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    Stock Market - 2 years with a 2k investment

    November 02, 2021

    Stock Market - 2 years with a 2k investment

    2 years with a 2k investment

    Posted: 02 Nov 2021 08:23 AM PDT

    Zillow is shutting down its homebuying business and laying off 25% of its employees

    Posted: 02 Nov 2021 01:54 PM PDT

    The SP500 is up around 100% since the pandemic bottom. In my eyes, this cannot go on forever. Any rational person can clearly see a hard pull back is imminent. How is money even real??

    Posted: 02 Nov 2021 08:20 AM PDT

    I may have a gambling problem.

    Posted: 02 Nov 2021 05:41 PM PDT

    Can Wallstreetbets beat the market? - I analyzed 20MM+ comments in 2021 to see if you should pay attention to the stock picks made in wsb. Here are the results.

    Posted: 02 Nov 2021 05:49 AM PDT

    Can Wallstreetbets beat the market? - I analyzed 20MM+ comments in 2021 to see if you should pay attention to the stock picks made in wsb. Here are the results.

    Like 4chan found a Bloomberg terminal

    This is how they define themselves. Wallstreetbets is a community that has gained a following of 11MM+ members over the years. As much as it's fun to follow their ups and downs and the laugh-out-loud memes that they post, the question in the back of everyone's mind is: Is there really more to WSB than just the memes and jokes? Do they have real insights?

    In this analysis, I try to use historical data about the conversations on WSB to see if there's a method to the madness and chaos and GME hype: to see if we can beat the market by using the stock picks made on WSB. After all,

    https://preview.redd.it/tkrcc2xsh6x71.png?width=894&format=png&auto=webp&s=6184a378217c68aeb410464bc9629aa4d5415330

    Data

    Reddit's PRAW API and Pushshift API were used to obtain the data for this analysis. There were more than 20 million comments and posts made on WSB in 2021. I have had a VM running for collecting the live data from all the financial subreddits since Dec'20.

    The summary sheet containing the analysis will be shared at the end in a Google sheet but if you want access to the full historical data, you can get it from Pushshift API.

    Analysis

    Ahh, this is where it gets tricky. There are multiple ways to consider what constitutes a recommendation from WSB. Since there are millions of comments, it's not realistic to invest in each and every recommendation made on the subreddit.

    So what I have done to simplify this is to calculate the most popular tickers for each day [2]. Why I settled on this logic is because a stock from this list is what a person is most likely to see when he/she would randomly browse through the subreddit and the higher the number of mentions, the more the chances of investing in the said stock.

    Considering the practical limitations, I kept the cut-off at the top 10 stocks. Once we have found the top 10 discussed stocks of that day, we invest in them at the market close. Then we calculate the returns generated by the stocks over the next

    a. One Week

    b. One Month

    c. Till Date ( From the date of investment to Today)

    The benchmark for comparison is SPY[3]. We will compare the returns against SPY to see if the most popular recommendations generated by the platform can beat returns by SPY during the same time period.

    Results

    Before we jump into the returns, here is a visualization of how the most popular stocks have changed over the last year in WSB.

    10 months of Wallstreetbets in 3 minutes

    In case the visualization is not loading, check it out here.

    We would have made a grand total of 2,613 investments [4] in 2021 following this strategy. We would have lost money on more than 51% over the next week and more than 60% over the next month. But if you consider till date, we are slightly above 50%. If you compare this to SPY, its an extremely poor performance, as during the same period SPY would have given a positive return of 66% over one week, 76% over one month, and 100% Till Date (as SPY is trading at an all-time high now)

    But, the stock market rewards predictions disproportionately [5]. Out of the 100 stocks you pick, even if you get 99 wrong but get one extremely unlikely event right your overall returns will still be extremely high (which is what WSB is aiming for - it's definitely not for safe plays).

    So, how has the average performance of WSB picks fared?

    Would you look at that! WSB recommendations have hands down beaten SPY across all time periods. It gave a 2% overperformance over the period of one week and 2.2% over one month and a whopping 6% if you had held on to your stocks.

    But keep in mind that your performance is skewed towards a few stocks which got featured repeatedly in the top 10 list.

    GME has been in the top10 discussed stocks in 100% of the days and on average you would have gained 73% if you invested in it every day. Both AMC and TSLA are close followers with both of them giving substantial returns. Among the other ones who have made the list repeatedly, only BB, CLOV, and WISH on average have lost money [6].

    Now that our main question is out of the way, we can really do a deep dive into the data and see some interesting patterns.

    https://preview.redd.it/lxryhi65i6x71.png?width=725&format=png&auto=webp&s=8538a41578eb85c2378e997025341eabb96edfe1

    Unsurprisingly, Gamestop and AMC are at the top of the pile with GME returning an insane 788% in one week. Even if you remove GME and AMC (due to the unlikely scenario of a short-squeeze), the other 3 stocks would have doubled your investment in one week.

    For every winner, there are bound to be losers. If you bought into GME at the top of the rally, you would have lost 73% of your investment in the next week. All the other companies on the list had a brief jump in popularity but folks who invested in that ended up holding the bag.

    But what if you did not want to invest in 10 stocks every day. What if you only wanted to invest in the top stock of the day (ie, the one creating the most discussion)? Would you have beaten the market?

    https://preview.redd.it/ylhpu4e7i6x71.png?width=705&format=png&auto=webp&s=dd4deba374c94455f83e09e02b6e269fbca280b7

    Unsurprisingly, you would have beaten the market by a wide margin. This is mainly due to the insane returns generated by GME, AMC, TSLA, etc. which came to the top of the list. You are just being rewarded for the high amount of risks you are taking by putting all your investment into a few stocks [7].

    Limitations

    There are some limitations to this analysis which you should be aware of

    • As explained in footnote-1 there are 8-12 days of missing data - though this is not going to affect the results in any significant way as it's lesser than 5% of the total days in the analysis.
    • This analysis does not consider Options which is a big part of what WSB is made of. The returns from options can be wildly different from what we are observing in the case of buying stocks
    • We have just considered the last year of data where it was predominantly a bull market and meme stocks have made insane rallies. The results might be different if we expand our time horizon.
    • Finally, the above analysis only considers the chatter and not the sentiment about the stock. I would invest no matter if people are saying positive or negative things about the company. My hypothesis is that we would be able to generate more alpha if we can distinguish the sentiment in comments. A part-2 of this analysis incorporating sentiment is in the works — stay tuned!

    Conclusion

    Before starting the analysis, I fully expected to end it with

    The real returns were the friends we made and the fun we had along the way!

    I was expecting that the chatter in WSB would be a lagging follower of the stock price rally and the people who invest in them would end up holding the bag.

    But I was pleasantly surprised to see that on average the stock that made it to the trending list beat SPY in returns, that too across different time periods.

    Either it's due to the self-fulfilling prophecy of stock price rallies leading to more chatter that will lead to more investments that will cause the stock to rally even more. Or it might just be that WSB is the place where we can successfully leverage the Wisdom of crowds.

    Whatever the case may be, you truly would need nerves of steel to keep holding on to a stock that rallies 700% in one week only to drop 70% in value next week and then finish net positive by the end of the year. For that, you are rewarded with market-beating returns!

    If you liked reading this issue, you will love

    Until next week…

    Footnotes

    [1] During the GME rally in January, the traffic was so high that the VM failed. I have used Pushshift to fill in the details wherever possible, but keep in mind that there are 7-8 days of missing data from 28th Jan to 8th Feb and 4 days of missing data in April 2nd week.

    [2] To find the most popular tickers I used a base of around 9,000 stock tickers that I got from IEX cloud. The program would flag if any of these tickers were present in a comment or post. This is by far the most data-intensive exercise I have done. if you hypothetically consider the loop as a cross join, we processed more than 200 Billion rows to find the most popular tickers.

    [3] If SPY was in the top 10 tickers, we would invest in that as well. I feel that this would slightly reduce our risk profile.

    [4] It's lesser than the expected 2,900 investments as there are some days in between where we had data loss (footnote 1) and also some stocks got delisted or underwent mergers (eg. Aphira) due to which we could not get the financial data from Yahoo Finance.

    [5] Take the classic example of Keith Gill (aka DFV). He at one point had a $50MM return using a 50K call option. Even if he had another 99 50K call options in other stocks which expired worthless, just this one right pick would have made him a net profit of $45MM. This phenomenon is known as black swan farming.

    [6] This is very surprising given the amount of risk we are taking investing in meme stocks. Also, in my mind, you cannot complain about the skew towards a few stocks as it's bound to happen. Even in the case of S&P500, a vast majority of returns is driven by a few tech stocks.

    [7] The Beta of this portfolio would be through the roof and you beating the market is more probable as we are in a rally. Remember, what Beta giveth, Beta can take it away just as easily.

    submitted by /u/nobjos
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    Facebook plans to shut down its facial recognition program

    Posted: 02 Nov 2021 01:08 PM PDT

    When looking at the candle charts for many stocks recently, I noticed a lot of fast, big price movements during after-hours that I don't understand. Does anyone know what's causing this?

    Posted: 02 Nov 2021 06:59 PM PDT

    $SBEA had a short life today. Maybe more movement tomorrow. Nice investor presentation.

    Posted: 02 Nov 2021 05:38 PM PDT

    Tesla free portfolio!

    Posted: 02 Nov 2021 07:33 PM PDT

    Starlink Deepens Cooperations With Taiwan on Solar Cells

    Posted: 02 Nov 2021 09:02 AM PDT

    What to listen for in Fed Statement Tomorrow

    Posted: 02 Nov 2021 01:44 PM PDT

    The Fed is in a box, any of its options could create problems.....

    "What does transitory mean? It means fleeting and temporary. The "inflation is transitory" expectation has, over the past two months, become less probable. The last time we had economic weakness and inflation, was in the '80s when the Fed (FOMC) found themselves needing to stimulate the economy by lowering rates while at the same time needing to stave off inflation with higher rates, back then we said, "the Fed is in a box." Well, for those of us that have forty-plus years of economic memories, it feels like we've been here before."

    ​

    full

    submitted by /u/channelchek
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    Mostly green in the market today

    Posted: 02 Nov 2021 01:40 PM PDT

    Very unusual action for Fsr $20 calls that expire Friday. Do you think they know something?

    Posted: 02 Nov 2021 07:29 PM PDT

    SP500 Winners and Losers | 11/2/2021

    Posted: 02 Nov 2021 06:40 PM PDT

    Winners

    Winner of the day by sector | SP500:

    Sector | Company | Ticker | % Price Change

    1. Industrials | Rockwell Automation | ROK | 7.35%
    2. Health Care | McKesson Corporation | MCK | 5.21%
    3. Information Technology | Arista Networks Inc | ANET | 20.39%
    4. Communication Services | Live Nation Entertainment, Inc. | LYV | 2.63%
    5. Consumer Discretionary | Under Armour Inc Class A | UAA | 16.47%
    6. Utilities | American Water Works Company Inc | AWK | 1.79%
    7. Financials | Franklin Resources, Inc. | BEN | 7.20%
    8. Materials | DuPont de Nemours Inc | DD | 8.79%
    9. Real Estate | Simon Property Group Inc | SPG | 6.44%
    10. Consumer Staples | Estee Lauder Companies Inc | EL | 4.14%
    11. Energy | Diamondback Energy Inc | FANG | 2.54%

    Losers

    Loser of the day by sector | SP500:

    Sector | Company | Ticker | % Price Change

    1. Industrials | Generac Holdings Inc. | GNRC | -4.39%
    2. Health Care | Incyte Corporation | INCY | -8.46%
    3. Information Technology | Global Payments Inc | GPN | -9.24%
    4. Communication Services | Match Group Inc | MTCH | -3.60%
    5. Consumer Discretionary | Ralph Lauren Corp | RL | -9.70%
    6. Utilities | NRG Energy Inc | NRG | -2.27%
    7. Financials | Citizens Financial Group Inc | CFG | -1.58%
    8. Materials | Mosaic Co | MOS | -9.21%
    9. Real Estate | Weyerhaeuser Co | WY | -2.24%
    10. Consumer Staples | Lamb Weston Holdings Inc | LW | -1.48%
    11. Energy | Marathon Petroleum Corp | MPC | -3.90%
    submitted by /u/Engineer_Economist
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    Hertz already receiving deliveries, but Musk says Tesla has not signed a contract with Hertz yet, halts stock rally

    Posted: 02 Nov 2021 11:46 AM PDT

    What is going on with Chegg??

    Posted: 02 Nov 2021 09:10 AM PDT

    What is going on with Chegg??

    I thought about buying Chegg stocks before last night's earnings report.
    fortunately, I missed the opportunity to help myself get a little poorer.

    The stock is down 46%, losing almost half of its valuation after lowering fourth-quarter projections.

    The reason I thought about buying into Chegg is that I believe that the company is one of the leading players in the education technology market, They offer course curriculum help primarily to college students worldwide. Its services are becoming increasingly sought after as more learning is happening online.

    I knew that the trend of online learning might reverse as more people are going back to school, so I wasn't surprised to read that the CEO said in the last earnings report that

    ​

    " In late September, it became clear to us that the education industry is experiencing a slowdown that we believe is temporary and is a direct result of the COVID-19 pandemic. "

    But I was definitely surprised to see the market's aggressive reaction.

    So What Happened?

    Chegg posted revenue of $171.9 million, up 12% from a year ago, and a little below the Street consensus forecast of $174.5 million but also managed to lower operating costs to $104 million from $109 million in 2020.
    Net income reached $6 million vs a loss of $37 million in the prior quarter, and operating cash flow grow to $5.9 million vs $5.1 a quarter ago.
    cash and cash equivalents grew to $753 million from $527 in 2020 and total liabilities increased from $109 million to $133 million.

    At first sight, the numbers look good, Chegg maybe missed the Street consensus forecast but still, the company showed revenue growth and $6 million in net profit

    The guidance was the issue.
    for the fourth quarter, Chegg projects revenue of $194 million to $196 million, well below the Street consensus at $240.6 million.
    lowering its forecast for both revenue and adjusted EBITDA for the full year. The company now seeing revenue coming in at as much as $764 million. Previously, it saw as much as $815 million. And then, again, on the bottom line, the company seeing adjusted EBITDA coming in at as much as $257 million, whereas it previously saw as much as $300 million for the first quarter.

    Peers comparison

    but still... 46% down? isn't that a bit much? Chegg is now valued at less than $5 billion!
    even Coursera has half of Chegg's revenue and a third of its gross profit and is more valuable than Chegg!

    Revenue Chart

    Revenue Comparison - jika.io

    Gross Profit Chart

    Gross Profit comparison - jika.io

    Cash And Cash Equivalents Chart

    Cash And Cash Equivalents Chart comparison - jika.io

    Do you think this is an overcorrection and might be an opportunity?
    In my opinion, investors overreacted to the company's slowdown announcement, plus, Chegg's price seems so unreasonable compared with its competitors like Udemy or Coursera.

    sources:
    jika.io- comparing stocks
    Chegg Investor Realstions

    submitted by /u/dooovi
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    Does it look like I’m too heavy in 1 sector? Is there anything wrong with not having a stock from every sector?

    Posted: 02 Nov 2021 10:24 AM PDT

    Zillow Stock Down Big! Buying Oppurtunity?! $Z $ZG

    Posted: 02 Nov 2021 05:47 PM PDT

    The $BEST inc recent sell off makes no sense when we consider how bullish the express unit deal was; and why I think this is a 'buy the dip moment'.

    Posted: 02 Nov 2021 08:32 PM PDT

    The $BEST inc recent sell off makes no sense when we consider how bullish the express unit deal was; and why I think this is a 'buy the dip moment'.

    Hey everyone,

    So If you're like me, you're wondering why what happened with the recent bullish news of $BEST inc's 'express China unit' sale and what it means for the company and us shareholders.

    What we know:

    $BEST inc has sold its express unit in China for around $1.1 billion USD; which they're expected to get around 600million USD in cash for; with the other 500million for what they refer to as being subject to "certain adjustments and conditions under the terms of a definitive agreement entered into by the parties".

    • The $1.1 billion $BEST inc is getting from the sale of the express unit is essentially double what the ENTIRE companies market cap is currently: around 500million.
    • While revenue will be reduced from the sale of the express unit (about 58% reduction in total company revenue) it means the biggest loss causing unit is now gone; the majority of $BEST inc's other units are currently profitable and growing. So the other 42% of the revenue (about $2+ billion USD) is generated by the better parts of the business which $BEST inc is keeping; and those units have better margins, too.
    • Presumably some of $BEST inc's debts will be payed down with the money paid for the express unit.
    • (IMPORTANT) If the entire company (all units) of $BEST inc were acquired for the $1.1 billion, then with taking the buyout price and dividing it by the total number of outstanding shares, we would have a total buyout price of $2.86 per share. BUT this did not happen, instead $BEST inc only sold ONE unit (express unit) for the $1.1 billion.
    • The short float is still 24.80% according to Finviz, too.

    Some thoughts:

    $BEST inc is so ridiculously undervalued! If the entire company was sold for the price of what express was sold for, then we'd all have $2.86 per share; instead the price dropped for some reason, and we continue to sit at a massively discounted price for no rational reason.

    I'm very bullish on $BEST inc; and I suspect some game is being played here. We have the opportunity to squeeze the shorts in $BEST; and it is demonstrable that they're undervalued as a company. Even will the sale of the express unit, $BEST inc will be generating $2+ billion usd per year in revenue; and are virtually assured to be profitable now since they've retained their better performing units.

    $BEST inc has the ability to be a double digit stock IMO: the fearmongering; the coordinated sell offs--non of this should take away from the fact this company is an undervalued gem; and why I believe smart investors should remain long and strong in $BEST inc.

    Not financial advice obviously; just why I'm bullish on $BEST inc!

    Good luck friends!

    Long on 300k shares.

    https://preview.redd.it/e6ouvvwsvax71.png?width=599&format=png&auto=webp&s=4456ee0ce5679038ef348c5a630b514a8007daa6

    https://preview.redd.it/mbow02duvax71.png?width=2719&format=png&auto=webp&s=a58fc14dc85552abb937c66602f8bff2cfc83972

    submitted by /u/the_mirror_viewer01
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    Italian watchdog drops Google display adv case as EU antitrust investigates

    Posted: 02 Nov 2021 12:56 PM PDT

    Italy's competition watchdog said on Tuesday it had dropped a probe into Alphabet's Google alleged abuse of its dominant position in the online display advertising market after the EU antitrust started a similar investigation.

    The Italian watchdog decided non to take any action as under EU laws the case is now out of its responsibility, it said in its weekly bulletin.

    The European Commission opened an investigation in June into whether Google distorts competition by favouring its own online advertising technology services to the detriment of rivals, advertisers and online publishers.

    Source.

    submitted by /u/RefinedStrategist
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    Redwood finding support at new highs or consolidation before beginning a downtrend? What’re your thoughts on this?

    Posted: 02 Nov 2021 08:26 PM PDT
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