Stocks - r/Stocks Daily Discussion Wednesday - Dec 29, 2021 |
- r/Stocks Daily Discussion Wednesday - Dec 29, 2021
- The biggest difference between 1998-2000 and today's market.
- Realizing These 7 Trading Mistakes Saved Me Over $200,000 in Losses This Year
- The January effect
- What are your non-tech stocks for 2022?
- What happens to Tesla if/when Elon Musk steps down
- Invest in Swiss Stocks from India?
- Vanguard Statements Down for two Days?
- Anyone got any thoughts on LSE:IMB Imperial Brands?
- DIDI arbitrage Opportunity
- Do the bonds in BITO (And similar ETFs) offset the time decay of etfs that follow futures?
- r/Stocks Daily Thread on Meme Stocks Wednesday - Dec 29, 2021
- didi lottery ticket
- Recreation properties: Casinos, hotels, etc. Potentially bad buy?
- What do you think about the heavy insider buying + any potential value in Torex Gold Resources? TXG
| r/Stocks Daily Discussion Wednesday - Dec 29, 2021 Posted: 29 Dec 2021 02:30 AM PST These daily discussions run from Monday to Friday including during our themed posts. Some helpful links:
If you have a basic question, for example "what is EPS," then google "investopedia EPS" and click the investopedia article on it; do this for everything until you have a more in depth question or just want to share what you learned. Please discuss your portfolios in the Rate My Portfolio sticky.. See our past daily discussions here. Also links for: Technicals Tuesday, Options Trading Thursday, and Fundamentals Friday. [link] [comments] |
| The biggest difference between 1998-2000 and today's market. Posted: 28 Dec 2021 07:02 PM PST From 1998 to April 2000, no one lost money. All stocks were up, pretty much. Today, the SPY is breaking new highs while there are many stock pickers who have lost money recently. The big 5 are only about 5% off their peak, but some speculative stocks are down 50% or more, in the middle of a raging bull market. This divergence did not exist in 1998 to 2000. What does this mean to you? [link] [comments] |
| Realizing These 7 Trading Mistakes Saved Me Over $200,000 in Losses This Year Posted: 29 Dec 2021 03:19 AM PST If you've recently started trading, you're likely very disturbed by the recent pullbacks and volatility, especially among high-flying household tech stocks like Docusign, Roku, and Teladoc, which are down 45% from recent highs. Even more jarring was the complete crash of Chinese darlings Alibaba, Tencent, and JD.com due to concerns that the communist government in China would be, well, communistic. Institutional investors used fears of inflation and the latest COVID variant as a reason (excuse) to get out of positions they knew had been overbought. And all the stop losses got triggered thereafter, creating a snowball effect. This has restored some sanity to the market, though I'd argue many stocks are still overvalued. I'm going to lay out 7 mistakes everyone makes when investing below in the hope that it provides some guidance to those who need it. If you feel you don't need, just don't read it. Thanks. Expecting the Market to Rise in a Straight Line Likewise, the number of smaller pullbacks of 5% have become more common over the past decades and now average around 5 per year. Keep in mind, these pullbacks represent the average of a bundle of 500 stocks, meaning some stocks are affected a lot more than 5% and others less than 5%. Not Picking An Entry Point These market pullbacks represent great buying opportunities, but should not be relied on as the entry points because in the moment investors don't know if it's a 5, 10, or 20% correction. Instead of trying to predict the future outcome of a pullback, I have a set list of companies I want to buy always ready to go with my target price. Think of this list as your budget - you determine this entry price and you don't budge from that target. If the stock drops to the price or below, it's a buy, and you enter the trade. I may lose more money on the way further down but that's OK, I got my entry price and need to have faith in the investment rebounding. I have gotten burned more times than I care to count by getting impatient and buying a stock above my target price only to watch in horror as it tumbles back down to the price I wanted to pay to begin with six months later. Truth be told, this is more a game of patience and good technology. I set price alerts using Fidelity (always to my phone not email) and I try to ignore the FOMO as the stock rides up high quickly. Being a successful investor is a lot like being on a diet at all times. I'm constantly hungry for more, wanting to jump in an enjoy decadent treats, and having to sacrifice my desires for better outcomes. If I'm not feeling the friction of personal restraint, I'm not investing, I'm just gambling. Setting Entry Prices Based on Graphs Only OK, so I need to set an entry point to avoid being the bag holder - how do I do that? There are many ways. The worst way IMHO is to look at a chart and pick a number based on where a stock has been previously aka a previous dip. Technical analysts will often point to support and resistance lines in graphs and talk about whether or not a stock will hold its fall at a resistance point or break out through a previous resistance line. New support and resistance lines are forming all of the time because of the micro and macro environments. Said plainly, events cause these levels - they are not mystical levels that form on their own. People react to events and prices change. And many levels are created by people in support of their own thesis these lines exist, self-perpetuating their existence. Usually, they are formed around events. The events could be company news or it could be macro news about the inflationary environment, policy changes, or other world events. So it's critical to track events and know what's going on with the company and the world before going in. You can do this through the news or by using technology. I use a software system to keep track of major company events and help me understand how they will impact the price movement. I haven't found a more efficient way of doing that. If you've taken account of events, the next thing to do is find a way to value the stock. There are many ways to do this and I plan on writing a post with more detail on that in the near future. For now, I'll note a few simple ways to do this. Price to Earnings Ratio (P/E) - the P/E ratio gives an analysis of the stock's price relative to its annual earnings or profit. The higher the P/E, the more expensive the stock. The easiest way to understand this is to think about your investment as the share price and the annual return on that investment as the earnings. If the P/E is 20, it would take you 20 years to recoup your investment in terms of the value of those earnings. This ignores a lot of things like inflation, free cash flow, the total assets of the company, company debt, and how fast the company is growing. But it's a useful back of envelope way to give an idea about whether the investment may turn out well. If a stock has a P/E above 20, the company should be growing double digits annually, not be riddled with debt, and have competitive positioning so it doesn't get crushed. If it's trading over 60 P/E, it should be growing earnings and revenue triple digits to justify the valuation, or be in a position to dominate a market for many years to come. Other valuations include the Price to Book ratio, the Price to Sales Ratio, and the Enterprise Value to EBIDTA. We'll have to cover these in another post. For now, know they exist but you can use the P/E as a north star to guide your entry points and avoid overpaying for stocks. In an environment of low inflation, P/E matters less than it does than in an environment of higher inflation, where companies with less earnings and cash flow have to borrow more at higher interest rates to continue growing. So set your entry price on a reasonable P/E ratio that is in line with the historical 5-year P/E of the company and its peers (Fidelity makes this readily available). If you buy a company with no earnings, it's going to get crushed every time there's an inflationary scare because in order to grow, that company has to borrow money or raise more money by selling more shares or debt, which dilutes the company's value. Likewise, if their high growth stalls for even one quarter, the stock will go into free fall. So you need to monitor earnings results very closely if you own one of these stocks. Creating a Portfolio That is High Risk If I had a hundred dollars for each time someone asked my opinion about Nio, PlugPower, or Docusign, I'd be able to pay a full year's college tuition. Yea, these stocks have done very well until now. But they are volatile stocks all based on the premise of future domination with little evidence to back that up today. Don't get me wrong, I LOVE growth stocks. But they should compose a portion of a portfolio, not the whole pizza. I allocate 20% of my portfolio to growth stocks and that's pretty high, but I'm willing to lose over half of that for the longer term gains. I would never be 100% growth stocks as that is an easy way to experience immense pain as these stocks are likely to crash heavily as we've seen recently. And I buy and sell these stocks - I don't hold them forever. There are far better experts than I at creating the killer portfolio allocation, but my advice is to carve it up into stable dividend payers like Verizon, large cap leaders in tech like Apple, large cap healthcare companies (I like Anthem), large cap payments companies like Visa and Mastercard, strong value mid-cap companies like my favorite: Crocs, some consumer staples stocks that people need even when things are bad, some semi-conductors that aren't overpriced, and companies leading in new industries that actually make money. Buying At The Peak Price If you've ever bought at the peak, the following scenario should sound familiar: An event happens, the stock you've been hearing about all year, which is up 100%, rallies 13% today and another 15% the next day. Analysts up their price targets, the news is buzzing that the company is unstoppable, and days later the stock is up another 50%. You've heard about this company for a long time and have wanted to buy it but waited. Everyone you know owns it, brags about their gains, and it looks like it's making another unstoppable, huge run. Not wanting to be left on the sidelines missing out again, you throw some money at the stock, buying at its peak. A week later, UBS calls the stock's valuation detached from reality and lowers its price target, sending the stock down 15%. In the days that follow, it continues to sink, with analysts downgrading their estimates. Then they miss their earnings target, and the stock plummets further. You're unsure what to do, so you do nothing and watch your losses pile up. You are the bag holder. If the description above sounds uncomfortably familiar, don't fret: you're not alone. We've all been there. The only thing to do is to learn from the events and take the lesson that it's very risky to buy at the peak, where a peak can be defined as the point at which everyone knows about it, is talking about it, and has already invested in it. If you come in after, you're taking on more risk than the possible reward. So what should you do when you want to own that stock? Wait. Set a reasonable entry point and wait. You might have to wait 9 months. Women do this for children all the time while being wildly uncomfortable. You can handle not buying a stock for 9 months. There is another way to play it that's more complicated: you could pick a price that is a little above your entry point and sell a put. That gives someone else the right to sell the stock to you at that price and in return you collect the premium for the contract. If the stock you want is trading at 300 and the price you want to pay is 200, sell a $30 put at 230. If the stock never comes down, you make $30 a share, and you have profited from the stock. Congrats! If it does come down under 230 and the contract is exercised, you end up buying the stock at 230 but pocket a $30 premium, making your net purchase price 200 - just the price you wanted! Win win. Losing Faith & Conviction After taking a beating on a stock or ten, it's easy to lose faith in your abilities to make sound investments and even easier to lose conviction in your other stock purchases. It's these moments where you need to remind yourself that the market goes up AND down and you will have many more years to make money (if you're healthy) provided you learn from your mistakes and continue trying. I write down everything I've learned in a list that I revisit time and time again. This list is now 30 points strong on what not to do based on 30 ways I've lost money. It's now a list of how to make money in the stock market (and how to populate blog content). If you write down what went wrong, you're committing to lifelong learning and to be improving. If you don't and opt to wallow in self-pity, you're bound to not only repeat these mistakes, but you're likely to sit out on future market rallies because you lack conviction. The best buying opportunities comes when market participants feel powerless and are willing to sell their stock at steep discounts. "When there's blood on the streets, buy property." Not Having an Exit Plan How much money do you want to make on your investment? The answer can't be infinity and I don't know isn't much better. Professional wealth managers aim for 6% a year, net of fees. The S&P 500 returned an average of 7.5% over the past 20 years. So what will I do if a stock I own goes up 300% in one year? I sell it and wait for an opportunity to buy it again when it comes back down to earth. Why? Because I've accomplished the returns I'm looking for. I sell it because I reached my exit price, even if that happens a lot faster than I thought it was going to because my goal is to make money not to own stocks. Some stocks are long holds. Visa, Apple, Microsoft, Google - it's ok not to have a lifetime price target on these. For others less established, I like to have a goal. I bought Lemonade stock at $44 for example. When I bought it pre-IPO, I thought it was a 10X stock over 10 years. In the first year, the stock skyrocketed to 175. It was too much too fast for the trajectory I was expecting so I sold some at 80 and the rest at 120. Making 2 x and 3x my money in one year reached my goal of 10X return over 10 years in terms of the annual return, so I was out. I also thought the valuation was not justified. Others agree, and the stock is back at $44 now. If I had bought and held, I would have achieved no profit. Instead, I grossed $50,000 on a $20,000 investment. In case you're curious, I do plan to buy Lemonade again IF they can prove they are able to gross more revenue per existing client. Right now they are paying too much for customer acquisition. Just remember to take taxes into account when determining your profit targets. In my case, I held LMND for a year prior to selling, so I paid capital gains taxes not income tax rates. Good luck. 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| Posted: 28 Dec 2021 08:59 PM PST What are your thoughts on such? Do you believe it is reasonable, most likely to happen or not at all? Is this market prediction scary to you? I would like to hear what y'all think. For those who do not know the January effect is the belief that in January securities increase in price more than any other month because of end of year bonuses and other small occurances. The reason this year is different is because small caps (not all) have been doing horrible in the past year and there is a belief by hedge funds and someone really intelligent (I don't remember who it was haha) that during this January effect things might flip for the better of this stocks. Please make sure to correct me if I got something wrong or missed something important. Thanks for any help you can provide. [link] [comments] |
| What are your non-tech stocks for 2022? Posted: 28 Dec 2021 09:23 PM PST Tech is great. Apple, Microsoft, Facebook, Google, Microsoft, AMD, etc. are all great. But I'm curious, what non tech stocks do you have in your portfolio for the up coming year. I got WM and BAC before 2021. But I'm looking for others for 2022. [link] [comments] |
| What happens to Tesla if/when Elon Musk steps down Posted: 28 Dec 2021 06:44 PM PST Most of my portfolio is right now riding in Tesla. I have 0 concerns with competition and other random issues that pop up (ignorant or not). But hypothetically, what predictions of teslas stock would you have if Elon Musk decided to completely walk away and give someone else complete responsibility of Tesla. [link] [comments] |
| Invest in Swiss Stocks from India? Posted: 29 Dec 2021 01:07 AM PST As the title suggests, I would like to invest in Swiss stocks from India, is it possible? I tried to research the topic but could not find if it was possible, the closest I came to was eToro but it is now not available in India anymore, I am willing to open a new account for this, please advise. [link] [comments] |
| Vanguard Statements Down for two Days? Posted: 28 Dec 2021 09:59 PM PST Anyone know what's happening at VG. Tried to get some statements and a pop up says statements are down due to a third party provider. This is day 2 and there is no useful info on VG about the issue or expected fix time. Will be moving all out of VG come 1/1/2022. Was hoping to pick up some VNQ for an inflation hedge. Other non VNQ ideas for inflation hedge? [link] [comments] |
| Anyone got any thoughts on LSE:IMB Imperial Brands? Posted: 28 Dec 2021 07:09 PM PST Background on the Company: Imperial Brands plc, formerly Imperial Tobacco Group plc, is a British multinational tobacco company headquartered in Bristol, England. It is the world's fourth-largest international cigarette company measured by market share… Imperial Brands produces over 320 billion cigarettes per year, has 51 factories worldwide, and its products are sold in over 160 countries. Its brands include Davidoff, West, Gauloises Blondes, Montecristo, Golden Virginia (the world's best-selling hand rolling tobacco), Drum (the world's second-largest-selling fine-cut tobacco), and Rizla (the world's best-selling rolling paper). Important Info: Market Cap: £15.1B Revenue: £16.56B Earnings: £2.83B Free Cash Flow: £1.97B PE (Useless Ratio): 5.3 Enterprise Value / EBITDA (Alpha Ratio): 6.86 ——————————————— Health Information Growing Profit Margin: IMB's current net profit margins (17.1%) are higher than last year (9%). Earnings Trend: IMB's earnings have grown significantly by 20.2% per year over the past 5 years. Accelerating Growth: IMB's earnings growth over the past year (89.6%) exceeds its 5-year average (20.2% per year). Earnings vs Industry: IMB earnings growth over the past year (89.6%) exceeded the Tobacco industry 19.6%. Debt: £9.86B Equity: £5.94B Cash and Short Term Investments: £1.3B Long Term and Other Assets: £19.1B Debt To Equity Ratio: £165.9% Short Term Liabilities: IMB's short term assets (£8.2B) do not cover its short term liabilities (£10.8B). Long Term Liabilities: IMB's short term assets (£8.2B) do not cover its long term liabilities (£12.3B). Reducing Debt: IMB's debt to equity ratio has reduced from 243% to 165.9% over the past 5 years. Debt Coverage: IMB's debt is well covered by operating cash flow (22%). Interest Coverage: IMB earns more interest than it pays, so coverage of interest payments is not a concern. ——————————————— Insider Trades: In August four executives bought in total an approximate £177K worth of shares. No selling has been recording in the last 12 months. Dividend Yield of 8.6% yr if you care. This stock's price has fallen consistently year after year since 2017 as a result of a dying tobacco industry, but I think there is a case to be made for it being undervalued. Despite the stock falling 60%, its revenue and earnings have increased over that time and the debt has decreased. It seems to have bottomed out, as it has been flat for the year, and I am taking signs that executives are buying as a positive thing for a reversal. To me, it seems to be a perfectly fine company that people are passing on out of fear tobacco will die. What do you guys think? Disclosure: I do not hold any positions in LSE:IMB. [link] [comments] |
| Posted: 28 Dec 2021 08:10 PM PST So DIDI is delisting into Honk Kong shares soon and I'm pretty sure that when they do delist you essentially get shares at $8 guaranteed. If that's the case shouldn't this just be a classic arbitrage opportunity or am I missing something. [link] [comments] |
| Do the bonds in BITO (And similar ETFs) offset the time decay of etfs that follow futures? Posted: 28 Dec 2021 06:43 PM PST So, as many of you know, BITO is an ETF that attempts to mirror the price of bitcoin using CME's bitcoin futures. I was looking into their holdings, and unsurprisingly they've begun averaging into the january contract, split about half and half. Now futures contracts are usually priced with interest rates included in further dated contracts, which means that the fund is bound to lose money over time. I've noticed that they carry bonds in the portfolio though and quite a significant amount too. I've also read some comments that said the fund won't actually follow the movements of bitcoin, so my question is, does these bonds actually offset the backwardation on bitcoin futures contracts, and if not, are there any scenarios that might cause BITO and other ETFs like it to deviate from the spot bitcoin price? [link] [comments] |
| r/Stocks Daily Thread on Meme Stocks Wednesday - Dec 29, 2021 Posted: 29 Dec 2021 04:00 AM PST The meme stock scheduled posts will run Mon to Fri and won't be a sticky; you're probably seeing this because automod sent you here or you woke up early Wall St time; good morning! Welcome traders who just can't help them selves discuss the same exact stock that's been discussed 100s of times a day. I get it, you want to talk about what's popular, what's hot, and that 1.. single.. stock you like.. well here you go! Some helpful links just for you:
An important message from our mod u/TCGYT regarding meme stocks. Lastly if you need professional help:
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| Posted: 28 Dec 2021 07:36 PM PST I am long about .2% of my portfolio in didi right now. I bought a while back so I am already in the red. I still believe it to be positive expected value to hold, if still risky. As you know they have been plummeting and are in the process of changing to Hong Kong. Also, the going dark period will be an interesting experience when they change exchanges — any potential opportunities or pitfalls (other than losing everything) to anticipate in this endeavor? [link] [comments] |
| Recreation properties: Casinos, hotels, etc. Potentially bad buy? Posted: 28 Dec 2021 03:53 PM PST There is a predictions that once everything will open up, these companies will skyrocket, however I have a feeling that once the world will open back up, a lot of Americans, who are now forced to travel within country, will fly to tourist destinations around the world, since they are cheaper, exotic and everybody misses it. [link] [comments] |
| What do you think about the heavy insider buying + any potential value in Torex Gold Resources? TXG Posted: 29 Dec 2021 01:21 AM PST Background on the Company: Torex Gold is a leading Canadian intermediate gold producer engaged in mining, developing and exploring our 29,000 hectare Morelos Gold Property in the highly prospective Guerrero Gold Belt in Mexico. We are currently Mexico's second-largest gold producer, delivering consistent and reliable production and strong cash flow. As we look to the future and continue to realize the full potential of the Morelos Gold Property, we are also seeking opportunities to acquire assets that enable profitable and productive geographic diversification. Important Info: Market Cap: CA$1.1B Revenue: CA$905M Earnings: CA$244M Free Cash Flow: CA$150M PE (Useless Ratio): 3.7 Enterprise Value / EBITDA (Alpha Ratio): 1.45 ——————————————— Health Information Debt: Debt free Equity: CA$1.1B Cash and Short Term Investments: CA$221.6M Physical Assets: CA$844.1M Growing Profit Margin: TXG's current net profit margins (27%) are higher than last year (7.2%). Earnings Trend: TXG has become profitable over the past 5 years, growing earnings by 63.1% per year. Accelerating Growth: TXG's earnings growth over the past year (367.6%) exceeds its 5-year average (63.1% per year). Earnings vs Industry: TXG earnings growth over the past year (367.6%) exceeded the Metals and Mining industry (115.2%.) Short Term Liabilities: TXG's short term assets ($409.2M) exceed its short term liabilities ($158.1M). Long Term Liabilities: TXG's short term assets ($409.2M) exceed its long term liabilities ($57.1M). Reducing Debt: TXG has no debt compared to 5 years ago when its debt to equity ratio was 60.4%. ——————————————— Insider Trades: There has been heavy insider buying recently, with seven different executives buying since December first and one buying in November, totalling CA$656K worth of shares. There has been no insider selling for the last six months. No dividend if you care about that. This stock's price has fallen about 43% since its peak in August 2020. However, from September 2020 to September 2021 TXG's earnings have increased 368%. I am also taking the heavy insider buying as a very positive sign. Would it be a mistake to assign much importance to insider transactions? As of now, I do not hold any positions in this stock. [link] [comments] |
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