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

    May 14, 2020

    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: 13 May 2020 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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    Fed Chairman Jerome Powell paints a grim economic picture — get ready for more selling

    Posted: 13 May 2020 06:15 AM PDT

    Powell in a speech this morning gave a decidedly negative outlook on the U.S. economy moving forward, which flipped the after-hours markets from green to red. While promising more help from the Fed, Powell also highlighted how many U.S. households have lost jobs, while pointing out that there remains significant downside risk to the economy.

    I would expect stocks to decline into today, and perhaps several days forward, as we continue to retreat from our recently overbought levels. This dip down will also take into account the virus warnings from Dr. Fauci, as well as the economic threat from Congress against China.

    Start preparing your buy list now. Figure out what prices you want for the stocks on your watch list. Good luck to all!

    submitted by /u/vacalicious
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    [WSJ] Uber Eats are losing money on delivery orders or barely breaking even, struggling to profit despite having one of the greatest food-delivery markets in decades due to pandemic.

    Posted: 13 May 2020 11:22 AM PDT

    https://www.wsj.com/articles/america-is-stuck-at-home-but-food-delivery-companies-still-struggle-to-profit-11589374801

    The coronavirus pandemic handed food-delivery companies an unprecedented business opportunity: millions of Americans stuck at home, missing their favorite restaurants.

    Yet they are struggling to profit from one of the greatest food-delivery markets in decades. Companies including Grubhub Inc. and Uber Technologies Inc.'s Uber Eats division, are losing money on delivery orders or barely breaking even. And they say they aren't sure how many diners will stick with delivery after stay-at-home orders are relaxed.

    submitted by /u/ssj4rab
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    Don't wait for Buffett to give an "all clear" signal on stocks or the economy. Look at what he said in 2009.

    Posted: 13 May 2020 08:16 PM PDT

    https://www.cnbc.com/id/31526130

    https://pbs.twimg.com/media/EX8TN--XYAE7ki4?format=jpg&name=small

    BUFFETT: Everything that I see about the economy is that we've had no bounce...in terms of the economy coming back, it takes awhile. I said the economy would be in shambles this year and probably well beyond. I'm afraid that's true.

    BECKY: We hear people on our air all the time who talk about the "green shoots" that they're seeing. Are you seeing any of those green shoots?

    BUFFETT: I looked. We're not seeing them. Whether it's retailing, manufacturing, whereever. We have a big utility operation. Industrial demand is down like we've never seen it for a simple thing like electricity. So it hasn't happened yet.

    ​

    At the time of the interview on June 24, 2009, the S&P was already 43% off the March 2009 bottom and would never come close to retesting the lows again.

    The market is forward looking. The economy in its current state is not what the market is going to focus on.

    submitted by /u/cefpodoxime
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    Hertz reportedly having cars repossessed from their locations.

    Posted: 13 May 2020 02:01 PM PDT

    Here's a link: https://www.thelayoff.com/t/14W7O8lc

    TLDR: Hertz employees are reporting that cars are being actively repossessed at their locations. One reported 54 cars taken under court order.

    Hertz has not commented on this yet, or released any explanation as to why it is happening. At least Avis is communicating with investors/stakeholders. Here's another article around the topic. https://www.marketwatch.com/story/hertzs-stock-falls-after-going-concern-warning-is-issued-with-debt-relief-deadline-approaching-2020-05-12

    It looks like Hertz is taking one last gasp before its death.

    submitted by /u/WGUMBAIT
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    What do you guys think about JETS?

    Posted: 13 May 2020 10:06 PM PDT

    Newbie investor here. I know airlines are risky bet at this time, but even though a few airlines bear high losses, the airline sector should pick up in a couple of years.

    I am looking to invest for medium term of a few years. Is JETS s good bet? What other options should I consider?

    submitted by /u/loony1236
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    (WSJ) JPMorgan Extends Banking Services to Bitcoin Exchanges

    Posted: 13 May 2020 01:35 PM PDT

    Unpopular Opinion or just Objective Fact? Dollar Cost Averaging is simply a psychological tool and will (on average) cost you money

    Posted: 13 May 2020 12:35 PM PDT

    1st: this entire post is from the perspective that you have the capital available to you on Day 1, and that it's sitting in cash. It is not from the perspective of you're earning the cash over time (ex:. 401k contributions over your lifetime)
    Before everyone, loses it on me immediately, I actually think the psychological gains from DCA are actually worth the average loss you'd take. But it doesn't change the fact that DCA as a methodology compared to strategy of dumping all your intended investment into an asset from Day 1 is inherently break-even (at best) or a net-loss (at-worst) - ON AVERAGE.

    If you start from the assumption that the stock market tends to rise over time, waiting to put money into a stock pick is costing you money. Sometimes you'll "win" and the stock will go down over that interval. Other times you'll "lose" and the price will go up over that interval. But over many stock picks and repeat trials, on-average DCA loses more than it wins (simply due to the first sentence of this paragraph).

    Now, psychologically, DCA really helps. I can attest from personal experience. Here are the basic scenarios you have:

    • Scenario #1: DCA & stock goes up during period you're buying:
      • Psychology: You feel like you made a good pick. You're happy. You're not overly concerned w/ the gains you missed if you'd invested all the capital at Day 1 because you're happy with your skill picking out a good stock
    • Scenario #2: DCA & stock goes down during the period you're buying:
      • Psychology: You're a bit disappointed, but you're also comforted that you didn't load up on Day 1. Sometimes, you feel excited, even great, that you're now getting an even better deal on this stock than your original buy price
    • Scenario #3: All-in at Day 1 & stock goes up during what would've been DCA buying period:
      • Psychology: You're happy. Though not much more happy than if you'd done Scenario #1.
    • Scenario #4: All-in at Day 1 & stock does down during what would've been DCA buying
      • Psychology: You're distraught. At best, upset with yourself that you mistimed your buy and left money on the table. At worst, considering panic selling.

    As you can see, in both DCA scenarios you feel pretty good about yourself. You certainly aren't kicking yourself too hard, and if you're in a hole it feels like one you can still climb out of. Compare to the "All-in" scenarios, the pain of the loss aversion in scenario #4 outweighs the extra satisfaction you get in Scenario #3.

    In summary / TLDR: if we were robots without emotion, and if you're faced with the decision many times throughout your life (so you get the benefit on "on average"), you would not engage in DCA.

    submitted by /u/flapjackbandit00
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    The case for Uber

    Posted: 13 May 2020 10:59 PM PDT

    Uber should generate around $12b in revenue this year. It is fair to say that they will probably burn through at least $10b. Investors have 2 main issues with Uber right now 1. Their ridiculous cash burn. 2. Their end game.

    1. This is short term and shouldn't be a problem for more than a few years. Before covid Uber was suggesting positive EBITA by years end.

    2. So let's first look at a simple bear case for Uber. Uber is in a hyper competitive market that is really in its infancy. There is no doubt that self driving cars are rapidly approaching and with companies such as Google and Tesla who needs Uber in the long run? Uber's tech can be easily replaced where as self driving cars cannot.

    Ok compelling - why I'm a bull. Uber will be the gig economy.

    Sure, companies such as google and Tesla have technology that Uber cannot match. But here is why that doesn't matter so much:

    • Uber holds tremendous value in terms of data and brand recognition that makes them a prime candidate for a partnership. They've already formed a partnership with Toyota for example. A company such as waymo entering this new space would take on a whole lot less risk if they partnered with Uber.

    • In the future a much smaller percentage of Uber's revenue will come from ride-share. Think about it, Uber is in a great place to make acquisitions. We have seen it this week with talks to buy grubhub. There are plenty of companies out there with synergies to Uber. There are already well over 100 gig economy companies that Uber can take aim at - https://en.m.wikipedia.org/wiki/List_of_gig_economy_companies

    In summary I see Uber as the future for all things Gig. You want gig shipping - you go Uber, you want gig work (Fiverr right now) you go Uber, you want your house cleaned you go Uber, you want your dog taken for a fucking walk you go Uber. You want a coshared ride in a Toyota self driving car you go through Uber.

    Am I talking trash?

    submitted by /u/jbray1
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    Stock Slide Deepens on Powell, U.S.-China Worries: Markets Wrap

    Posted: 13 May 2020 10:50 AM PDT

    Stock Slide Deepens on Powell, U.S.-China Worries: Markets Wrap

    ​

    • Powell says virus poses lasting harm, more may need to be done
    • Federal savings plan delays transfer to fund with China stocks

    https://www.bloomberg.com/news/articles/2020-05-12/asia-stocks-to-open-lower-after-u-s-retreat-markets-wrap?srnd=premium&sref=VyUXtO60

    Article on Bloomberg, by Rita Nazareth, Vildana Hajric, and Katherine Greifeld.

    U.S. stocks tumbled to a three-week low after Jerome Powell warned economic risks from the virus are significant and tensions with China flared.

    The S&P 500 fell after the Federal Reserve chairman said the threat of a lasting downturn can deepen without additional government spending. Equities extended losses after a federal savings plan delayed moving funds into an index with Chinese stocks, adding to tensions stoked by President Donald Trump. Treasuries and the dollar advanced.

    ​

    The stock weakness has the S&P 500 headed for its worst week since March 20, the session before a furious 30% rally started. Equities tumbled Tuesday after health official Anthony Fauci warned the pandemic could worsen if states open too soon, and some Fed chiefs expressed concern the recession will be long. Famed investor Stanley Druckenmiller also hit sentiment, saying stocks are too high. David Tepper joined hate chorus Wednesday, saying only 1999 was more overvalued than the current market.

    "It continues the theme from yesterday that the recovery will be slower and more uneven than what markets may currently be discounting," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. "With the nice run off the lows, it makes sense to take some profits."

    Meanwhile, traders of fed funds futures pushed bets on a negative policy rate into next year. Powell acknowledged the speculation, but said such a move was not being considered -- though he stopped short of completely ruling the tool out as an option in the future.

    "While Powell's remarks paint a grim but realistic picture of the deep scarring of the virus on the U.S. economy, Fed watchers might find relief in the fact that Powell remains committed to deploy his remaining arsenal to the fullest extent as we continue to ride out the pandemic," said Mike Loewengart, managing director of investment strategy at E*Trade Financial. "This means their toolkit primarily relies on additional fiscal stimulus."

    Here are some key events coming up:

    • U.S. weekly jobless claims data is due Thursday.
    • China on Friday releases industrial production and retail sales data for April.

    These are some of the main moves in markets:

    Stocks

    • The S&P 500 decreased 1.8% as of 1 p.m. New York time.
    • The Stoxx Europe 600 Index fell 1.9%.
    • The MSCI Asia Pacific Index advanced 0.1%.

    Currencies

    • The Bloomberg Dollar Spot Index increased 0.3%.
    • The euro decreased 0.2% to $1.0822.
    • The Japanese yen strengthened 0.1% to 107 per dollar.

    Bonds

    • The yield on 10-year Treasuries decreased two basis points to 0.64%.
    • Germany's 10-year yield decreased three basis points to -0.53%.
    • Britain's 10-year yield declined four basis points to 0.208%.

    Commodities

    • The Bloomberg Commodity Index declined 1.4%.
    • West Texas Intermediate crude dipped 1.9% to $25.28 a barrel.
    • Gold advanced 0.6% to $1,716.20 an ounce.

    — With assistance by Adam Haigh, Matt Turner, Todd White, Robert Brand, Sophie Caronello, and Claire Ballentine

    ​

    submitted by /u/Kytetsu
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    [LATimes] Uber offers to buy Grubhub, plans to sell $900M in bonds

    Posted: 13 May 2020 06:42 PM PDT

    https://www.latimes.com/business/story/2020-05-13/uber-grubhub-bond-sale

    Uber Technologies Inc. has made an offer to acquire Grubhub Inc., a move that could combine two of the largest food-delivery apps in the U.S. as the novel coronavirus — and the stay-at-home orders meant to limit the virus' spread — drives a surge in demand, according to people familiar with the matter.

    The companies are in talks about a deal and could reach an agreement as soon as this month, said the people, who asked not to be identified because the matter isn't public. Deliberations are ongoing, and talks could still fall through, the people said.

    Although neither company confirmed the talks, they both said they're always looking for opportunities to provide value to their businesses.

    On Wednesday, Uber brought a $900-million bond sale. That's up from a planned $750-million sale, which the company said may be used for acquisitions, among other general corporate purposes. The five-year notes, which can't be bought back for two years, will yield 7.5%, said people with knowledge of the matter, who asked not to be named discussing a private transaction.

    Grubhub, founded in 2004, is the oldest of the major food delivery companies in the United States. In recent years, competition from DoorDash Inc. and Uber has squeezed Grubhub's profit margins. The pandemic is adding more pressure, forcing Grubhub to withdraw its 2020 financial guidance last month. Uber pulled its forecast too, and said a plan to turn a quarterly adjusted profit this year would be delayed until 2021.

    As part of a series of cost-cutting movies, Uber said last week that it is ending its food-delivery operations in seven countries where the service has proved unpopular. Those markets represented 1% of Uber Eats' gross bookings and 4% of the business' adjusted loss before interest, taxes and other expenses for the first quarter of 2020, the company said. Uber's ride-hailing business has been hammered by the global pandemic, but in the U.S. and other developed markets, delivering meals has helped the San Francisco company drive sales as people mostly stay at home.

    Food delivery remains largely unprofitable. That dynamic has led to much speculation about potential consolidation in the industry. DoorDash, which is privately held and backed by SoftBank Group Corp., is the most popular in the U.S., followed by Grubhub and Uber. Any merger between the major apps could draw antitrust scrutiny. Together, Uber and Grubhub could account for 55% of the market, according to Wedbush Securities.

    A deal "would help consolidate the U.S. online food delivery market and reduce cash burn," Bloomberg Intelligence senior industry analyst Mandeep Singh wrote in a note Tuesday.

    Meanwhile, these companies face calls from officials to improve conditions for their gig economy workers. California's attorney general sued Uber and ride-hailing rival Lyft Inc. last week, alleging they're in violation of a state law designed to give their workers the benefits due to employees. A loss in that case could set a precedent that increases costs for the companies and raises further questions about their ability to be profitable.

    Rep. David Cicilline (D-R.I.), who heads the House antitrust subcommittee, said the proposed deal underscores the urgency for a moratorium on most mergers, an idea supported by other Democrats. "Uber is a notoriously predatory company that has long denied its drivers a living wage. Its attempt to acquire Grubhub — which has a history of exploiting local restaurants through deceptive tactics and extortionate fees — marks a new low in pandemic profiteering," Cicilline said in a statement.

    Restaurant advocates also said they were worried about the potential consequences of an Uber-Grubhub combination. "It's extremely concerning," said Andrew Rigie, executive director of the NYC Hospitality Alliance, a group that represents restaurants in New York. Grubhub and its Seamless division already dominate the city, Rigie said, "and they use their leverage and market share at the expense of local restaurants."

    Bradley Tusk, an early Uber advisor who has since sold his stake in the company, said that if the policies cities are considering take hold long term, "it may be that consolidation is the only way to have a couple of market players that can survive at all." Otherwise, food delivery could end up looking like the costly ride-hailing rivalry between Uber and Lyft, Tusk said.

    "Uber should have found a way to buy or kill Lyft a lot earlier," Tusk said. "The unit economics of ride sharing would be a lot easier if they had, and I think they're trying to learn that lesson now with the acquisition of Grubhub."

    submitted by /u/funtaspen
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    Luckily for investors on here WeWork and Airbnb IPOs never happened

    Posted: 13 May 2020 08:42 AM PDT

    Airbnb was supposed to have gone public back in 2018 but postponed (huge mistake) it to 2020 but now unlikely to happen or at a very low valuation. WeWork is in real trouble. Was about to launch IPO but then began to unravel and now the outlook is even worse than pre-Covid 19

    These were supposed to be hot stocks had they come out

    submitted by /u/NPRjunkieDC
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    Global funds invest more in China as coronavirus spreads to the rest of the world

    Posted: 14 May 2020 01:16 AM PDT

    As U.S. stocks plunged to three-year lows in March, allocation to Chinese stocks among more than 800 funds reached nearly a quarter of their nearly $2 trillion in assets under management, according to fund flow data from EPFR. That's up from about 20% a year ago, and roughly 17% six years ago.

    Edit: source https://www.cnbc.com/2020/05/14/global-funds-invest-more-in-china-as-coronavirus-spreads-to-the-world.html

    submitted by /u/Dagoru95
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    Aswath Damodaran: A Viral Market Update VIII: A Crisis test of Value vs Growth, Active vs Passive, Small vs Large

    Posted: 13 May 2020 04:42 PM PDT

    Video

    IMO, Prof. Damodaran is among the most informative and entertaining academics in finance. He's been doing regular updates on region, sector and category performance during this crisis. This is part 8. If you don't feel like nerding out for half an hour, here's the TL;DW:

    1. Commodities have taken a hit, particularly oil (for multiple reasons). Gold has done well, though perhaps not as well as expected. Bitcoin hasn't acted like gold.
    2. Developing markets have underperformed developed markets during the crisis. Latin America has been hardest-hit.
    3. The crisis has been selective/orderly in its damage dealt across sectors. Healthcare/Technology have fared well while Airlines/Oil/Finance have been hard hit.
    4. Growth has outperformed value, continuing a decade-long trend, but in defiance of the overall market outperformance of value.
    5. Large-cap has outperformed small-cap during the crisis, continuing a decade of outperformance, but in defiance of the overall trend.
    6. Passive has outperformed active during a crisis across most categories, confounding one of the last remaining arguments for active investing.

    The last point is the one I found most interesting. Even if you couldn't predict the crisis, you hypothetically could've gotten out before the worst or picked stocks less hit by the crisis. Yet a comparison of passive vs. active managed funds shows passive outperforming active even during a crisis. He expects this performance to accelerate the ongoing stampede of money out of active investing.

    Here's the whole series so far: I, II, III, IV, V, VI, VII, VIII

    submitted by /u/msnf
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    $VTIQ market cap/ownership question

    Posted: 13 May 2020 05:26 PM PDT

    First time caller, long time lurker.

    VTIQ (eventually NKLA) will only represent 6% ownership of Nikola when the merger closes. At a $10 stock price in the deal, Nikola was worth $4B. Its now ~3x that w a share price of nearly $30.

    Current market cap for the stock is $898.09M but thats not 6%...🤔

    Anyone have clarity into this?

    submitted by /u/washuffitze2
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    Why has VXUS returned such a poor investment since Inception?

    Posted: 13 May 2020 08:27 PM PDT

    I'm curious why VXUS has been such a poor investment over the past decade, and has returned roughly 1% since inception.

    https://investor.vanguard.com/etf/profile/VXUS

    submitted by /u/objectivedirections
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    Shopify hits record as e-commerce enabler becomes ‘one of the greatest’ stock stories of all time

    Posted: 13 May 2020 11:58 AM PDT

    https://www.cnbc.com/2020/05/13/shopify-hits-record-as-e-commerce-enabler-becomes-one-of-the-greatest-stock-stories-of-all-time.html

    It's hard to imagine challenging Amazon's dominance in the e-commence space, but the coronavirus pandemic just brought Canadian start-up Shopify closer to being a serious threat to the trillion-dollar juggernaut.

    The Ottawa-based company is giving small businesses a fighting chance by allowing them to quickly move operations online during the forced shutdowns.

    Shopify shares have been on a tear, soaring 20% in May alone and pushing its 2020 gains to more than 90%. The company also surged past Royal Bank of Canada to become Canada's largest company by market value. The stock, which went public in May 2015, hit another all-time high on Wednesday.

    "To me, it's a company enabling small businesses to get more in line with what the post-pandemic economy looks like," said Dan Nathan, principal of RiskReversal Advisors.

    Shopify is experiencing a surge in sales and users during these unprecedented times. Last week, Shopify reported that its sales grew by 47% to $470 million in the first quarter and continued to accelerate in April, while new stores created on the platform grew 62% in a six-week period during the pandemic.

    "We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality," Shopify CEO Tobi Lutke said in a statement last week. "Our goal is that, because Shopify exists, more entrepreneurs and small businesses will get through this."

    One of the appeals for using Shopify is that companies can sell products on their own website, instead of listing items on an Amazon-style marketplace. This month, Shopify also announced a partnership with Pinterest, which allows merchants to share their products to about 350 million users.

    submitted by /u/cannainform2
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    Airline stock and Air Canada specificly

    Posted: 13 May 2020 11:40 PM PDT

    Airlines stocks are getting a big big hit. Most of them are 50% drop or even more.

    What do you think about buying these stock and wait for 2 years? I am looking at AC.

    submitted by /u/hieplenet
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    Must Read Books that actually teach you about investing and the like?

    Posted: 14 May 2020 03:14 AM PDT

    No just general pop books or fluff books that "motivate" you

    ​

    I dont need a book to tell me investing in subaru > buying a Subaru car

    submitted by /u/KtoMM199
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    Has anyone heard rumors around Goldman and Wells Fargo merger?

    Posted: 13 May 2020 06:31 PM PDT

    Pharmaceutical FDA Approval Question?

    Posted: 13 May 2020 10:23 PM PDT

    Does anyone know where i can find the exact times, not just the date, when fda approvals are coming out? Or just knowing if its AMC or BMO is good enough too. Thanks

    submitted by /u/TraderChas
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    If I think that the S&P is going to 2500, what is the target price of SPXL that correlates with this?

    Posted: 13 May 2020 10:14 PM PDT

    I plan on buying a put on SPXL (3x leveraged bull S&P ETF) and I am expecting the S&P to hit 2500 by August. How would I go about calculating what that strike/target price of SPXL should be when I buy August dated puts to reflect this S&P hitting 2500 bet?

    Also, what is the difference between buying a Put on SPXL vs. buying a Call on SPXS (3x leveraged bear)?

    submitted by /u/RWB4MVP
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    Best Brokerages for Day Trading Stocks and Forex?

    Posted: 14 May 2020 01:47 AM PDT

    My problem with brokerages I use is fat spreads and slow execution. I heard that trade station is good. Do you guys have any suggestions. I have not done too much research, but ideal would be tight spreads, 0 commission and quick execution. I guess the closer to that the better. Thanks.

    submitted by /u/iamamalesnowflake
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    Anyone buying DAL for long term?

    Posted: 13 May 2020 02:32 PM PDT

    DAL hit a new 52-week low today. Obviously the airline is going to take a while to recover but I don't see them going to 0. Is anyone else buying and holding hoping a significant recovery takes place?

    submitted by /u/TheCommonCop
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