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

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• Daily Advice Thread - All basic help or advice questions must be posted here.
• Gamestop Big Picture: Theory, Strategy, Reality
• Emotional involvement has never been this high, please understand the risk involved.
• Is Robinhood raising billions of cash a worrying sign?
• Aphria/Tilray - The European Giant
• BABA Earnings
• Corsair - CRSR - Recent Activity and Earnings Play
• LMT: A Deep Dive
• DD on Bandwidth (BAND)
• Help understanding basics of making less-risky options trading
• Time to go long on AMD?
• New to investing; trying to make sense of Tesla, and general question about P/E
• What do you think about Petco and Coinbase IPO this year?
• Are there ETFs with tracking difference DELTA of e.g. 50%?
• Uh oh - employment report is coming and a potential positive non confirmation
• ETNs too good to be true?
• Is My Assessment of Nvidia Correct? (Bullish)
• Taiwan Semiconductor Manufacturing
• TRTX seems like a good deal right now. What am I missing
• Apple vs SP 500
• Dividend investing the smart transition in a slowing market
• Virgin Galactic Test Flight Incoming!!
• Potential Liquidity Fueled Bubble

Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 02 Feb 2021 02:00 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following: How old are you? What country do you live in? Are you employed/making income? How much? What are your objectives with this money? (Buy a house? Retirement savings?) What is your time horizon? Do you need this money next month? Next 20yrs? 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?) Any big debts (include interest rate) or expenses? And 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 And our side bar also has useful resources. 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 [link] [comments]

Gamestop Big Picture: Theory, Strategy, Reality Posted: 02 Feb 2021 02:11 AM PST Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. Also, full disclosure, I hold a net long position in GME, but my cost basis is very low, and I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours. Before I get into Monday's action, a couple of things: I wanted to first give a shout out to /u/piddlesthethug for capturing this screenshot, which shows that moment in time I referenced in my third Gamestop post, where some poor soul got sniped while sweeping the 29 January 115 calls. I added it into the post with an edit, but my guess is most who read the post a while back would have missed it. I guess my mental math in the moment was off as you can see from the image that the cost was actually just shy of $500k rather than $440k as I wrote in the post. Brutal. People have also asked me where I stand on this trade. I was lucky to get in early, trade some momentum, and retain a sizeable core holding (relative to my play account). As I've mentioned some comments, my core holding, which I will hold until this saga plays itself out, would buy me a new car, all cash. Though after today I'd have to downgrade from a lower end Lexus to a Corolla lol. Alright, so, today's action. I have to admit that I was just glancing at the chart between writing emails, working on excel spreadsheets, conference calls, and meetings. Whenever I could, I was listening to CNBC in the background, and taking a closer look whenever I heard anything that might move sentiment, or theoretically telegraph an attack as had happened so many times last week. In my opinion the price action played out almost by-the-numbers according to a squeeze campaign strategy as I laid out in my previous post. I want to be clear, however, that while it was consistent with what I laid out (liquidity drying up, trying to skirmish at lower and lower price points), you could reasonably interpret it other ways. As I mentioned in at least one comment, seeing things play out in a manner consistent with your expectations is by no means positive confirmation that your thesis is correct. It just happens to be consistent with the evidence you have so far. Always keep that in mind. I tried responding to a few comments and questions in realtime as I got notifications on my phone. Just as a heads up, I won't always be able to do so, and it seems like there were a number of knowledgeable people commenting in realtime anyway. As I've said in comments on my previous posts, I am definitely not the smartest person in the room, so don't just take my word for it just because I'm the original poster. Please challenge anything I say if you feel I'm mistaken, and don't dismiss out of hand people who may have a different viewpoint. One thing I thought I noticed in early morning market hours action was that there was no sell order depth above the ticker price, which I interpret as a good sign. Downward pushes into fairly good volume got sucked back up largely in a low-volume vacuum. The most extreme example of this was the first push right at market open. Tons of volume to push the price down, then a tiny fraction of volume as price got sucked back up. This means very little continued panicking and bailing due to the aggressive push, resulting in gaps to the upside on the follow-on buying. There were messages and comments from people concerned that low price would let the short side cover, but, as I explained, low price doesn't help the short side unless they can buy at that low price in meaningful volume. That sort of action where price gaps up as soon as buying (whether by shorts or longs) is driving price tells you that there isn't much meaningful volume to be had at the lower prices. From a higher level view, volume through the day dropped as price dropped, and that seems to have remained consistently true throughout the day. There was some very strange after-market volume. No idea what that may have been, other than maybe hedge unwinding as T+2 contract settlement outcomes were determined. It seemed, at least to me, to be too much volume in too dense a time window to be retailers bailing out of their accounts en mass. It would make no sense to do so into the vacuum of after hours anyway rather than the firmer price support of market hours. I got messages that I was both a short side hedge fund shill and a long side pump and dump fraudster trying to somehow take peoples' money. My sentiment analysis KPIs thus indicate I'm likely striking a healthy balance (lol). The Game (Theory) Ok, but seriously, is this situation a pump and dump? Possibly. I say possibly because, as I stated in a comment, a failed squeeze campaign is effectively identical to a pump and dump in that the only thing that happens is capital is transferred mostly from people who got in later to people who got in earlier. Even worse, in aggregate a good amount of capital may end up being transferred from the campaigners to the short side. Not that it was necessarily intended to be that way from the start--it's just what ends up happening if the campaign fails. Ok, so failure aside, what are the dynamics of the trade? What kind of game is this? In simplified terms, I'd describe a squeeze campaign where the short side doubles down as a modified dollar auction where the winning side also takes the losing side's bid money. In other words, at an aggregate level, it's winner take all, go hard or go home, with all the excitement of market action in the middle. Note that I said in aggregate and with market action in the middle, as that basically means even the winning side will have individuals who lose possibly everything if they get washed out before the end. As I mentioned in some comments where I urged people to consider taking profits if they needed the money, this is going to be a white-knuckle trade to the very end. Power For most of our lives, most of the time, the saying that 'information is power' and the closely related 'knowledge is power' are abstract, philosophical truisms that people say to try to sound cool and edgy. More tangible and relevant to our daily lives might be 'money is power', or, for the least fortunate, the threat and reality of physical force. Today, for many in the GME trade, that previously abstract philosophical truism gained intense and urgent relevance. What is current SI? Can you trust numbers from S3? What about Ortex? Are there counterfeit shares in play? What is the significance of Failures to Deliver? Can the short side cover their position off the exchange? etc. etc. Being in this situation, if nothing else, has lifted the veil for many people. The right information, in the right circumstances, is incredibly powerful. It outlines in stark contrast the power dynamics of information asymmetry. If you want to exercise more agency in your future as a trader and investor, you have to make a habit of cultivating your critical thinking skills and ensuring you have diverse and often divergent sources of information. Do not let yourself be trapped in an information bubble where you can be easily manipulated. Most of all, try to avoid developing a siege mentality at all costs. If nothing else, in my opinion, it's critical for your long-term financial success. I don't know the answer to those questions definitively, and my purpose in creating this account and posting is absolutely not to get people to listen and necessarily believe everything I write. In fact, it would make me happier if I see people use some of the tools, techniques, and concepts I've tried to introduce to challenge some of my thinking. Catching my mistakes helps me. Doing it in the open for all to read helps everyone. Faith, Conviction, Calculated Risk Many people trade and invest according to wildly divergent strategies. Some people, including those that most Wall Street types consider to be 'responsible' investors, invest on blind faith. You put your capital is someone else's hands (hopefully a qualified fiduciary), and trust that they will do a good job. The only judgment you exercise really is in choosing the person(s) in which to place your faith. This is not entirely unlike what many WSBettors are doing with respect to DFV. I do this with my retirement accounts, though lately I've been considering transferring about half my retirement capital to a self-directed IRA. Others trade on conviction. They have, for whatever reason, a very strong belief in an investment thesis that they are willing to put to the test by putting capital at risk, and are willing to lean into the thesis through unfavorable price action so long as no disconfirming evidence comes to light. I consider value investors to fall into this category. Others are momentum traders and 'technical analysts', who are trying to read the market data to look for asymmetrical calculated risk opportunity. These opportunities need not necessarily be tied to any particular underlying fundamental investment thesis. All that matters is whether you win on a sufficiently frequent basis and carefully manage your downside risk. I think it's healthy to try to gain an understanding of all three approaches. I personally also find it necessary to be careful if you find yourself switching between those approaches mid-trade. I.e., if you started in the GME trade on faith, it may be deeply disturbing if you find yourself in the no-man's land between faith and conviction, where you have learned enough to understand more of the risks in the trade, but not enough to understand the underlying investment thesis of how it could play out. I'm not saying you shouldn't try to make that transition--just try to maintain self awareness if you choose to do so to avoid making any rash decisions. Swimming In The Deep So, the consistent #1 question I always get: what happens next? My consistent answer, which I know frustrates everyone, is I don't know, and no one else does either. One person in the comments made an astute observation that perhaps the truth, which some may find disturbing, is that our fate really lies in the hands of the whales on the long side rather than retail being in the driver's seat. This may very well be true. I would give it better than even odds at this point. In fact, even if retail collectively represents more shares in this trade, retail is not a well-organized, monolithic entity, and therefore would have more difficulty playing a decisive role at critical times. Another question I got, which was a very good one to be asking, is what evidence do we have that there really are whales on the long side? For me, there have been critical actions over the past few days that I would have found to be highly unlikely to be achievable by retail investors, such as the sustained HFT duel into the close on Friday. That was very consistent, relatively well controlled, and sustained push on volume of 6-7mio shares traded in the $250 - $330/share price range. Oversimplified math would peg that at just shy of $2bn in capital flow. That is not retail--particularly with so many retail brokerages restricting trading at that time. The 17mio shares sold into the aftermarket action consistent with a squeeze (and Ortex reported reduction in short interest) is also definitely not retail. Others have pointed out massive action in the options today. Tons of block purchases in the millions of dollars and high 6 figures. Not retail. All of that being said, does that really change very much? Even if you consider yourself to be part of a movement, and have genuine feelings of solidarity with your retail fellows (I do, which is why I'm writing these posts and holding that core position), in the end you are trading as an individual. This is a point that I have made repeatedly. In the end, you need to know yourself, know your trade, and have a plan. Your plan may conceivably be to follow someone else (I know many are following DFV to whatever the end may be), but in the end even that is still your plan as an individual. If my thesis is correct we will continue to see lower trade volumes, and price grinding down to a floor of harder support, possibly even at the retail line of support (~$148/$150) I outlined in a prior post. There may also be some price dislocation tomorrow depending on options contract T+2 settlement impact. I don't know enough about what to expect there. If the squeeze is to happen, unless RH lifting restrictions or people transferring their accounts causes a surge of retail momentum, it will happen after that type of price movement continues for a while (maybe days, maybe longer), until sufficient liquid float has been locked up. Right now options action is heavily weighted to puts, so any market maker hedging activity will put more pressure on price. If the squeeze fails to happen there won't be a siren, ringing of a bell, or anything like that. It might happen gradually and non-obviously until suddenly, as only the market seems to be able to do, it becomes obvious that whoever's still there has been left holding the bag. Hopefully this isn't the case, but if it is I'll be right there with what at that point may only buy me a razor scooter rather than a car lol. If it succeeds, it should be fairly obvious. Just don't forget to ring the register! Either way, this is market history in the making. As I said in a previous comment, when you ride the rocket, it's definitely not going to be smooth--but it might just be awesome. Apologies for the lengthy post again. Good luck in the market! submitted by /u/jn_ku [link] [comments]

Emotional involvement has never been this high, please understand the risk involved. Posted: 01 Feb 2021 05:42 AM PST First of all, I can't wait to be berated in the comments. I'm gonna be blunt, I have seen a whole lot of dumb shit over the last week. A lot more than normal. And compounding all of that is an unprecedented amount of legitimate emotional involvement here. So let me get started by saying outright that people getting emotionally involved with trading stocks always lose. Short, long, whatever. It doesn't matter if you're a 19 year old throwing in your life savings or Bill fucking Ackman not being able to admit he was wrong with Herbalife. Letting your emotions be a major factor in trading is a fantastic way to lose money. And a whole lot of you are really emotionally involved with this GME, AMC, whatever. To the point: I am not making a buy/sell/hold/whatever recommendation. I have no special insight in to what's happening with GME or whatever else. What I can tell you is that it is for sure not worth $300. So let's dispel one quick thing: this is not David vs Goliath. It also isn't the little man vs hedge funds or WSB vs big finance. It might have started out that way, but if you only read one thing read this: Many of the big retail brokerages, including Robinhood, route a lot of their customer orders to Citadel Securities, so it ends up seeing a large percentage of retail trades in U.S. stocks. It can see if retail traders are mostly buying or mostly selling or mostly pretty balanced. You might expect—I certainly expected—to see that retail traders were buying more than they were selling this week. The stock seemed to be rocketing up on frenzied retail sentiment, and the posters on WallStreetBets were all claiming that they would never sell and keep buying until it hit $1,000. But here's what Citadel Securities' retail flow looked like in GameStop this week: 1 Graphic here Retail investors were net buyers on Monday but net sellers for the rest of the week (through yesterday), and all in all quite balanced: About 49.8% of retail orders (that Citadel Securities saw) were to buy, and 50.2% were to sell. What do you make of that? One reading would be: "Retail investors on Reddit might have started the GameStop rally, but they're not piling into this stock now, and the price action this week is coming from professionals." Or as one Twitter user put it, "past the retail ignition, the rocket ship was mostly intra-fast money warfare." So, just to be clear about this, there is massive institutional money on both sides of this trade, and retail is a toddler sitting at the world series of poker. Understand that melvin does not need to cover in the way a retail trader needs to cover. You, and everyone else, have no idea what Melvin's position looks like, and they can reorganize and exit a position before you ever knew it happened. You don't know how hedged they are, you don't know what their collateral looks like, and you don't know if they've covered and restructured a short at last week's prices. You simply don't know. You only know what's been presented in the news, which is almost certainly bullshit. This thing could come to an end as fast as it started and you won't know what happened for weeks. You might go take a shit at 1pm today and come back to GME trading at $16 because Ken Griffin got on CNBC and announced they restructured their short at an average price of $200, and were happy to sit on it. Make no mistake, you'll get kicked in the nuts and have your ball taken away faster than you can comprehend. Emotions The problem with this whole "strike back at wall street" narrative is that lots of you are getting really worked up over this trade. Losing money sucks, but losing money and feeling like you got shit on by the big guy is going to hurt. This isn't a moral crusade to them, it's 25 billion dollars. So if you're out here putting money and emotions on the line that you can't afford to lose there won't be a happy ending. Want to fight the good fight against wall street? Write your congressman, Tweet AOC or Ted Cruz, get you a fucking picket sign and go wave it around on the streeet. But dropping money on GME that you need in life ain't gonna change anything except your net worth. TLDR: 1) know and understand who is playing this game. And that they have access to tools, leverage, and markets that you do not. You're playing Le Chiffre at Casino Royale right now, you might think you're James Bond but there's a good chance that you're just the fat dude in the corner. 2) Short squeezes end fast. As fast as they started. If you're new to trading then understand buying GME at this price can mean all of your money will evaporate before you had time to make a TikTock about it. 3) Get your emotions out of play here. This whole nonsense political narrative is only going to cause you to make trading mistakes. Can't handle that? then maybe it's not a good idea to sit at this table. Lastly, if you really just can't get yourself out of the whole "fight the hedge funds" nonsense, at least understand that you're spending money that you likely won't get back. If that's worth it to you then have at it. But don't fool yourself in to thinking otherwise. E: Completely unrelated: I hate reddit awards, reddit doesn't need your money. Go buy like a hundredth of a share of VTI or something. submitted by /u/MasterCookSwag [link] [comments]

Is Robinhood raising billions of cash a worrying sign? Posted: 01 Feb 2021 01:02 PM PST Latest from Reuters is they are looking for another $1bn on-top of the $3.4bn raised in the last few days. If the YOLO trades go wrong and Robinhood is left holding the can, are we in for some nasty volatility? submitted by /u/shane_stockflare [link] [comments]

Aphria/Tilray - The European Giant Posted: 01 Feb 2021 07:46 PM PST Aphria & Tilray Merger Aphria and Tilray Combine to Create Largest Global Cannabis Company With Pro Forma Revenue of C$874 Million https://www.businesswire.com/news/home/20201216005519/en/ Under the terms of the Arrangement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the Arrangement, Aphria Shareholders will own approximately 62 percent of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse acquisition of Tilray, representing a premium of 23 percent based on the share price at market close on December 15, 2020 to Tilray shareholders. On a pro forma basis for the last twelve months reported by each company, the Combined Company would have had revenue of C$874 million (US$685 million). The cannabis industry as a whole has extreme growth potential. I recently made a post illustrating my views on US Legalization & the opportunity with long term plays. We have entered the roaring rolling 20's, where cannabis regulations will ease dramatically. While the media picks up on US Legalization, Aphria & Tilray are slowly taking over Europe. On January 27th, 2021 the CFO of Aphria, Carl Merton did an AMA in which he highlights the challenges Aphria/Tilray face to create desired synergies. More importantly and something I think too many people fail to completely comprehend; we bring a distribution system to Tilray in Europe. Currently, Tilray pays a third party to distribute their product in Europe. That means they are only recording the sale of cannabis from the producer to the distributor and are incurring a cost to do it. By running the Tilray sale through CC Pharma, not only do we remove the distribution expense from Tilray's operations, but the combined entity will now record the sale from the distributor to the pharmacy, effectively moving up market in our share of wallet with the consumer. What is CC Pharma? CC Pharma is a leading German Pharmaceutical and Medical Cannabis Distributor that was acquired by Aphria in 2019. Last week, CC Pharma inked a deal with AMP German Cannabis Group. AMP will organize with the support of CC Pharma, "information events" in Germany to market Aphria branded products to doctors and pharmacists; Dr. Stefan Feuerstein, Director and President of AMP, commented, "We are proud to partner with Aphria and CC Pharma GmbH. Our sole focus is to sell medical cannabis in Germany, which makes us an ideal partner to co-promote and sell the Aphria brand. Tilray & France The same day Aphria & CC Pharma gobble up market share in Germany, Tilray was selected by French National Agency to Supply GMP-Certified Medical Cannabis Products in France it has been selected by the French National Agency for the Safety of Medicines and Health Products (ANSM) to supply Good Manufacturing Processes (GMP) certified medical cannabis products for experimentation in France. Tilray will supply GMP-produced medical cannabis products to serve patients in need for the duration of the French experiment (18-24 months), due to begin in the first quarter of 2021. The cannabis will be exported to France from Tilray's facility in Portugal In May 2020, Tilray received its third and complete Good Manufacturing Practice (GMP) certification for Tilray Portugal. The complete GMP-certification allows Tilray to manufacture medical cannabis extracts in-house and export GMP-produced finished medical cannabis products, both dried flower, and oil, from Portugal throughout the European Union and other international markets with authorized national medical cannabis programs. The amount of untapped growth potential in Europe is eyeopening & Aphria/Tilray will be first in line to benefit. I highly recommend doing your own DD and deepdiving the management. Irwin Simon moves quickly and has a great track record. I believe this company is poised to be the best. Stay safe & GLTA I am not a Financial Advisor, so please do your own DD. In my opinion, Aphria & Tilray are poised for significant growth submitted by /u/seebz69 [link] [comments]

BABA Earnings Posted: 02 Feb 2021 05:30 AM PST https://www.businesswire.com/news/home/20210202005625/en/ BUSINESS HIGHLIGHTS In the quarter ended December 31, 2020: Revenue was RMB221,084 million (US$33,883 million), an increase of 37% year-over-year. Annual active consumers on our China retail marketplaces reached 779 million for the twelve months period ended December 31, 2020, an increase of 22 million from the twelve months period ended September 30, 2020. Mobile MAUs on our China retail marketplaces reached 902 million in December 2020, an increase of 21 million over September 2020. Income from operations was RMB49,002 million (US$7,510 million), an increase of 24% year-over-year. Adjusted EBITDA, a non-GAAP measurement, increased 22% year-over-year to RMB68,380 million (US$10,480 million). Adjusted EBITA, a non-GAAP measurement, increased 21% year-over-year to RMB61,253 million (US$9,387 million). Net income attributable to ordinary shareholders was RMB79,427 million (US$12,173 million), and net income was RMB77,977 million (US$11,950 million). Non-GAAP net income was RMB59,207 million (US$9,074 million), an increase of 27% year-over-year. Diluted earnings per ADS was RMB28.85 (US$4.42) and non-GAAP diluted earnings per ADS was RMB22.03 (US$3.38), an increase of 21% year-over-year. Diluted earnings per share was RMB3.61 (US$0.55 or HK$4.29) and non-GAAP diluted earnings per share was RMB2.75 (US$0.42 or HK$3.27), an increase of 21% year-over-year. Net cash provided by operating activities was RMB103,208 million (US$15,817 million) and non-GAAP free cash flow was RMB96,210 million (US$14,745 million). submitted by /u/Muck_the_fods2 [link] [comments]

Corsair - CRSR - Recent Activity and Earnings Play Posted: 02 Feb 2021 06:30 AM PST Posting some info on Corsair. Corsair manufactures and sells parts for computers, especially gaming computers, as well as the peripherals used in streaming and gaming. Covid has understandably provided a large uptick in sales and we are coming up on Q4 earnings in 8 days, which will include holiday sales. The stock traded as high as $51.37, and has traded between $35 and $45 for some weeks. What you need to know: -Relatively small market cap (3.43 Billion) - Earning's release for Q4: Feb 9th. - Announced release of new product (solid state drives) on Jan 28th - Expected earnings were recently adjusted, with - Tied for first place in the 'computer hardware' category, alongside Logitech - Last quarter Corsair reported a 100% earnings suprise (0.52 vs 0.26 earnings per share) Christmas sales will likely be focused around peripherals, like head phones and streaming gear. A number of Corsair execs announced they will be selling shares direct, ie. will not dilute common shares, direct to institutional investors at $35 per share. This will, hopefully, reduce volatility in the stock, as there is relatively little available for trade, most of it being locked up with execs and institutional owners. It should also set a floor on near term pricing. Analyst currently give the company a 'Buy' and 'Strong Buy' rating. TLDR: buy CRSR. Earnings date: February 9th. All time high: $52.37 Current: $38.13 Q3 Report: https://ir.corsair.com/news-releases/news-release-details/corsair-gaming-reports-third-quarter-2020-financial-results Share sale article: https://www.fool.com/investing/2021/01/22/dont-worry-about-corsairs-public-offering/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo Not financial advice. Positions: 2000 shares, $38 price average. submitted by /u/ThisistheEndMyFren [link] [comments]

LMT: A Deep Dive Posted: 01 Feb 2021 08:39 AM PST Edit 1: More ARKQ buying today (~50k shares). Thank you everyone for the positive feedback and discussion! Bottom Line Up Front (BLUF) or TL;DR for the non-military types: LMT is a good target if you want to literally go to the moon, and my PT is $690.26 in two years (more than 2x from current levels). Justification and some possible trade ideas are listed below, just CTRL-F "Trade Ideas". I hope you guys enjoy this work and would appreciate any discussion or feedback. I hope to catch you in the comments. Team, We interrupt today's regularly scheduled short squeeze coverage to discuss a traditionally boring stock, LMT (Lockheed Martin), with significant upside potential. To be clear, this is NOT a short squeeze target like many reddit posts are keying on. I hope that this piece sparks discussion, but if you are just looking for short squeeze content, all I have to say is BUY, HOLD, and GODSPEED. The source of inspiration for me writing this piece is threefold; first, retail investors are winning, and I believe that we will continue to win if we continue to identify opportunities in the market. In my view, the stock market has always been a place for the public to shine a light on areas of innovation that real Americans are excited about and proud to be a part of. Online communities have stolen the loudspeaker from hedge fund managers and returned it to decentralized online democracies that quickly and proudly shift their weight behind ideas they believe in. In GME's case, it was a blatant smear campaign to destroy a struggling business. I think that we should continue this campaign by identifying opportunities in the market and running with them. It may sound overly idealistic, but if reddit can take on the hedge funds, I non-ironically believe that we can quite literally take good companies researching space technology to the moon. I think LMT may be one of several stocks to help get us there. Second, a video where the Secretary of State of Massachusetts argues that internet boards are full of a bunch of unsophisticated, thoughtless traders really ticked me off. This piece is designed to show that 'the little guy' is ready to get into the weeds, understand business plans, and outpace analysts that think companies like Tesla are overvalued by comparing them to Toyota. That is a big reason that I settled on an old, large, slow growth company to do a deep-dive on, and try my best to show some of the abysmal predictive analysis major 'research firms' do on even some of the most heavily covered stocks. LMT is making moves, and the suits on wall street are 10 steps behind. At the time of writing this piece, Analyst Estimates range from 330-460 (what an insane range). Third, and most importantly, I am in the US military, and I think that it is fun to go deep into the financials of the defense sector. I think that it helps me understand the long-term growth plans of the DoD, and I think that I attack these deep-dives with a perspective that a lot of these finance-from-day-one cats do not understand. Even if no one ever looks at this work, I think that taking the time to write pieces like this makes me a better Soldier, and I will continue to do it in my spare time when I am feeling inspired. I wrote a piece on Raytheon Technologies (Ticker: RTX) 6 months ago, and I think it was well-received. I was most convicted about RTX in the defense sector, but I have since shifted to believing LMT is the leader in the defense space. I am long both, though. If this inspires anyone else to do similar research on other companies, or sparks discussion in the community, that is just a bonus. Special shout-out to the folks that read more than just the TL;DR, but if you do just read the TL;DR, I love you too! Now let us get into it: Leadership I generally like to invest in companies that are led by people that seem to have integrity. Jim Taiclet took the reins at LMT in June of last year. While on active duty, he served as a C-141B Starlifter pilot (a retired LMT Aircraft). After getting out he went to work for the American Tower Corporation (Ticker: AMT). His first day at American Tower was September 10, 2001. The following day, AMT lost 13 employees in the World Trade Center attack. He stayed with the company, despite it being decimated by market uncertainty in the wake of 9/11. He was appointed CEO of the very same company in 2004. Over a 16 year tenure as CEO of AMT the company market cap 20x'd. He left his position as CEO of AMT in March of last year, and the stock stagnated since his departure, currently trading at roughly the same market cap as to when he left. Jim Taiclet was also appointed to be the chairman of the board this week, replacing the previous CEO. Why is it relevant that the CEO came from a massive telecommunications company? Rightfully, Taiclet's focus for LMT is bringing military technology into the modern era. He wants LMT to be a first mover in the military 5G space, military application of AI space, the… space space, and the hypersonic glide vehicle (HGV) space. These areas are revolutionary for the boomer defense sector. We will discuss this in more detail later when we cover the company's P/E multiple and why it is absolute nonsense. It is not a surprise to me that they brought Taiclet on during the pandemic. He led AMT through adversity before, and LMT's positioning during the pandemic is tremendous relative to the rest of the sector, thanks in large part to some strong strategic moves and good investments by current and past leadership. I think that Taiclet is the right CEO for the job. In addition to the new CEO, the new Secretary of Defense, Secretary Lloyd Austin, has strong ties to the defense sector. He was formerly a board member for RTX. He is absolutely above reproach, and a true leader of character, but I bring this up not to suggest that he will inappropriately serve in the best interest of defense contractors, but to suggest that he speaks the language of these companies effectively. I do not anticipate that the current administration poses as significant of a risk to the defense sector as many analysts seem to believe. This will be expanded in the headwinds section below. SPACE Cathie Wood and the ARK Invest team brought a lot of attention to the space sector when the ARKX, The ARK Space Exploration ETF, Form N-1A was officially filed through the SEC. More recently, ARK Invest published their Big Ideas 2021 Annual Report and dedicated an entire 7-page chapter to Orbital Aerospace, a new disruptive innovation platform that the ARK Team is investigating. This may have helped energize wall street to re-look their portfolios and their investments in space technology, but it was certainly not the first catalyst that pushed the defense industry in the direction of winning the new space race. In June 2018, then President Trump announced at the annual National Space Council that "it is not enough to merely have an American presence in space, we must have American dominance in space. So important. Therefore, I am hereby directing the Department of Defense (DoD) and Pentagon to immediately begin the process necessary to establish a Space Force as the sixth branch of the Armed Forces". Historically, Department of Defense space assets were under the control of the Air Force. By creating a separate branch of service for the United States Space Force (USSF), the DoD would allocate a Chairman of Space Operations on the Joint Chiefs of Staff and clearly define the budget for space operations dedicated directly to the USSF. At present, this budget is funneled from the USAF's budget. The process was formalized in December of 2019, and the DoD has appropriated ~$15B to the USSF in their first full year of existence according to the FY21 budget. Among the 77 spacecraft that are controlled by the USSF, 29 of them are Lockheed Martin GPS satellites, 6 of them are Lockheed Martin Space-Based Infrared Systems (SBIRS), and LMT had a hand in creating and/or manufacturing for several of the other USSF efforts. The Next Generation Overhead Persistent Infrared Missile Warning Satellites (also known as Next-Gen OPIR) were contracted out to both Northrup Grumman (Ticker: NOC) and LMT. LMT's contract is currently set at $4.9B, NOC's contract is set at $2.37B. Tangentially related to the discussion of space is the discussion of hypersonic glide vehicles (HGVs). HGVs have exoatmospheric and atmospheric implications, but I think that their technology is extremely important to driving margins down for both space exploration and terrestrial point-to-point travel. LMT is leading the charge for military HGV research. They hold contracts with the Navy, Air Force, and Army to develop HGVs and hypersonic precision fires. The priority for HGV technology accelerated significantly when Russia launched their Avangard HGV in December of 2019. Improving the technology for HGVs is a critical next-step in maintaining US hegemony, but also maintaining leadership in both terrestrial and exoatmospheric travel. LARGE SCALE COMBAT OPERATIONS (LSCO) The DoD transitioning to Large-Scale Combat Operations (LSCO) as the military's strategic focus. This is a move away from an emphasis on Counter-Insurgency operations. LSCO requires effective multi-domain operations (MDO), which means effective and integrated strategies regarding land, sea, air, space, and cyberspace. To have effective MDO, the DoD is seeking systems that both expand capabilities against peer threats and increase the ability to track enemy units and communicate internally. This requires a modernizing military strategy that relies heavily on air, missile, and sensor modernization. Put simply, the DoD has decided to start preparing for peer or near-peer adversaries (China, Russia, Iran, North Korea) rather than insurgencies. For this reason, I believe that increased Chinese and Russian tensions are, unfortunate as it may be, a boon to the defense industry. This is particularly true in the missiles/fires and space industry, as peer-to-peer conflicts are won by leveraging technological advantages. There are too many projects to cover in detail, but some important military technologies that LMT is focusing on to support LSCO include directed energy weapons (lasers) to address enemy drone technology, machine learning / artificial intelligence (most applications fall under LMT's classified budget, but it is easy to imagine the applications of AI in a military context), and 5G to increase battlefield connectivity. These projects are all nested within the DoD's LSCO strategy, and position LMT as the leader in emergent military tech. NOC is the other major contractor making a heavy push in the modernization direction, but winners win, and I think a better CEO, balance sheet, and larger market cap make LMT the clear winner for aiding the DoD in a transition toward LSCO. SECTOR COMPARISON (BACKLOG) The discussion of LSCO transitions well into the discussion of defense contractor backlogs. Massive defense contracts are not filled overnight, so examining order backlogs is a relatively reliable way to gauge the interest of the DoD in a defense contractor's existing or emerging products. For my sector comparison, I am using the top 6 holdings of the iShares U.S. Aerospace & Defense ETF (Ticker: ITA). I hate this ETF, and ETFs like it (DFEN) because of their massively outsized exposure to aerospace, and undersized allocation to companies like LMT. LMT is only 18% smaller than Boeing (Ticker: BA) but is only 30.4% of the exposure of BA (18.46% of the fund is BA, only 5.62% of the fund is LMT). Funds of this category are just BA / RTX hacks. I suggest building your own pie on a site like M1 Finance (although they are implicated in the trade restriction BS… please be advised of that… hoping other brokerages that are above board will offer similar UIs like the pie design… just wanted to be clear there) if you are interested in the defense sector. The top 6 holdings of ITA are: Boeing Company (Ticker: BA, MKT CAP $110B) at 18.46% Raytheon Technologies (Ticker: RTX, MKT CAP $101B) at 17.84% Lockheed Martin (Ticker: LMT, MKT CAP $90B) at 5.62% General Dynamics Corporation (Ticker: GD, MKT CAP $42B) 4.78% Teledyne Technologies Incorporated (Ticker: TDY, MKT CAP $13B) at 4.74% Northrop Grumman Corporation (Ticker: NOC, MKT CAP $48B) at 4.64% As a brief aside, please look at the breakdowns of ETFs before buying them. The fact that ITA has more exposure to TDY than NOC and L3Harris is wild. Make sector ETFs balanced how you want them to be balanced and it will be more engaging, and you will likely outperform. I digress. Backlogs for defense companies can easily be pulled from their quarterly reports. Here are the current backlogs in the same order as before, followed by a percentage of their backlog to their current market cap. All numbers are pulled from January earning reports unless otherwise noted with an * because they are still pending. Boeing Company backlog (Commercial: $282B, Defense: $61B, Foreign Military Sales (FMS, categorized by BA as 'Global'): 21B, Total Backlog 364B): BA's backlog to market cap is a ratio of 3.32, which is strong, but most of that backlog comes from the commercial, not the defense side. Airlines have been getting decimated, I am personally not interested in having much of my backlog exposed to commercial pressures when trying to invest in a defense play. Without commercial exposure, their defense only backlog ratio is .748. This is extremely low. I understand that this does not do BA justice, but I am keying in on defense exposure, and I am left thoroughly unsatisfied by that ratio. Also, we have seen several canceled contracts already on the commercial side. Raytheon Technologies backlog (Defense backlog for all 4 subdivisions: 67.3B): Raytheon only published a defense backlog in this quarter's report. That is further evidence to me that the commercial aerospace side of the house is getting hammered. They have a relatively week backlog to market cap as well, putting them at a ratio of .664, worse off than the BA defense backlog. Lockheed Martin backlog (Total Backlog: $147B): This backlog blows our first two defense backlogs out of the water with a current market cap to backlog ratio of 1.63. General Dynamics Corporation backlog (Total Backlog: $89.5B, $11.6B is primarily business jets, but it is difficult to determine how much of their aerospace business is commercial): Solid 2.13 ratio, still great 1.85 if you do not consider their aerospace business. The curveball here for me is that GD published a consolidated operating profit of $4.1B including commercial aerospace, whereas LMT published a consolidated operating profit of $9.1B. This makes the LMT ratio of profit/market cap slightly in favor of LMT without accounting for the GD commercial aerospace exposure. This research surprised me; I may like GD more than I originally assumed I would. Still prefer LMT. Teledyne Technologies Incorporated backlog (Found in the earnings transcript, $1.7B): This stock is not quite in the same league as the other major contractors. This is an odd curveball that a lot of the defense ETFs seem to have too much exposure to. They have a weak backlog, but they are a smaller growing company. I am not interested in this at all. It has a backlog ratio of .129. Northrop Grumman Corporation backlog ($81B): Strong numbers here. I see NOC and LMT as the two front-runners in the defense sector. I like LMT more because I like their exposure to AI, 5G, and HGVs more than NOC, but I think this is a great alternative to LMT if you like the defense sector. Has a ratio of 1.69, slightly edging out LMT on this metric. LMT edges out NOC on margins by ~.9%, though, which has significant implications when considering the depth of the LMT backlog. The winners here are LMT, GD, and NOC. BA is attractive if you think anyone will have enough money to buy new planes. BA and RTX are both getting hammered by commercial aerospace exposure right now and are much more positioned as recovery plays. That said, LMT and NOC both make money now, and will regardless of the impact of the pandemic. LMT is growing at a slightly faster rate than NOC. Both are profit machines, but I like LMT's product portfolio and leadership a lot more. FREE CASH FLOW Despite the pandemic, LMT had the free cash flow to be able to pay a $2.60 per share dividend. This maintains their ~3% yearly dividend rate. They had a free cash flow of $6.4B. They spent $3.9 of that in share repurchases and dividend payouts. That leaves 40% of that cash to continue to strengthen one of the most stalwart balance sheets outside of big tech on the street. Having this free cash flow allowed them to purchase Aerojet Rocketdyne for $4.4B in December. They seem flexible and willing to expand and take advantage of their relative position during the pandemic. This is a stock that has little downside risk and significant upside potential. It is always reassuring to me to know that at the end of the day, a company is using its profit to continue to grow. HEADWINDS New Administration – This is more of an unknown than a headwind. The Obama Administration was not light on military spending, and the newly appointed SecDef is unlikely to shy away from modernizing the force. Military defense budgets may get lost in the political shuffle, but nothing right now suggests that defense budgets are on the chopping block. Macroeconomic pressure – The markets are tumultuous in the wake of GME. Hedgies are shaking in their boots, and scared money weighed on markets the past week. If scared money continues to exert pressure on the broader equity markets, all boomer stocks are likely weighed down by slumping markets. Non-meme Status – The stocks that are impervious to macroeconomic pressures in the above paragraph are the stonks that we, the people, have decided to support. From GME to IPOE, there is a slew of stonks that are watching and laughing from the green zone as the broader markets slip deeper into the red zone. Unless sentiment about LMT changes, I see no evidence that LMT will remain unaffected by a broader economic downturn (despite showing growth YoY during a pandemic). TAILWINDS Aerojet Rocketdyne to the Moon – Cathie Wood opened up a $39mil position in LMT a few weeks ago, and this was near the announcement of ARKX. The big ideas 2021 article focuses heavily on satellite technology, deep learning, and HGVs. I think that the AR acquisition suggests that vertical integration is a priority for LMT. They even fielded a question in their earnings call about whether they were concerned about being perceived as a monopoly. Their answer was spot on—the USFG and DoD have a vested interest in the success of defense companies. Why would they discourage a defense contractor from vertical integration to optimize margins? International Tensions – SolarWinds has escalated US-Russia tensions. President Biden wants to look tough on China. LSCO is a DoD-wide priority. 5G.Mil – We still do not have a lot of fidelity on what this looks like, but the military would benefit in a lot of ways if we had world-wide access to the rapid transfer of encrypted data. Many units still rely on Vietnam-era technology signal technology with abysmal data rates. There are a lot of implications if the code can be cracked to win a DoD 5G contract. TRADE IDEAS Price Target: LMT is currently at a P/E of ~14. Verizon has roughly the same. LMT's 5-year P/E ratio average is ~17. NOC is currently at a P/E of ~20. TSLA has a P/E Ratio of 1339 (disappointingly not 1337). P/E is a useless metric because no one seems to care about it. My point is that LMT makes a lot of money, and other companies that are valued at much higher multiples do not make any money at all. LMT's P/E ratio is that of a boomer stock that has no growth potential. LMT's P/E is exactly in line with the Aerospace and Defense Industry P/E ratio standard. LMT's new CEO is pushing the industry in a new direction. I will arbitrarily choose a P/E ratio of 30, because it is half of the software industry average, and it is a nice round number. Plus, stock values are speculative and nonsense anyway. Share price today: $321.82 Share price based on LMT average 5-year P/E: $384.08 (I see this as a short term PT, reversion to the mean) Share price with a P/E of 30: $690.26 Buy and Hold: Simple. Doesn't take much thought. Come back in a year or two and be happy with your tendies (and a few dividends to boot). LEAPS Call Debit Spread (Based on last trade prices): Buy $375 C 20 JAN 23 for $26.5, Sell $450 C 20 JAN 23 for $12. Total Cost $14.5 for a spread width of $75. Max gain 517% per spread. Higher risk strategy. LEAPS: Buy $500 C 20 JAN 23 for $7.20. Very high-risk strat. If the price target is hit within two years, these would be in the money $183 per contract for a gain of 2500%. This is the casino strat. SOURCES https://www.lockheedmartin.com/en-us/news/features/2020/james-taiclet-from-military-pilot-to-successful-ceo.html https://www.warren.senate.gov/newsroom/press-releases/in-response-to-senator-warrens-questions-secretary-of-defense-nominee-general-lloyd-austin-commits-to-recusing-himself-from-raytheon-decisions-for-four-years https://news.lockheedmartin.com/2019-08-30-Lockheed-Martins-Expertise-in-Hypersonic-Flight-Wins-New-Army-Work https://www.lockheedmartin.com/en-us/capabilities/hypersonics.html https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK%E2%80%93Invest_BigIdeas_2021.pdf?hsCtaTracking=4e1a031b-7ed7-4fb2-929c-072267eda5fc%7Cee55057a-bc7b-441e-8b96-452ec1efe34c https://www.deseret.com/2018/6/19/20647309/twitter-reacts-to-trump-s-call-for-a-space-force https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2021/fy2021_Budget_Request_Overview_Book.pdf https://www.airforcemag.com/lockheed-receives-up-to-4-9-billion-for-next-gen-opir-satellites/ https://spacenews.com/northrop-grumman-gets-2-3-billion-space-force-contract-to-develop-missile-warning-satellites/ https://www.lockheedmartin.com/en-us/capabilities/directed-energy/laser-weapon-systems.html https://emerj.com/ai-sector-overviews/lockheed-martins-ai-applications-for-the-military/ https://www.defenseone.com/business/2020/07/new-ceo-wants-lockheed-become-5g-player/167072/ https://www.wsj.com/articles/defense-firms-expect-higher-spending-11548783988 https://www.etf.com/ITA#efficiency https://s2.q4cdn.com/661678649/files/doc_financials/2020/q4/4Q20-Presentation.pdf https://investors.rtx.com/static-files/dfd94ff7-4cca-4540-bc4b-4e3ba92fc646 https://investors.lockheedmartin.com/static-files/64e5aa03-9023-423a-8908-2aae8c7015ac https://s22.q4cdn.com/891946778/files/doc_financials/2020/q4/GD_4Q20_Earnings_Highlights-Outlook-Final.pdf https://www.fool.com/earnings/call-transcripts/2021/01/27/teledyne-technologies-inc-tdy-q4-2020-earnings-cal/ https://investor.northropgrumman.com/static-files/6e6e117f-f656-4c68-ba7f-3dc53c2dd13a submitted by /u/Estri_Grobbulus [link] [comments]

DD on Bandwidth (BAND) Posted: 02 Feb 2021 02:45 AM PST Disclosure: I bought some shares in BAND a couple of weeks ago by selling half my stake in TWLO. BAND and TWLO are close competitors, so much so that BAND has a page on their site about why they are "The smarter Twilio alternative". I'm hoping the BAND will be able to produce similar returns that TWLO has in recent years because it's: ​ Starting to grow quickly At a good value now In a growing market ​ Starting to grow quickly Over the past four quarters, BAND's revenue growth has accelerated from 18.46% to 40.12%. This trend looks like it should continue at least into the next quarter as the company is expecting total revenue between $96.5-97.0M (~56% growth). Its Selling/General/Admin and R&D expenses are still growing, but now at a lower rate than its revenue growth. This has helped the company to become operationally profitable, but not yet consistently bottom-line (net income) profitable. Its Net Retention Rate is also increasing. Up from 116% a year ago to 131%. This is still behind TWLO, which is at 137%, but a strong figure nonetheless. ​ At a good value now BAND Price-to-Gross Profit Growth Ratio (similar to PEG ratio) is at 0.94. This is a bit above the median value for its industry, but well below TWLO at 1.41 (check out the distribution feature for this data). I think this is fine since BAND's growth is one of the best in its industry and this growth is accelerating. I'm using Gross Profit as my main comparison metric for a few reasons. I like that it takes into account the gross margin of the company. BAND has a lower gross margin than TWLO, so it should be penalised for this in the comparison. Using net income doesn't make much sense since BAND is just missing out on making a profit, so its PE ratio is nonsensically low. The market caps in the software-infrastructure industry are correlated well with gross profit, so as gross profit increases, the market cap should increase in a similar step. ​ In a growing market As seen by both BAND's and TWLO's revenue growth, there's plenty of room to grow in this market. TWLO's management expects its total addressable market will reach $87B by 2023. Currently, their combined trailing-twelve-month revenue is $1.83B (TWLO: $1.54B; BAND: $292M). TWLO's market cap is $52B vs $4B for BAND, so there's plenty of room for it to play catch up. TWLO offers a wider set of services than BAND, but I see this as more opportunities for the company. If it can continue to offer a lower price and higher quality than TWLO, as it claims it can, then it should be able to remain a strong competitor. The reason for keeping half my shares in TWLO was largely a diversification play. BAND looks like good value now and is growing well. TWLO has a long history of growth and a wide product range. Given the size of the market, there's plenty of room for them both. Since I'm not fully confident that one will outperform the other, I thought it best to own both. submitted by /u/Currie32 [link] [comments]

Help understanding basics of making less-risky options trading Posted: 01 Feb 2021 07:53 PM PST I'm fairly new to investing and the options lingo has a lot of overlapping terms,making it hard to google answers. Lets say I think that stock ABC is going to drop significantly in the next 2 months. I would like to use options to profit off of that, but I don't want to short because I'm not comfortable with unlimited downside in case I'm wrong. I also do NOT own any ABC stock. My understanding is I can do the following: Buy a "put option" as "buy to open". This gives me the right, but not the obligation, to sell ABC stock at the strike price by the given date. For this privilege, I pay a premium upfront. I would not want to "buy to close" as this would be "shorting" and leave me on the hook to cover the position (though without paying a premium). Since I don't have stock in ABC I could not exercise the contract even if it were "in the money" (profitable), but I CAN sell it to someone who has stock in ABC who would want to exercise to offset their losses. Questions: Are the above all fully correct? I really don't want to accidentally buy the wrong thing and be on the hook. If that's all right, how does part 3 work? I don't see in my Ameritrade window a place to buy and sell existing options on an options market. It seems like the options tab exclusively deals with creating new contracts (options) not buying or selling someone elses. Is there ever issue with trading away an option in the money? submitted by /u/CobaltBlue [link] [comments]

Time to go long on AMD? Posted: 01 Feb 2021 07:16 AM PST I missed last year's incredible bull run in a lot of tech. I played the options market more and held cash. Now I'm looking for decent value holds. AMD's most recent earnings blowout has me pretty exciting that they're living up to the hype. As far as I can see their P/E was basically cut in half after their report last week. That, plus the fact that their stock has been dropping ever since makes me think this is an excellent dip to buy. Any thoughts or comments are appreciated. Just wanna discuss what everyone else thinks. submitted by /u/ABonafidePotato [link] [comments]

New to investing; trying to make sense of Tesla, and general question about P/E Posted: 01 Feb 2021 01:04 PM PST Hi all, I'm fairly new to investing. I'm reading some recommended materials; reading A Random Walk Through Wall Street and listening to The Intelligent Investor. I've started trying to read through some earnings reports to learn a bit about the space and how to do my own research. Some stocks of interest to me are the auto stocks; Toyota and Tesla to be precise. My understanding is that the P/E is the price over earnings. This number doesn't seem to be handed out per stock. Some seem to automatically calculate it? How is this done? For instance if I google "Tesla stock" I get the P/E value of 1318. If I google ATT (T) I don't get a P/E value, which I assume means I need to calculate it myself from their earnings reports? Also, playing with the numbers and trying to figure out how Tesla (a $730B market cap company) stands up next to Toyota (A $227B market cap company) I came up with the following: $835 / earnings = 1318.42 earnings = $835/1318, which would be $0.63 per share (TSLA) This is interesting to me. Because if we do the same for Toyota: $140.49 / earnings = 14.56 earnings = $140.49 / 14.56 = $9.65 earnings per share (TM) More interestingly, if I try and apply the PE of TSLA to Toyota, I get the following: 1318 = price / $9.65 earnings per share 1318 * $9.65 = price price = $12718.7 This would bring Toyota's market cap to $20.6T, which I think we probably all agree would be ridiculous? The more interesting thing is I took Toyota's P/E and applied it to TSLA 14.56 = price / $0.63 earnings per share price = $9.17 This would bring Tesla's market cap to $8.7B if my math is right. I guess the point of my post is to ask, what gives? Are PE values in excess of 1000 for large-cap companies ever justified? Speculatively, is this sustainable? Who is this value coming from? I'm far enough in the books I mentioned to understand that growth is an important part of the equation when valuing a company, but I'm really trying to make sense of this. In general everything in my logical being tells me Tesla's stock is way, way overvalued, but everything in my gut is telling me "It doesn't matter" and that it's going to continue rocketing, because when I'm out on the road, I see Teslas. My coworker making $70k a year? Tesla Model 3 Driver. My boss making a few hundred thousand a year (I'm a software engineer)? Tesla Model S Driver. My wife making a few hundred thousand a year? Tesla Model X driver. Toyota on the other hand has a lot more market share on overall cars. More people objectively drive Toyotas at the time of this posting. Even though Tesla's are becoming more common, and they seem to be "affordable" if you go with a Model 3, there are more Prius on the road at this point, I believe. Some general questions: I have felt like I missed the bag on TSLA a few times. At what point does the market stop tolerating this? Isn't the idea on a growth stock that eventually the P/E will balance out? It doesn't feel like that will ever be the case on Tesla. Does this mean the future of a "successful" TSLA would eventually see a Tesla valued at a few trillion with a <= 100 P/E ratio (which I still feel is high)? "Who" are the investors who have propelled Tesla as such? Most people I talk to about Tesla in general talk about how they can't afford to buy stocks at $300+ a share. Most individuals I know go the Random Walk route and invest in the S&P, which I suppose "indirectly" invests into TSLA. I suppose I mean to ask, are these primarily retail investors, or hedge funds? Are there any previous Tesla's in history I'm missing? A Random Walk brings up the South Sea Company, and the Tulip Bulb Craze. I'm only 33, so I'm a bit curious if there's been anything like this before in that: Tesla IS successful, and it trades very high. Has anything in this situation "failed" before? Pardon my ignorance on these topics. I am genuinely trying to learn some of the psychology behind this and would greatly appreciate others' 2 cents on the topic. I know Tesla as a stock is probably a controversial topic, so I tried to provide as much "math" as I could to back up what I'm saying. Also, if I'm wrong, or not seeing the overall picture, please enlighten me. I'm here to learn. submitted by /u/QuarksAreUnbreakable [link] [comments]

What do you think about Petco and Coinbase IPO this year? Posted: 01 Feb 2021 07:16 PM PST I've been trying to research and coinbase is great solely because cryptocurrency is becoming more and more popular. They also charge a fee for when you want to withdrawal so they always make money even if you don't. Petco is great because they still have retail stores and they're stepping up their e-commerce. They also are getting involved with the veterinary world. Anyone have more information and research on them as to why they're great businesses to get behind?! submitted by /u/ayodmo90 [link] [comments]

Are there ETFs with tracking difference DELTA of e.g. 50%? Posted: 02 Feb 2021 05:51 AM PST I am fairly new to this all and excuse me if I am talking nonsense. So I realize that ETFs have this thing called tracking difference. It says how accurate it is in tracking whatever it's tracking. And usually, it's like 1% or whatever off, because of administrative and transaction fees. But are there ETFs that have tracking difference of 50%? E.g. if index goes -20%, ETF goes -10%. And if index goes +20%, ETF goes +10%? Short of like leveraged ETFs, but not really? IDK if there is a term for this. submitted by /u/LegatusDivinae [link] [comments]

Uh oh - employment report is coming and a potential positive non confirmation Posted: 02 Feb 2021 05:47 AM PST The first Thursday of the month is the employment report. If it is not good, then this could bring another down leg. Another down leg would mean the resurgence upward happening this morning Tues turns into another down draft. That would mean the last market peak last week is not surpassed and a lower peak forms. This is called a positive non confirmation. It would seem no big deal, but the machines react to it by selling. Having another stimulus is not guaranteed, and the last stim is already in the markets. Businesses are still closing even though the pandemic is in essence peaked out. Recessions begin looking like one thing and end looking like another. The beginning of this recession is obvious - COVID 19 lock down induced. The latter part of the recession would include foreclosures and evictions being allowed to happen, plus people becoming addicted to unemployment. I don't always post downer stuff. I am a long term bull like everyone, but long term is the sum of all short terms - so watch out for this week's Thursday and Friday IMHO. submitted by /u/Brett-_-_ [link] [comments]

ETNs too good to be true? Posted: 01 Feb 2021 07:05 PM PST I've been a long-time leveraged ETF investor (with typically ~30% of my portfolio) but the effects of beta-slippage and occasional poor tracking of the underlying index have always been difficult to factor in when making investing decisions. It's fairly hard to forecast medium-term and long-term volatility and how that might impact portfolio performance. I have been researching ETNs and so far they seem an excellent alternative to hold vs. leveraged ETFs for the following reasons: No short term capital gains tax Far better tracking of the underlying index Don't have to worry about beta slippage The risk of a bank/lender defaulting seems (to me) extremely low unless we have a repeat of 2008 and the bank collapses Can someone please poke holes in the logic above? Thanks submitted by /u/jsaldana899 [link] [comments]

Is My Assessment of Nvidia Correct? (Bullish) Posted: 01 Feb 2021 08:09 AM PST I think Nvidia is a good investment right now. They have been going sideways for a few months now, even though the 3000 series GPU's are still selling out instantly at nearly all retailers. In addition, they have reported record revenue for the past two quarters. Their final earnings report for 2021 is set to release on the 11th of this month, and looking at the availability of the 3000 series GPUs I think it will follow the trend. Although Nvidia stock is as high as it has ever been, I think that it is still slightly undervalued by at least 10%, and at most 25%. Do you think this is a good assessment? Is there information I am missing? submitted by /u/DiscreteNotDiscreet [link] [comments]

Taiwan Semiconductor Manufacturing Posted: 01 Feb 2021 05:16 AM PST I have been mulling over getting a position into Taiwan Semiconductor Manufacturing Co for the past week. It has had a nice little correction in the last couple weeks. I feel like the world is dangerously dependent on them and as EV boom continues the demand for semiconductors is only going to increase. Then, I just happened to stumble upon the HSBC MSCI Taiwan UCITS ETF. It is 32% exposure to TSM and 5% each to couple of other solid Taiwanese companies like Media Tek and Hon Hai. It also has ~3% in United Microelectronics Corp which is another solid company! I feel like the ETF would be a better choice than going for a single stock in TSM. Does anyone else have a position in either of the two or care to share their two cents? Thanks! submitted by /u/pratikz1309 [link] [comments]

TRTX seems like a good deal right now. What am I missing Posted: 01 Feb 2021 08:04 PM PST Usually I have a balanced portfolio but this stock just recently pulled me in to the point that it's over 40% of my portfolio. What am I missing? TRTX is a real estate holding company that pays out dividend based on the earnings from mortgage. They took a hit during the pandemic and dropped in expected earnings per share by about $2.2. Historically they earned $0.44 eps and in Q4 of 2020 it seems they bounced back to $0.44. It seems to me that they could just cut dividends to $0.20 for 7 quarters and then they would return to handing out $0.44 per share per quarter. https://www.barrons.com/quote/stock/us/xnys/trtx/research-ratings $2.2= lost earnings per share during pandemic $0.44=expected earnings per share after pandemic $0.50 = dividends cut in 2020 $1.70 =outstanding lost earnings per share as of January 2021 $0.22 - $0.05 range of monthly cuts in dividends in 2021 &2022 7 = Quarters until lost earnings have been recovered from dividend cuts =$1.70/$0.22. Based on the price today 2/1 of $9.6 a $0.38 dividend corresponds to an annual return of %15 !!! So it seems to me that I can hold on to TRTX for about 2 years and it's price will creep up to $17 and in that time I'll accumulate between $1.6 -$3 in dividends. What am I missing? Additional comments: Its price hase slid over 12% this past week making it more attractive. The range of dividends paid out in Q1 2021 is between $0.20 and 0.38. this will probably be volitile since the price will move on sentiment. Hopefully they give a dividend of $0.20+$0.18/3 =$0.26 https://www.nasdaq.com/market-activity/stocks/trtx/dividend-history PSA: I am ape with an unusually smooth brain and this is not investing advice. I just like the stock. submitted by /u/skellis [link] [comments]

Apple vs SP 500 Posted: 01 Feb 2021 09:14 AM PST Hey all, Newish investor here...my whole life I have seen people say it is hard to beat the SP500 over time, and that even Warren can't do it, but then I see a stock like Apple (over the past 20 years especially) and think, why couldn't/hasn't a stock like Apple beat it? ​ If you look at apples Returns in the past 20 years (even 25) it seems like if you're willing to wait 5 years there is a VERY LOW chance you're not making a shit load of money. Sure you can say pre 1998 there was some red years in there, but that was also before the iphone, ipads, and the tech boom...what am I missing here? I am not talking 100k, I am just sayin, if I have 5-7k I can invest...I could put in the SP and watch it double every decade....orrrrrr I could put it in apple and watch it quadruple? Obviously with a risk of one stock, you never know...but I guess my point of this is why does everyone say you can't beat the SP? Is that looking at 100 years of data, or what? submitted by /u/DoeJumars [link] [comments]

Dividend investing the smart transition in a slowing market Posted: 01 Feb 2021 08:18 PM PST Usually I have a balanced portfolio but this stock just recently pulled me in to the point that it's over 40% of my portfolio. There is a real estate holding company (see link) that pays out dividend based on the earnings from mortgages. They took a hit during the pandemic and dropped in expected earnings per share by about $2.2. Historically they earned $0.44 eps and in Q4 of 2020 it seems they bounced back to $0.44. It seems to me that they could just cut dividends to $0.20 for 7 quarters and then they would return to handing out $0.44 per share per quarter. https://www.barrons.com/quote/stock/us/xnys/trtx/research-ratings $2.2= lost earnings per share during pandemic $0.44=expected earnings per share after pandemic $0.50 = dividends cut in 2020 $1.70 =outstanding lost earnings per share as of January 2021 $0.22 - $0.05 range of monthly cuts in dividends in 2021 &2022 7 = Quarters until lost earnings have been recovered from dividend cuts =$1.70/$0.22. Based on the price today 2/1 of $9.6 a $0.38 dividend corresponds to an annual return of over %15 !!! So it seems to me that I can hold on to a dividend company in said link for about 2 years and it's price will creep up to $16 and in that time I'll accumulate between $1.6 -$3 in dividends. What am I missing? Additional comments: Its price hase slid over 12% this past week making it more attractive. The range of dividends paid out in Q1 2021 is between $0.20 and 0.38. this will probably be volitile since the price will move on sentiment. Hopefully they give a dividend of $0.20+$0.18/3 =$0.26 https://www.nasdaq.com/market-activity/stocks/trtx/dividend-history PSA: I am ape with an unusually smooth brain and this is not investing advice. I just like the stock. submitted by /u/skellis [link] [comments]

Virgin Galactic Test Flight Incoming!! Posted: 01 Feb 2021 04:52 AM PST " Preparation is underway for a rocket-powered test flight of SpaceShipTwo Unity from Spaceport America, New Mexico. The flight window will open on Feb 13th with opportunities to fly throughout the month, pending weather conditions and technical readiness. " https://twitter.com/virgingalactic/status/1356200406586716167 submitted by /u/Web_Mastered [link] [comments]

Potential Liquidity Fueled Bubble Posted: 01 Feb 2021 07:44 PM PST Hello All, So i'm going to say upfront that I really hope that my analysis here is wrong. The fact that literally, NO ONE I've seen is talking about this indicates to me that I have to be wrong. But every way I look at it I come to the same conclusion. I'm really new to the investing game, but I have known about how financial markets and how the systems around them work since I was a kid though as my father is a trader for an oil company. So I'm not a complete idiot at least. A lot of this is parroted from other sources, some of which are even from reddit, though I have lost the posts I pulled from so I can't cite them. But I'm not INTENTIONALLY plagiarizing at least. I've posted about this in the wallstreetbets community but they are both idiots and so focused on the GME yolo train that they don't seem interested in anything else. I really hope that someone here can look at my analysis and point out where I'm wrong. So by reading and commenting you are doing me a huge favor so I appreciate it. I'm going to drop the TL;DR at the top and my evidence below. TL;DR The behavior of the Federal Reserve (the Fed) of the last 20 years has created a market bubble with the value of the US Dollar. Their policies are based around constant and accelerating growth of GDP that is not a realistic goal from a practical perspective as even if there was the possibility of this there is always forces outside the market that affect GDP growth. (Such as a pandemic) As a result, the value of money in the economy is far far greater than the value of the actual dollars that exist. This has created a massive, if yet unseen, bubble that is bound to burst eventually with no real way for the Fed or the government to do anything about it. My expectation is that when this GME rocket goes off in the mother of all short squeezes we will see MASSIVE de-grossing and as a result a steep fall in the value of the stock market over all. Which will in turn cause a run on the banks just like what happened in the depression. When that happens the system will come completely unglued as since not only is there not enough cash on hand to give everyone, the debt backed by that money will no longer be collateralized so everyone is going to come knocking for their money. This sudden evaporation of "money" in the economy that's generated by debt will cascade and drive the value of the dollar to at or near 0. Triggering a global economic collapse. The behavior of the Fed in the last 20ish years has been to progressively reduce the interest rate that they will loan money to banks to cover their minimum cash on hand amounts by law. This functionally increases the liquidity and availability of money in the form of debt as it allows the banks to make increasingly large amounts of loans for a profit. There's more going on under the hood than just the interest rate but it's historically the primary way that the Fed manages inflation and money supply. The Fed can't make large changes to the interest rate because to do so would not only shake confidence in the system but trigger amplification of the inflation/deflation effects on GDP, which in turn can further reduce the GDP due to decreased confidence by those with money to invest. You also don't want to suddenly massively increase your money supply because this will amplify any effects increased money velocity has on inflation. Increased inflation will also lead to less savings and more people spending money as soon as they receive it. So gradually over time the Fed has decreased the interest rates to the point whereas of March last year they were effectively 0. There is massive wealth inequality in the united states. This is not any new information to anyone. But why this matters is that a wealthy individual is far more likely to invest any money they get either through legitimate gains or through increased money supply by the fed than a "regular" person would be. This in turn makes it to where rather than circulating back into the economy as regular purchases of conventional goods like bread, milk, cheese, gas. etc. this money goes into investments such as the stock market. This is where the velocity of money comes into play. In short, the "velocity" of money is the rate at which it changes hands, usually due to the purchase and sale of real goods. Over the last 20 years the velocity of money has gone down dramatically as the wealth gap gets bigger and bigger. The decreased interest rate has added more and more money into the economy through loans/debt. The new money supply, through loans, would be mostly issued for consumption, like a mortgage to buy a new house or a new car loan to buy a car. This will have the added benefit of increasing the velocity of money because this new money supply is recycled into the economy. After 2008, the Fed had to find a new mechanism, with interest rates being permanently too close to zero to have any meaningful impact on the money supply to actually help anything, especially since most Fed board members think that negative interest rates are a bad idea. With quantitative easing, direct purchases of treasuries artificially lowers the yields of treasuries and makes bonds and equities relatively more attractive when looking at risk / reward, inflating prices of those securities. We've effectively reached 0% yield on the risk-free-rate during the last crisis, so the next logical step for the Fed was to buy other securities, like commercial paper and now bonds. Except the biggest holders of treasuries and bonds were actually corporations and high-net-worth individuals, who compared to regular people have a much lower propensity to consume, and would not at all address the lowering velocity of money. It also leads towards higher wealth inequality, as it inflates prices of those securities, and all other financial assets which are concentrated at the top corporations and individuals, which tends to be bad for velocity of money. In simplified terms, the increase in money supply goes towards the people who already held a lot of wealth. This is probably why we're seeing a steep drop-off of money velocity after 2008, even after the economy has recovered. Then you throw a pandemic into this. Suddenly all the variables are changing rapidly with the economic shock of the effects of the disease. This causes a dramatic drop in the velocity of money. At the same time we're having the biggest sudden drop in GDP in history, at the scale of the Great Depression. The positive feedback loops mean that if the Fed is not able to expand the supply of money enough, we'll quickly see a deflationary spiral. If they do too much, we quickly get into hyperinflation. The Fed has pretty much maxed out on everything they could have possibly done to keep inflation at 2% by increasing the money supply using tools they're allowed to use. Interest rates and the risk free rate have been near 0% since 2008, and bond yields are already at unrealistic levels for the amount of risk they have, resulting in a skyrocketing increase in equities. Since none of these actually address the velocity of money issue, which has sharply decreased since March, we're probably going to head towards a deflationary spiral. This has lead to a situation where the true "value" of the money in the banks is way different than the value of the debt loaned out to the various parties buying assets in an effort to get greater returns on their investment than they would if they took a "risk free" stance. Hence the bubble. To put it another way, for every 1 "real" dollar in the banks there are many more dollars circulating in the economy/stock market due to collective debt and risk management. The "risk free" investment of treasury bond's rate of return has reached effectively 0. So everyone is dumping their bonds, some of which aren't even getting any bids when being sold, even briefly going into negative territory. Add on the fact that a substantial amount of non-US debt is denominated in US dollars, meaning governments and corporations around the world are trying to get their hands on USD to cover their debt payments with reduced revenue. The skyrocketing corporate bond yields make it virtually impossible for companies, even the ones with strong balance sheets, to raise their much-needed cash to survive through bond issuance. How much longer can this last? Fed funds rates are already effectively stuck near zero; even in the "booming" economy that we've had the past decade the Fed was barely able to raise the repo rate past 2% before the stock market started crashing in late 2018 and was never able to meaningfully unwind their balance sheet from all the quantitative easing they did in the Great Recession. Now they've put their liquidity injection program on steroids with infinite QE. They've reduced the risk of corporate bonds by saying they will be the bag holder if things go bad. The key takeaway here is that increased liquidity from the Fed causes inflation of asset prices. And at the moment we are at or near maximum liquidity in the economy due to the gradually changing economic policies by the Fed. In an effort to maintain constant "growth" of the economy during the financial recessions of 2008 and now 2020 the Fed has made the bar for banks ability to loan money (that they don't actually have mind you as they are using debt to do so) so low that with the effective 0% interest rate they can loan out as much as they want since they can just buy the reserve cash they are required to by law for a rate FAR lower than they can get the buyer of the loan to pay. All of this has made the value of the single dollar in the bank is far less than the value it produces in the economy. Remember the bubble part from earlier? Well this is that but on a massive unprecedented scale. Now this could continue for a while and inflation will continue, but the velocity of money will continue to go down and the wealth gap will continue to increase. This increased gap in wealth has made it to where a greater and greater percentage of wealth is in the hands of investment groups like hedge funds which themselves operate off of taking both long and short positions to "hedge" their risk, which is thereby rewarded by increased ability to buy due to the confidence the banks/investors have in the hedge funds. So if you as a hedge fund have 1 dollar and your creditor gives you access to 10 dollars for your long positions as long as you promise to take a 10 dollar short position as well. This makes everyone feel good because it feels like you are taking zero risk, but in reality your 1 dollar is exposed to 20 dollars worth of risk. Then comes along wallstreetbets. They notice the massive overshorting of GME stock. They take this opportunity to trigger the mother of all short squeezes to spike the price of the GME stock and sell at the top for huge gains. In other words, as the meme stocks like GME go up the highly leveraged hedge funds that are shorting these stocks are forced to sell their longs as they cover their shorts. This is called grossing / de-grossing and as a result of this massive sell off of other assets, be it stocks, bonds, commodities, what have you. Cause the price to drop. You can see this in the effect the GME thing has had on the overall stock market just last week. What makes this worse is that since the price of the GME stock has risen the financial market sees the short position as increasingly lucrative as once the squeeze is over if they can bear through it they will see great returns. This causes a feedback loop as the GME buyers buy more and more of the shorted stock the price rises, which causes the price of other assets in the stock market to fall. And since the GME stock is so over shorted there is theoretically no limit on how far this could go. So when the short squeeze on GME begins there is going to be an unfathomably large amount of de-grossing causing the value of all other assets to hit the floor. Much of the stock market's value is held by over-leveraged hedge funds, so if GME (and other common shorts) skyrockets the rest of the stock market might collapse around it, triggering a financial crisis. This would be very bad obviously. But to make it even worse, when the GME bubble does burst all the wealth that's been put into it basically disappears. If it were just major firms that were getting the gains from this they could conceivably reinvest in the now catastrophically low valued stocks. But as a practical matter this is unfeasible as the time between the GME rocket and the reinvestment the run on the banks will have already happened. Additionally, so many of these shareholders are now low net worth individuals and they are far more likely to "consume" such as paying off debt or charitable giving such as we've seen on the WSB subreddit already. The sudden decrease in net value of the stock market will trigger a panic and just like in the great depression a run on the banks. Which the bank obviously can't cover because they have loaned out so much of their money that they don't have even a fraction of the ability to return actual dollar bills to their customers. Making this EVEN WORSE the fact that the debt accrued by the banks is so overvalued when the stock market crashes all their loans become basically worthless so not only do they not have no cash on hand from the run on the bank, they don't have any means to recoup the losses from the loans. All this to say, the monetary policy of the Fed for the last 20 years has artificially increased the supply of money without actually printing more money. As a result, the value of the stock market is several times greater than the companies that make it up are actually worth. This is going to see an economic crash not just on the scale of the great depression, but several times greater than that. Plus the "bubble" here is not tulips, or mortgage-backed securities, but of the dollar itself. So when this collapse happens the value of the dollar will become basically nothing. As the world's reserve currency this will trigger a worldwide collapse, which will trigger an international run on the banks, which will have their own problems respective to their economies financial policies. I have NO idea how to stop this. If it weren't GME now, it'd be something else in the future, we're just seeing it now due to the massive acceleration of interest in the GME stock due to wallstreetbets and it's subsequent exposure to the main stream media. There aren't any tools left in the Feds toolbelt to get this under control. Even if the SEC froze all purchase/sales of the GME stock (which would be incredibly unpopular anyway) that would only be a temporary solution as eventually some other stock will see this problem and we'll have to go through it all over again. This isn't just bad, this is apocalyptically bad. And that's not hyperbole. It could realistically cause the complete collapse of the global economy. There won't just be bread lines, there will be no bread for ANYONE to have. My earlier mentioned trader father believes this will cause essentially what happened in the great depression. But this isn't a great depression. This is potentially the collapse of the entire system. During the depression, the stock market didn't hit zero. Not even close. Additionally, there is no "gold standard" to get off of like there was in the depression. ALL of our money is fiat currency and is only backed by our collective faith in the government to continue to exist. But that goes out the window now, no one will believe the government can pull us out of this. If you've made it this far and think I'm missing something or have too few brain wrinkles then downvote the shit out of me. But I don't think my analysis here is flawed. I really, truly, and sincerely hope I'm wrong. If what I proposed here goes down it will be unspeakably bad. So seriously, if you have an alternative viewpoint or idea to help solve the problem. I'd LOVE to hear it. Even if every member of WSB became a millionaire because of sick gains from GME, if that triggers the run on the banks and subsequent devaluation of the USD those millions of dollars might not even buy you more than a handful of tendies. Thank you for coming to my TED talk. submitted by /u/Kalfira [link] [comments]

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