Daily General Discussion and spitballin thread - May 08, 2021 Investing |
- Daily General Discussion and spitballin thread - May 08, 2021
- Daily Advice Thread - All basic help or advice questions must be posted here.
- Guess who has no future competetion and is not in a bubble. Railroads.
- U.S. Bureau of Labor Statistics announces increase in unemployment rate from 6.0% to 6.1% over the last month, falls short of expectations
- Help me understand Cathie Wood's math on her projected returns
- Competition is Growing in the Telehealth Sector
- What would happen to Tesla if Elon died?
- Using math followed by some due diligence to build an index fund
- CNN: Steel Prices Have Tripled
- Will business models like DoorDash, Instacart, or Uber Eats, ever be profitable?
- Is accredited investor status something you apply for or is it a passive status? (And a couple other questions)
- questions on options in fidelity
- What guaranteed income funds are worthwhile these days?
- Gold Has Best Week Since October on U.S. Payrolls Shock
- Is this a way to get invested in a future rush on nuclear power?
- Beating the market and risk metrics over a 5 year time span
- Bulge Bracket S&T Reading List
- SVVC - After 10-Year Negative 78% Share Price Performance (& $33.8M in fees) 3.7% Holder of Firsthand Technology Value Fund (NASDAQ: SVVC) Urges Termination of Investment Advisory / Management Agreements with Firsthand Capital Management
| Daily General Discussion and spitballin thread - May 08, 2021 Posted: 08 May 2021 02:01 AM PDT Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! This thread is for:
Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google. If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions. Any posts that should be comments in this thread will likely be removed. [link] [comments]  |
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 08 May 2021 02:00 AM PDT 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:
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! [link] [comments]  |
| Guess who has no future competetion and is not in a bubble. Railroads. Posted: 07 May 2021 06:45 PM PDT Ok, there is some competition but, future competition is non existant. The regulatory hurtles, the land that would need to be baught, the man power it would take to build a new railroad network is just out of the question. So what are we left with? The only companies that still exist. And they are all prospering. Me, I chose CNI. Canadian National Railway. (CNI or CNR) Just had a huge dip after the KCS offer. Perfect time to get in while the market is down. If they dont get the railway, their SP should shoot back up. If they do get it, theyll have the first transcontinental railway going from across Canada down to Mexico. Win win in my opinion. [link] [comments]  |
| Posted: 07 May 2021 05:58 AM PDT "Total nonfarm payroll employment rose by 266,000 in April, and the unemployment rate was little changed at 6.1 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains in leisure and hospitality, other services, and local government education were partially offset by employment declines in temporary help services and in couriers and messengers. " Expectations were that unemployment would fall to about 5.8% for the month. More here and here. [link] [comments]  |
| Help me understand Cathie Wood's math on her projected returns Posted: 07 May 2021 04:59 PM PDT Recent interview of Cathie Wood on CNBC (search YouTube for "I love this setup, rotation is good news" to find video) got my head scratching around the math she just did in her statements. Back in February she said she expects 15% YoY compounded returns in next 5 years when ARK funds (say ARKK) was around 140 (down from 160 high) which now slid to 110 this week in May. She said in that CNBC interview "Nothing has changed but the price" and now expects 25-30% YoY compounded returns in next 5 years. So by simple math 140*(1.155) = 281 back then Now she's promising : between 110*(1.255) = 335 and 110*(1.35) = 408 That's almost 20-50% higher but if nothing has changed then how does the number grow so much more in end result ? I don't follow the math or logic here. Also, let's say give here benefit of doubt and say back in February she meant ARK price numbers that were in Jan 21 for YoY growth of 15% but then price was even lower between 120-140. So I don't know if she's bluffing (I'm gonna guess saving her skin and fund outflows) and taking us for a ride or is she really onto something that we don't know ? If nothing has changed but the price then how does your model give these numbers ? Am I to assume these companies are growing faster than ever that their prices will skyrocket even faster ? Is there any proof ? [link] [comments]  |
| Competition is Growing in the Telehealth Sector Posted: 07 May 2021 01:22 PM PDT The pandemic has changed a lot of things for good, including healthcare. Since the demand for telehealth skyrocketed in 2020, it's been a super hot sector with not only a lot of investments, but a lot of new players in the arena. As I've debated on which company to put my stake in, I've always had an eye on Amwell. It's consistently been under the target price since it's IPO and I think there's a ton of potential here. Fueling my logic is a recent WSJ article about how PepsiCo has switched telehealth platforms. The company stopped using Teledoc for telemedicine services and now uses LiveHealth Online, a platform connected to the company's health plan that also happens to be powered by Amwell technology. I feel as though this revelation flew under the radar. If Amwell runs platforms that integrate better with company's current health plans, it could become a serious competitor to Teledoc. Head of benefits at PepsiCo, Erik Sossa, says "Telehealth is a fantastic medium, but if it's just late-night urgent care, it's kind of a commodity." This is true and I think this statement will guide the "what's next" in the telehealth industry. With so many companies entering the market, what will set each one apart? Making it easier on employers by integrating with what already exists is a great way to gain a step-up on competitors. I'll be continuing to keep a close watch on Amwell. The stock can only go up from here—and many analysts agree. Numbers look good and recent news suggests that the company is headed in a great direction. [link] [comments]  |
| What would happen to Tesla if Elon died? Posted: 08 May 2021 12:48 AM PDT I feel like an unusually large part of Tesla's valuation is tied directly to Elon and that unlike a lot of other megacap public companies with a deep bench of interchangeable executives, Tesla is all Elon and there are very few other long serving executives who could readily take over the ship if he left or suddenly died. Also so many people are invested mostly because of Elon, and if he were no longer there I don't think those same investors would have the same conviction in Tesla without him and would divest. So my hunch is that a sudden death would be pretty much catastrophic for the stock. Given how large the company is now by market cap it leads me to wonder if a sudden crash would trigger contagion effects in the broader market that could cause a wider crash as well. [link] [comments]  |
| Using math followed by some due diligence to build an index fund Posted: 07 May 2021 10:54 AM PDT TLDR: I did a bunch of math based on some reasonably good ideas to determine a selection of stocks worth investing/reviewing. Lists of stocks found in 2020 and 2021 Experiment sections. Observations/Assumptions
HypothesisUsing industry bench marking against the best of the best of the bestcompanies in each industry in equal measure should provide a well diversified portfolio that over the long term should be able to beat the S&P 500. Industry Classification
Experiment 2020750 stocks were analyzed against their peers in their industry. Stocks were given a score based on their relative percentage compared to the industry index. For example, each companies' average ROE of the last 4 years was compared to this index value with the following type of breakdown:
For example, the ROE communication services industry index value used was 10.10%. If a communication services company had a ROE average of 9%, they would receive a poor rating. If they had a ROE of 10.5% they would receive a good rating. If they had a ROE of 25% they would receive a great rating. This was done for all of the metrics below:
The relative scores used for each of the metrics was tweaked until there was a good distribution of results. e.g., if the 150% revenue growth only found 5 companies with a Great rating, that may need to be decreased to 125% for a better distribution. Any stock that received a poor in any of the 4 metrics was eliminated. Example on ROE https://imgur.com/a/kujNkWE That left 53 stocks. EBITDA was then analyzed to see if it was declining, and if so, it too was eliminated. This left 45 stocks. These 45 were reviewed more thoroughly. What did the company do? What were their competitive advantages? Are they currently in any lawsuits? Does their debt look out of control? Do I see them being a long-term sustainable choice? Is their IP about to expire? Essentially boiling down to: Is there any reason that I want to exclude them? That left 26 across 7 sectors. https://imgur.com/a/NsBdPtb These 26 stocks were bought in equal amounts in July 2020, August 2020, and September 2020. To easily perform time weighted analysis of these stocks and determine if there was an opportunity cost, 10% of the total purchase each period was also allocated to VFIAX. The chart below shows the total return of each stock including reinvested dividends. MATH INDEX, second to the bottom, is the average of returns. https://imgur.com/a/al60PZN 2020 LIST OF STOCKS:
You can see VFIAX returned 28.20% vs the MATH INDEX of 36.56% over the same period, 30% higher returns. For those wondering how the exclusions did, they were only tracked against the first July purchase, but that comparison to date, including dividends for July purchase only, would be:
Overall after ~10 months we have 2 excellent results.
This is obviously a short period. Can we do it again this year? Should we go bigger? Yes. Experiment 20212,850 tickers of the largest US stocks were identified as the initial list. The stocks had their last 5 years averaged for each of nine metrics:
More metrics were used due to the increased data set. These stocks were then grouped by industry, and the average of the averages is taken to determine the industry average for the last 5 years; I switched to median based on a few outliers really throwing the average for some of the metrics. If that was confusing, here is an example:
Each stock was compared against its Industry benchmark for each of the metrics and given a score 1=Poor, 2=Good, 3=Great as well as a composite score out of 27. 9 metrics with a max score of 3 in each of the metrics. The scores are based on how much better they are then the average. I measured them against the benchmark using the same methodology as previously performed: Poor < 100%, Good < 150%, Great > 150%. Again, these may be tweaked slightly depending on the particular metric to find a useful distribution. I also ranked every stock against the entire list for each of the metrics and overall. For those wondering, the best stock in this ranking was CORT with a score of 2,097 and the worst was CYCN with a score of 23,095. Because the overall rank is a combination of 9 categories with values ranging from 1-2791, the theoretical best a company could do would be 9 and the theoretical worst a company could do would be 25,119. Anyone wondering why the number of stocks doesn't match the original input is primarily due to mergers/acquisitions or the stock being taken private. Another stock was acquired during the analysis, changing the max number yet again. Here is an example showing Aerospace & Defense scoring: https://imgur.com/a/fKDYNXE Here is an example showing growth scoring (the Revenue Growth column is the company's most recent year): https://imgur.com/a/6hy5NuM Here is an example of the visualizations for the data:https://imgur.com/a/bMH98rM I applied a series of filters to eliminated unwanted noise. I looked at the top 5 stocks per industry (extending out for any ties), any stock that scored a 25, 26, or 27 on the composite, or any stock that had a high enough overall rank to justify being reviewed. Next, I read the description of ~300 stocks and looked through their financials for any inconsistencies, such as one huge year throwing off their average, profit margins higher than operating margins, highly leveraged companies with poor growth, etc. My favorite find was that Chemed Corporation provides hospice/palliative care and owns Roto-Rooter. Yes, I did end up keeping them, no there are not great synergies between the sectors of the business, yes, they are aware of this. I also eliminated industries I wasn't interested in reviewing, such as REITS due to the need to look at different metrics like FFO, Oil and Gas because it's oil and gas, etc. These activities eliminated ~150. I would like to get back to REITs, but I'd need to build a separate model. I then looked at each stock in more detail compared to its peers that made the cut. Are all the rest of them in the double digits for growth, are the profit margins substantially less, which one is in a better debt situation, etc. Who deserves to be on this list? This eliminated ~75. We were down to 84 stocks at this point. I then attempted to look at each company's investor presentation, annual report, etc. to better understand what the company does, their revenue model, risks, etc. I was not nearly as thorough on this portion this year compared to last year just due to the substantial increase in companies, 26 vs 84. I only eliminated 1 company which left us at the grand total of 83 companies across 31 industries. Breakdown here: https://imgur.com/a/8P9dmd9 I then purchased all of these in equal proportion a few days ago:
Notes
*I am not a financial advisor or anything else I should put here to ensure it is clear that I did this for myself and am sharing my results and am in no way forcing you to push buttons to buy things you don't understand or requiring justification for this run on sentence and henceforth. You are welcome to do whatever you like with the information, though if you're going to sell it that's some pretty messed up ****. Past results are no guarantee of future returns. [link] [comments]  |
| CNN: Steel Prices Have Tripled Posted: 07 May 2021 07:16 AM PDT
https://www.cnn.com/2021/05/06/investing/steel-shortage-stocks-bubble/index.html [link] [comments]  |
| Will business models like DoorDash, Instacart, or Uber Eats, ever be profitable? Posted: 07 May 2021 08:20 AM PDT I increasingly ask myself how can these commoditized business models could retain some profits over the long term. They are all playing in an extremely competitive environment with the same modularized supplier (restaurants). Some could compare these business models with Amazon, but Amazon is a huge exception and it has a by far bigger network advantage over the other competitors like Walmart, and Amazon doesn't have any head-to-head competitor with the same propositions. You don't buy a power bank on Walmart. Why am I thinking this: 1) DoorDash, Uber Eats & Co. have the same product assortments, making these platforms purely interchangeable. Usually, the restaurants don't sell only on one platform but they are in all of them, and the skills/barrier of entry required to sell in a new platform are basically zero because they work the same, have the same fees, and don't have to do anything more. 2) They can only attract a meaningful profit only if they develop some form of advantage. Take Netflix, the only sustainable advantage they could have is to develop their own series/movies. Do you think is the same with the ghost kitchen? I believe that foods are purely interchangeable (except you have a differentiated brand like Whole Foods), not quite the same as a movie though. 3) They can compete with a better service, but it can be easily copied (and nobody has a substantially bigger advantage in network or scale), and there is also a limit on the convenience. Do you think customers care if one delivers the food 3-5 minutes before the other? Is it an enough competitive advantage for the long term? The same thing applies to grocery deliveries like Instacart. BTW I'm huge bullish on Amazon Fresh/Whole Foods since 1) it controls the majority of the assortments with private labels 2) It controls the distribution 3) It doesn't need to spend $Bs in ads, hence lowering down the prices. What are your thoughts on this? Do you believe they could ever be profitable? If yes, how? Looking to discuss with you. [link] [comments]  |
| Posted: 07 May 2021 07:19 PM PDT Basically certain non-conventional or unregulated funds and investment vehicles state that they require potential investors to be "accredited investors" before being able to invest. I am aware of the requirements needed to be one (income level, net worth or certain qualifications). However, it is not very clear if I actually need to do something in order to get such status, or if this is something that needs to be demonstrated individually to whoever requires it. I have also noticed sometimes all that is needed is a self-certification that I am an accredited investor (without them actually checking). Assuming someone lies that he or she is an accredited investor and proceeds with the investment, what is the legal situation here? Is it the investor who is liable? Or the company/fund for not doing due diligence? Or is there any liability at all? Finally, does this even apply at all to non-US persons (who intend to invest in US funds/companies that are US-based and require accredited status)? Or is it just something that Americans need to be concerned about? [link] [comments]  |
| questions on options in fidelity Posted: 08 May 2021 03:22 AM PDT recently move to fidelity about a month and a half back. Came from RH who has the most insanely simple options UI out there. Question is, anyone know why fidelity doesn't have the option to Buy for Open ? All I see when trying to buy a call option is Buy to Close and Sell to Open. Tried looking online but no where tells my why only Buy to Close and Sell to Open are the only ones popping up in the drop down list of choices. Does this imply that I only have a certain options level enabled on my fidelity and that a higher options level gives me the ability to choose Buy to Open? [link] [comments]  |
| What guaranteed income funds are worthwhile these days? Posted: 07 May 2021 11:57 AM PDT I have low 6-figures in cash that I want to park somewhere and preserve the money while hopefully getting some rate of return. The term would be anything up to 1-2 years but I'd prefer shorter terms so I can get out if need be. Risk tolerance is very very low. I have no plans to spend the money and it's not part of my rainy day monies. T-Bills seem like a waste of time due to the low rates but if that's all there is, oh well. The 1-year T-bill rate today is .06, no surprise but pretty depressing. That ciphers out to be hardly worth messing with. I can't convince myself that any muni bond is 'safe' but that might be because I haven't studied them in any detail. [link] [comments]  |
| Gold Has Best Week Since October on U.S. Payrolls Shock Posted: 07 May 2021 11:49 AM PDT Gold was headed on Friday for its best week since October as a shockingly low U.S. payrolls number for last month, coupled with the yellow metal's belated catch up to inflationary trends, put it on a course to a weekly gain of 3.5%. Price-wise, gold was nearing peaks last seen 12 weeks ago, closing in on the $1,850 per ounce level, that could set up a return to $1,900 and ultimately the $2,000 record highs attained in August. "Gold's short-term momentum could make a run towards the $1,857 level, which could be followed by a move towards the $1,925 resistance level," said Ed Moya, head of research for Americas at online trading platform OANDA. Benchmark gold futures on New York's Comex were up $15.45, or 0.9%, to $1,831.15 an ounce by 1:40 PM ET (17:40 GMT). The session high was $1,844.40. For the week, gold futures showed a 3.2% gain, the highest since the week ended Oct. 29. The spot price of gold rose by $15.36, or 0.9%, to $1,830.54, after a peak at $1,843.36. For the week, spot gold printed a much higher gain of 3.5%. Traders and fund managers sometimes decide on the direction for gold by looking at the spot price — which reflects bullion for prompt delivery — instead of futures. "Gold appears poised to hit $1,850 which will be the 200-Day Simple Moving Average," said Sunil Kumar Dixit of D.K. Dixit Charting in Kolkata, India. "From there, it could head up to $1,877, which would mark as a 50% Fibonacci retracement level of the move from the $2,075 record high to lows of $1,676." After months of anemic prices, gold suddenly broke out on Thursday, playing catch-up to the rally in a horde of commodities from oil to copper, and even coffee, that had reacted to inflationary pressures building since the start of the year. Friday's rally in gold came after the Labor Department reported that the U.S. unemployment rate rose to 6.1 percent in April as the country added a sharply lower-than-forecast 266,000 jobs in a pandemic-suppressed market. The United States lost more than 21 million jobs between March and April 2020, at the height of business lockdowns forced by the coronavirus. More than 8 million of those jobs have not returned, officials say. Economists had expected as many as 1 million new U.S. jobs for April, building on March's gains of 916,000. That made what the Labor Department reported disappointing to many. "There's a bit of disbelief around this number," said economist Adam Button, commenting on a post on ForexLive. "I wonder if this is a game-changer and shifts the conversation towards the Fed's baseline about rates staying very low for a very long time along with only-transitory inflation." The Federal Reserve has kept U.S. interest rates at between zero and 0.25% since the outbreak of the coronavirus pandemic last year, with Chairman Jerome Powell arguing that the rise in price pressures in recent months were temporary trends that would abate over time. Analysts said while the latest U.S. jobs report itself was a damper for inflation, it nevertheless kept up the theme of monetary accommodation by the Fed, which was positive for gold. "Gold's best friend is Fed Chair Powell and other doves that remain committed to the idea that temporary inflation won't persist," said OANDA's Moya. [link] [comments]  |
| Is this a way to get invested in a future rush on nuclear power? Posted: 07 May 2021 05:56 AM PDT Saw today that NuScale hired Guggenheim Partners to "explore financing options". I'm personally optimistic about the future of nuclear companies due to their potential contributions to any goals towards reducing carbon emissions. There's no way we're going to meet these targets without a large push to nuclear, and it seems like NuScale is the furthest ahead out of the new technologies. For example, they are the only SMR to have an approved design by the NRC, and I think it's only a matter of time before they get more customers signing up to get plants in the US and around the world. Looking at Guggenheim's history, it seems like they have steered similar companies towards a SPAC offering. How can I try and get in on any public offering if they are looking to go this route? [link] [comments]  |
| Beating the market and risk metrics over a 5 year time span Posted: 07 May 2021 03:47 PM PDT Curious about those of you who have beaten the market over the last 5 years. First off, what is your percentage gain per year and what is your strategy to beat the market? Also, if you have access to this data, what is your risk metrics such as Standard deviation, Sharpe ratio, Alpha, Beta, R squared. My idea is that in order to beat the market, most people have to take outsize risks. Me for example. Here is my stats... 5 yr return: 37.78% Standard deviation: 44.29 My account has high volatility Sharpe ratio: .83 My account's risk adjusted return. My account has high returns but has had endure very high volatility to achieve those returns. For comparison S&P Sharpe ratio for the past 5 years is 1.09. Higher is better. Risk adjusted alpha: 7.01 A risk adjusted measure that measure's excess returns over an index. Higher is better. I have achieved higher than average returns compared to the index Beta: 2.06 Measures volatility related to an index which has a beta of 1. Higher means more volatility. My account has been very volatile compared to the index R2: .48 Measures correlation with an index. Lower number means low correlation with an index. My account has low correlation with the index. I know there are those out there who have beaten the index but have risk metrics that are much better than the I have. Very curious about the strategies of those people who have beaten the index and have high sharpe ratios and lower standard deviation and beta. [link] [comments]  |
| Bulge Bracket S&T Reading List Posted: 07 May 2021 07:58 AM PDT Thought you all would enjoy this resource! Below is a list that we used to give out to interns and analysts in the S&T program at a BB. The books are split into 3 categories (Markets, History and Other). Each of the categories starts with the basic must-reads and leads to more complicated topics. The idea was that you should read the first couple in each category as an intern/analyst and then keep reading as you develop in your career eventually completing the list as a ~VP level on the trading floor. Hope you enjoy - Feedback appreciated! Markets:
History:
Other:
[link] [comments]  |
| Posted: 07 May 2021 07:32 AM PDT |
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