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.
- WeWork pulls IPO
- Fidelity's 0% expense ratio index funds are likely to trail the index by about 0.15% per year (An original analysis)
- WeWork's Financials and Underlying Story
- So do you feel you have/can beat the S&P 500 over your investing career?
- Is impeachment something investors should be worried about?
- Dividend Growth Chasers - why not simply buy a S&P High Yield Dividend Aristocrats ETF?
- Stocks rise with strong Chinese manufacturing data and reassurances that Chinese companies will not be delisted from US exchanges at this time.
- What are your favorite websites?
- LX
- Whats the best way to invest 600 dollars?
- New to investing. How to read the 3/5/10 yr numbers?
- Any Gamers Here? Lets talk E-sports - Mogul
- JPMorgan predicts Apple's stock will spike 20% on strong iPhone demand (AAPL)
- The Superinvestors of Graham-and-Doddsville - PDF Article
- How to do a long term short on a company? CVTI
- Where can I create a practice environment for people to compete against each other?
- Letter Agreement allows Fannie/Freddie to start Retaining Capital
- CD Laddering - Good Idea?
- Is this situations when "Tax loss harvesting" is almost a no-brainier?
- Are top-tier investors successful because they're the smartest or because they have unearned advantages over average joes like us?
- Tokai Fuji Brokerage investment scam
- Do you think Macy's will survive?
- Wash sales
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 30 Sep 2019 05:16 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:
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! [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Posted: 30 Sep 2019 09:09 AM PDT | ||||||||||||||||||||||||||||||||||||||||
| Posted: 01 Oct 2019 12:10 AM PDT Fidelity Released Zero Fee Index FundsThe exploding popularity of low fee index index funds in recent years has been putting pressure on brokerages to push their index fund expense ratios even lower. About a year ago, Fidelity ramped up that battle when they released four 0% expense ratio index funds, including FZROX a zero fee Total Market Index Fund. Expense Ratio WarHere's a look at a US total market index fund from each of the three major discount brokerages:
The Dirty Little SecretOn the surface, the new FZROX looks like it just won the war on expense ratios. But hidden inside these new index funds is a dirty little secret. Take a look at their dividend distribution schedule.
VTSAX Pays QuarterlyVanguard's VTSAX stands alone as the only one of the bunch to distribute dividends quarterly. That means FZROX (and SWTSX) are sitting on dividends for up to a year before releasing that cash to the investor. Dividends make up an important part of the growth of a fund when reinvested. The opportunity cost of reinvesting those dividends annually instead of quarterly turns out to be (relatively) expensive. An Analysis of The Annual Dividend EffectThis spreadsheet shows a hypothetical recreation of both FZROX and VTSAX over the past 40 years if they were tracking the S&P 500 index. It takes into account the expense ratio of each fund as well as the respective dividend reinvestment schedules. When you look at the net effect over 40 years, the cost of waiting to reinvest those dividends until the end of each year ends up costing FZROX more than the 0.04% expense ratio of VTSAX. An initial $10,000 investment turns into $714,671 for FZROX and $725,999 for $733,569, a difference of $18,898 or about 2.6%. FZROX Costs About 0.15% Per YearFor those hyper sensitive to expense ratios, this cost has the net effect of a 0.15% inefficiency to the market. Despite VTSAX's 0.04% expense ratio, VTSAX only trails the market by 0.07%, less than half that of FZROX. As long as there's positive growth, annual dividend reinvestment will always incur a cost to the growth over quarterly. The bigger the increase in share price and the bigger the dividends, the larger that effective cost becomes. VTSAX Still KingSo with the largest net assets, the most stocks in the portfolio and the only fund to pay dividends quarterly, VTSAX is still king of the total US market index fund game. Don't Chase Tiny Differences in Expense RatiosThat said, the real lesson here ISN'T to dump your current index fund in search of an ever so slightly more efficient one. Even FORTY YEARS down the road, the difference was only about 2%, or a single good or bad day in the market. Instead, focus your energy on investing early and often and staying the course. One panic during a market downturn will more than wipe out any benefit a tiny decrease in expense ratio provided. TL;DRFidelity's new zero fee index funds only pay out dividends once per year. The opportunity cost of not reinvesting those dividends sooner is about 0.15% per year. More InfoA while back I posted five ways to max your IRA. If you're a beginning investor or otherwise into this kind of stuff, join us at /r/personalfinanceclub where we break down investing topics into simple digestible examples. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| WeWork's Financials and Underlying Story Posted: 30 Sep 2019 12:05 PM PDT WeWork has been all over the news lately and I thought it would be an interesting pause to actually take a deep dive into their financial statements to really dig in and see what made this another one of silicon valley's unicorns. One comment at the outset is that I'm going to side-step all the governance issues and try to focus on the underlying business value. Right away on page 3 of their S-1, WeWork notes that the company has reached a run-rate revenue of $3B. Their growth cannot be ignored, as the company has been growing 20% QoQ since 2017. One of their big selling points is that their annual lease cost is only $7,304 per desk vs. the traditional $21,594. With a membership base of 527k and a backlog of approx. $4B, this would seem to imply their revenue is locked-in for the next twelve months (527k x $7,304 = $3.8B). Despite the meteoric growth in revenue and subscribers (128k to 527k), their revenue per Member has remained very stable at approximately $1,550/member for the last 2 years. Effectively their entire growth is from more and more people utilizing their workspaces. Looking a bit further down their financial statements (p. 112 of the S-1), they list 7 categories of expenses to run the business. Location operating expenses (direct costs related to underlying rent and location management), other operating expenses (tbd), pre-opening location expenses, sales and marketing expenses, growth and new market development (their core real-estate team for finding new assets), general and administrative, and depreciation and amortization. For the quarter ended June 30, all of these expenses added up to $1.5B. One of the tidbits that they mention is that pre-opening location expenses and location expenses includes a non-cash straight-line lease cost (which amortizes rent-free periods and contractual increases in lease costs). That adds $227mm of non-cash expenses that we can remove since it is an accounting burden (and can be captured elsewhere). There is also $130mm of depreciation and amortization, which is non-cash, and $48mm of stock-based compensation. So adjusting those 3 out arrives at an EBIDA of $323mm loss in the most recent quarter. WeWork broadly mentions that their target contribution margin percentage is 30%. That is (Revenue - Location Operating Expenses) / Revenue. Stripping out the accounting adjustments, their location operating expenses have been fairly stable around $925/workstation/quarter, meaning they're close to their target margins. Going back to Q1, the $807mm of revenue leads to $259mm of contribution profit (despite an additional $583mm of other expenses). Benchmarking this against competitors, Regus target contribution margin is 20% with overheads being 18.5% of revenue. In WeWork's calculations, their target excludes other operating expenses, pre-opening location expenses (timing is understandable here), and sales and marketing expenses. For other operating expenses, pre-opening location expenses, and sales and marketing, these expenses have hovered around 25 - 30% for the last several quarters. These seem to be a sticky part of the expense structure, that is directly associated with the additional services they provide and their ability to fill the available workstations. This leaves growth and new market development expenses and G&A. These have represented anywhere from 30% - 45% of sales (vs. Regus 18.5%). Regus has 9,615 employees vs. WeWorks 15,000. While the growth and new market development expenses may curtail as they reach saturation, we will assume this expense continues in the near term. One thing that WeWork highlights in their IPO filing is the speed at which they build-out the space and how quickly they reach their target fill rate. They note in their filing that it costs approximately $3,661 to build each workstation and that it only takes them 5 months from possession to revenue-generation (on average they have a rent-free period of 9 months - p. 74 S-1). From there, fill rate goes from 52% to 84% rapidly, and stabilizes around 89% at 18 months (p 83 S-1). The assumption is that the remaining life of the lease, which averages 15 years, these metrics will stabilize and each property turns into a cash cow. If we were to look at this from the perspective of a single workstation. It is approximately $1,100 to rent the workstation, $1,550 for rent per Member, and another $385 paid for other and sales expenses. This means that each individual workstation generates ~$125 - $130/quarter in profit that can be used to cover the cost of building out the space. Without meaningful improvements in rent or efficiency, each workstation will continue to hurt WeWork's bottom line. One major question from here starts does come up. While the operating expenses are heavy for this business, once the CapEx is factored in, the economics are difficult. If we take $3,661 per workstation, and assume a 12.5% cost of capital, and a lease term of 15 years, that comes out to an equivalent CapEx of $45/month or $135/quarter. Given WeWorks environment, I might scale down the life of the CapEx rather than for the term of the lease (e.g. desks break, or umbrella doors need to be replaced) to an average life of 10 years. This means that the equivalent CapEx is $161/quarter. If we were to rebuild their business model from CapEx backwards. We come up with a very different picture. The target revenue per Member increases dramatically and moves much closer to industry comps that they list at the beginning of the prospectus. If they truly want a differentiated service, they will likely need to make a few hard choices, do they significantly mange expenses to keep their target rents? Do they start increasing rents to keep the business afloat? Or do they move into an entirely different subscription model where they can drive oversubscription in the properties? TL;DR WeWork fundamentally needs to re-work their rent or expenses to keep the business as a valid model. At $3,650/workstation, even with target margins of 30%, they need to increase rents. Underlying Charts Final Note: I did this entirely as a thought experiment and wanted to understand their business model better since they have been in the news so much. There are many of you with better expertise in this space that probably can pick this apart, which I encourage and ask you to do. I'm happy to share my excel file for those interested since everything here is all from publicly available information, so there is nothing proprietary. EDIT: Link to excel file here. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| So do you feel you have/can beat the S&P 500 over your investing career? Posted: 01 Oct 2019 03:15 AM PDT I'm relatively new to Reddit, I have more time since I've retired from a Wall Street job, most of my acquaintances have been professional traders and bankers and I have strong views about beating the market that are largely honed from years of trading. As I get away from a bank, I see how hard it is to actually make money in the markets "alone". "Alone" means without the resources of a big bank, surrounded by traders and analysts who live and breathe the Street. I'm appalled at the number of Youtube Ads I now get that start with some version of "Want to beat the markets?" or "I turned 10K into 1mm". I'm curious if I'm the only market cynic or I am one among many. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Is impeachment something investors should be worried about? Posted: 01 Oct 2019 02:10 AM PDT I've been hearing differing opinions about what impeachment could mean for the markets. Some say it could have an impact on confidence by further making America look like a country on the brink of political and social ruin. Others say it would have a positive impact on markets because it would remove a president who seems determined to start a trade war with China, something that would surely send the world economy into a 2008 style recession. How do you see a potential Trump impeachment playing out in the markets? [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Dividend Growth Chasers - why not simply buy a S&P High Yield Dividend Aristocrats ETF? Posted: 30 Sep 2019 10:13 PM PDT aren't you adding more risks by betting on single stocks ETFs than to capture a 4-5% yield with a dividend ETF? NOTICE: this isn't intended to be ETF vs Stoccks type of topic. I would like to understand what you folks see as the intrinsic difference between the 2 dividend strategies. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Posted: 30 Sep 2019 08:55 AM PDT | ||||||||||||||||||||||||||||||||||||||||
| What are your favorite websites? Posted: 30 Sep 2019 12:58 PM PDT I will start with fact that most websites are short term view optimized, which makes it hard to search for new ideas or review existing. My favorite has been seeking alpha, but most interesting articles are behind price y paywall. Some important historical statistics are behind paywall as well. I have never been into fool com website, Yahoo or Google news aggregator. Any ideas. Please include why. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Posted: 01 Oct 2019 04:12 AM PDT What do you guys think of Lexinfintech? The fundamentals look absolutely gorgeous with good growth in earnings, sales and fcf. Low debt, high margins and high return on capital, valued at only pe of around 6. The stock lost all of its gains this year due to slowing economy and trade war, but the numbers are still good. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Whats the best way to invest 600 dollars? Posted: 01 Oct 2019 04:02 AM PDT | ||||||||||||||||||||||||||||||||||||||||
| New to investing. How to read the 3/5/10 yr numbers? Posted: 01 Oct 2019 03:24 AM PDT I already looked in the 'about' section of the sub and couldn't find the answer there, so hear I go. What's the proper way to read those 3/5/10 yr yield percentage numbers? As an yearly average over that time or not? An example, of the 10yr yield is 10.00% and I started with 100k, after ten years would I have 110k or some number like 100 + 10 + 11 + 12.1 + 13.3 etc? Thanks for answers. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Any Gamers Here? Lets talk E-sports - Mogul Posted: 01 Oct 2019 03:07 AM PDT E-sports Mogul - ESH , if anyone else is into Gaming im sure you already understand how big the E-sports sector has become and is still Expanding.. with tournaments, sponsors, events, the list goes on. Hasbro is a $15 Billion dollar company Mogul has partner with.... They also have a piece in Fort-nite tournaments which im sure you guys know how big that has also become. think about all the platforms Hasbro could of picked to partner with.... i mean too pick a Little australia owned company must be for good reasons... Love too hear others thoughts , holding or not, positive or negative... cheers [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| JPMorgan predicts Apple's stock will spike 20% on strong iPhone demand (AAPL) Posted: 30 Sep 2019 08:52 AM PDT Apple traded as much as 1.6% higher Monday after JPMorgan raised its price target on the company. The firm now expects the stock to climb 20% over the next 12 months. The tech giant is selling more iPhones from its latest lineup than initially expected, said analyst Samik Chatterjee. Initial estimates projected sales to slump as limited hardware upgrades and the wait for 5G compatibility would drive consumers to wait for the 2020 models. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| The Superinvestors of Graham-and-Doddsville - PDF Article Posted: 30 Sep 2019 01:48 PM PDT https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/Buffett1984.pdf Just a fun old time read if you have the time. Good luck everybody! [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| How to do a long term short on a company? CVTI Posted: 30 Sep 2019 08:19 PM PDT I think that CVTI will most likely go bankrupt over the next few years. They're hurting bad and following the trend of other trucking companies that have gone bankrupt. They suck to work for, I want to short them. But it seems like most of the time you can only short companies over weeks not long time periods. I'm pretty ignorant when it comes to options, so could someone help me out? Thanks. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Where can I create a practice environment for people to compete against each other? Posted: 01 Oct 2019 02:03 AM PDT Hi, I run a university investment soc and I'm looking for a site that allows paper trading with a league table so that teams within the soc can compete with each other over the year, any ideas where I can do this? If it even exists... [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Letter Agreement allows Fannie/Freddie to start Retaining Capital Posted: 30 Sep 2019 09:36 AM PDT | ||||||||||||||||||||||||||||||||||||||||
| Posted: 30 Sep 2019 01:29 PM PDT With interest rates dropping, I'm looking for other risk-averse, relatively liquid investments. CD Laddering is a concept that intrigues me. I understand early withdrawals come with penalties, but I would keep adequate emergency funds in a high yield savings and only have to pull from CDs if something catastrophic happens. I would love insight from anyone who has used this strategy. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Is this situations when "Tax loss harvesting" is almost a no-brainier? Posted: 30 Sep 2019 02:51 PM PDT A Person lives in Albany, NY, with salary of 110k. His Marginal Tax Rate are: 24% (federal), 6.57% (state) and 7.65% (FICA). Total 38.22%. He has invested his money: 50% in stocks, 50% in simple saving account. He keeps his stock investment with no intention of selling. He's producing an income from dividends and Saving account's interests. All his dividends are qualified, so he will be taxed "long term" on them. Saving's interests are obviously taxed "short term". In calendar year, all he'll earn is:
Now, here's the situation... sometime in the middle of the year, he wants to pickup new stocks. His intention is to hold, but suddenly, the price of newly bought stock fall and he's down by $1000. Is this a perfect situation to sell and buy similar stock? (Let's assume for the purpose of that example that he's 100% sure, it's not "wash-sale rule"). Second question, can you generalize, that if you're in the situation described above and have short term losses you should keep realizing them? Let's assume you have alternative stocks that doesn't trigger "wash-sale rule". I'm asking because I understand that "tax loss harvesting is a process of deferring taxes until a future date". But if I will sell that alternative stock with "long term" gains (eventually, in the future) - that is a benefit, because this year I'm not paying 38% taxes on them. Is my thinking correct and you can generalize it this way? [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Posted: 01 Oct 2019 02:24 AM PDT I've always wondered what separates the most successful investors from the average Joes. When I recently took my first business class, my professor said that Warren Buffett was the most successful investor in history because he was smarter than everyone else. He also said that the winners on Wall st. are the guys who have the cognitive horsepower that the little guys like me and you don't have. The whole thing just bummed me out. But then i think about guys like Shkreli and Madoff. They got their success by playing dirty. Among the top investors there have to be more Shkrelis and Madoffs hanging around. It can't just all be about smarts. Plus you got the trust fund babies who get an inheritance and throw it in an index fund while strutting around like genius investors. Sometimes I don't know what think. I'm not a genius, I don't wanna play dirty, and I don't come from a wealthy. So what's left for me? [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Tokai Fuji Brokerage investment scam Posted: 30 Sep 2019 01:48 PM PDT I've been worked by a scam caller for the past weeks, who calls himself Timothy Stark. He says he's got a great opportunity to invest with his brokerage firm Tokai Fuji in Japan. He tries to get me to invest in Galaxy Entertainment Group Limited 0027:HK. Everything about his contact is top notch: native english speaker, trustworthy British accent, perfect first follow up via email with a perfectly designed folder on the stock he wants me to buy. Yet he's clearly social engineering me, by withholding information, trying to get me to spend time on the phone, establishing trust by feeding me bits of info etc. I'm 100% positive it's a scam, it checks all the major boxes. Still, I've never enjoyed being scammed this much. Man, I'd love to have this guy on my sales team! My final confirmation that I'm getting scammed was the moment I told him Im not buying anything. He didn't take it well and also skipped the politeness for a moment. Have any of you been called by this guy? Couldn't find anything about this particular scam online. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Do you think Macy's will survive? Posted: 30 Sep 2019 09:55 PM PDT They are priced at a ridiculous PE of 4.81, i mean......bankruptcy is pretty much priced in. Dividend yield of 10% lol. The real estate alone should make this a buy, no? [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||
| Posted: 30 Sep 2019 03:46 PM PDT This is regarding wash sales. Let's say I buy a stock and sell it at a lost for -$100, then next week I buy the same stock again and sell it for another lost for -$100, how will this affect my taxes? Will I have to pay for the total stocks for example $200 instead of the $-100? I sold 2 stocks for a total of -60$ lost I bought and sold two of the same stocks for a lost, how much will I have to pay during taxes season I didn't know about wash sales about until now, I guess I can't file for a lost since I bought and sell twice [link] [comments]  |
| You are subscribed to email updates from Lose money with friends!. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment