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

    August 30, 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.

    Posted: 29 Aug 2019 05:13 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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    Why not just park money in QQQ and come back in 20 years?

    Posted: 29 Aug 2019 10:44 PM PDT

    Looking at the growth of $10,000 over the past 20, 10, 5 year periods, investing in QQQ has handily beaten SPY(S&P 500), VTI (Total Stock Index), VNQ(REIT Index)

    If one has a time horizon of 15-20 years and can stomach the volatility, why not invest a 100% in QQQ?

    I get that the major argument would be diversification, but the numbers are pretty clear.

    submitted by /u/xtootse
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    China says it’s willing to resolve the trade war with a ‘calm attitude,’ hints it won’t retaliate for now

    Posted: 29 Aug 2019 05:47 AM PDT

    What is the benefit of bonds? Is it because it's stable? If so why is the charts for bonds look volatile as stocks charts?

    Posted: 29 Aug 2019 07:45 PM PDT

    Before you consider investing in Peloton $PTON, have a look back at Fitbit and GoPro

    Posted: 30 Aug 2019 02:16 AM PDT

    The folks at Goldman and JPMorgan aren't just advising WeWork, but Peloton Interactive too. Here's the S-1 filing.

    $PTON's financials look like this:

    June year-end 2017A 2018A 2019A
    Sales $219m $435m $915m
    Gross Profit $74m $190m $384m
    EBIT -$71m -$48m -$202m

    So it's growing nicely, has a positive gross margin, but it's losing money at the operating level. Of the $915m of sales in the latest year $181m comes from subscriptions. They've 0.5m subscribers.

    Let's flash-back to Fitbit: a device where you can also become a subscriber. Though they haven't been anywhere near as successful in selling subscriptions.

    $FIT's last 8 years:

    December 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A
    Sales $14m $76m $271m $745m $1.9bn $2.2bn $1.6bn $1.5bn
    Gross Profit $5m $27m $60m $358m $901m $846m $691m $604m
    EBIT -$4m -$4m -$9m $158m $348m -$112m -$201m -$189m

    Or how about GoPro, who never really succeeded in building a subscription business.

    $GPRO's last 9 years:

    Dec. 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A
    Sales $64m $234m $526m $986m $1.4bn $1.6bn $1.2bn $1.2bn $1.1bn
    Gross Profit $33m $123m $227m $362m $627m $673m $462m $385m $361m
    EBIT $12m $39m $54m $99m $187m $55m -$373m -$163m -$94m

    Yes, Peloton is more than a hardware company. It's IPO filings states:

    We are a TECHNOLOGY, FITNESS, MEDIA, DESIGN, SOFTWARE, RETAIL, PRODUCT, APPAREL, EXPERIENCE, LOGISTICS, company.

    I fear they they are trying too hard.

    submitted by /u/shane_stockflare
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    To everyone predicting a recession

    Posted: 29 Aug 2019 05:51 AM PDT

    A recession by definition is 2 consecutive quarters of negative GDP growth. Since the 1940s, there has been 11 recessions by this definition. The constant vibe is if we go into a recession, stocks must drop 35% right? 2008 all over again and I want to be the smartest person around and sell right before.

    In fact, 6/11 recessions since 1940s had positive S&P 500 returns during the average 11 months they lasted. 3/2001 to 11/2001 lasted 8 months and market was -2%. 7/1990 to 3/1991, the market returned 5%. The market was up 17% during a recession in 1960-61.

    Of course the worst performance was 2007-2009. So could we run into flat or negative markets, absolutely. A recession though is not this fool proof indicator of massive stock drops.

    submitted by /u/Pmmenakedbitcoin
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    Mobile payments have barely caught on in the US, despite the rise of smartphones

    Posted: 29 Aug 2019 11:46 AM PDT

    https://www.cnbc.com/2019/08/29/why-mobile-payments-have-barely-caught-on-in-the-us.html

    Compared with China, India and other parts of the world, the U.S. is way behind in adopting mobile payments.

    It seems odd considering the ubiquity of smartphones in America. But experts say a deeply embedded legacy system and rewards cards, among other factors, make it unlikely that we'll see a major shift anytime soon.

    "The reality is we're not there yet," says Will Graylin, a former Samsung Pay executive. "There is simply not enough ubiquitous acceptance."

    submitted by /u/coolcomfort123
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    Bond Investors are making a killing in 2019

    Posted: 29 Aug 2019 01:04 PM PDT

    While Wall St. Talks of Recession, Bond Investors Make a Killing
    https://nyti.ms/2PmHi8C

    Vanguard Extended Duration Treasury (VEDTX / EDV) is up 32.5% YTD

    Vanguard long-term Treasury (VUSTX / VUSUX) is up 23.25% YTD.

    Vanguard Total Bond (VBTLX / BND) is up 9.4% YTD

    People often post that they don't allocate for bonds because the rates are paltry but in times of uncertainty people will pay a premium for safety.

    If you are a long horizon investor, long duration bonds or treasuries warrants consideration.

    submitted by /u/risk_parity
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    Small caps overly depressed by index funds?

    Posted: 29 Aug 2019 05:39 PM PDT

    I've heard this before. Link below suggests some good but smaller companies aren't gaining market cap as fast as they "should" because so many people are using cap weighted index funds.

    https://www.bloomberg.com/news/articles/2019-08-28/the-big-short-s-michael-burry-sees-a-bubble-in-passive-investing

    submitted by /u/mateoverano
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    U.S. second-quarter GDP growth revised to 2.0%

    Posted: 29 Aug 2019 05:55 AM PDT

    https://finance.yahoo.com/news/u-second-quarter-gdp-growth-124133829.html

    WASHINGTON (Reuters) - The U.S. economy slowed a bit more than initially thought in the second quarter as the strongest growth in consumer spending in 4-1/2 years was offset by declining exports and a smaller inventory build.

    Gross domestic product increased at a 2.0% annualized rate, the Commerce Department said in its second reading of second-quarter GDP on Thursday. That was revised down from the 2.1% pace estimated last month. The economy grew at a 3.1% rate in the January-March quarter. It expanded 2.6% in the first half of the year.

    Federal Reserve Chair Jerome Powell told a conference of central bankers last week that the economy was in a "favorable place," but reiterated that the U.S. central bank would "act as appropriate" to keep the economic expansion on track.

    submitted by /u/coolcomfort123
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    Negative Rates Actually Cut Lending, Research Shows

    Posted: 29 Aug 2019 10:07 AM PDT

    Spyd dividend yeild is 4.77% but for each quarter the dividends are $.35, $.38, $ .45, ,$.44 for the year 2018. Can some one explain how it work and how these 4 numbers in relation to 4.77?

    Posted: 29 Aug 2019 08:00 PM PDT

    What Growth Stories Do You Admit You "Didn't Get?"

    Posted: 29 Aug 2019 07:52 AM PDT

    Trying to generate some potentially fun discussion on here -

    Not really talking about valuation (although one could make that point in regards to a lot of growth stories in recent years) although people can certainly discuss that. More looking for people's stories where they missed the growth story because they didn't see the general appeal, moat, etc. Basically, what's a growth story that has done well that you didn't appreciate the appeal of when you first looked at it and why.

    Three from me:

    Chegg: Got this completely wrong because I just didn't understand why Amazon couldn't do this and rather than going back and re-examining when the turnaround started doing well, wrote it off. It kept going. About a 6x or so in the last 5 yrs.

    Carvana: In a time where car ownership is in decline, I didn't think trying to reinvent the car dealership was as compelling as it turned out to be.

    Five Below. Thought the stores were sorta fun but nothing all that special. One "trend" (fidget spinners) after another ("slime") in the cheap kids toys area that the company capitalized off of well (and then got further into the Toys business after Toys R Us went ch 11) and the thing took off.

    submitted by /u/dvdmovie1
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    Looking for small cap growth stocks

    Posted: 30 Aug 2019 03:56 AM PDT

    Hi, does anybody know some promising growth stocks with a low market capitalization?

    submitted by /u/ruttydm
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    Basic Bond Questions

    Posted: 30 Aug 2019 03:40 AM PDT

    I'm hoping to sense-check my understanding of some bond basics and how it relates to ever-growing negative interest-rate environments...

    • a bond's coupon is fixed (as a percentage of its face value) until maturity. It's only influenced by central bank interest rates upon issuance in the sense that the issuer sets coupon rate taking into account wider interest rates. Central banks changing interest rates have zero effect on already issued bonds' coupon payments.
    • a bond's yield is the rate of return (that varies in real-time) due to interest rates and price (depending on which way you look at it). You don't get paid the yield - it's just an expression/abstraction of how much overall return your coupon payments represent. So if the fed cuts to zero, then existing bonds in the market (with >0 coupon) will have a comparatively more attractive yield than newly issued ones, creating a buy/demand-pressure and lifting the price.

    Assuming I've got that correct, a few questions...

    • in my example of the fed cutting to zero, it wouldn't raise the price of newly issued bonds right? Just the ones that had a higher coupon already secured? In fact, shouldn't the newly issued bonds trade at a lower price in relative terms?
    • when we talk about investors losing money on negative yielding bonds, it's simply that the coupon doesn't fully offset the wider interest rate right? i.e. even in a negative-interest rate world, bonds are still making positive coupon payments - just not large enough to offset central bank rates.
    • when we say there's $17 trillion negative-yielding debt and counting, that's growing by the day simply because new bonds are being issued with coupon rates that don't offset interest rates right? The only time already-issued-bonds could spill over to the negative-yield side is if the central bank dropped interest rates (i.e. this won't happen day-to-day)
    • With yields this low and getting negative, why on earth would the average retail investor not be selling their bonds now/soon? Surely they have become assets that are almost irresponsible not to sell when you have the double-sell-incentive of falling yields and rising prices. I suppose you may think yields could fall even further, but at some point everyone has to turn into a bond trader instead of a long-term holder now because the price has to correct at some point?

    Sorry that's a bit long - thanks for any thoughts!

    submitted by /u/punchbagged
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    Bitcoin and cryptos

    Posted: 30 Aug 2019 02:32 AM PDT

    Are bitcoin and/or other crpytos technically investments on their own? Why or why not. My perspective is how they are used. Appreciate any feedback.

    submitted by /u/mercator0
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    Month of bond market milestones: How low can you go?

    Posted: 30 Aug 2019 02:03 AM PDT

    Why doesn't Berkshire Hathaway just acquire Goldman Sachs?

    Posted: 29 Aug 2019 07:05 PM PDT

    I’m interested in beginning a small portfolio but I know very little about the stock market. Can you guys recommend a couple of books that give a solid introduction to the fundamentals of the stock market and investments for a newcomer like myself? Thanks!

    Posted: 30 Aug 2019 04:47 AM PDT

    Determining Options Value After Hours

    Posted: 29 Aug 2019 05:23 PM PDT

    I'll get to the point, I work second shift and am not up for market open. Now, I've been holding on to some Dell calls, that I would like to sell but don't want to take a big L putting a limit sell too high or too low. Is there a way to somewhat accurately determine a good limit sell price to put in?

    submitted by /u/CodyMarshmallow
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    What is China losing? And who exactly is gaining?

    Posted: 29 Aug 2019 02:06 PM PDT

    What industries/businesses were just barely cheaper in China but are now cheaper elsewhere because of the tariffs? And which regions do you think they will they move to?

    submitted by /u/ElektroShokk
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    Best books on learning how to invest?

    Posted: 29 Aug 2019 06:27 PM PDT

    The main goal is to make money, but I would like to learn how stocks, bonds, etf's, commodities, etc. work at a lower level to get a real understanding of how the market behaves. I need something with raw information instead of gimmicks which a lot of these books tend to lean towards. What are the best books to learn how to do this?

    submitted by /u/TheKingInYellow-
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    Remember kids: Cash flows, valuation and corporate fundamentals matter. Not Silly Anecdotes.

    Posted: 29 Aug 2019 02:04 PM PDT

    Opinions on hiring an advisor versus doing it yourself?

    Posted: 29 Aug 2019 12:50 PM PDT

    Hey all, I have seen a ton of different perspectives on this and wanted to know what you think.

    1. Do you think an advisor is worth the fees?
    2. Do you think you are likely to get a higher return investing yourself or with an advisor?
    3. If you wanted an advisor, which firm would you go to?
    submitted by /u/AsceticHedonist47
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