible expirations, i.e., that same day. That's pure gambling and generally doesn't pay off except during massive moves like we've seen over the past week (or during Covid). Those are pretty few and far between, but as HintonJames so eloquently put it, when you have a loon at the top surrounded by fools, big swings become much more common.

That's why I said buying both a put and a call simultaneously would've been a good strategy since Trump announced the tariffs. You're not making a directional bet, but a bet that there is going to be a big move one way or the other (or, as has been the case a few times this week, sometimes both in the same day). You're still speculating that there will be a big move one way or the other, but you're doubling your chances vs. just going long or short...
 
superrific said:
But by the same token, revenue would be way up! If you were doing $10M in business, and suddenly you're doing $20M in business, the lower margins would lead to the same profit.

This is the explanation I've seen elsewhere on the internet, and it just doesn't make economic sense. The business has the same risk level as before. Its operational leverage hasn't changed.

Maybe the answer is that small business loans are not processed with a great deal of intelligence because intelligence is too costly. Like, you'd get a person to evaluate a $1B loan; a $1M loan might go into a formula because it's too expensive otherwise, and the formula doesn't know about steep tariff increases. And maybe also the reason is that people expect that banks will nix their loans on declining margins, even if the banks wouldn't.
Click to expand...

I guess it would depend on if your fixed costs stay fixed with your revenue doubling (can happen in some industries, not in most).

All I know from years working at banks is that a a reduction in margins sets of all sorts of alarms. Not an automatic reject, but does raise concern and scrutiny.
 
ZenMode said:
I think you'd agree that letting the tariffs go into effect would have been throwing gas on the fire....
Click to expand...
The problem is this pause is him standing over that little ember still holding that bucket of gas and thinking, should I pour this gas on the fire.

He hasn't extinguished, he's postponed. And he's too stupid and narcissistic to just walk away unless he fells he's won.
 
CRHeel94 said:
I guess it would depend on if your fixed costs stay fixed with your revenue doubling (can happen in some industries, not in most).

All I know from years working at banks is that a a reduction in margins sets of all sorts of alarms. Not an automatic reject, but does raise concern and scrutiny.
Click to expand...
Well, remember: what we're talking about here is just tariffs. Nothing else about the business has changed. Why don't the purchasers demand it.
 
You must log in or register to reply here.
Back
Top