Daily General Discussion and Advice Thread - December 13, 2021 Investing |
- Daily General Discussion and Advice Thread - December 13, 2021
- Where would you park your cash reserves?
- $TPGY/EvBox: Why i believe this could be the next big thing
- Why are bond yields dropping today?
- Debt & credit cycles and the role they play in portfolio strategy
- Could Square's deal to buy Afterpay face the same fate as Zoom's deal to buy Five9?
- is there anywhere i can view interactive graphs of entire market sectors? so i can quickly see how the entire auto sector, oil and gas drilling sector, software sector, etc are moving as a whole over the past year or two?
| Daily General Discussion and Advice Thread - December 13, 2021 Posted: 13 Dec 2021 02:01 AM PST 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! 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] |
| Where would you park your cash reserves? Posted: 13 Dec 2021 06:54 AM PST So right now I'm 100% equities, I'm fairly young and have a moderate risk tolerance. Without literally everything being overvalued right now, and bonds giving negative yields, where's a good place to park some cash in case of a market correction? I want to have some money ready to buy discounted stocks when a market correction hits, but bonds seem like such a waste of time right now, what's a fair alternative? [link] [comments] |
| $TPGY/EvBox: Why i believe this could be the next big thing Posted: 13 Dec 2021 04:58 AM PST $TPGY is negotiating for a merger with Europe's EvBox. EvBox: Europe's biggest EV charging-station company. -190,000 EV charging ports delivered globally around the world up to the year 2020, the most of any company in Europe, with that number expected to be much higher now in 2021. -$135 million in revenue for 2021. -Their charging stations look fabulous -Attractive valuation, much cheaper than its competitors, EvBox will be trading at only 6.7x 2021 EV/Revenue, and 3.6x their 2022 revenue. Compare this to Chargepoint that trades at 76.1x their 2021 revenue, and 43.6x their 2022 revenue. -A 72% YoY Growth from 2020 to 2021, from $79 million to $135 million in revenue. They have also announced in a statement that they expect revenue for next year to be $252 million, which is a 87% growth from this year. -EvBox quality of products compared to its peers -EvBox partners with key companies from various industries around the world to provide charging infrastructure for cities, enterprises, and residents. -Partners include: France's "Engie"($70 billion dollar company), France's "Rexel"($13 billion dollar company), Sweden's "Vattenfall"($18 billion dollar company), Netherlands 'Eneco'($4,6 billion dollar company), Denmark's 'Norlys'(4,8 billion dollar company), Iceland's 'On Power*, and many others companies around the world from different nations. -Example of customers include: Ikea, Lidl, DHL, Pfizer, Mcdonalds etc. -Through partnerships, EvBox has managed to provide cities around the world with charging infrastructure, cities such as Amstardam, Rotterdam, Monaco, New York State and many others. -European Market Leader: There exists two types of charging methods for electric vehicles, they're called "AC" and "DC". EvBox has a 25% market share of all "AC" public charging in Europe, and a 35% market share of all "DC" charging in Europe, which is just incredible. -Award winning tech, awards include: 1st place in the CleanTech sector for Netherland's "Deloitte Technology Fast 50" in 2016. Named a Grid Edge Award winner by Greentech Media and highlighted as an industry leader focused on paving the way towards tomorrow's distributed energy systems in 2017. Named a CES Innovations Award Honoree in the category of Smart Energy with the Elvi product in 2018. Also featured on the Inc. 5000 Europe List of fastest-growing private companies in 2018. Named as a leading provider of Public Charging Network and EV Charging Services by Navigant Research in 2019. Won a CES Innovations Award, a iF Design Award, and a Red Dot Award. -EVBox is set to install 300,000 charging stations across Denmark by the year 2030. The contract is with Denmark's largest energy and telecommunications company Norlys, a company which had $4,8 billion in revenue for 2020. Installations have already started. State of the spac: Negotiations have been ongoing for almost a year now and are still ongoing today, and I believe that a confirmation on whether the merger will happen or not should be due any minute now. If the negotiations fail, TPGY's stock price would probably go back down to nav at $10 which is only a -2% loss considering the share price is $10,18 at the moment of writing this. However if the negotiations succeed and we get a merger, we could perhaps get a +200% or even +300% gain considering that previously a merger news-article made the share price go from $10 to $33 in only a couple of days earlier this year. TLDR; $TPGY is negotiating for a merger with EvBox, Europe's biggest EV charging infrastructure company, with $135 million dollars in revenue for 2021, over 190,000 charging stations in 2020, partnerships with many different multi billion dollar companies around the world from different nations including France, Netherlands, Sweden, Denmark, Iceland etc. 300,000 charging stations set to be installed in Denmark by the year 2030, award winning technology, cheaper valuation compared to its peers, proven better quality of products compared to its peers, long list of famous brands as their customers, etc. You can lose -2% if negotiations fail and it goes back to NAV, however if the deal does go through it could explode, maybe to the levels of its previous shareprice of $33 which is a 330% gain. This is a great deal which is the reason I've chosen to invest. Disclosure & disclaimer: I own 500 shares of TPGY, please do your own due dilligence too. [link] [comments] |
| Why are bond yields dropping today? Posted: 13 Dec 2021 09:24 AM PST Today all the bond yields are dropping:
As far as I understand this, when bond yield drop that is because investors are buying bonds. When investors buy bonds (more offer than demand) the price of the bond raises, therefore those bonds give lower yield if you purchase them at this value. So why is anyone buying bonds when it is expected that the FED is going to announce a raise of interest rates sooner than expected this Wednesday? Can anyone explain this to me? If you expect a market crash you keep cash not buy bonds if you also expect a raise of interest rates. It makes zero sense. [link] [comments] |
| Debt & credit cycles and the role they play in portfolio strategy Posted: 13 Dec 2021 08:31 AM PST Hey team, I manage most of my assets personally and, as a result, I feel an ongoing responsibility to understand the world around me, as this enables me to make the best investment decisions I can. Recently, I've been thinking about how to best allocate my portfolio given the current state of asset valuations, government debt, and general investor sentiment. Through studying the works of Ken Galbraith, Howard Marks, Ray Dalio and other great investors, I have learned that the single most important variable in determining whether I should be aggressive or defensive with my portfolio strategy is the debt cycle. The ability to understand where we are in the debt cycle, and adjust our portfolios accordingly, is one of the hallmarks of great investors. I have decided to share my thoughts here in order to get your feedback. Before diving in, I want to emphasize that these are my views, and that different people have different perspectives. I hope that by sharing my views, I will encourage debate and advance our understanding together. TLDR: The debt & credit cycle are paramount in helping me understand how to think about my ETF portfolio strategy. CyclesAt its core investing is making good decisions about the future. To do this well, investors need to form probability distributions of different outcomes to guide their actions. But it is important to remember that even if we know the probabilities, we don't necessarily know the outcome. Howard Marks has a helpful analogy: successful investing is like choosing a lottery winner. The winner is determined by one ticket (outcome) being pulled from a bowl of tickets (many possible outcomes). Superior investors have a better sense of what tickets are in the bowl, and thus, whether it is worth participating in the lottery. Said another way, great investors don't know exactly what the future holds, but they have an above-average understanding of future tendencies and probabilities. This brings us to cycles. Understanding cycles helps us form a view of future probabilities. It helps us understand how many winning lottery tickets there are in the bowl. Analyzing cycles is not a precise science. The goal is not to time the market; rather, it provides a directional sense of what has happened, and what might happen. Marks explains this elegantly: The superior investor is attentive to cycles. He takes note of whether past patterns seem to be repeating, gains a sense for where we stand in the various cycles that matter, and knows those things have implications for his actions. This allows him to make helpful judgments about cycles and where we stand in them. Specifically: Are we close to the beginning of an upswing, or in the late stages? If a particular cycle has been rising for a while, has it gone so far that we're now in dangerous territory? Is the market overheated (and overpriced), or is it frigid (and thus cheap) because of what's been going on cyclically? The most important cycle for investors to follow is the debt cycle. Credit & DebtSince we will use the terms "credit" and "debt" a lot, I will quickly define them. Credit is the giving of buying power. When you take on credit, you exchange it for a promise to give it back; this is called debt. Credit and debt, in and of themselves, are good things, and little credit and debt can be a bad thing. For example, if there is credit available to build roads, schools, and other essential infrastructure, that is a good thing. If the credit and debt are used to consume goods outside of one's income level, that is a bad thing. So, the overarching principle is that credit is desirable when the borrowed money is used productively to generate enough income to repay future debt obligations. If this occurs, good decisions have been made, and both the lender and borrower will benefit. Debt CyclesAt the highest level, a debt cycle is the oscillation between credit and debt being easily available and being scarce. [1] When credit is easily available, there is more money in the system. This leads to growth in GDP, asset prices, incomes, etc. and is called an economic expansion, or a "boom." To prevent prices from growing indefinitely, central banks taper credit, which causes everything to shrink. This is called an economic contraction, or a "bust." This dynamic has existed for as long as credit has been around, predating the Roman Empire. [2] Debt cycles are nothing more than a logically driven series of events that recur in patterns. Whenever you borrow money, a debt cycle is created. Let's explore this in more detail. A debt cycle has two distinct phases: (1) expansion; and (2) deflation. Expansion: Every debt cycle begins with widely available credit. There is a famous line in In Fields of Dreams, "If you build it, they will come". In the economy, if you offer cheap debt, people will borrow. When debt is cheap, the threshold for its productive use is lower and skews more toward consumption. Since one person's spending is another person's income, higher consumption leads to higher incomes. Eventually, this leads to higher asset prices (stocks, bonds, real estate, crypto-assets, etc.) since there is more money chasing assets. This has a positive self-reinforcing effect. As incomes and asset prices inflate, people feel rich and start to take on even more debt. Creditors look at the increased net worth of their debtors and feel comfortable giving them more debt. [3] This strengthens the feedback loop. Risk averseness diminishes, investor sentiment shifts toward optimism, and everyone thinks the good times will last forever. At this point debt is used more recklessly to fund consumption or projects with negative returns. Deflation: Eventually, to stop the upward cycle central banks taper credit, by making it more expensive. Making debt more expensive has two impacts: (1) people are less likely to take on new debt; and (2) existing debt becomes more expensive, which increases the risk of default and shifts spending away from consumption and investment to debt repayment. This triggers a negative spiral. A lack of credit creates a liquidity problem. Investors and lenders become more critical of who they lend to. There is less money flowing around and consumption is reduced. Reduced consumption reduces income (remember that one person's spending is another's income). Lower incomes and lower asset prices mean lower net worths. Lenders, who were providing credit based on higher income and asset prices feel exposed and tighten credit even more. This creates a self-reinforcing cycle and the downward spiral continues. Resetting the cycle: To combat the downward spiral, central banks lower interest rates and make credit easily available again. This marks the end of one cycle and the beginning of the next. The Most Important CycleThe slammed-shut phase of the credit cycle probably does more to make bargains available than any other single factor – Howard Marks Why do I ascribe such importance to debt cycles? Because credit, at least, impacts four important economic factors:
When the credit markets are wide open, the cumulative effect of the above is overly optimistic investor sentiment. When incomes and net worths are high, growth rates attractive, and all businesses avoiding default, people think the music will never stop. As a result, the potential risk-reward spectrum of investing is at its least favorable. But investor sentiment is also a cycle, shifting from overly euphoric to overly pessimistic. When we enter the deflationary stage of debt cycles, the inverse is true. Making Good DecisionsThe ultimate purpose of this essay is to enable you, the reader, to have a sense of where we stand in the debt cycle and take the appropriate action. As such, I have outlined some typical signs of an open and cautious credit market. Signs of an open credit market:
Signs of a cautious credit market:
What does all this mean? It means that one of the best ways to enjoy superior returns is to get the market on your side. Outcomes will never be under your control, but if you invest when the lottery tickets are biased toward favorable, you will have the wind at your back. Understanding cycles gives you a better chance of knowing when this is and positioning your portfolio accordingly. It helps you understand how many winning tickets are in the bowl and whether you should buy one. The next logical question is where are we currently in the debt cycle and how should my portfolio be skewed toward the balance between aggressive and defensive? At the time of writing this, I am leaning toward neutral-to-defensive. [5] When uncertainty is high, asset prices should be low, creating high potential returns that are compensatory. However, the combination of money printing and low interest rates has forced asset prices to be the opposite. While I don't think prices are egregiously high, it is hard to find mouthwatering deals. Regards, Arash Param Notes, Inspirations & Additional Readings [1] Ray Dalio explains that there are two debt cycles we should pay attention to: the short-term debt cycle and the long-term debt cycle. For the sake of this essay, I have ignored this distinction and the policy and political implications associated with them. [2] In Debt: The first 5000 years David Graeber lays out the historical development of debt. The first recorded debt system was in the Sumer civilization around 3500 BC. [3] What I find fascinating is that this seems rational. For example, if you buy a house for $50 in year 1 with $25 of debt your total debt-to-asset ratio would be 50%. The next year, your house is worth $75 on paper, so your debt-to-asset ratio is now 33%. Based on this, you take on more debt to get the ratio back to 50%, resulting in ~$38 of debt. But what if your home price drops back to $50? Then your debt-to-asset would be 76%. The point here is that the amount of credit one has available is often based on asset value, which is a variable number. [4] Many corporate assets, such as buildings and machinery, are long-term in nature. But they are often financed with short-term debt because the cost of borrowing is lower relative to long-term debt. This mismatch is what drives the default risk that is associated with credit markets drying up. [5] It is outside the scope of this article for me to go into great details as to why. If you want to have a deeper conversation on this, please reach out. [link] [comments] |
| Could Square's deal to buy Afterpay face the same fate as Zoom's deal to buy Five9? Posted: 13 Dec 2021 05:30 AM PST On July 18th, Five9 agreed to be acquired by Zoom (ZM was trading for around $360 per share at that time) in an all stock deal. Over the subsequent months, ZM's stock price fell by over 25% and the FIVN deal completely fell apart. On August 1st, Afterpay agreed to be acquired by Square (SQ was trading for around $247 per share at that time) in an all stock deal. Over the subsequent months, SQ's stock price has fallen by over 25%. Do you think it's probable that this deal is also going to fall apart? [link] [comments] |
| Posted: 12 Dec 2021 04:22 PM PST i really like the "market" section of webull because it allows you to see the average % gain/loss of every sector over the past 1 day, 5 days, 1 month, and 3 months. however, it doesnt let you view it in a graph format. i want to be able to see graphs of how entire sectors are moving to help me better visualize what is happening in the markets [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