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    Friday, July 5, 2019

    Daily Advice Thread - All basic help or advice questions must be posted here. Investing

    Daily Advice Thread - All basic help or advice questions must be posted here. Investing


    Daily Advice Thread - All basic help or advice questions must be posted here.

    Posted: 05 Jul 2019 05:15 AM PDT

    If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions. If you are going to ask how to invest you should include relevant information, such as the following:

    • How old are you?
    • Are you employed/making income? How much?
    • What are your objectives with this money? (buy a house? Retirement savings?)
    • What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?)
    • What are you current holdings? (Do you already have exposure to specific funds and sectors?)
    • Any other assets? House paid off? Cars? Expensive significant other?
    • What is your time horizon? Do you need this money next month? Next 20yrs?
    • Any big debts?
    • Any other relevant financial information will be useful to give you a proper answer.

    Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq

    Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions!

    submitted by /u/AutoModerator
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    Tomorrow the S&P 500 will continue to break record highs

    Posted: 04 Jul 2019 04:55 PM PDT

    Today is July 4th, 2019. I have been to tomorrow, and I can confirm that the S&P 500 will continue to break record highs, and will finally surpass the 3000 mark on July 5th, 2019. I hope this information is helpful.

    submitted by /u/Bob_is_Time_Traveler
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    How do investors get paid?

    Posted: 04 Jul 2019 07:19 AM PDT

    Let's say you're a professional investor and you get paid a management fee equal to 1% of assets plus 25% of profits from returns greater than the market. For example, say you manage $100k, get a return of 18%, and the market grows 10%.

    The asset fee is easy to calculate. Once a year, the investor takes 1% of the $100K for $1K. How do you calculate the variable component though?

    • Is the variable portion collected only when dividends are paid or stock is sold (e.g. no profiting from unrealized gains)?
    • When do you apply the calculation? Do you pick a set date each year and stick with it?
    submitted by /u/mastermascovich
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    France issues first 10-year bond at negative interest rate

    Posted: 04 Jul 2019 08:30 PM PDT

    How much trouble is Deutsche Bank actually in?

    Posted: 04 Jul 2019 08:39 AM PDT

    I haven't been able to follow it closely, but I feel like I am constantly seeing headlines about Deutsche Bank laying off thousands of employees, announcing restructuring plans, and trying to spin off toxic assets. They're have also been stories about Deutsche trying to merge with banks like Commerzbank only for things to fall apart during negotiations. The stock has gone from around $40 in 2014 to about $7 to $8 today.

    Is Deutsche Bank on the slow road to insolvency ala Lehman, and if so, shouldn't this constantly be in the news as a major threat to the global economy, potentially a bigger threat than the trade war?

    submitted by /u/QuoProQuid
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    China says the existing US tariffs against the country must first be removed if Washington wants any trade deal with Beijing.

    Posted: 04 Jul 2019 05:42 PM PDT

    https://www.presstv.com/Detail/2019/07/04/600123/China-US-tariffs-trade-deal-Trump-Xi

    Chances of this happening? Seems more likely that this trade war turns gets significantly hotter going forward, which is market negative for 2H 2019...

    submitted by /u/mark000
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    Large portion of net worth about to become real (IPO) and not sure how to balance risk [x-post personalfinance]

    Posted: 04 Jul 2019 03:57 PM PDT

    I'm an engineer at a recently public unicorn. We've gone public in H1 this year, and I'll be able to sell stock grants that have vested over the last few years of working here. I'm looking for help on what fraction to sell, and how to do so in tax-advantaged situations.

    Numbers:

    • Age: 29
    • Location: San Francisco
    • Current salary: 220K
    • Current annual stock grants: ~400K at current share price
    • Current vested equity: ~700K at current share price, tax already withheld at ~53% (Fed, CA, Social Security)
    • Net-worth: ~230K: [170K in 401K, 40k in ETFs, 20K emergency fund, no debt.]

    Big questions I have:

    • What percentage makes sense to sell when the employee lockup expires to balance risk? I recall guidance to not let a single stock make up more than 10% of your portfolio, but selling so much makes me worry about taxes, especially because of this next point:
    • I paid tax on the equity based on the IPO list price, and shared were withheld on my behalf. The current price is ~40% higher than the list price, and I believe selling this year would realize those gains as short-term, while I can realize them as long-term if I wait to sell in Q2 of 2020. Does it make sense to avoid selling for another ~6 months? I almost see the change in taxes on the appreciation as a hedge for a drop in the stock price.
    submitted by /u/financialadviceplzz
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    There’s No End in Sight for the U.S. IPO Frenzy

    Posted: 05 Jul 2019 05:11 AM PDT

    "It is a FOMO -- fear of missing out -- mentality on IPOs because investors are underperforming their benchmarks and looking at IPOs as a way to catch up on performance," said Kristin DeClark, the co-head of Barclays Plc's U.S. equity capital markets practice and global head of technology ECM.

    https://bloom.bg/32cXWtW

    submitted by /u/markyu007
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    Yield curve inversion hit the three-month mark, an occurrence that has preceded the past seven U.S. recessions.

    Posted: 04 Jul 2019 11:20 AM PDT

    The yield curve remained inverted for three months, or an entire quarter, which has for half a century been a clear signal that the economy is heading for recession in the next nine to 18 months, according to Campbell Harvey, a Duke University finance professor who spoke to NPR on Sunday. His research in the mid-1980s first linked yield curve inversions to recessions.

    "That has been associated with predicting a recession for the last seven recessions," Harvey said. "From the 1960s, this indicator has been reliable in terms of foretelling a recession, and also importantly, it has not given any false signals yet."

    More: https://www.npr.org/2019/06/30/737476633/what-just-happened-also-occurred-before-the-last-7-u-s-recessions-reason-to-worr

    submitted by /u/SaltyPrinciple
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    Buy VOO now or wait?

    Posted: 05 Jul 2019 05:15 AM PDT

    I know you can't time the market, but even so it seems foolish to buy at a 52week high. Should I wait or no?

    submitted by /u/trynastatmajor
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    Legalization of cannabis in Europe

    Posted: 04 Jul 2019 11:10 PM PDT

    Hey guys, Since it is probably only a matter of years until weed is legal in more european countries, which stocks do you think are going to blow up?

    submitted by /u/ZackBummm
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    The Case Against Tesla

    Posted: 05 Jul 2019 04:41 AM PDT

    For me at least, the case against Tesla comes down to one thing: Elon Musk. Some claims he has made, including that he was planning to take the company private, just make him seem dishonest and untrustworthy. And then, by doing things such as smoking pot on live radio, he seems too unpredictable. He would not have made the false claim about taking Tesla private and he would not have smoked pot if he were thinking about what is best for company. And then he makes these claims such as that there will be one million self-driving Tesla taxis on the road in 2020. Such claims make him seem arrogant and detached from reality. One could argue that seeming to be detached from reality is a quality of a lot of geniuses before they revolutionize their field. But I prefer somebody who is grounded and careful in everything he or she does. All of this makes Tesla seem like too risky of an investment. Sure, Elon Musk and Tesla may knock it out of the park one day. But the risk of him doing something else that hurts the company and drives the stock price down just seems to high. To put it all another way, I wouldn't want to work for Tesla. The unpredictability of Elon Musk and the company overall would make me feel too uncertain and insecure about my job there.

    submitted by /u/rascally1980
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    Game Theory-ish on FED and QE interest rates etc

    Posted: 05 Jul 2019 02:21 AM PDT

    Have been thinking of a scenario that I want to get feedback on regarding game theory of FED decisions etc. So given the following are true and widely known:

    1. Everyone is aware that assets are in a bubble and the FED have stated as such

    2. The FED is aware that the stock market is now larger than the economy and the 2 are inextricably linked

    3. A large decrease in the stock market will cause a decrease in economic activity/the economy (maybe)

    4. The FEDs monetary policy of low interest rates and QE are becoming increasingly less effective at supporting growth and could be considered a failure

    5. Further easing may prolong the expansion but won't postpone it

    6. Further easing will further inflate asset prices and since 4. Has been true over the last decade it will not lead earnings/growth to catch up to prices.

    7. The higher asset prices go the greater the inevitable crash will be.

    I think its fair to assume that the FED is aware of all the above, they are not stupid and in my opinion all of this is fairly evident. So in my view they have 2 options:

    a) Kick the can down the road with further easing and hope that someone else is in the position to deal with the shit when it comes crashing down.

    b) Try to slowly let some air out without popping and whilst still trying to stimulate growth (very hard).

    There is no doubt that option b) is the correct choice however it seems that a) has been chosen. My question is this, at what point if ever does someone (Powell) decide that they are pushing rope with NIRP/ZIRP & QE and will only make the bubble bigger and worse when it eventually pops? Or am I asking too much of our esteemed bureaucrats to actually take responsibility and take the hard road by looking further than their next election/end of term for the long term prosperity of the country/world?

    I know everyone wont agree with everything here I've just thrown it out for discussion.

    submitted by /u/Hanz-Wermhat
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    Best (audio) books and podcasts to learn specific industries

    Posted: 04 Jul 2019 09:48 AM PDT

    There are a lot of lists of recommended investing books and podcasts, but I've yet to find a list that would help investors learn specific industries (e.g. healthcare, oil & gas, software, etc.). Industry primers are great but are not typically available in audio form like many books.

    submitted by /u/sabz1
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    Are there any downsides in having multiple investment accounts with different brokers?

    Posted: 05 Jul 2019 12:55 AM PDT

    I'm using Degiro at the moment, but they don't offer some of the ETFs that I would like to buy. Are there any downsides in having more than one brokerage account with different brokers?

    submitted by /u/SimpleMinded001
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    Lower Interest Rates Don’t Always Mean Higher Stock Prices, Goldman Sachs Warns

    Posted: 04 Jul 2019 08:16 AM PDT

    The sentiment-driven stock market rally may not have much farther to run, Goldman Sachs says. Slowing growth or political uncertainty could suppress stock valuations, even if interest rates fall.

    While Treasury yields could fall further this year, that won't necessarily help the stock market much, Goldman Sachs says.

    Normally, falling interest rates and Treasury yields boost the stock market's performance. There are two reasons for that: First, U.S. corporate debt yields are linked to those rates, so lower yields usually mean lower interest costs. Second, low returns in safe assets like U.S. debt tend to push investors into riskier securities, including the stock market.

    That dynamic may be fueling the stock market's gains this year. More than 90% of this year's S&P 500 rally has been driven by rising valuations, not earnings growth, according to a July 1 note from Goldman Sachs equity strategist David Kostin. That essentially means the gains have been driven by sentiment and a lack of other attractive investment options—and not by improvement in corporate fundamentals.

    That valuation-driven rally may not have much farther to run, the bank argues. Slowing growth or political uncertainty could suppress stock valuations, even if interest rates fall.

    "While lower interest rates benefit equity valuations, the growth outlook has also weakened and uncertainty has risen," the strategists wrote in a note.

    That is why the bank predicts the S&P 500 will rise just 0.6% to 3,000 by year-end, even if the 10-year Treasury yield slides to 1.75% as forecast.

    On Wednesday, the benchmark 10-year U.S. yield declined to its lowest point since 2016. It fell as low as 1.94% in morning trade, following the news that International Monetary Fund chief Christine Lagarde has been nominated to lead the European Central Bank. German 10-year government bond yields fell as low as -0.4%, which is the ECB's current deposit rate.

    For investors who are optimistic that low global yields will spur on economic growth, Goldman Sachs recommends stocks in its basket of companies with low labor costs, which includes Western Union (ticker: WU), Cboe Global Markets (CBOE), and Under Armour (UA). Those stocks have lagged behind the broader market, and trade at 15 times next year's earnings forecasts, compared with the S&P 500's multiple of 17.

    Source: Barron's

    submitted by /u/coolcomfort123
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    How are expenses ratios on ETFs paid by the investor?

    Posted: 04 Jul 2019 08:37 AM PDT

    Let's say you invest in an ETF with a 0.20% expense ratio. Do you somehow pay a fee to the ETF manager (Vanguard, Schwab, etc.) every day a percentage that at the end of the year would equal to 0.20%, or is this paid monthly, or is the whole 0.20% expense just paid at the end of the year? If someone could explain this, that would be really helpful.

    submitted by /u/ChoteBoi
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    What is a good source for M&A activity?

    Posted: 04 Jul 2019 10:35 AM PDT

    Ideally I'm looking for a site (free or paid) that lists all pending M&A deals. A plus would be if it included info like the buyout price, date etc. Any ideas?

    submitted by /u/The_John_Galt
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    What investments would be good when living abroad?

    Posted: 04 Jul 2019 06:53 PM PDT

    Hi, I am from Canada. I never invested before. I want my first investment to be real estate as it can produce monthly income. I have read that people use real estate to help them during retirement instead of relying on a retirement plan like 401 K or RRSP. I was thinking to get real estate to fund my retirement.

    I will be working as an English teacher in China this year. My plan is to work in different countries. So I will work 2-3 years in China, 2-3 years in Japan, 2-3 years in Thailand, etc. I do not want to live in Canada anymore because I want to live in other countries.

    I was thinking to buy real estate in Canada and other countries that I will be living in. I do not want to sell them. The only problem is that I have to hire somebody/company to look after the property and to collect rent for me. The problem with hiring a property manager is that there is a high risk of them deceiving me as I will not be able to monitor what they are doing. However, I have to hire a property manager because I will not know anybody in that country.

    Based on my goals and my concern with property managers, is it worth me investing in real estate? What investments I should consider instead? I am looking for investments that can support me for retirement and are portable.

    Thank you so much for your time and consideration in reading this message.

    submitted by /u/BaldMan134
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    How risky are high yield bond mutual funds really?

    Posted: 04 Jul 2019 02:47 PM PDT

    Just fishing for some insights from those more experienced than me. I know that with any given low-grade bond there is a risk of default, but with some of these funds that have hundreds of bonds in them, is there really that great of a risk of something catastrophic happening? There are high yield bond funds that have existed for decades and seem to give a fairly consistent payout. Is the risk more about the fluctuations in NAV more than fluctuations in the actual monthly/quarterly payout?

    submitted by /u/Keystone_Heavy1
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    Free options trading

    Posted: 04 Jul 2019 04:56 PM PDT

    Hey everyone,

    I was looking through some apps for free options trading other than Robinhood and I came across this app called Gatsby which was in beta mode after some research I found out that it was featured in Benzinga. Should I switch to this or continue to use Robinhood for options trading?

    submitted by /u/Knightlock343
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    How common is insider trading?

    Posted: 04 Jul 2019 02:44 PM PDT

    It's illegal but it seems very difficult to stop. Have there been any studies on how prevalent it is?

    submitted by /u/infohawk
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    Options Trading Platform

    Posted: 04 Jul 2019 07:50 AM PDT

    What's the best trading platform for options and why?

    submitted by /u/f1113
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