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    Saturday, July 10, 2021

    Stock Market - So that was a fucking lie

    Stock Market - So that was a fucking lie


    So that was a fucking lie

    Posted: 10 Jul 2021 05:17 AM PDT

    Yeah. Ok.

    Posted: 10 Jul 2021 12:13 PM PDT

    This is why you don’t short a company 140%

    Posted: 10 Jul 2021 02:50 AM PDT

    Why the meme stock revolution will last

    Posted: 10 Jul 2021 07:48 PM PDT

    https://finance.yahoo.com/news/why-the-meme-stock-revolution-will-last-093624458.html

    Andy Serwer with Max Zahn Sat, July 10, 2021, 4:43 AM

    "Oh people, look around you. The signs are everywhere."

    —Jackson Browne

    It's the silly season on Wall Street. It's been the case for a while now, and may continue to be for some time.

    The economy and markets are awash in money; from stimulus checks, Federal Reserve policy moves and rising wages, all of which are boosting stock prices to record highs.

    Interest rates are at record lows which is creating, among other things, massive demand for high-yielding junk bonds, sending their yields below the rate of inflation rate for the first time ever. (Low rates are also contributing to the run-up in stocks, as stocks are now the only investment providing any kind of return.)

    Meanwhile bankers and CEOs are flooding financial markets with initial public offerings, (Krispy Kreme (DNUT), an ill-fated IPO from 20 years ago — which I got wrong — has gone public again) as well as their shadowy cousins, SPACs (special purpose acquisition companies.)

    Betting against all this froth has proven to be a fool's errand so far, giving proof yet again to the Wall Street adage: "The market can remain irrational longer than you can remain solvent." (An old favorite of mine, whose origin is probably Gary Shilling, not Keynes fyi.)

    Underlying all this are several factors; for one, an uneven yet mostly strong recovery from COVID-19 (at least in the U.S.), as well as the aforementioned (and some say increasingly unnecessary and potentially counterproductive) assistance from the government. Net net though, this is just another cycle, same as coming out of the fourth wave of the Spanish Flu in 1920.

    And yet there are at least two factors that are potentially different this time around; cryptocurrency and the meme stock phenomenon. I won't dwell on crypto — and all of its potential and foibles — here, but will focus instead on meme stocks and more broadly, the so-called retail investor revolution.

    Before I delve into that though, let me acknowledge that in suggesting something that is unique or new when it comes to the financial markets, triggers another Wall Street aphorism. To wit: "Beware when someone says 'this time it's different.'" Meaning, a new business model or trading scheme isn't really new at its core and the old rules still apply, especially the one that says bubbles always burst.

    The problem though is that sometimes things really are different. Crypto — rat poison though it may be —certainly is, (we'll find out how sustainably so in our dotage.) As for the retail investor revolution, I'm less certain, but if you consider that the driving force behind it is really technology, then that would seem to be different, and to a degree permanent, which is the crux of what I'd like to explore.

    First, let's define terms. When I'm talking about meme stocks,* I'm of course speaking of GameStop (GME), AMC (AMC), Blackberry (BB) and a few dozen other usually heretofore off-beat stocks that get talked up online, most prominently at Reddit's wallstreetbets forum by an army of 10.6 million "degenerates." These investors share tips, ideas and conspiracy theories and buy and sell stocks and options, sometimes trading these securities "to the moon" (to use the lexicon). Unless you've been in hiding for the past year, you probably know how crazy this all is, with GameStop, $GME, the meme stock poster child, going from $3 to $300 and now back to $190, over the past year.

    Who are these people and what are they thinking?

    "A lot of these people who go in there openly say I'm not F-ing selling even if it goes to zero," says Jaime Rogozinski, Reddit's WallStreetBets founder. "It's somebody who knowingly wants to view the market in a different way, and doesn't care about losing money. Is this how to build slow wealth for the rest of your life? No. It's how to buy lottery tickets and hopefully win the lottery. And if you lose, you will buy a ticket next week."

    Got it?

    At first, say six months back, professional investors ridiculed this thinking. Some like Melvin Capital, Light Street Capital and others reportedly bet heavily against meme companies by shorting their stocks — and ended up suffering billions in losses, which in some cases was existential. All to the delight of the WSB crowd. "In general, the stupid money used to be retail but not anymore," says veteran Wall Street institutional trader Tiger Williams, founder of Williams Trading, who says his firm now tracks and sometimes trades meme stocks and their options.

    Other trends have facilitated the retail revolution more broadly as well, such as fractional shares. This goes back to Warren Buffett who opted decades ago never to split the stock of Berkshire Hathaway (BRK-A, BRK-B) because he figured that not doing so would attract only like-minded investors who wanted to buy and hold Berkshire for long periods of time. A share of Berkshire A now fetches $420,249. It's true that in 1996 Buffett created lower priced B shares so that investors with less money could buy into Berkshire. Still, Buffett's idea of not splitting took root. After a few stock splits early on, Amazon has also eschewed the practice (a share of $AMZN goes for $3,728.) Google's split once, (current price: $2,509). Ditto for the likes of NVR, Booking Holdings and Cable One.

    I guess you could argue this reduced speculation in these stocks, but it also had the effect of shutting out the little guy. In response, brokers like Schwab, Fidelity and upstart Robinhood (we'll get to them in a second) started to offer fractional trades where investors could buy a slice of one of these high-priced stocks (or thousands of other, lower priced stocks too) for as little as a dollar. That's allowed smaller investors to pour into these stocks, no doubt amping up trading and speculation which is exactly what Buffett was trying to prevent. You wonder had these companies just split their stocks when they hit $100 or so as many companies do, if fractional shares and the type of trading that it facilitates would have ever happened. Who knows.

    A bigger facilitator of the retail investor revolution though, has been the emergence of new fintech brokerages like Robinhood which offers commission-free trading made possible in part through a strategy it has embraced called payment for order flow or PFOF. Payment for order flow is a practice where market makers pay Robinhood for the right to execute trades (they still have to be at the best price), allowing those companies to have more insight into the portfolio moves of retail customers. Those trends are valuable information for trading, in some instances this might mean that the market maker jumps in front of customers' trades, which is called front running.

    Robinhood, as you may know, was taken to task by investors and Congress when it restricted trading in GameStop and other stocks this past January during a market flurry in order to meet collateral requirements. The company was hit with a class action lawsuit, and the Financial Industry Regulatory Authority announced that it fined Robinhood $57 million and ordered the company to pay $12.6 million in restitution, plus interest, to thousands of customers for a total settlement of $70 million.

    "To me, that would've been a complete game stopper. That's it, no one will ever forgive Robinhood for this," says Rogozinski of WallStreetBets. "[But] they did forgive them. It was a temporary outage, like what happens with my Netflix. Robinhood's customer base has been growing in numbers since then. People now know that's the downside of free brokers and they don't care."

    Rogozinski is right, none of this has stymied Robinhood's growth, (indeed millions of young investors and traders, 17.7 million monthly active customers to be precise now trade on Robinhood.) Nor has it prevented Robinhood from moving forward with its plan to go public soon. In the brokerage's recently filed registration statement, we learn that 75% of the company's revenue came from PFOF via market makers, especially from Chicago-based Citadel Securities, which is run by real-estate lovin', billionaire Ken Griffin.

    So where to come out on payment for order flow anyway? Good, bad or ugly?

    "Payment for order flow — I'm not really concerned about it," says Rogozinski. "I used to be, when Robinhood first came out, I disliked it very much, in large part because the execution was terrible. [But] when you have people turn $50,000 into $50 million — I don't think they're affected or dissuaded in any way whether they got front run by a few cents.

    Others are less sanguine. "Because of the lack of disclosure, I'm a skeptic," Tiger Williams says. "To be clear, Williams trading does not use any payments for order flow. We don't think it's in the best interest of our clients."

    A different perspective comes from Sarah Levy, CEO of Betterment, another fintech firm, who I spoke to a few weeks ago about PFOF. "We do not practice payment for order flow, but we've not ruled it out. What's important about payment for order flow is two things. One is best execution, and the second is transparency. I think the opportunity to give customers better financial outcomes through best execution really depends on the provider. So I don't take a strong opinion either way, except that the customer has to come first. That's what's most important."

    'A dopamine delivery device'

    Another knock on Robinhood is that it utilizes what is called gamification, meaning its app is, well, game-like, replete with scratch cards, confetti and congratulatory messages. We asked Dr. Teresa Ghilarducci, a professor of economics at The New School who testified before a Senate subcommittee in March on the risks of retail investing, if the SEC was right to be wary of gamification and payment for order flow: "Those concerns of the SEC are exactly correct," says Ghilarducci. "Gamification has created a predatory effect on the innocent. I know that firsthand and anecdotally by the responses of some of my students who have abandoned all analytical sense."

    "The gamification of Robinhood in particular has distorted their ability to look critically at their behavior and the product. That's because they're appealing to the part of my student's brains that play video games and not to the part of my student's brains that are critical and discerning thinkers. They have hijacked my student's hobby to make them think they're doing something analytical and wise."

    And it's true that trading on these slick apps like Robinhood, MooMoo and Public.com are fun and cool, if not self-consciously democratic, never mind growing. (In January alone, 6 million Americans downloaded a trading app.) Check out Public.com which says: "We're on the mission to make the public markets work for all people." At the same time the app counts a wide array of bold-face names as its investors and advisors, including Will Smith, Scott Galloway, Tony Hawk and J.J. Watt.

    "It's the equivalent of a dopamine delivery device," says Williams about these apps. "When trading becomes connected to a brain function, well, sure you trade all day long from your iPhone or from your computer in your basement and now back at work too."

    To those who for years have called for banks and brokers to make their products more accessible to the average human, perhaps they should have been careful of what they wished for, because it has been delivered.

    Just how powerful are these new real investors now? It's tricky to say because there are various ways of measuring. Williams points to this real-time measuring tool of trading volume here, which shows that the TRF (Trade Reporting Facility) category, mostly retail trading, accounts for around 45% of all activity, that's up from 37.3% in January 2019, according to Deloitte.

    How much staying power do these new investors have? Again, and sorry to say, unclear. One of the dudes from "The Big Short," Michael Burry is decidedly bearish, telling Barron's: "I don't know when meme stocks such as this will crash, but we probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails. We're running out of new money available to jump on the bandwagon."

    But Matt Tuttle, CEO of Tuttle Capital Management, sees something more permanent and I'm inclined to agree with him to an extent.

    "I think on the trading side, retail investors are a force to be reckoned with. I don't think it's going away," says Tuttle, (whose firm has a new ETF named FOMO that invests in meme stocks.) "Wall Street likes to put out parallels to the late 90s and the internet bubble. There are some similarities, but a lot of really important differences. Back then brokers had all the power. They had access to information. You had to trade through them. Retail investors weren't connected to each other."

    "Now retail guys have access to as good if not better information as the institutional investors have. They have the ability to trade at lightning speed at no commission. Most importantly these guys are connected. When going into a stock they have the same type of power a large institutional investor has. I saw the other day they got AMC to scrap a secondary offering. That's power. What history tells us is people who have power do not give it up voluntarily, you have to force them out. And the SEC may. Short of that, these guys aren't going anywhere."

    To me Tuttle's connected point is the key though. He's really talking about a network. Meaning the retail revolution is really driven by a technology enabled network, which is empowering the little guy, the retail investor, to a degree at the expense of the big guy, i.e., the institutional investor.

    And that is new.

    It's a shift that mirrors the consumerization of technology. Meaning that the first wave of technology was the IBM mainframe managed by a handful of specialists who held sway over vast swaths of information technology. Fast forward to today where with the advent of the iPhone and software like search and apps, (which I wrote about last month in this piece about inflation) and the power dynamic has shifted from an opaque, closed system controlled by an elite to more of a transparent market where the crowd rules.

    Now that is a gross oversimplification, but directionally I stand by it. Also, I'm not judging whether this is good or bad, and to be sure, there will be pain and woe (and triumph) as this plays out, but my point is the retail revolution, such as it is, has staying power.

    And so look for the silliness, in some form, to continue until further notice.

    *The term 'meme stock' comes from the traditional meaning of a digital meme or "a concept that spreads rapidly from person to person via the Internet."

    submitted by /u/SavannahSmiles_
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    True magic

    Posted: 10 Jul 2021 01:45 PM PDT

    Nancy Pelosy caught making millions with insider trading

    Posted: 10 Jul 2021 01:11 AM PDT

    A must watch as when one domino falls the rest will fallow.

    Posted: 10 Jul 2021 06:59 PM PDT

    How to read an earnings release quickly and know what the stock will do

    Posted: 10 Jul 2021 11:43 AM PDT

    Hey all! Henry Chien here - I'm a former wall st. analyst (10 years) here to share everything I've learned to get your up to speed as quickly as possible!!! My book is here.

    Here's one on how to read an earnings release quickly.

    Warm Up - How to Read an Earnings Release?

    For every earnings release, you want to answer three questions:

    Do business trends appear to be improving (or slowing)? And is this better (or worse) than expected? What will be the reaction of the stock (value up or down)?

    Here is how to do this quickly.

    • Look at the revenue number. What was the y/y % change? How did this compare to the previous quarter? Is it improving or slowing?

    \Note - look for the* "organic" number where possible (this excludes acquisitions or one-time items), since this is more reflective of underlying trends.

    • Look at adj. EPS and earnings number (EBITDA or operating income). If also negative, look for gross profit. Is the y/y % change improving or slowing? What was the profit "margin" (earnings / revenues)?

    *Note - if there is an adjusted income or EPS (any of the above) - you can use that.

    • Compare this to estimates. Load up your favorite data terminal* (I love Koyfin!) and compare these numbers with consensus analyst estimates (before the release). Is it above or below estimates? What "drove" the beat or miss?

    \Terminals are where you find aggregated information. Koyfin, Factset, Sentieo, Bloomberg, Refinitiv, are major platforms to find this.*

    • Now find the guidance number. What was the y/y % change? How does this compare with the most recent results? Use revenue and adj. EPS.

    How does the guidance number compare with consensus analyst estimates (before the release)? Above or below estimates?

    Example: "Beat and raise" in this $UPST earnings release. Earnings estimates will go higher. Trends are improving. Guidance raised. More investors will want to buy the stock.

    • $UPST earnings (May 2021) - EPS "beat" consensus estimates ($0.22 vs $0.15 est.).
    • Beat was driven by the top-line ($121m vs. $116m est.) and also on margins (17% adj. ebitda margins vs. 12.9% est.).
    • Growth accelerated on top-line (90% y/y vs. 39% last Q) and for ebitda (472% y/y vs. 123% y/y last Q.
    • Guidance for 2021 was raised for both revenues ($600m vs. $500m prior) and contribution margins (42% to 41%).

    Use these techniques to quickly look at an earnings release and see if company performance is improving or getting worse. Usually that will tell you what the stock will do. (Keep in mind its SO RANDOM, sometimes market does weird things).

    Let me know if that helps!!! See my book here for detailed walkthrough. I'm on twitter at henrychien4 for daily updates and feel free to DM. Putting together emails so I can learn more and figure out how I can best help everybody.

    Cheers! Henry

    submitted by /u/Empty_Performance308
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    heard people on here love memes ��

    Posted: 10 Jul 2021 03:44 PM PDT

    Help me disqualify these stocks

    Posted: 10 Jul 2021 07:11 PM PDT

    I've collected 150 stocks, I know it's too many, so I would appreciate some help disqualifying the obvious mistakes. Most of these are either tech stocks, especially cloud, or on some list, like Dividend Kings, or Aristocrats. My goal is to have the absolute best growth stocks, then also growth stocks that also pay increasing dividends, a combination approach, plus a few spec on the side. I have a medium-high risk tolerance and 15 year + Horizon.

    • I will keep APL ADBE BABA BIDU COST HD HON INTC KO MA MSFT NVDA O PEP PYPL T TCEHY TGT TXN UNH V

    • but I am less certain on others like ABB ABM ACN ADP AMAT APPH APPN ARCC ASML AVGO BAC BLK CMCSA COIN CRM CRWD CSCO DD DDOG DOCU DPZ DUK ENPH ETSY FDX FSLY GILT HVBT IRDM ISRG JMIA JPM LOGI LRCX LSCC MELI MP MRVL MU NEE NET NIO NOW ORA ORCL PAYX PG PLUG PNR PSA QCOM RNG ROKU ROP SE SEDG SNOW SPCE SPLK SQ SWKS TDOC TTD TTWO UPS VSAT WELL XEL ZEN ZG ZM ZS

    • and others on those dividend lists such as: ADI AIZ AMT ANTM APD ATO ATR AWK AWR BANF BMI BRO CAT CB CBU CFR CHD CINF CL CLX CME CMI CSL CSX CTBI DCI DOV EMR ESS EXPD FAST FELE GPC HTD ITW JKHY LANC LECO LIN MCHP MCO MGRC NDSN NUE PH RPM SPGI TROW UNP WEC WM

    submitted by /u/zanoo911
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    Asset allocation versus S&P 500 returns. Today's high levels of stock ownership yield a prediction that S&P 500 returns will average -0.66% per year for the next 10 years

    Posted: 10 Jul 2021 09:16 AM PDT

    Federal reserve and relation historically to the market

    Posted: 10 Jul 2021 09:44 PM PDT

    I'm looking for a good read that outlines what/how/why the federal reserve takes its actions and what those results are economically and how they relate to the stock/bond market and it's history. I'm trying to get into investing but I'd like to first understand the large picture, I always see 10 year treasury bond and have no clue what that is. I also want to make sure I know which indicators to look for prior to investing so I can be more comfortable with doing it.

    Very technical haha hopefully no textbooks, but if I have to I will read one. Thank y'all and best of luck in the market!

    submitted by /u/murhMAIDman
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    Dow Jones Sustainability Index (DJSI). Help me find this information.

    Posted: 10 Jul 2021 05:45 PM PDT

    How many stocks on the S&P are also on the Dow Jones Sustainability Index?

    Where could I even find a list of all the companies currently on the DJSI? On the DJSI North America?

    I have done my fair share of searching on this and other subs - as well as Google etc.; I'm not sure if this is actually that difficult to locate or if I'm just showing you to this and using the wrong terms. All I seem to be able to find is a list of the invite companies for this year.

    I realize that the s&p has its own sustainability index, but I'm trying to find the overlap with DJSI.

    submitted by /u/temp_jits
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    Back testing growth predictions

    Posted: 10 Jul 2021 08:48 PM PDT

    TLDR at bottom

    I decided to try a back testing experiment where I would look at current and recent operations of a company ($GIL: Gildan) and come up with my own five year estimates for growth taking into account quantitative and qualitative factors. The process was to look at old financials and come up with my judgement. I have never analyzed $GIL before and I knew nothing about their financial state past or present. I read their annual reports in order from oldest to newest in order to maintain an unbiased opinion.

    I know that some of you will point out that I could have just said that I did this in order to make me look smart by having accurate growth estimates. I assure you that the point of this post is to highlight the discrepancies between predictions and reality, and hopefully add something to your investing toolbox for you to think about.

    Ten years ago analysis:

    (2011) The balance sheet has a good structure. Current assets along can cover all liabilities quite easily. Debts are not a problem. There has been recent sales and earnings with good profit margins hovering around 10%. Operating cash flow is generating consistent cash flow. Net cash flow was negative attributable to a large business acquisition so this year net cash flow was negative but on average could be expected to reach 100M annually.

    Acquisitions:

    • The business they acquired was a sock supplier for 350M at a net asset premium of 137M.
    • They also spent 15M on 12M assets on a vertically integrated T-Shirt manufacturing facility in Bangladesh.

    Inventories are mostly finished goods (About 80% are finished goods) with the remainder being materials, spare parts, and partially finished goods. Manufacturing equipment is about half of PPE and increased by 100M in the last year. Goodwill increased by roughly the value excess of assets in the acquisitions. They have an 800M RLOC with 209M drawn @ 2.3%.

    Based on their past income statement data, I would not say it is unreasonable to expect 100M in revenue growth per year over the next five years. They have increased sales by 300M per year, but to stay conservative I will use the figure of 100M YoY or about 5%. Earnings and OCF will follow this trend. The balance sheet will stay strong, hopefully with the same structure of assets as we see now. Depending on their appetite, debt may increase if they keep up with large acquisitions.

    What actually happened:

    2016:

    -Current assets went up about 500M, or about 60%. Overall assets increased by 1B

    - Liabilities doubled, Retained earnings increased by about 50%

    - Sales increased by about 1.3B, or 250M per year. Overall increase of about 12% yearly

    - Earnings increased by about 4% yearly. OCF increased by about 50%, or 8% YoY.

    Their financial health got stronger overall. Sales and OCF did much better than expected, and earnings slightly underperformed. The operating environments during this period were quite good. The world economy was experiencing growth after the financial meltdown in 2008 that was above average.

    Five years ago analysis:

    (2016) The balance sheet has good structure. Current assets are almost double liabilities. Most current assets are inventory. Assuming that of these only finished products will be converted into cash and receivables nets 640M, which still covers all liabilities. The company is on track to have almost no need for debt. Sales are large compared to the balance sheet, and profit margins are and have been above 10%. OCF is good, but ideally this number would be about 20% larger to cover current asset requirements with a larger debt coverage margin of safety.

    They recently acquired a shirt manufacturer for 112M with 14M goodwill. They also paid 102M for the assets + 26M goodwill in a lingerie company, the first acquisition of this sort.

    It would be reasonable to say that revenue can grow by about 250M per year or about 8% YoY. This is about half of the growth seen in the recent two years, so it is considered a conservative estimate. Net income will likely trail this trend by 20-30% earnings growth has been slightly slower than revenue growth. Earnings growth can be estimated to be 4-5% YoY, and OCF could follow this closely. If they manage money right, total liabilities could shrink to ⅓ of total assets in the coming years, although debt may rise as a number if they continue their current acquisition habits.

    What actually happened:

    2021:

    • Sales are at 2B, about a 35% decrease from 2016
    • Net income is -220M
    • Operating cash flow have decreased by 40%
    • All three of my predicted growth rates were useless. Revenue from 2019 year end was also much lower than the growth rates would have dictated.
    • Instead of selling more shears, they issued one billion in debt payable over the next six years with an average interest rate of 2.8%

    It is clear that in periods of stable growth, it is much easier to be optimistic. Who would have been able to predict the pandemic? Certainly not me. But that is not an excuse for being wrong. This was a very interesting activity for me to do, and hopefully this can serve as a reminder that predictions and reality can very possibly have zero correlation. The low growth in 2019 was not related to the pandemic, further proving that predictions - your own or from others or even professionals - have the possibility of being dangerously wrong.

    TLDR:I tried to look at really old financials and predict what would happen in the companies near future. It worked well from 2011-2016, but completely failed between 2016-2021.

    submitted by /u/valuescott
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    But if you’ve been yelling at people for years and years about fundamentals you’ve missed the fact that a tidal wave of money and demand for assets has trumped every historical metric in the book. What’s Driving the Stock, Bond & Housing Markets Right Now?

    Posted: 10 Jul 2021 10:01 AM PDT

    $BABA analysis

    Posted: 10 Jul 2021 07:33 PM PDT

    This is not much of analysis, but rather something u should keep in the back or your minds. Stocks in the short term are speculations and are separate from the company itself; however, in the long term the stock will follow the trend of the company, if company is doing good, stock will go up and vice versa. So just ask yourself:

    Do you think Alibaba will still be in business 5-10 years from now?

    Do you think China (the 2nd biggest economy in the world) will still be as big as it is today, if not bigger in the years to come?

    what is your risk to reward ratio using the discounted cash flow model.

    Am I willing to hold for years despite the short term negative news on the company? And the country? Or should I try to chase the markets like everyone else?

    These are just some question I asked myself before selling a couple of puts on Baba and getting assigned. Do ur own DD and feel free to downvote my post of u like.

    submitted by /u/Significant-Ad-1665
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    What high interest rates COULD mean for different industries

    Posted: 10 Jul 2021 01:34 PM PDT

    This is all my own opinion, but I did some deep research into each industry and tried to make this post as objective as possible. I hope you get something out of this!

    In general: In high interest rates, bonds do better and stocks do worse than in lower interest rates. High interest rates means more difficulty growing. It also implies the risk free rate is high so bond yields must rise with it in order to have any demand for corporate paper.

    Basic Materials:

    The interest rate to commodity price index is inverted. This is because the demand for commodities falls with the level of economic activity. This can be seen quite clearly by comparing a chart of interest rates with commodity prices.

    The implications of high interest rates are divided across the industry. Commodity producers will have more difficulty staying profitable and expanding operations. Cash generation will be severely strained. Commodity buyers on the other hand will find that expenses are much lower and it easier to get competitive prices. There are some material producers that will suffer less than others. In general, smaller companies suffer more because the larger ones are more capable of providing the most competitive prices.

    Communication services:

    Communications services do well in low interest rates, and tend to struggle in higher rates. This sector is generally the most overpriced and most leveraged. Stock prices in this sector may decrease more than the average market does. In addition to lower stock prices, companies that require a lot of leverage will have difficulty expanding or continuing operations. Established companies that have less capital intensive operations will fare much better, but still won't be able to come up with the same revolutionary technologies that come from lower interest rate environments.

    Technology:

    This sector is unique because it is much newer and has not been exposed to high interest rates. If the current environment of startups are extended, many startups will find difficulty finding funding and small companies with high debt will face similar problems. For larger companies, a unique situation is presented. These companies are known for constant acquisitions and with high interest rates, all of the talent in niche tech businesses will suddenly look much more attractive.

    It is possible that the mega cap tech companies will be nearly unaffected because of their massive operating cash flows that are vital to normal life. Many companies in tech have become very large with a low interest rate for the entirety of their existence. It is possible that these companies suffer more than older companies of similar operations and size because of a lack of experience operating at higher interest rates.

    Industrials:

    These companies have mixed implications. On one end, commodities and other material input are cheaper, but on the other end there is less demand for industrial products in an economic slowdown. Revenue and cost of goods sold could be expected to decrease, creating smaller, more profitable businesses.

    A nice way to think about this is to examine the airplane manufacturing industry in a high interest rate environment. The manufacturer can acquire the materials and possibly prefabs for the plane for cheaper. The gross margin on the individual plane is higher as a result, but in the general economy, consumer activity is lower, so there is less traveling and a resulting lower demand for aircraft.

    Health Care:

    Health care is much less volatile than the average market because the demand for healthcare services is mostly disjoint from economic activity. The main concerns in health care are shared with the rest of the economy - mostly issues arising in debt refinancing and upgrading or acquiring fixed assets.

    Utilities:

    Utilities generally underperform in high interest rates. They take on more debt, require consistent servicing of fixed assets, and are slower to increase revenue than other industries. When operating conditions are staying similar (utility costs for consumers are not increasing much) and interest rates are high, utilities have a much more difficult time covering capex and depreciation.

    Consumer staples:

    Consumer staples are historically less volatile than most of the market. Consumers may not be buying luxury goods or a second home at high interest rates, but like healthcare, consumer staples are not things that are optional for most people. [Most?] Consumers are not going to stop purchasing food and toiletries just because their variable rate debts are becoming more costly.

    Finance:

    Finance tends to do well in high interest rate environments. They are able to write higher rate loans, and demand for loans increases. Insurance historically issued higher premiums. Financial firms can be viewed as the most obvious beneficiaries of high interest rates at the cost of most other industries.

    submitted by /u/valuescott
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    Companies That You Wish Were Public To Invest In?

    Posted: 10 Jul 2021 11:14 AM PDT

    I'm new to investing and it has been quite the ride thus far in learning about the market, seeing the movements, fluctuations, and reading on Reddit both useful and not so useful information while seeing how people trade/buy/sell on a much larger scale than myself.

    With that being said, I've been slowly buying into different things. Some based on research, some based on companies I like for different reasons. There are times when I think of a company that I can relate to and wonder if they are publicly traded which turns into searching and sometimes research which can come up empty.

    So it got me thinking and I was wondering what companies others wish/hope/want to go public so that they can invest in into it.

    My most recent example is because I am vegetarian. While there is $BYND (Beyond Meat) I wish and am hoping that Impossoble Foods will someday be something I can invest into through the market.

    Thanks for reading and I hope to see some good answers!

    submitted by /u/DPancoast
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    Typical stages of a market break.

    Posted: 10 Jul 2021 12:40 PM PDT

    Eight reasons to buy RMED on Monday, 7/12

    Posted: 10 Jul 2021 08:44 AM PDT

    Sharing some DD for a friend since he's not able to post for a few days due to prior engagements:

    1. RMED high short percentage fluctuating between 30% and 50% most days. 2. Shorts are starting to cover RMED as of yesterday. Large RMED orders were seen covering end of day. 3. Large group of us who hold RMED are committed to the squeeze, and many large shareholders committed to long term due to RMED FDA upcoming approval. 4. RMED Product is needed in the industry and is a very unique patent 5. RMED is a seriously Possible acquisition target early 2022. 6. Very low float drives RMED stock up quickly during short covering. 7. The biggest sign is that we all like to make money and by pushing RMED upward, shorts have to cover! Buy RMED now at open. 8. RMED Price per share is low, so your cash value increases faster than higher price stocks! RMED is way undervalued.

    "We are grateful for the valuable feedback we have received from our physician advisors as they are leaders in their field and represent the customer base for our excimer laser system," said Will McGuire, Ra Medical Systems CEO. "Also, the current pace of enrollment in our atherectomy trial is encouraging, as we believe regulatory clearance for this indication will better position Ra Medical to address the large and growing market for treating vascular disease."

    submitted by /u/madryno6
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    Is Now The Time To Buy Stock In Bumble Or Match Group? -

    Posted: 10 Jul 2021 08:57 PM PDT

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