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.
- Berkshire Hathaway and the incredible power of float
- A historical basis for how long you should intend to hold stocks
- Buffett's Berkshire buys 5% stake each in five Japanese trading firms
- S&P500 Largest Stocks vs Smallest Stocks YTD Returns
- The Real Reason Berkshire Hathaway does not Pay a Dividend.
- Selling tech, buying airlines, hotels and real estate.
- LinusTechTips' Analysis on Corsair IPO
- How to claim foreign tax credit for VXUS held in fidelity account?
- Stay away from FASTINVEST
- 12K in Charles Schwab Roth IRA. What do I do?
- "The average inflation target "is to achieve an average inflation of 2% within a period of time", what do you think.
- The insane (price) history of FCEL
- Facebook Stock
- ARK ETF allocation
- Workaround for "Closed to New Investors"
- Bonds and rising interest rates
- Storage and Distribution of Vaccines
- Passively managed index funds vs ETFs in a taxable account?
- Advantage to be small investor? Why you should not follow Buffett.
- NIOs worst time to make a share offering?
- Question about Vanguard Funds
- What are some Jan 2021 options that everyone should consider
- Beginner: having a hard time starting because of irrationality/covisd-19
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 30 Aug 2020 05:12 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]  |
| Berkshire Hathaway and the incredible power of float Posted: 30 Aug 2020 05:13 PM PDT Today we're going to talk about float, what it is and how you can build billion-dollar companies with it. Float is the money that a business receives today but doesn't have to pay out until sometime in the future. Float is most commonly seen in insurance companies with customers paying premiums upfront to insure themselves against bad things happening sometime in the future. More examples include: Video game publishers, where they receive pre-orders. Commercial banking when they receive deposits and so on. Why is receiving money upfront so valuable even when it needs to be paid at later date? Well, you can invest it! And the longer you have to invest it, the more likely it will grow larger than the amount that you will have to eventually pay out! So, you can see how easily this can snowball. Say I owned a tiny insurance business that insured $1,000 worth of damages for a year in exchange for a $100 upfront payment. If I have $10,000 in the bank I can safely have say, five customers insured like this every year for $500. Every year I can invest the money I got from those new customers and every year the cash I have grows so I can safely insure more customers and the cash you have grows in an exponential manner. Ok cool got it. So, what does this have to do with Berkshire Hathaway? Sometime around the mid-1960s Mr. Buffett realized, with the help of his friend Charlie Munger, that he can't keep investing in broken down businesses and had to instead look for "franchise" business that will continue to compound his hard earned capital through thick and thin. The next thing he realized is that he couldn't just rely on the free cash flow generated from those company's and had to instead find low cost financing for his acquisitions. That low cost financing came in the form of an insurance float which, as we've seen, are the premiums paid by insurance customers up front in order to be paid out by the insurance company later. Buffett bought a ton of these insurance companies starting with National Indemnity in 1967 Wait, why did we just say that float is low cost financing? Why is it financing and what is the cost of that financing? Well, float is financing because you are receiving money today, but you have to pay it out sometime in the future, exactly like a loan. The beauty of float though is that you don't have to pay interest on that money! The only "interest" that you have to pay on that money is the normal cost of operating your business. We've already seen why float would matter so much to Buffett, but it bears repeating. A dollar you receive today is worth more than a dollar you get a week from now because you can invest it at some rate to receive more money in the future. Buffet realized that the more float he had, the more float he could invest to buy other businesses. Float would compound in lockstep with the free-cashflow generated by his other businesses and in time create a juggernaut. The final step in the Berkshire secret formula was increasing the duration of time between when the premiums are received and when they're paid out. So, for Buffett, this meant buying up longer tailed insurance companies like insurance for catastrophes, and recently, Reinsurance companies. And there you have it! This is the basic DNA of one the most successful stocks in over the past 50 years and they're still going at it. [link] [comments]  |
| A historical basis for how long you should intend to hold stocks Posted: 30 Aug 2020 02:17 PM PDT I've seen lots of conflicting answers to the question "I want to put $ in stocks for [x] years." Most agree that buying stocks for a shorter horizon than 5 years (for house down payment, etc.) is a bad idea. Beyond that though, you see some people saying 7, 10, or 15 years is safe. I'm not going to say I know for sure what is optimal, but what I can do is provide some actual numbers. While past returns are no guarantee of future returns, on a large enough timescale we can at least build a decent model. I looked at the past 90 years of total returns for the S&P 500 (including dividends), Baa corporate bonds, US T-bonds, and 3-month T-bills. I calculated rolling total return for various holding periods across the entire range. I then compared them to each other to see how often the stocks had a negative return, and how often they were outperformed by the various bond classes. While I wouldn't draw any strong conclusions from this, it certainly casts a lot of doubt on people advising that 7 or 10 years is adequate for 100% equity when you have about a 27-34% chance of losing to bonds. On the other end of the spectrum, this paints many target date funds as overly conservative, for example the Vanguard 2045 fund holds about 10% bonds even though they have about half that chance of beating stocks. I expect these numbers may be quite surprising to some people, especially since the past decade has been a generous bull market that makes equities look invincible. Anyway, if anybody has other quantitative means of looking at this, please share. Happy investing! [link] [comments]  |
| Buffett's Berkshire buys 5% stake each in five Japanese trading firms Posted: 30 Aug 2020 05:48 PM PDT
Companies are known as "sogo shosha" and are conglomerates in various industries. A 5% stake in each is roughly $6 billion in total. [link] [comments]  |
| S&P500 Largest Stocks vs Smallest Stocks YTD Returns Posted: 30 Aug 2020 06:30 AM PDT The 50 largest stocks in the S&P 500 are up about 11%, on average, for 2020. The 10 largest stocks are up about 27%. The 50 smallest stocks in the index are down about 15% for 2020 with over 2/3 of them showing a negative return for the year. What, if anything, do you think causes this disparity to turn around? [link] [comments]  |
| The Real Reason Berkshire Hathaway does not Pay a Dividend. Posted: 30 Aug 2020 12:48 PM PDT Sitting atop a cash pile of over $100 billion dollars, Warren Buffet is often asked why Berkshire Hathaway does not pay a dividend. The standard answer for the past thirty or forty years has been that Berkshire's cash pile would be better spent on either acquisitions or share buybacks. While there is certainly truth to this statement, there is a bigger reason for the lack of a Berkshire yield. Warren Buffett personally owns approximately 250,000 shares of Class A Berkshire stock. Often Buffett has been quoted as saying he has "never sold a share of Berkshire Hathaway." If this is true, that would indicate that in the process of building up his multi-billion-dollar fortune, Buffett has never paid any income taxes on his Berkshire shares. Assuming Buffett does not, or has not, ever personally sold any Berkshire shares, that would mean he is not only a savvy investor but also the undisputed master of the unrealized gain. Warren has often said he draws a yearly salary of $100,000 from Berkshire Hathaway. Assuming his Berkshire salary is accurate and he has little else for additional income coming in, it is likely that Buffett (a multi-billionaire) pays nearly the same amount of income taxes as you or I. A Berkshire dividend would be exceptionally detrimental to Buffett's income tax bill. A quick calculation to demonstrate: (all numbers very approximate for demonstration purposes) Number of "A" shares owned by Buffett: 250,000 A 5% yield on Berkshire "A" shares for 1 year would yield (for Buffett) approximately: $4,087,500,000 A 20% capital gain tax on his dividend would result in a personal tax bill of approximately: $817,500,000 With Berkshire paying a 5% yield, not only would Buffett end up with a near $1 billion tax bill, he would also have to find a place to invest nearly $3 billion of his after-tax dividend income (every year). This clearly demonstrates why he prefers share buybacks over dividend payouts. Buffett is a multi-billionaire and he certainly did not get there by accident. As a result of (arguably) the greatest (legal) tax avoidance scheme in the history of modern American business, Buffett has painted himself into a corner when it comes to the payment of a Berkshire dividend. Berkshire investors can pretty near be guaranteed Berkshire Hathaway will never pay a divided as long as Buffett is alive and holding his shares. We will, however, very likely see a Berkshire yield upon Buffett's exit from the business world. [link] [comments]  |
| Selling tech, buying airlines, hotels and real estate. Posted: 31 Aug 2020 12:35 AM PDT Hey guys, I started investing in march and due to a tech heavy portfolio I have done pretty well. However the longer this goes on and the more overpriced tech stocks become, the more worried I am that tech will inevitably pull back soon and I will loose some of my profit. I am thinking of selling some of my tech stocks and moving into airlines, hotels and property stocks, as these stocks have good upside potential. A few airlines and hotel stocks I have been looking at; Southwest, Delta, Dart, Alaska, Marriott, MGM, Hyatt. Need to research real estate some more. (Any suggestions?) Would it be a dumb idea to move 60% of my portfolio into these industries? Or is it too early/risky? What are your thoughts? How long do you think these tech stocks will continue to uptrend? And how long until the recovery of the industries mentioned? Thank you! [link] [comments]  |
| LinusTechTips' Analysis on Corsair IPO Posted: 31 Aug 2020 01:37 AM PDT At the 54:11 mark Aside from the SEC filing, Linus provides some perspective as someone who is very well-versed with Corsair Pros Dominant position in the industry Brand loyalty and established business Cons Have been making losses before 2020 Limited room for growth beyond the position they are in If COVID-19 drags on, they will continue to do well, and even after the pandemic some people may end up buying equipment for home use in the LR. Questionable acquisition of OriginPC Does not own any factories Conclusion: Luke says short due to volatility and hype in the short term, long in the long term. Linus would "not buy the stock at all", due to his belief of the company's potential, and he thinks that he average investor wouldn't buy the hype around rgb peripherals. Not investment advice btw. LTT does not do stocks. I am not planning to dabble in IPOs. Curious what are your thoughts because as a PC enthusiast corsair never came off as a brand that sells the most performance/bang for your buck. A lot of what they sell has a big cosmetic element to it. But would I dare to short this? Lol probably not either [link] [comments]  |
| How to claim foreign tax credit for VXUS held in fidelity account? Posted: 30 Aug 2020 11:48 PM PDT VXUS = Vanguard Total International Stock ETF pays some amount as tax to foreign govts. The tax paid can be claimed as foreign tax credit. Vanguard explains it here. It mentions it provides this info in 1099-DIV if vanguard is your brokerage. Fidelity has a similar pagewhere it specifically talks about fidelity funds. If I hold VXUS in fidelity, will fidelity's 1099-DIV include this information? [link] [comments]  |
| Posted: 31 Aug 2020 01:12 AM PDT Hi, I just wanna warn others about Fastinvest. You won´t get your money back. Also, if you make some research about the founder there is some shady stuff going on. I unfortunately came to know about these things once I had given them money. Fortunately it wasn´t much since I was testing. Withdrawal requests will take forever (6 months and counting) if they ever happen. [link] [comments]  |
| 12K in Charles Schwab Roth IRA. What do I do? Posted: 31 Aug 2020 01:08 AM PDT This is my first reddit post ever. I have a traditional 401k through my old employer that is invested primarily in S&P, Russel 3000, and some small/mid cap. I've had a new account with Charles Schwab ready to go with a current balance of $12k in Roth IRA. I was thinking about going all in on S&P ETFs, but I'm a little nervous with the climate were in, and figure I might benefit from some other kind of investment to diversify a bit. I don't want to DCA, abd would like to do something relatively soon because I've been sitting on this for a while now paralyzed to make a move. I'm looking to hold long term (I'm only 34) but can't decide which route to take. Can anyone give some insight on what they would do if they were in my shoes? Any response is greatly appreciated! :) [link] [comments]  |
| Posted: 31 Aug 2020 12:41 AM PDT Powell announced that it will formally introduce an "average inflation target" policy: The Fed seeks to achieve an average inflation of 2% over a period of time. After inflation has remained below 2% in the past few years, monetary policy will seek to keep inflation slightly above 2 % Over a period of time. [link] [comments]  |
| The insane (price) history of FCEL Posted: 30 Aug 2020 04:02 PM PDT I was looking at the this company FuelCell and found it interesting that the company's stock price went from IPO of around $100 a share to the height of dot com bubble of $6842.78 a share , and then fell to about $0.22 a share in 2020 , then gained almost 900% in less than 1 year to about $3 a share right now! Isn't that pretty crazy?!! I don't know any other company has a price history like that . Granted that's over a very long period of time, but if I bought their stock in 1999 and keep holding on to it , I'd have lost 99.99 % of the value!! [link] [comments]  |
| Posted: 30 Aug 2020 10:56 PM PDT Hi. I'm very new and to this, so please excuse the ignorance of this question first and foremost. When Facebook became a publicly traded company, my father bought me 1,000 shares. I know I can't really ask if now is a good time to sell it, but I'm wondering how much it's worth? I'm thinking about selling off some of it and then reinvesting the rest. I honestly don't know where to start though. I have the shares, but I don't know what to do with them. I am extremely new to this and I'm sorry if I sound naive and I'm asking very basic questions, but I'd appreciate absolutely any advice here. I come from a very blue collar family and I married into a very blue collar family. I design shoes for a living. I have no one around me who can give me answers. All my father knows is that he bought them for me because "his friend told him it was a good investment." Lol. Yeah. I need help. [link] [comments]  |
| Posted: 30 Aug 2020 07:01 PM PDT I'm really interested in putting a percentage of my portfolio into the ARK ETFs. I find their investing strategy across the board super compelling and want to have exposure to all 5 ETFs. I understand that ARKK is the one which includes most of the holdings. Would it suffice to go all in on ARKK or should I add any other of the 4 ETFs to get full exposure to ARKs offerings? [link] [comments]  |
| Workaround for "Closed to New Investors" Posted: 31 Aug 2020 03:45 AM PDT I know a lot of banks and institutions support transfers in kind, so I was wondering if anyone knows if a transfer in kind is a possible workaround so that you can invest in a fund that are otherwise closed to new investors. As an example, I have money in several mutual funds through my company's 401k with Fidelity. I recently added money to my Roth IRA through E-Trade and would love to be able to invest in some of those same funds. However, some of those funds are closed to new investors. Is it feasible to initiate a transfer in kind from the 401k to a Traditional IRA with E-Trade, and then purchase the closed fund through my Roth IRA? If this isn't possible, are there any other good ways to invest this tax-exempt money in a fund that I am currently only invested in through tax-deferred money? Of course, if I am fundamentally missing something or anyone has other valuable ideas, I'm very open to hearing new things! [link] [comments]  |
| Bonds and rising interest rates Posted: 30 Aug 2020 09:28 AM PDT So I know that bonds decrease in value when interest rates rise (because you could get higher returns on newly issued bonds). But isn't this "decrease in bond value" only relative to the second market? I.e, this "decreased bond value" is only important in the context of other investors wanting to buy/sell bonds to one another? So if you have a bond with 2% interest rate yield, but the interest rates are now 3%, obviously you aren't getting the maximum possible return, but as your interest rate returns are still the same, regardless of how the second market values your lower interest bond, you're still getting a profit-- albeit it just being less than the maximum possible, correct? So my question is, is the decreasing value of your bond in the secondary market when interest rates increase only significant if you're looking to make the most profit/buy the most profitable type of bond available? Simplifying the picture, is it safe to assume one is "greedy" (simplifying desires for greater profit margins) for worrying about increased interest rates and thus the (declining) value of the associated bond, as in the end you still get back your bond equity + original 2% interest rate? Also, if the interest rate is increasing, for the long term, doesn't that mean inflation will (at the very least) slow down? Thus I'm assuming you're still getting profit/value out of your bond (albeit the return being less than the new 3% bond--but you're still making profit). [link] [comments]  |
| Storage and Distribution of Vaccines Posted: 31 Aug 2020 03:00 AM PDT Once the COVID vaccine is produced, which companies will be part of the supply chain? I understand Operation Warp Speed has identified Mckesson as the distributor - but, the administration and freezer at sites - are there companies that might be interesting? The Pfizer's vaccine per the below article requires -94F temps that a local CVS / Walgreens does not have - is it then the CVS will buy those freezers? Who makes the ultra low temp freezers? Who else will administer those vaccines? [link] [comments]  |
| Passively managed index funds vs ETFs in a taxable account? Posted: 30 Aug 2020 07:21 PM PDT Apologies if this has been asked before, although I can't seem to find a specific answer to this scenario; I fully understand the difference between ETFs and Mutual Funds, but am confused as to what to do in a taxable brokerage account. My understanding is that ETFs are generally considered to be more tax-efficient and the better choice, but most articles that say this are saying so in comparison to actively managed mutual funds. However, if an index fund is passively managed (ex. FXAIX), then would it not also trigger very few capital gains, therefore making it effectively the same in terms of tax benefits as compared to an ETF like SPY? I know that the expense ratios differ, but as someone who finds tax filings to be very confusing, my main concern is dealing with the tax implications of these choices. If it were up to me, I would prefer to invest in an index fund like FXAIX in my taxable account so that I don't have to purchase whole shares of SPY, but if SPY triggers less capital gains then I'd obviously prefer to go with that. Any advice on this is greatly appreciated! [link] [comments]  |
| Advantage to be small investor? Why you should not follow Buffett. Posted: 31 Aug 2020 02:46 AM PDT I think you cannot apply the same logic to trades like Buffett does. He has billions to invest and he cannot effectively buy smaller stocks because he would make huge spike in prices. What are the advantages of being small investor where you can invest your monthly/yearly worth of wage on one trade and you dont make any dent on the chart? How to utilize this advatage and what you can do what Buffett cannot? [link] [comments]  |
| NIOs worst time to make a share offering? Posted: 31 Aug 2020 02:10 AM PDT So after the bullish week NIO had last week, they decided to make an offering of 75mm shares. Since the price tanked, they decided to make a second offering to rise the goal of 1.5 billions... Just months after they secured funding from the chinese goverment for that same amount of dollars. Many seem to believe the offering is well placed due to the run and because they wanted to increase their ownership from around 70 to 80 something percent. From a shareholders perspective, this seems to be a very dodgy move. I believe this is more about greed than anything else by the company's management. 70-80% ownership does not have any meaningful value since they already have the majority of the company's ownership. In any case, we will see how the market reacts (already down 5% in pre market). And as a typical case of dodgy moves by the chinese, I consider this a risky bet at this price range. I am setting a stop-loss at 16.5 level and might reenter the stock at a latter date. Adding volatility to an already volatile stock... Do you think this was a smart move for NIO? Do you believe the buy orders will support the current levels ? Congrats to all that managed to get the stock at 2-10 bucks level and are fine with the volatility or took profits. [link] [comments]  |
| Posted: 31 Aug 2020 01:36 AM PDT I am considering investing some money into a few Vanguard Index Funds. When you directly click on them it says the minimum investment is £500 lump sum or £100 monthly deposits. However when you compare the funds on their comparison page it says the minimum for some index funds is GBP 1 million? Sorry if this seems stupid I just don't want to commit to them if I can't invest in them anyway. EDIT: I am investing from the UK [link] [comments]  |
| What are some Jan 2021 options that everyone should consider Posted: 30 Aug 2020 05:37 PM PDT I thought this would be a good topic for those that don't have the risk tolerance. I'm a novice so don't roast me but here are a few ideas: - $320 BABA - $200 SE BABA has me pretty hopeful given the upcoming ANT IPO but I'm aware of the inherent risk with China trade talks. SE has had a huge run but given the fact that they are becoming the Amazon of SE Asia, I can see them continuing to run. [link] [comments]  |
| Beginner: having a hard time starting because of irrationality/covisd-19 Posted: 31 Aug 2020 01:08 AM PDT Hello, sorry if this is irrelevant. I have been meaning to start investing since 2018, but I have kept procrastinating because I suffer from depression and I didn't really know anything about investing so I thought that I should do my research first. I kind of forgot about it for a while, until this year when the coronavirus hit and the market crashed. I thought that this would be a great opportunity to start since the stocks were cheaper and I had a lot of money in my savings account, but of course I procrastinated once again and missed the dip. This summer I finally decided to do something about it, so I started listening to finance/investing podcasts, reading forums and articles, opened an investment account, etc but then my depression got worse again and I have been putting this off for a month. I know that I'm being irrational and I know that time in the market beats timing the market, but I feel like I missed out on a huge opportunity by not investing in March when I actually thought of doing it and I don't know how to start now. I feel really bad for procrastinating for two whole years and I don't know if I should just keep my original plan of investing every month and just increase the sum to make up for it. Is this sustainable? [link] [comments]  |
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