Daily General Discussion and spitballin thread - September 14, 2021 Investing |
- Daily General Discussion and spitballin thread - September 14, 2021
- Daily Advice Thread - All basic help or advice questions must be posted here. September 14, 2021
- How to hedge against inflation Michael Burry style. Part 2.
- 5 gold tips for forex investments
- Getting Lost on the Basics of Index Funds
- What are the best sources of information for discovering unusual investments?
- This is a Curious question, if im wrong please rectify the errors
- SWAPS: how do they work. How did Bill Hwang use it
- Investing in Crowd Funded real estate?
- The market is strong: correcting some common misconceptions about the market being unstable
- Anyone interested in real estate?
- How would I become a private investor?
- Big $$$ opportunity: which companies are most likely to be hired to do massive DNA tests? Israel just announced genetic tests for everyone arriving at their airport bc of COVID, soon coming worldwide imo
| Daily General Discussion and spitballin thread - September 14, 2021 Posted: 14 Sep 2021 02:02 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. September 14, 2021 Posted: 14 Sep 2021 02:01 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]  |
| How to hedge against inflation Michael Burry style. Part 2. Posted: 13 Sep 2021 10:04 AM PDT This is the second installment to a post I made back in May that documented some of my inflation DD from researching Michael Burry/Scion's 13F plays. People on other subs found the information in part 1 useful so I thought I'd make a part 2 specifically for the broader audience on r/Investing. By my estimate, 28.4% of Scion's Q2 2021 portfolio is currently hedging against inflation. I arrived at this number by going through the individual positions of Scion's Q2 2021 13F, using the "Think Back" function in ThinkOrSwim to estimate options contracts prices, and summing the resulting positions together. US 20+ year Treasury ETFs (7.6% of Scion's Q2 2021 portfolio)Burry's treasury instrument of choice is the 20+ year bond. This is a direct play on inflation where he's essentially concluding that the Fed will eventually need to raise interest rates which will lead to an increase in bond yields thereby causing their prices to fall. TLT is tied to the bond price itself. TBT is tied to the inverse of the yield (so when the yield falls, TBT goes up 2x that rate (in theory)). He has positions in both TLT and TBT (see below for descriptions). It should be noted that both of these positions first appeared in Scion's 13F in Q1 2021. It should also be noted that he reduced his TBT position and increased his TLT position in Q2 2021. His TLT position is the third largest position in his Q2 2021 portfolio (which, in my opinion, says something about which ETF he prefers). Put Options on Ishares 20+ year treasury bond etf (TLT) - 7.2% of current holdings Probable Burry thesis: rising inflation over the mid- to long-term will lead to the need to increase interest rates, leading to increased yields and making these 20 year bonds less attractive. Some context: The U.S. Treasury announced plans to start issuing 20-year treasury bonds in January 2020. The benefits to 20 year treasury bonds are that they're relatively safe, their value could increase if interest rates drop, and they're relatively liquid. The cons are that they're over a 20 year period (meaning you lock in very low interest rates at which you get paid), inflation may occur over that 20 year period and lead to an increase in interest rates that you'll miss out on, and rising interest rates in general hurt the value of these bonds (link). Call Options on Proshares trust ultrashort lehment 20+ year treas etf (TBT) - 0.4% of holdings Probable Burry thesis: this is the same 20+ year treasury bond mentioned above so the strategy is likely the same. The difference here is that it's a call on a 2x inverse bond ETF. Context: The ProShares UltraShort 20+ Year Treasury seeks daily investment results, before fees and expenses that correspond to two times the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. (from Zacks article linked above). Energy, Commodities, and Transport (11% of current holdings)Commodities are a fairly traditional inflation play. This article on investopedia gets into some of the details regarding the relationship between commodities and inflation. The challenge with each of these companies is determining whether the company is an explicit hedge against inflation or whether it's a value investing play. Ovintiv Inc. (Pan Canadian Energy - Encana Corp.) (OVV) - 4.06% of current holdings This is the 6th largest Scion position and the 2nd largest shares-only position (i.e., no options contracts). Probable Thesis: First, it's an oil & gas company (meaning the commodities checkbox is checked on this one). Second, it's arguably a riskier investment at the moment. They have very little cash on the balance sheet (enough for 1 day of operations). They are currently redirecting their cash flow towards paying down long-term debt which in itself is another positive for inflationary times (one group that does particularly well during inflation is debtors as the debt inflates itself away). Scorpio Tankers (STNG), SunCoke Energy (SXC), and Golden Ocean Group Limited (GOGL) - 2.9%, 2.4%, and 1.7% I grouped these positions together as they each clock in below 3% of the overall portfolio. Each of these was also an existing position that Burry added to in Q2 2021. Scorpio Tankers and Golden Ocean Group These two are likely plays on ocean freight/transport inflation. Scorpio is tied to oil transport and is a proxy play on any boost to oil demand that occurs at the global level. Golden Ocean Group looks similar but tied specifically to dry bulk goods. SunCoke Energy This is the one that I'm leaning more towards "value investing play" and less towards inflation (but I could be wrong). The arguments in favor of it being an inflation play are that it's a commodity company (coal), it just recently started paying a dividend, and its been working towards deleveraging (at least that was the case earlier in the year). These are themes that you'll see in other investments such as CVS Health below. Revenue Mammoths (9.8% of current holdings)The final group of companies are the revenue mammoths. They hail from the retail, grocery, and pharmacy sectors. All four of these organizations are in the top 31 companies in the world by revenue. They have some combination of pharmaceutical distribution and retail/grocery. They offer dividends with two of them being dividend aristocrats. CVS Health (Call Options and Shares) - 4.7% of portfolio Interestingly, CVS Health is the only stock where Burry is currently holding both shares and call options. They are the 7th largest company in the world by revenue (hence the revenue mammoth term). The characteristics that make CVS an interesting potential inflation play are: • They have a large pharmaceutical distribution presence • They have a large health insurance segment • They have a sizeable retail store segment • They froze their dividend in 2018 to pay down debt related to their Aetna acquisition What makes these intriguing characteristics from the inflation perspective? Healthcare and pharmaceuticals have consistently beaten inflation over the past several decades. Pharmaceutical drugs continue to trend up. CVS owns a pharmacy benefits manager which, as a business, is incentivized through proportional rebates to push pricier drugs where they can. From the retail perspective, their "front" stores are essentially baskets of goods which can pass on the costs of inflation to the consumer. Lastly, the most intriguing reason (in my opinion) is their current strategy to pay down long-term debt. Their stock price is arguably depressed due to the massive $69 billion acquisition of Aetna they made in 2018. They had been increasing dividends every year for almost 2 decades before this acquisition, at which point they froze the dividend and put the money towards their debt. They estimate that they'll hit their debt-to-capitalization ratio in Spring of next year (I personally think it will be summer or fall of next year). At that point, it is anticipated that they will resume dividend hikes and share buybacks as they've done historically. With CVS, you have a potential case where the 7th largest company in the world by revenue is undervalued due to a large amount of debt that they are slowly and steadily paying off in an advantageous inflationary environment with a predicted return to hiking their dividends in 2022 (and they appear to be largely inflation-proof). The Opioid Twins: McKesson Corp. and Cardinal Health (Call Options only) - 2.9% of portfolio Two more pharmaceutical revenue mammoths: McKesson clocks in at #12 on the largest companies by revenue list and is the largest pharmaceutical distributor in the United States. They also own a chain of 4000 pharmacy stores. Cardinal Health clocks in at 14th by revenue and is in the top 5 largest pharmaceutical distributors with McKesson. Both offer similar inflation characteristics to the ones listed for CVS Health with the difference being that CVS owns a health insurance plan on top of their pharmacy retail/PBM businesses. Another key difference between CVS Health and the duo of McKesson and Cardinal is that McKesson and Cardinal Health were penalized in July of 2021 for their role in the Opioid crisis. Cardinal Health expects to pay $6.4 billion over 18 years for its share of a $26 billion opioid settlement. It's possible that this legislation is currently a drag on these two stocks. Walmart (Call Options only) - 1% of portfolio Walmart is an interesting case because, at first glance, it appears to make more sense as an inflation play than the rest of this mammoth revenue group. Walmart is the largest company on Earth by yearly revenue. They have a strong pharmaceutical presence like the other companies in this category though over half of their revenue is actually from their grocery segment. What makes them an interesting inflation play is that their stores are literally giant baskets of goods. They have a large breadth of products which allows them to keep the prices of various product categories lower than their competitors. They also own the basket that the goods live in (along with the land around the basket). Real Estate is a well-known inflation hedge. Thanks for reading. [link] [comments]  |
| 5 gold tips for forex investments Posted: 14 Sep 2021 03:45 AM PDT Understand and constantly remind yourself that emotions should never be brought to the trading table ever! This is one of the key rules when trading. This has been emphasised by many top traders and professional finance managers. Many fail in the forex industry because they get emotionally attached to their trades. When you bring emotions to the table, you are not making informed decisions based on facts and logic, so this increases the likelihood of losing the trade. Learn to leave your emotions at the door (so to speak); so this means not getting angry, shocked, upset, overexcited and not falling in love with any charts or currency pairs. Even though you may have favourite pairs that you enjoy trading, try your best not to get attached as they can break your heart 'in a heartbeat' - if you're not careful. A habit that was very helpful - making prediction trades or paper trades (not real trades). Helps with your mind frame on the industry because the more you do this the better you get, the more you learn and the more confident you are. When a person is confident, good things usually happen to them and in this case your trading improves and that equates to more success. When starting out, it's crucial to understand that the money will not come straight away but it will eventually. It's easy to get carried away because of the excitement of starting this new forex journey and wanting to be profitable right away - it cannot work like that - you have to start slow and steady. One way this was achieved was to prove to myself that I could gain pips and percentages - not the money. Understanding that pips make the money, you'll also know that if you can consistently accumulate the pips then the money will follow. Do not get greedy; learn your craft before you focus on the money. One important habit in forex and life in general is exercising self-control and having patience. These are key factors and major characteristics that are needed to be a great trader - it's like waiting for a bus; another setup will come in five minutes (well probably longer but you get the drift). Sitting on our hands a lot of the time is part of package. Do tests and exercises to stimulate the brain every now and then. This is a great tactic to put you in the frame of mind of knowing that this is serious and that you need to revise, research and train for forex. An example of a test would be to set yourself 10 questions to answer weekly, almost like an exam when you were in college. This will help keep the mind fresh on key aspects of the industry. These were a snippet of the tips shared in forex route for investors book, simplified hacks from guys that studied markets for years. What other points would you add? [link] [comments]  |
| Getting Lost on the Basics of Index Funds Posted: 14 Sep 2021 03:12 AM PDT I've been pointlessly building a savings account for my children to go to college in about 12 years. I'm putting about 150 Euros a month in at the moment which will increase in time (I'm EU based). Obviously I'm earning 0 interest and so am looking at putting this in to an index fund that tracks the S&P500 instead. I'm confused however about how I actually go about doing this and have some questions. I downloaded Plus500 and played with the demo account to see if I could get my head around it. 1) Is the US500 (Indeces) the same as the S&P500. If not, what's the difference? There is no S&P500 listed on the app in my locality. 2) I'm confused by the leverage. I don't want to leverage anything. I want the money I invest to be invested, not more which would open me up to potential losses over my assets (although unlikely obviously in an index fund). However, when I go to buy in the demo, the only option is to leverage at 1:20. I can't just say "Ok, put 150 in to this" for example). These things lead me to believe that I've been looking in the wrong place. Looking at this link it appears that the things I'm looking at on PLUS500 are no index funds https://money.stackexchange.com/questions/110740/where-can-i-invest-into-sp500-without-leverage So where do I go to invest a small amount every month in to an Index fund without leverage? Do I have to walk in to my bank or can I do it through an app? I looked at Etoro which allows you to leverage at 1* and so this seems to be what I'm looking for. It has an EFT called SPX500. Is this what I should be looking for? I sincerely apologise for what probably seem to you guys to be ridiculous questions, but I'm a little lost here. Thanks [link] [comments]  |
| What are the best sources of information for discovering unusual investments? Posted: 13 Sep 2021 02:08 PM PDT Anything's on limits. The weirder, the better. I'm thinking of weird situations where like the company hasn't filed a quarterly report for 9 years and then a shareholder sues and then the company complies, puts out the report and we find it is in a whole new line of business and there's a huge repricing of the shares. Or a situation with little-to-no precedents. Is there any place where we can vacuum up info on weird one off situations? [link] [comments]  |
| This is a Curious question, if im wrong please rectify the errors Posted: 13 Sep 2021 07:49 AM PDT I've taken a course and read books on fundamental analysis, it seems that most instructors and authors struggle to explain this in clear detail since there are a lot of assumptions in calculating intrinsic value , such as expected growth rate , terminal growth rate ( which is 3% for most companies ) according to a book I read and the discount rate , everyone teacher just says with a disclaimer that the intrinsic value can change with the slightest of changes in assumptions , I thought , why can't we just average out the value of several different assumptions and find an average value? Does it work ? This will be my question to y'all. Has anyone ever thought of this idea? PM's are open if you want to discuss fundamental analysis and value investing and also I'm new to this concept so please forgive and mistakes [link] [comments]  |
| SWAPS: how do they work. How did Bill Hwang use it Posted: 13 Sep 2021 09:40 AM PDT This bloomberg video How to Lose $20 Billion in Two Days - YouTube indicates that Bill Hwang used SWAPS to hide his stock holdings How do swaps work? Did Hwang put all his holdings in the bank's name paying them a FIXED SUM as a RENT; while he enjoyed his profits? Does this have a name to it? What is it called? The swaps that I learnt is that you exchange a floating interest rate asset with a asset providing fixed sums but did not know that you can use it to CONCEAL ASSETS. If there are any YouTube videos, articles, books; etc do send them across [link] [comments]  |
| Investing in Crowd Funded real estate? Posted: 13 Sep 2021 10:24 AM PDT I've heard mixed things about investing into crowd funded real estate, mainly good things about it. I'm curious it's worth the investment is wroth the time and money for the returns, or you'd be better off investing into something else. [link] [comments]  |
| The market is strong: correcting some common misconceptions about the market being unstable Posted: 13 Sep 2021 05:47 PM PDT Hi everyone, there's been a whole lot of talk about a market crash on reddit lately. Most of that chatter comes from WSB and not this sub but there is still some talk of it on this sub. I wanted to give my 2 cents on the issue and start a discussion on the topic. I usually see people talking about market crashes on reddit referring to 3 key issues: the price of equities, inflation, and reverse repo. I am going to address all of those here. The price of equities Many people are worried about the soaring prices of stocks right now. If you take a look at the SPX or NDX or really any index, the RSI will say that it's oversold. Additionally, the market hasn't had a 5% correction since October of LAST YEAR. Even more, the market is making new all time highs almost every single month and it seems like the stock market just keeps going up and won't stop. Despite all of this, I am not sold in the least bit on this being a cause for a market crash. First, if you take a look at the SPX historically, we've had bull runs last longer and gain more on a percentage basis than this current one (I plan on doing a DD on that in the near future). Additionally, it makes sense for the market to be at these levels - earnings are consistency out of the park for most companies. Most importantly, however, is the FED's actions. The FED's QE policies can be described in no way but aggressive. The FED has been purchasing bonds and such since the 2008 recession, but has aggressively picked this up because of covid. The effect that this has is it makes bond prices go extremely high, which is why yields are so low. When yields are that low and inflation fears are persistent, investors can only put their money in the stock market if they want to make returns that outpace inflation. This is even more evident if you simply google "SPX FED balance sheet." Doing this will show you pictures of how the SPX moves directly proportional to the size of the FED's balance sheet. In conclusion, I believe that it makes complete and total sense that the market is at this current level. Are we due for a pullback in the near future? Probably. But is a giant looming correction coming? I don't think so in the least bit. Inflation Many people also say that inflation is what will destroy the stock market. I am not going to discuss whether I believe inflation is transitory or not because that will take up way too much time and is another issue in its own right. To analyze why I don't believe inflation would cause a market crash, let's look at several factors. First, let's look at history. The greatest inflation in the US was in the 1970's and 1980's. We didn't see a market crash in the least bit in the 1970's and in the 1980's we saw a very strong bull market. Next, lets assume for a minute that inflation does get a bit out of hand. If prices get out of control, the idea is that the economy will slow down because consumer spending will decrease, which will lead to lower earnings and fewer jobs. However, I don't believe this will happen because of the FED. The FED has shown us time and time again that it is here to support the stock market. If we see inflation, yes, maybe the FED will raise rates but the stock market has grown so accustomed to QE policies, I don't think the FED will just end them to stop inflation. Instead, I think that the FED will do something to stimulate the market in a different way - perhaps through more targeted bond purchases or something in that nature. The point is, I see absolutely no scenario where the FED just says "sorry baby" to the market to stop inflation. Reverse Repo Seeing people talk about how RRP transaction amounts being at records is an indication that the economy is going to crash is something that really annoys me because it shows an absolute and total misunderstanding of the subject. People who say this see that RRP total overnight transactions have been hitting records basically every week - this is completely correct, they have been getting into the trillions lately. People see this and immediately think MARKET CRASH. However, this shows a complete and total misunderstanding of RRP. The only time that RRP stats are a cause for concern is when the RATE goes up. When the rate goes up, it means that institutions see overnight lending as risky and want more compensation for it - we saw this in 2019 and the FED quickly addressed it. The current reason why RRP total transactions are rising because the FED is trying to put more liquidity into the system in order to spur economic growth - this is exactly what the FED wants to happen. The FED wants excess liquidity to be in the system. Economic crises often start when there is a credit crunch - i.e. large institutions are hesitant to lend because of some systemic risk or downturn. Reverse repo numbers show the exact opposite - they show that there is excess lending activity in the system. Conclusion Thanks for listening to my rant. I think that the economy is completely fine right now. Yes, there will probably be a slight correction in the near future due to delta concerns or just the general market cycle but I do not in the slightest bit believe that there will be a market crash in the foreseeable future. If you found this useful share it with friends, family, enemies, whoever. Happy investing. [link] [comments]  |
| Anyone interested in real estate? Posted: 13 Sep 2021 10:40 PM PDT I started looking into real estate lately for my financial independence goal, and spent quite some time researching different markets and neighborhoods across US. FYI, there are lots of market in US where you can put down <$20K and get net positive monthly cash flow and 3-4% yearly appreciation. I've been asked by friends and family to share the research and database I've accumulated so far, so I'm thinking to share it with more folks to save some time finding investment properties in different markets. If you're interested, leave your email here and I'll follow up:
*it's all free for the first 2000 signups and we'll see from there* Also if you have any thoughts or comments, DM or leave a comment below. [link] [comments]  |
| How would I become a private investor? Posted: 13 Sep 2021 08:03 PM PDT I am 18 years old and a sophomore in college (in the USA). I am a business major, as business/investing has been pretty much a passion for me since I discovered it. I love the field and enjoy it. I started getting into stocks when I was 16. I also did an internship at a company that summer and was able to "shadow" the owner to see what running a company is like. Learned a lot and it was interesting even though it was only a month there. Wish it could be longer, it was a different country too. After a year of investing and researching the stock market every single day, I decided to make the big jump and start an e-commerce store. I was still under 18 and had to use my parents behalf to start it. It was a big jump. The website and products were great, but the only issue was that I didn't know how to drive traffic and customers that were going to make a purchase. I didn't know how to market my products. And just because a business is visually good it doesn't mean that the business can perform well. Starting my own business was great, I learned more in those 2 months (I know its short) than I did in my freshman year of college. This was the only issue, however I did learn how important every part of a business is., and how one bad part of a business can cause it to fail. I also had to learn some basic marketing stuff on my free time. So for the next year and a half I started to get involved in any sort of investing I can do at my age. Ive created business models/ideas as well on the side to safe as future reference. Ive noticed my strengths in the business field, and I think being a private investor might be a good option in the future. Heck, I love all types of investing in general lol. Maybe I could start investing in different industries privately. How would I start being a private investor (starting small of course. More in startups, different industries etc)? Is this something I can right out of college or even before if I have enough capital? Do I need to be an Accredited Investor and have a better background? [link] [comments]  |
| Posted: 13 Sep 2021 09:01 AM PDT Ok let's make a list of the top companies specialized in DNA tests, I'm pretty sure that what Israel just announced will be implemented worldwide in a few months. If we do it right, it would be like entering MRNA at $30 last year. Massive gains ahead. What companies are most likely to be hired by the gov to do these tests? I'm betting for $ME, if you know more public companies please share. Let's do it. [link] [comments]  |
| You are subscribed to email updates from Lose money with friends!. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment