Your Trading Freedom - 50x.com

Monfex

Cryptocurrency trading platform - offers easy-to-understand margin trading for top digital coins with up to 50X leverage.
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@binance: #Binance Futures Will Launch BNB/USD Coin-Margined Perpetual Contract Trade #BNBUSD, using #BNB with up to 50x leverage. ➡️https://t.co/qHNc6XCcza https://t.co/ltXocJ7O9K

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@cz_binance: RT @binance: Today @Binance: 🔸 $50,000 @maticnetwork trading competition 🔸 #Binance Futures will launch @Theta_Network $THETA with up to 50x leverage 🔸 Enabled Isolated Margin Trading for $ADA, $EOS, $ETC, $LINK and $MATIC #BUIDL https://t.co/dDhEDp28k6 submitted by rulesforrebels to BinanceTrading [link] [comments]

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The Mouthbreather's Guide to the Galaxy

The Mouthbreather's Guide to the Galaxy
Alright CYKAS, Drill Sgt. Retarded TQQQ Burry is in the house. Listen up, I'm gonna train yo monkey asses to make some motherfucking money.

“Reeee can’t read, strike?” - random_wsb_autist
Bitch you better read if you want your Robinhood to look like this:
gainz, bitch


Why am I telling you this?
Because I like your dumb asses. Even dickbutts like cscqb4. And because I like seeing Wall St. fucking get rekt. Y’all did good until now, and Wall St. is salty af. Just google for “retail traders” news if you haven’t seen it, and you’ll see the salty tears of Wall Street assholes. And I like salty Wall St. assholes crying like bitches.
https://www.zerohedge.com/markets/retail-investors-are-crushing-hedge-funds-again

That said, some of you here are really motherfucking dense & the sheer influx of retardation has been driving away some of the more knowledgeable folks on this sub. In fact, in my last post, y'all somehow managed to downvote to shit the few guys that really understood the points I was making and tried to explain it to you poo-slinging apes. Stop that shit yo! A lot of you need to sit the fuck down, shut your fucking mouth and listen.
So I'm going to try and turn you rag-tag band of dimwits into a respectable army of peasants that can clap some motherfucking Wall Street cheeks. Then, I'm going to give you a mouthbreather-proof trade that I don't think even you knuckleheads can mess up (though I may be underestimating you).
If you keep PM-ing me about your stupid ass losses after this, I will find out where you live and personally, PERSONALLY, shit on your doorstep.
This is going to be a long ass post. Read the damned post. I don't care if you're dyslexic, use text-to-speech. Got ADHD? Pop your addys, rub one out, and focus! Are you 12? Make sure to go post in the paper trading contest thread first.

THE RULES:
  1. Understand that most of this sub has the critical reading skills of a 6 year old and the attention span of a goldfish. As such, my posts are usually written with a level of detail aimed at the lowest common denominator. A lot of details on the thesis are omitted, but that doesn't mean that the contents in the post are all there is to it. If I didn't do that, every post'd have to be longer than this one, and 98% of you fucks wouldn't read it anyway. Fuck that.
  2. Understand that my style of making plays is finding the >10+ baggers that are underpriced. As such, ALL THE GOD DAMN PLAYS I POST ARE HIGH-RISK / HIGH-REWARD. Only play what you can afford to risk. And stop PM-ing me the second the market goes the other way, god damn it! If you can't manage your own positions, I'm going to teach your ass the basics.
  3. Do you have no idea what you're doing and have a question? Google it first. Then google it again. Then Bing it, for good measure. Might as well check PornHub too, you never know. THEN, if you still didn't find the answer, you ask.
  4. This sub gives me Tourette's. If you got a problem with that, well fuck you.

This shit is targeted at the mouthbreathers, but maybe more knowledgeable folk’ll find some useful info, idk. How do you know if you’re in the mouthbreather category? If your answer to any of the following questions is yes, then you are:
  • Are you new to trading?
  • Are you unable to manage your own positions?
  • Did you score into the negatives on the SAT Critical Reading section?
  • Do you think Delta is just an airline?
  • Do you buy high & sell low?
  • Do you want to buy garbage like Hertz or American Airlines because it's cheap?
  • Did you buy USO at the bottom and are now proud of yourself for making $2?
  • Do you think stOnKs oNLy Go uP because Fed brrr?
  • Do you think I'm trying to sell you puts?
  • If you take a trade you see posted on this sub and are down, do you PM the guy posting it?
  • Do you generally PM people on this sub to ask them basic questions?
  • Is your mouth your primary breathing apparatus?
Well I have just the thing for you!


Table of Contents:
I. Maybe, just maybe, I know what I’m talking about
II. Post-mortem of the February - March 2020 Great Depression
III. Mouthbreather's bootcamp on managing a position – THE TECHNICALS
IV. Busting your retarded myths
V. LIQUIDITY NUKE INBOUND
VI. The mouthbreather-proof trade - The Akimbo
VII. Quick hints for non-mouthbreathers


Chapter I - Maybe, just maybe, I know what I’m talking about
I'm not here to rip you off. Every fucking time I post something, a bunch of dumbasses show up saying I'm selling you puts or whatever the fuck retarded thoughts come through their caveman brains.
"hurr durr OP retarded, OP sell puts" - random_wsb_autist
Sit down, Barney, I'm not here to scam you for your 3 cents on OTM puts. Do I always get it right? Of course not, dumbasses. Eurodollar play didn't work out (yet). Last TQQQ didn't work out (yet). That’s just how it goes. Papa Buffet got fucked on airlines. Plain retard Burry bought GME. What do you fucking expect?
Meanwhile, I keep giving y'all good motherfucking plays:
  1. 28/10/2019: "I'ma say this again, in case you haven't heard me the first time. BUY $JNK PUTS NOW!". Strike: "11/15, 1/17 and 6/19". "This thing can easily go below 50, so whatever floats your boat. Around $100 strike is a good entry point."
  2. 3/9/2020: "I mean it's a pretty obvious move, but $JNK puts."
  3. 3/19/2020, 12pm: "UVXY put FDs are free money." & “Buy $UVXY puts expiring tomorrow if we're still green at 3pm. Trust me.”
  4. 3/24/2020: “$UUP 3/27 puts at $27.5 or $27 should be 10-baggers once the bill passes. I'd expect it to go to around $26.”
And of course, the masterpiece that was the TQQQ put play.
Chapter II. Post-mortem of the February - March 2020 Great Depression
Do you really understand what happened? Let's go through it.
I got in puts on 2/19, right at the motherfucking top, TQQQ at $118. I told you on 2/24 TQQQ ($108) was going to shit, and to buy fucking puts, $90ps, $70ps, $50ps, all the way to 3/20 $30ps. You think I just pulled that out of my ass? You think I just keep getting lucky, punks? Do you have any idea how unlikely that is?
Well, let's take a look at what the fuckstick Kevin Cook from Zacks wrote on 3/5:
How Many Sigmas Was the Flash Correction Plunge?
"Did you know that last week's 14% plunge in the S&P 500 SPY was so rare, by statistical measures, that it shouldn't happen once but every 14,000 years?"
"By several measures, it was about a 5-sigma move, something that's not "supposed to" happen more than once in your lifetime -- or your prehistoric ancestors' lifetimes!
"According to general statistical principles, a 4-sigma event is to be expected about every 31,560 days, or about 1 trading day in 126 years. And a 5-sigma event is to be expected every 3,483,046 days, or about 1 day every 13,932 years."

On 3/5, TQQQ closed at $81. I just got lucky, right? You should buy after a 5-sigma move, right? That's what fuckstick says:
"Big sigma moves happen all the time in markets, more than any other field where we collect and analyze historical data, because markets are social beasts subject to "wild randomness" that is not found in the physical sciences.
This was the primary lesson of Nassim Taleb's 2007 book The Black Swan, written before the financial crisis that found Wall Street bankers completely ignorant of randomness and the risks of ruin."
I also took advantage of the extreme 5-sigma sell-off by grabbing a leveraged ETF on the Nasdaq 100, the ProShares UltraPro QQQ TQQQ. In my plan, while I might debate the merits of buying AAPL or MSFT for hours, I knew I could immediately buy them both with TQQQ and be rewarded very quickly after the 14% plunge."
Ahahaha, fuckstick bought TQQQ at $70, cuz that's what you do after a random 5-sigma move, right? How many of you dumbasses did the same thing? Don't lie, I see you buying 3/5 on this TQQQ chart:
https://preview.redd.it/9ks35zdla5151.png?width=915&format=png&auto=webp&s=2c90d08494c52a1b874575ee233624e61ac27620
Meanwhile, on 3/3, I answered the question "Where do you see this ending up at in the next couple weeks? I have 3/20s" with "under 30 imo".

Well good fucking job, because a week later on 3/11, TQQQ closed at $61, and it kept going.
Nomura: Market staring into the abyss
"The plunge in US equities yesterday (12 March) pushed weekly returns down to 7.7 standard deviations below the norm. In statistical science, the odds of a greater-than seven-sigma event of this kind are astronomical to the point of being comical (about one such event every 160 billion years).
Let's see what Stephen Mathai-Davis, CFA, CQF, WTF, BBQ, Founder and CEO of Q.ai - Investing Reimagined, a Forbes Company, and a major fucktard has to say at this point:

"Our AI models are telling us to buy SPY (the SPDR S&P500 ETF and a great proxy for US large-cap stocks) but since all models are based on past data, does it really make sense? "
"While it may or may not make sense to buy stocks, it definitely is a good time to sell “volatility.” And yes, you can do it in your brokerage account! Or, you can ask your personal finance advisor about it."
"So what is the takeaway? I don’t know if now is the right time to start buying stocks again but it sure looks like the probabilities are in your favor to say that we are not going to experience another 7 standard deviation move in U.S. Stocks. OTM (out-of-the-money) Put Spreads are a great way to get some bullish exposure to a rally in the SPY while also shorting such rich volatility levels."
Good job, fuckfaces. Y'all bought this one too, admit it. I see you buying on this chart:
https://preview.redd.it/s9344geza5151.png?width=915&format=png&auto=webp&s=ebaef4b1414d901e6dafe354206ba39eb03cb199
Well guess what, by 3/18, a week later, we did get another 5 standard deviation move. TQQQ bottomed on 3/18 at $32.73. Still think that was just luck, punk? You know how many sigmas that was? Over 12 god-damn sigmas. 12 standard deviations. I'd have a much better chance of guessing everyone's buttcoin private key, in a row, on the first try. That's how unlikely that is.
https://preview.redd.it/luz0s3kbb5151.png?width=587&format=png&auto=webp&s=7542973d56c42e13efd3502331ac6cc5aea42630
"Hurr durr you said it's going to 0, so you're retarded because it didn't go to 0" - random_wsb_autist
Yeah, fuckface, because the Fed bailed ‘em out. Remember the $150b “overnight repo” bazooka on 3/17? That’s what that was, a bailout. A bailout for shitty funds and market makers like Trump's handjob buddy Kenny Griffin from Citadel. Why do you think Jamie Dimon had a heart attack in early March? He saw all the dogshit that everyone put on his books.

https://preview.redd.it/8fqvt37ama151.png?width=3711&format=png&auto=webp&s=0b06ee5101685c5274c6641a62ee9eb1a2a3f3ee


Read:
https://dealbreaker.com/2020/01/griffin-no-show-at-white-house
https://www.cnbc.com/2020/03/11/bank-ceos-convene-in-washington-with-president-trump-on-coronavirus.html
https://www.proactiveinvestors.co.uk/companies/news/914736/market-makers--didn-t-show-up-for-work--macro-risk-ceo-says-914736.html
https://www.chicagobusiness.com/finance-banking/chicago-trading-firms-seek-more-capital
https://www.housingwire.com/articles/did-non-qm-just-disappear-from-the-market/
https://www.bloomberg.com/news/articles/2020-03-22/bruised-hedge-funds-ask-clients-for-fresh-cash-to-buy-the-dip
https://fin24.com/Markets/Bonds/rand-bonds-rally-after-reserve-bank-intervention-20200320

Yup, everyone got clapped on their stupidly leveraged derivatives books. It seems Citadel is “too big to fail”. On 3/18, the payout on 3/20 TQQQ puts alone if it went to 0 was $468m. And every single TQQQ put expiration would have had to be paid. Tens or hundreds of billions on TQQQ puts alone. I’d bet my ass Citadel was on the hook for a big chunk of those. And that’s just a drop in the bucket compared to all the other blown derivative trades out there.

https://preview.redd.it/9ww27p2qb5151.png?width=2485&format=png&auto=webp&s=78f24265f3ea08fdbb37a4325f15ad9b61b0c694
Y’all still did good, 3/20 closed at $35. That’s $161m/$468m payoff just there. I even called you the bottom on 3/17, when I saw that bailout:

"tinygiraffe21 1 point 2 months ago
Haha when? I’m loading up in 4/17 25 puts"
"dlkdev
Scratch that, helicopter money is here."
"AfgCric 1 point 2 months ago
What does that mean?"
"It means the Fed & Trump are printing trillions with no end in sight. If they go through with this, this was probably the bottom."

"hurr durr, it went lower on 3/18 so 3/17 wasn't the bottom" - random_wsb_autist
Idiot, I have no way of knowing that Billy boy Ackman was going to go on CNBC and cry like a little bitch to make everyone dump, so he can get out of his shorts. Just like I have no way of knowing when the Fed decides to do a bailout. But you react to that, when you see it.
Do you think "Oh no world's ending" and go sell everything? No, dumbass, you try to figure out what Billy's doing. And in this case it was pretty obvious, Billy saw the Fed train coming and wanted to close his shorts. So you give the dude a hand, quick short in and out, and position for Billy dumping his short bags.
Video of Billy & the Fed train

Here's what Billy boy says:
“But if they don’t, and the government takes the right steps, this hedge could be worth zero, and the stock market could go right back up to where it was. So we made the decision to exit.”
https://www.businessinsider.sg/bill-ackman-explains-coronavirus-trade-single-best-all-time-podcast-2020-5
Also, “the single best trade of all time.” my ass, it was only a 100-bagger. I gave y’all a 150-bagger.
So how could I catch that? Because it wasn't random, yo. And I'm here to teach your asses how to try to spot such potential moves. But first, the technical bootcamp.

Chapter III. Mouthbreather's bootcamp on managing a position – THE TECHNICALS

RULE 1. YOU NEVER BUY OPTIONS AT OPEN. You NEVER OVERPAY for an option. You never FOMO into buying too fast. You NEVER EVER NEVER pump the premium on a play.
I saw you fuckers buying over 4k TQQQ 5/22 $45 puts in the first minutes of trading. You pumped the premium to over $0.50 dudes. The play's never going to work if you do that, because you give the market maker free delta, and he's going to hedge that against you. Let me explain simply:

Let's say a put on ticker $X at strike $50 is worth $1, and a put at strike $51 is worth $2.
If you all fomo in at once into the same strike, the market maker algos will just pull the asks higher. If you overpay at $2 for the $50p, the market maker will just buy $51ps for $2 and sell you $50ps for 2$. Or he'll buy longer-dated $50ps and sell you shorter-dated $50ps. Max risk for him is now 0, max gain is $1. You just gave him free downside insurance, so of course he's going to start going long. And you just traded against yourself, congrats.

You need to get in with patience, especially if you see other autists here wanting to go in at the same time. Don't step on each other's toes. You put in an order, and you wait for it to fill for a couple of seconds. If it doesn't fill, AND the price of the option hasn't moved much recently, you can bump the bid $0.01. And you keep doing that a few times. Move your strikes, if needed. Only get a partial fill or don't get a fill at all? You cancel your bid. Don't fucking leave it hanging there, or you're going to put a floor on the price. Let the mm algos chill out and go again later.

RULE 2. WATCH THE TIME. Algos are especially active at x:00, x:02, x:08, x:12, x:30 and x:58. Try not to buy at those times.
RULE 3. YOU USE MULTIPLE BROKERS. Don't just roll with Robinhood, you're just gimping yourself. If you don't have another one, open up a tasty, IB, TD, Schwab, whatever. But for cheap faggy puts (or calls), Robinhood is the best. If you want to make a play for which the other side would think "That's free money!", Robinhood is the best. Because Citadel will snag that free money shit like no other. Seriously, if you don't have a RH account, open one. It's great for making meme plays.

RULE 4. YOU DON'T START A TRADE WITH BIG POSITIONS. Doesn't matter how big or small your bankroll is. If you go all-in, you're just gambling, and the odds are stacked against you. You need to have extra cash to manage your positions. Which leads to
RULE 5. MANAGING YOUR WINNERS: Your position going for you? Good job! Now POUND THAT SHIT! And again. Move your strikes to cheaper puts/calls, and pound again. And again. Snowball those gains.
RULE 6A. POUND THOSE $0.01 PUTS:
So you bought some puts and they’re going down? Well, the moment they reach $0.01, YOU POUND THOSE PUTS (assuming there’s enough time left on them, not shit expiring in 2h). $0.01 puts have amazing risk/return around the time they reach $0.01. This is not as valid for calls. Long explanation why, but the gist of it is this: you know how calls have unlimited upside while puts have limited upside? Well it’s the reverse of that.
RULE 6B. MANAGING YOUR LOSERS:
Your position going against you? Do you close the position, take your loss porn and post it on wsb? WRONG DUMBASS. You manage that by POUNDING THAT SHIT. Again and again. You don't manage losing positions by closing. That removes your gainz when the market turns around. You ever close a position, just to have it turn out it would have been a winner afterwards? Yeah, don't do that. You manage it by opening other positions. Got puts? Buy calls. Got calls? Buy puts. Turn positions into spreads. Buy spreads. Buy the VIX. Sell the VIX. They wanna pin for OPEX? Sell them options. Not enough bankroll to sell naked? Sell spreads. Make them fight you for your money, motherfuckers, don't just give it away for free. When you trade, YOU have the advantage of choosing when and where to engage. The market can only react. That's your edge, so USE IT! Like this:

Example 1:
Initial TQQQ 5/22 position = $5,000. Starts losing? You pound it.

https://preview.redd.it/gq938ty8e5151.png?width=944&format=png&auto=webp&s=734ab7ed517f0e6822bfaaed5765d1272de398d1
Total pounded in 5/22 TQQQ puts = $10,824. Unfortunately expired worthless (but also goes to show I'm not selling you puts, dickwads)
Then the autists show up:
"Hahaha you lost all your money nice job you fucking idiot why do you even live?" - cscqb4
Wrong fuckface. You see the max pain at SPX 2975 & OPEX pin coming? Sell them some calls or puts (or spreads).

https://preview.redd.it/7nv23fr41a151.jpg?width=750&format=pjpg&auto=webp&s=14a8879c975646ffbfe2942ca1982bfabfcf90df
Sold 9x5/20 SPX [email protected], bam +$6,390. Still wanna pin? Well have some 80x5/22 TQQQ $80cs, bam anotha +$14,700.

https://preview.redd.it/1iqtpmc71a151.jpg?width=750&format=pjpg&auto=webp&s=df9b954131b0877f4acc43038b4a5a4acf544237
+$21,090 - $10,824 = +$10,266 => Turned that shit into a +94.85% gain.

.cscqb4 rn

You have a downside position, but market going up or nowhere? You play that as well. At least make some money back, if not profit.

Example 2:

5/22, long weekend coming right? So you use your brain & try to predict what could happen over the 3-day weekend. Hmm, 3 day weekend, well you should expect either a shitty theta-burn or maybe the pajama traders will try to pooomp that shite on the low volume. Well make your play. I bet on the shitty theta burn, but could be the other, idk, so make a small play.

Sold some ES_F spreads (for those unaware, ES is a 50x multiplier, so 1 SPX = 2 ES = 10 SPY, approximately). -47x 2955/2960 bear call spreads for $2.5. Max gain is $2.5, max loss is 2960-2955 = $5. A double-or-nothing basically. That's $5,875 in premium, max loss = 2x premium = $11,750.
Well, today comes around and futures are pumping. Up to 3,014 now. Do you just roll over? You think I'm gonna sit and take it up the ass? Nah bros that's not how you trade, you fucking fight them. How?
I have:
47x 2960 calls
-47x 2955 calls

Pajama traders getting all up in my grill? Well then I buy back 1 of the 2955 calls. Did that shit yesterday when futures were a little over 2980, around 2982-ish. Paid $34.75, initially shorted at $16.95, so booked a -$892 loss, for now. But now what do I have?

46x 2955/2960 bear calls
1x 2960 long call

So the fuckers can pump it. In fact, the harder they pump it, the more I make. Each $2.5 move up in the futures covers the max loss for 1 spread. With SPX now at ~3015, that call is $55 ITM. Covers 24/46 contracts rn. If they wanna run it up, at 3070 it's break-even. Over that, it's profit. I'll sell them some bear call spreads over 3050 if they run it there too. They gonna dump it? well under 2960 it's profit time again. They wanna do a shitty pin at 3000 today? Well then I'll sell them some theta there.
Later edit: that was written yesterday. Got out with a loss of only $1.5k out of the max $5,875. Not bad.
And that, my dudes, is how you manage a position.

RULE 7 (ESPECIALLY FOR BEARS). YOU DON'T KEEP EXTRA CASH IN YOUR BROKER ACCOUNT. You don't do it with Robinhood, because it's a shitty dumpsterfire of a broker. But you don't do it with other brokers either. Pull that shit out. Preferably to a bank that doesn't play in the markets either, use a credit union or some shit. Why? Because you're giving the market free liquidity. Free margin loans. Squeeze that shit out, make them work for it. Your individual cash probably doesn't make a dent, but a million autists with an extra $1200 trumpbucks means $1.2b. That's starting to move the needle. You wanna make a play, use instant deposits. And that way you don't lose your shit when your crappy ass broker or bank gets its ass blown up on derivative trades. Even if it's FDIC or SIPC insured, it's gonna take time until you see that money again.


Chapter IV. BUSTING YOUR RETARDED MYTHS

MYTH 1 - STONKS ONLY GO UP

Do you think the market can go up forever? Do you think stOnKs oNLy Go uP because Fed brrr? Do you think SPX will be at 5000 by the end of the month? Do you think $1.5 trillion is a good entry point for stonks like AAPL or MSFT? Do you want to buy garbage like Hertz or American Airlines because it's cheap? Did you buy USO at the bottom and are now proud of yourself for making $2? Well, this section is for you!
Let's clear up the misconception that stonks only go up while Fed brrrs.

What's your target for the SPX top? Think 3500 by the end of the year? 3500 by September? 4000? 4500? 5000? Doesn't matter, you can plug in your own variables.

Let's say SPX only goes up, a moderate 0.5% each period as a compounded avg. (i.e. up a bit down a bit whatever, doesn't matter as long as at the end of your period, if you look back and do the math, you'll get that number). Let's call this variable BRRR = 0.005.

Can you do the basic math to calculate the value at the end of x periods? Or did you drop out in 5th grade? Doesn't matter if not, I'll teach you.


Let's say our period is one week. That is, SPX goes up on average 0.5% each week on Fed BRRR:
2950 * (1.005^x), where x is the number of periods (weeks in this case)

So, after 1 month, you have: 2950 * (1.005^4) = 3009
After 2 months: 2950 * (1.005^8) = 3070
End of the year? 2950 * (1.005^28) = 3392

Now clearly, we're already at 3015 on the futures, so we're moving way faster than that. More like at a speed of BRRR = 1%/wk

2950 * (1.01^4) = 3069
2950 * (1.01^8) = 3194
2950 * (1.01^28) = 3897


Better, but still slower than a lot of permabulls would expect. In fact, some legit fucks are seriously predicting SPX 4000-4500 by September. Like this dude, David Hunter, "Contrarian Macro Strategist w/40+ years on Wall Street". IDIOTIC.
https://twitter.com/DaveHcontrarian/status/1263066368414568448

That'd be 2950 * (BRRR^12) = 4000 => BRRR = 1.0257 and 2950 * (BRRR^12) = 4500 => BRRR = 1.0358, respectively.

Here's why that can't happen, no matter the amount of FED BRRR: Leverage. Compounded Leverage.

There's currently over $100b in leveraged etfs with a 2.5x avg. leverage. And that's just the ones I managed to tally, there's a lot of dogshit small ones on top of that. TQQQ alone is now at almost $6b in AUM (topped in Fed at a little over $7b).

Now, let's try to estimate what happens to TQQQ's AUM when BRRR = 1.0257. 3XBRRR = 1.0771. Take it at 3XBRRR = 1.07 to account for slippage in a medium-volatility environment and ignore the fact that the Nasdaq-100 would go up more than SPX anyway.

$6,000,000,000 * (1.07^4) = $7,864,776,060
$6,000,000,000 * (1.07^8) = $10,309,100,000
$6,000,000,000 * (1.07^12) = $13,513,100,000
$6,000,000,000 * (1.07^28) = $39,893,000,000.

What if BRRR = 1.0358? => 3XBRR = 1.1074. Take 3XBRRR = 1.10.
$6,000,000,000 * (1.1^4) = $8,784,600,000
$6,000,000,000 * (1.1^8) = $12,861,500,000
$6,000,000,000 * (1.1^12) = $18,830,600,000
$6,000,000,000 * (1.1^28) = $86,526,000,000

And this would have to get 3x leveraged every day. And this is just for TQQQ.

Let's do an estimation for all leveraged funds. $100b AUM, 2.5 avg. leverage factor, BRRR = 1.0257 => 2.5BRRR = 1.06425

$100b * (1.06^4) = $128.285b
$100b * (1.06^8) = $159.385b
$100b * (1.06^12) = $201.22b
$100b * (1.06^28) = $511.169b

That'd be $1.25 trillion sloshing around each day. And the market would have to lose each respective amount of cash into these leveraged funds. Think the market can do that? You can play around with your own variables. But understand that this is just a small part of the whole picture, many other factors go into this. It's a way to put a simple upper limit on an assumption, to check if it's reasonable.

In the long run, it doesn't matter if the Fed goes BRRR, if TQQQ takes in it's share of 3XBRRR. And the Fed can't go 3XBRRR, because then TQQQ would take in 9XBRRR. And on top of this, you have a whole pile of leveraged derivatives on top of these leveraged things. Watch (or rewatch) this: Selena Gomez & Richard H. Thaler Explaining Synthetic CDO through BLACKJACK

My general point, at the mouth-breather level, is that Fed BRRR cannot be infinite, because leverage.
And these leveraged ETFs are flawed instruments in the first place. It didn't matter when they started out. TQQQ and SQQQ started out at $8m each. For the banks providing the swaps, for the market providing the futures contracts, whatever counter-party to whatever instrument they would use, that was fine. Because it balanced out. When TQQQ made a million, SQQQ lost a million (minus a small spread, which was the bank's profit). Bank was happy, in the long run things would even out. Slippage and spreads and fees would make them money. But then something happened. Stonks only went up. And leveraged ETFs got bigger and more and more popular.
And so, TQQQ ended up being $6-7b, while SQQQ was at $1b. And the same goes for all the other ETFs. Long leveraged ETF AUM became disproportionate to short AUM. And it matters a whole fucking lot. Because if you think of the casino, TQQQ walks up every day and says "I'd like to put $18b on red", while SQQQ walks up and says "I'd only like to put $3b on black". And that, in turn, forces the banks providing the swaps to either eat shit with massive losses, or go out and hedge. Probably a mix of both. But it doesn't matter if the banks are hedged, someone else is on the other side of those hedges anyway. Someone's eating a loss. Can think of it as "The Market", in general, eating the loss. And there's only so much loss the market can eat before it craps itself.

If you were a time traveller, how much money do you think you could make by trading derivatives? Do you think you could make $20 trillion? You know the future prices after all... But no, you couldn't. There isn't enough money out there to pay you. So you'd move the markets by blowing them up. Call it the Time-travelling WSB Autist Paradox.

If you had a bucket with a hole in the bottom, even if you poured an infinite amount of water into it, it would never be full. Because there's a LIQUIDITY SINK, just like there is one in the markets.
And that, my mouth-breathing friends, is the reason why FED BRRR cannot be infinite. Or alternatively, "STONKS MUST GO BOTH UP AND DOWN".

MYTH 2 - YOU CAN'T TIME THE MARKET

On Jan 14, 2020, I predicted this: Assuming that corona doesn't become a problem, "AAPL: Jan 28 $328.3, Jan 31 $316.5, April 1 $365.7, May 1 $386, July 1 $429 December 31 $200."
Now take a look at the AAPL chart in January. After earnings AAPL peaked at $327.85. On 1/31, after the 1st hour of trading, when the big boys make moves, it was at $315.63. Closed 1/31 at $309.51. Ya think I pulled this one out of my ass too?
Yes you can time it. Flows, motherfucker, flows. Money flow moves everything. And these days, we have a whole lot of RETARDED FLOW. Can't even call it dumb flow, because it literally doesn't think. Stuff like:

  • ETF flows. If MSFT goes up and AAPL goes down, part of that flow is going to move from AAPL to MSFT. Even if MSFT flash-crashes up to $1000, the ETF will still "buy". Because it's passive.
  • Option settlement flows. Once options expire, money is going to flow from one side to another, and that my friends is accurately predictable from the data.
  • Index rebalancing flows
  • Buyback flows
  • 401k passive flows
  • Carry trade flows
  • Tax day flows
  • Flows of people front-running the flows

And many many others. Spot the flow, and you get an edge. How could I predict where AAPL would be after earnings within 50 cents and then reverse down to $316 2 days later? FLOWS MOTHERFUCKER FLOWS. The market was so quiet in that period, that is was possible to precisely figure out where it ended up. Why the dump after? Well, AAPL earnings (The 8-K) come out on a Wednesday. The next morning, after market opens the 10-Q comes out. And that 10-Q contains a very important nugget of information: the latest number of outstanding shares. But AAPL buybacks are regular as fuck. You can predict the outstanding shares before the market gets the 10-Q. And that gives you EDGE. Which leads to

MYTH 3 - BUYBACKS DON'T MATTER

Are you one of those mouthbreathers that parrots the phrase "buybacks are just a tax-efficient way to return capital to shareholders"? Well sit the fuck down, I have news for you. First bit of news, you're dumb as shit. Second bit:

On 1/28, AAPL's market cap is closing_price x free_float_outstanding_shares. But that's not the REAL MARKET CAP. Because the number of outstanding shares is OLD AS FUCK. When the latest number comes out, the market cap changes instantly. And ETFs start moving, and hedges start being changed, and so on.

"But ETFs won't change the number of shares they hold, they will still hold the same % of AAPL in the index" - random_wsb_autist

Oh my fucking god you're dumb as fuck. FLOWS change. And the next day, when TQQQ comes by and puts its massive $18b dong on the table, the market will hedge that differently. And THAT CAN BE PREDICTED. That's why AAPL was exactly at $316 1 hour after the market opened on 1/31.

So, what can you use to spot moves? Let me show you:
Market topped on 2/19. Here’s SPY. I even marked interesting dates for you with vertical lines.

https://preview.redd.it/7agm171eh5151.png?width=3713&format=png&auto=webp&s=d94b90dcd634c8dc688925585bf0a02c3299f71b
Nobody could have seen it coming, right? WRONG AGAIN. Here:

https://preview.redd.it/i1kdp3cgh5151.png?width=3713&format=png&auto=webp&s=7a1e086e9217846547efd3b6c5249f4a7ebe6d9e
In fact, JPYUSD gave you two whole days to see it. Those are NOT normal JPYUSD moves. But hey maybe it’s just a fluke? Wrong again.

https://preview.redd.it/fsyhenckh5151.png?width=3693&format=png&auto=webp&s=03200e10b008257ae15d40b474c4cf4d8c23670f
Forex showed you that all over the place. Why? FLOWS MOTHERFUCKER FLOWS. When everything moves like that, it means the market needs CASH. It doesn’t matter why, but remember people pulling cash out of ATMs all over the world? Companies drawing massive revolvers? Just understand what this flow means.
The reversal:
https://preview.redd.it/4xe97l0oh5151.png?width=1336&format=png&auto=webp&s=07aaa93f6b1d8f542101e40e431edccbc109918f
https://preview.redd.it/v6i0pdmoh5151.png?width=1338&format=png&auto=webp&s=74d5589961db2f978d4d582e6d7c58a85f6305f9
But it wasn’t just forex. Gold showed it to you as well. Bonds showed it to you as well.
https://preview.redd.it/40j53u8th5151.png?width=3711&format=png&auto=webp&s=fe39ab51321d0f98149d33e33253e69f96c48e23
Even god damn buttcoin showed it to you.
https://preview.redd.it/43lvafhvh5151.png?width=3705&format=png&auto=webp&s=1ef53283cbc0fb97f71c1ba935c0bd747809636e
And they all did it for 2 days before the move hit equities.

Chapter V. LIQUIDITY NUKE INBOUND
You see all these bankruptcies that happened so far, and all the ones that are going to follow? Do you think that’s just dogshit companies and it won’t have major effects on anything outside them? WRONG.
Because there’s a lot of leveraged instruments on top of those equities. When the stock goes to 0, all those outstanding puts across all expirations get instantly paid.
Understand that Feb-March was a liquidity MOAB. But this will end with a liquidity nuke.
Here’s just HTZ for example: $239,763,550 in outstanding puts. Just on a single dogshit small-cap company (this thing was like $400m mkt. cap last week).
And that’s just the options on the equity. There’s also instruments on etfs that hold HTZ, on the bonds, on the ETFs that hold their bonds, swaps, warrants, whatever. It’s a massive pile of leverage.
Then there’s also the ripple effects. Were you holding a lot of HTZ in your brokerage margin account? Well guess what big boi, when that gaps to 0 you get a margin call, and then you become a liquidity drain. Holding long calls? 0. Bonds 0. DOG SHIT!
And the market instantly goes from holding $x in assets (HTZ equity / bonds / calls) to holding many multiples of x in LIABILITIES (puts gone wrong, margin loans, derivatives books, revolvers, all that crap). And it doesn’t matter if the Fed buys crap like HTZ bonds. You short them some. Because when it hits 0, it’s no longer about supply and demand. You get paid full price, straight from Jerome’s printer. Is the Fed going to buy every blown up derivative too? Because that's what they'd have to do.
Think of liquidity as a car. The faster it goes, the harder it becomes to go even faster. At some point, you can only go faster by driving off a cliff. THE SQUEEZE. But you stop instantly when you hit the ground eventually. And that’s what shit’s doing all over the place right now.
Rewatch: https://www.youtube.com/watch?v=3hG4X5iTK8M
And just like that fucker, “I’m standing in front of a burning house, and I’m offering you fire insurance on it.”

Don’t baghold!
Now is not the time to baghold junk. Take your cash. Not the time to buy cheap crap. You don’t buy Hertz. You don’t buy USO. You don’t buy airlines, or cruises, or GE, or motherfucking Disney. And if you have it, dump that shit.
And the other dogshit that’s at ATH, congrats you’re in the green. Now you take your profits and fucking dump that shit. I’m talking shit like garbage SaaS, app shit, AI shit, etc. Garbage like MDB, OKTA, SNAP, TWLO, ZM, CHGG etc.
And you dump those garbage ass leveraged ETFs. SQQQ, TQQQ, whatever, they’re all dogshit now.
The leverage MUST unwind. And once that’s done, some of you will no longer be among us if you don’t listen. A lot of leveraged ETFs will be gone. Even some non-leveraged ETFs will be gone. Some brokers will be gone, some market makers will be gone, hell maybe even some big bank has to go under. I can’t know which ones will go poof, but I can guarantee you that some will. Another reason to diversify your shit. There’s a reason papa Warrant Buffet dumped his bags, don’t think you’re smarter than him. He may be senile, but he’s still a snake.
And once the unwind is done, THEN you buy whatever cheap dogshit’s still standing.
Got it? Good.
You feel ready to play yet? Alright, so you catch a move. Or I post a move and you wanna play it. You put on a small position. When it’s going your way, YOU POUND DAT SHIT. Still going? Well RUSH B CYKA BLYAT AND PLANT THE GOD DAMN 3/20 $30p BOMB.

Chapter VI - The mouthbreather-proof play - THE AKIMBO
Still a dumbass that can’t make a play? Still want to go long? Well then, I got a dumbass-proof trade for you. I present to you THE AKIMBO:

STEP 1. You play this full blast. You need some real Russian hardbass to get you in the right mood for trading, cyka.
STEP 2. Split your play money in 3. Remember to keep extra bankroll for POUNDING THAT SHIT.
STEP 3. Use 1/3 of your cash to buy SQQQ 9/18 $5p, pay $0.05. Not more than $0.10.
STEP 4. Use 1/3 of your cash to buy TQQQ 9/18 $20p, pay around $0.45. Alternatively, if you’re feeling adventurous, 7/17 $35p’s for around $0.5.
STEP 5. Use 1/3 of your cash to buy VIX PUT SPREADS 9/15 $21/$20 spread for around $0.15, no more than $0.25. That is, you BUY the 21p and SELL the 20p. Only using Robinhood and don’t have the VIX? What did I just tell you? Well fine, use UVXY then. Just make sure you don’t overpay.


Chapter VII - Quick hints for non-mouthbreathers
Quick tips, cuz apparently I'm out of space, there's a 40k character limit on reddit posts. Who knew?

  1. Proshares is dogshit. If you don't understand the point in my last post, do this: download https://accounts.profunds.com/etfdata/ByFund/SQQQ-historical_nav.csv and https://accounts.profunds.com/etfdata/ByFund/SQQQ-psdlyhld.csv. Easier to see than with TQQQ. AUM: 1,174,940,072. Add up the value of all the t-bills = 1,686,478,417.49 and "Net other assets / cash". It should equal the AUM, but you get 2,861,340,576. Why? Because that line should read: NET CASH = -$511,538,344.85
  2. Major index rebalancing June 22.
  3. Watch the violent forex moves.
  4. 6/25 will be red. Don't ask, play a spread, bag a 2x-er.
  5. 6/19 will be red.
  6. Not settled yet, but a good chance 5/28 is red.
  7. Front run the rebalance. Front-run the front-runners of the rebalance too. TQQQ puts.
  8. Major retard flow in financials yesterday. Downward pressure now. GS 180 next weeks looks good.
  9. Buy leaps puts on dogshit bond ETFs (check holdings for dogshit)
  10. Buy TLT 1/15/2021 $85ps for cheap, sell over $1 when the Fed stops the ass rape, rinse and repeat
  11. TQQQ flow looks good:
https://preview.redd.it/untvykuxea151.jpg?width=750&format=pjpg&auto=webp&s=a0a38c0acb088ebff689d043e48466eb76d38e2f

Good luck. Dr. Retard TQQQ Burry out.
submitted by dlkdev to wallstreetbets [link] [comments]

Why you should trade futures - WSB Edition

Note: all numbers are approximate. Do your own research. I'm sure I fucked something up, so let me know what and I'll fix it.
Alright, ignore my flair for a minute. I earned it, but that doesn't take away from everything else I'm going to say. This is why you should get approved for futures, especially before the end of the month if you can.
- Leveraged as fuck
So you wish you had the $33,000 to be able to trade 100 shares of SPY, right? Even with margin, you're looking at tying up $16,500 just for them to hold in case SPY drops by 50% (it won't) and that's a terrible use of leverage. You can buy a fucking house with less money down (percentage-wise). /ES is the equivalent of 500 shares of SPY (it's really 50xSPX, but you get the point) and only uses $13,000 or so in buying power so you can ride those waves with way less money in use. You can also trade /MES which is the equivalent of 50 shares of SPY with only $1300 or so, so with $2600 you can emulate having 100 shares of SPY. Way better use of margin, right?
I should add a note here that you have to be prepared to have it go against you too, so don't trade two /MES contract if your account is only $3000 because a 4 point SPY move will take your account out and put you in a margin call.
All the people playing GLD and SLV? If they have the cash, they could trade straight up futures (with this leverage, do you really need options?). For example, /SI is $11,000 in BP, but it equals 5,000 ounces of silver. So those two-dollar moves? That's right: $10,000 in profit. They have mini versions of the metals too, so if you're scared of /SI swings (like I am), you can trade /SIL which is 1,000 ounces, so a fifth of the moves and a fifth of the leverage. There are also mini-oil, mini-natgas, currencies and mini-currencies. If you really are confident in bushel price of wheat going up, you can trade shit like what, corn, soybeans. My broker doesn't offer Lean Hogs, but if yours does, you can join the retarded Lean Hogs Gang.
- 23 hours a day, 5 days a week
Most products trade 23 hours a day, 5 days a week including the Nasdaq, Russell and S&P500 futures. They start at 5pm Central Time (CME Time) on Sunday and run to 4pm Central Time on Friday. Ever watched futures rocket green as fuck, get your dick in your hand ready to go, just for it to reverse overnight and be flat by morning? Imagine locking in your gains at night on a /ES call instead of waiting for open to get fucked on your SPY calls. Or scalping $5 per point with a long or short /MES contract when you see the move coming (or $50/point for /ES).
- Hedging (we don't do that here)
So I know this isn't the most risk-averse place, but you can go long or short any contract with no borrowing fees. There's no "hard to borrow" bullshit in futures, so you can pick an opinion, and hedge your 100 SPY 220p FDs with a long /MES overnight just in case it goes completely against you. You can also scalp /ES or /NQ options overnight when the Europeans sell off all their gains that you paid for.
- The options are coming, the options are coming
The micro-S&P and the micro-Nasdaq are both getting options soon so you'll be able to buy /MES and /MNQ calls and puts starting August 31st. I have no opinion on how these will work until they roll out, but if you ever dreamed of having 100 shares of SPY and selling covered calls for easy income, you'll be able to but two /MES contracts and sell calls against them. You can also sell naked puts/calls for thousands less in buying power (if they don't get blown through of course) on those two micro products.
- No fuckery
Speaking of SLV, people have been posting all the reasons that JPM fucks with the SLV ETF and to be honest, I've never read them. But /SI is a deliverable contract of 5,000 ounces of silver. No management fees for the ETF, no oversight. Straight up fucking contract at what price you're willing to buy the silver. The products are pure and pretty self explanatory.
- No PDT Rule on any products ever
The CME has no daytrading rules, so you can buy/sell all goddamn day without getting your account fucked for 3 months. I constantly see people on here talking about "Well, I have to have diamond hands since I'm out of trades." You'll never know that feeling again.
New smaller futures
"But lucasandrew, I don't want to get completely fucked with a 2% move against me!" I get it. The Small Exchange was made by the guys who made tastyworks and are available most places that futures are offered. Their products take $100 to $500 in buying power and the notional value for all of them is extremely simple. Each penny move in the price is $1. They have /SM75 which is the 75 most-volatile stocks they could find with equal weightings by industry. They also have /SFX with dollar exposure where you go long if you're bullish in USD and short if you're bearish. It's weighted against multiple currencies instead of just one so individual events in Australia don't totally fuck your position. They're also releasing an interest rate product, a small oil product and more coming up. You can see all the deets at www.thesmallexchange.com. These products are getting options once they have approval too.
- Warnings
If you just got your first Robinhood account and they hooked you up with a Hertz share you're trying to daytrade, FUTURES ARE NOT FOR YOU. If you've been around a little bit and understand the risks you're taking, they are, in my humble opinion, about a million times better products.
The leverage is awesome and a bitch. If SPX moves 40 points down in a day and you're long /MES, you're out $200. If you're long /ES, you're out $2000. Know how to use the leverage in your favor and how to handle if it goes against you.
SOME PRODUCTS ARE DELIVERABLE. Remember people buying oil contracts for negative money? That wasn't a flaw in the design. It was that nobody could store 5,000 barrels of oil, so they were literally paying people to take the oil contracts off their hands. The equities futures products are all cash-settled, so you'll never have to take delivery, but wheat, corn, soybeans, (presumably) lean hogs and oil are all physical products that if you hold until expiration, you have to accept physically at a predefined location. See the CME website for contract details that will tell you if it's physical delivery or cash. Or, do yourself a favor and know when the contract ends and get the fuck out or roll before that date.
- TL;DR futures are the ultimate WSB tool and not a lot of people understand anything about them. The micros are getting options on August 31st, so you can daytrade some equivalent of SPY/SPX to your heart's desire. Tastytrade has a beginner's course and so does the CME. If you don't understand futures or don't feel confident, take them both.
Positions: Long /MES, Long /M2K, synthetic strangle on /RTY, credit put spread on /NG
Edit: Looked it up and lean hogs are cash settled.
Edit 2: Screenshot of positions as requested: https://i.imgur.com/6QHSavc.png
submitted by lucasandrew to wallstreetbets [link] [comments]

Long-Term Falling Interest Rates and the Rise of Neofeudalism

Historian Paul Schmelzing recently published an exceptional working paper on eight centuries of global real and nominal interest rates, from 1311 to 2018.
Nominal rates graph
What he discovered surprised me: nominal and real rates over very long periods of time are in "suprasecular decline" and that the fall in real and nominal interest rates over the last forty years are merely a reversion to long-term historical trends. When I say "interest rates", I mean both literal rates (paid for debt servicing), as well as effective rates (i.e., at what earnings multiple stocks trade). Schmelzing is more limited in his definition but I will use the term "falling rates" to mean both lowering bond yields and rising equity multiples. What's more surprising, the rate of decline is fairly "rapid" across human history at about 2 basis points (.02%) a year. In 100 years, interest rates will be a full 2% lower in expectation. If this phenomenon is reliable and persists into the future, what will the world look like when interest rates are near-zero or negative? Allow me to engage in some rank speculation.
1). Outsized wealth creation will no longer be possible by professional "asset compounders" like Warren Buffett because there's not a lot of "compounding" one can do when rates are so low. I mean this very literally: since expected human lifespans are only getting a little bit longer, and the Rule of 72 remains true for all non-relativistic finance we literally can't live long enough to compound enough money to move the needle. Instead, capitalism will heavily favor "asset gatherers" and "money-raisers" that invest in direct capital projects -- people who raise a lot of money to do something low-return and (legally) skim a bit off the top, because there's going to be simply so much more money floating around and the return hurdle is so much lower. Insofar as this is already painfully true of capitalism by the early 2000s and 2010s, it will be even more the dominant reality for our grandchildren's grandchildren. Someone like Warren Buffett was truly born in the right decade: a time when, at the midpoint of his life, interest rates were unusually high (i.e., assets were unusually cheap) and began a long decline, driving outsized returns for "professional capitalists" and especially for value investors who correctly assigned a very high cost of capital to earnings. The dominant model of wealth creation has shifted from squirrely hoarders like Buffett to either bombastic asset gatherers like Adam Neumann, or to extremely talented builders like Elon Musk, in part because interest rates are much, much lower.
2). Monopolies will be more valuable than ever and non-monopolies will trade at more significant discounts. As required returns lower, capital will flow toward non-monopolistic, competitive industries (think Quip, Boll & Branch, and whatever other favorite podcast sponsor you have) and reduce returns in those industries even further than where they are now. What really matters isn't how much money a company is making per se, but the certainty that they will earn those returns in the future. This certainty in maintaining pricing, margins, and market share enables investors to capitalize businesses at very high multiples because there's "nothing else left to invest in". More on this later.
3). Commodity-capital industries become particularly bad industries over time. Finance (all of it: main street banking, investment management, insurance) becomes even more commoditized than it already is. Funnily, I think investment banking is a service and will be excluded from this implosion, and the high-end firms should remain well-insulated as capital raising and valuation-setting activities from IPOs remain a fairly sensitive activity. Real estate cap rates should continue to decline and so should their associated capitalization requirements and costs of capital: one day we'll commonly start to get 100% debt financed apartment complexes that only cost 3% to service (China is perilously close to this phenomenon already).
4). The rise of what I can only describe as Neofeudalism. Imagine a world where a "typically risky" asset has a 2.5% nominal return: a. If you can build an income stream, it will trade at 40x earnings. b. If you fail to build an income stream, you need 40x the money to replicate the same-sized income stream. c. If your parents were rich and frugal, you will be rich, because they amassed all of the asset increase benefits from when interest rates were high and dropped. Inheritances, in some weird reversion to the mean, will once again become a greater determinant of wealth. d. It will be almost impossible to become independently wealthy as a wage-worker, because if you save money, you'll only be earning a 2% nominal return. e. "High-certainty assets" will be seen as even more valuable than before, relative to peers. This is due a weird intersection of behavioral finance and arithmetic: an investor being willing to accept a company valued at 1% cap rate instead of 2% will go from valuing a company at 50x earnings to 100x earnings. In low interest rate worlds, the value of securitizing and financializing income streams only grows, because the equivalent capital required to generate those equivalent streams becomes very high. This is why payments startups make so much more sense today than ever before: their revenue streams are incredibly reliable, on an ever-growing churn of economic activity. Even if their profits are low now, the certainty of the growth of future cash-flows is extremely high, and being certain as interest rates asymptote to zero enables the biggest and best valuations.
Why do low future rates bring about Neofeudalism? Interest rates are like a very long lever. As rates go lower, the lever gets longer, and the more valuable income streams become. At some point the lever itself becomes a sort of king-maker: if you are able to build a perpetual-income business of any kind, you will effectively control an economic fiefdom, because that income stream will be considered incredibly valuable. And if you fail to create that perpetual income stream, you'll be a serf, forced to either deplete your savings (since returns aren't high enough) or work forever.
This also re-calibrates our understanding of Baby Boomer wealth. They entered the job market when interest rates were at their very highest in recent human history. If you were a reasonably competent young person who could secure a job, you could compound an unbelievable amount of wealth over the ensuing 5 decades.
submitted by bunnydoge to investing [link] [comments]

Is Reach (Mirror, Express, Star, OK!) A Cheap Buy Right Now?

I've been looking for some cheap investments while COVID-19 has the market in a slump. Ideally trying to find stocks which hadn't returned to their original potential, and appear to be cheaply valued. Potentially Reach (RCH) on the London Stock Exchange meets that criteria.

https://preview.redd.it/jocg5fxuu2751.png?width=800&format=png&auto=webp&s=ab3b0d5a4e8fa806d635dadec2cc63913a5491f7
Who Are Reach?
If you haven't heard of the name before, don't worry. Reach is a collection of UK print and digital newspapers and magazines, some focusing on national news, others on gossip and celebrates, and a few on hyper-localised news. They are the largest commercial national and regional news publisher in the UK, with over 150 national and regional multichannel brands including the Mirror, Express, Star, OK!, New!, Daily Record, Manchester Evening News, Liverpool Echo, WalesOnline, MyLondon and BelfastLive.

https://preview.redd.it/bpm4y6tvu2751.jpg?width=678&format=pjpg&auto=webp&s=1f95b709dc3c26c7dd235172dac0f444e112f983
Source: Reach 2019 Annual Report
You might think a print-based company would be the last investment you would want to make when you think about the world in five or ten years. Keep in mind, in December 2019, Reach sold 40m newspapers and reached a digital audience of over 47m people in the UK, their digital offerings are growing.
With a new CEO who joined back in August 2019, a period of operational focus after buying the Daily Express and Daily Star, and now with COVID-19 there are a lot of headwinds that Reach are battling.
As this is a UK listed company, it's harder for us to get up to date information, as the fundamentals update bi-annually. Thankfully we have seen a trading update which we can talk about later on.
How Does Reach Make Money?
Print has been in decline for several years now, with that in mind it's important to make sure Reach is actively looking to diversify their income.

https://preview.redd.it/vwhruwpwu2751.jpg?width=625&format=pjpg&auto=webp&s=7d7fff695a529ca7292ec0f891e6a897cf810021
Source: Reach 2019 Presentation
As we can see, they are expanding the digital revenue but it is massively behind print, and print is declining faster than digital can replace it.

https://preview.redd.it/bnmoa5kxu2751.jpg?width=603&format=pjpg&auto=webp&s=cb02f50bb3975598bc03936f2945e3af87a51d82
Source: Reach 2019 Presentation
Looking at the breakdown for print it's the advertising which is in decline above everything else. As advertisers move to more holistic, trackable, and cheaper methods it's hitting Reach's top-line revenue.
That isn't to say Reach doesn't love advertisers. The digital offering is the new powerhouse in terms of what can be done for advertisers with customers data.

https://preview.redd.it/o5rc4meyu2751.jpg?width=1263&format=pjpg&auto=webp&s=6d7d21969cded7066ec9310306ad5dbe29c9ecf0
Source: Reach 2019 Presentation
The digital aspects of Reach have been tailored to build up a complete picture of you across all their brands. The more data they collect, the higher fee they can charge for more targetted advertising. Reach has already made this a priority within their traditional print outlets to ensure they have a strong digital offering. The vast expanse of outlets and the hyper-local solutions drastically increases the odds of Reach being able to offer you up to advertisers.
Is Reach Fundamentally Strong?
Reach has brought up other brands, currently going through an integration, and digitally upscaling their efforts, which all sounds very expensive.

https://preview.redd.it/jaznrx5zu2751.png?width=704&format=png&auto=webp&s=c46c7fe77d8024a4a460e5f9688203a56fe66f74
Source: Genuine Impact
I was taken back and impressed to find some pretty sable fundamentals for Reach. Even compared to investments in the US, Reach was showing up as a cheap buy and had a solid balance sheet behind it.
Naturally, we want to dig into the raw data to make sure we understand the business a bit more.
Carrying on with the finances, let's talk about the revenue again. Bringing in £702.5m worth of revenue is a pretty decent figure, as we know it's what happens next which matters.
The gross margin is not as high as I normally like, 47.23% means you are losing half your revenue just to make any money at all. The print business is an expensive one to be in, and this is something Reach is looking at reducing. With the two new brands on board, there are more savings to be made there operationally speaking.
Where I start getting impressed is the profit margin of 13.42%. This dipped in 2018, due to buying the other brands.
We also see a return on assets of 6.60%, and a solid return on equity of 15.81%. One thing Reach gets right is putting money to good use.
Seeing how Reach just brought some new brands I wanted to check out the debt to see if there were any clear red flags.

https://preview.redd.it/1pegtg00v2751.jpg?width=1389&format=pjpg&auto=webp&s=ccaba168a64ea98071f77964d849e15a4bfb625d
Source: Wallmine
Debt to assets of 52% is higher than it needs to be but not uncomfortably so. We do know they have drawn down an additional £25m in debt to protect their cash during COVID-19, considering the current debt is £693.2m this isn't a dramatic change. They also have £35m left on their credit facility if they need it.
Speaking of debt, I wanted to have a closer look at the balance sheet. In terms of cash, we have £20m plus £102.2m in net receivables. Then things get weird. £224.9m in equipment (told you printing was expensive) and £810m of intangible assets. These very high intangible assets could well be the value of the "brands" rather than anything you should be taking debt against. When you consider this, the debt to assets percentage isn't as attractive. Removing £810m from the assets brings it down to £518.6m, and suddenly the debt looks a bit more serious.
While COVID-19 has stalled many dividend payouts, including for Reach, it's worth mentioning as when this dividend returns it's one to hold onto. An 8.34% dividend yield which has grown for the last four years, it's suspended right now but will be returning. The payout ratio is only 20.79% meaning as the price increases the yield will drop again. Though keeping 80% of the profits does allow Reach to keep building a war chest and hopefully chip away at that debt.
Is This A Value Purchase?
The price has seen a COVID-19 related drop, and we have had some tame news about revenues being down but digital being up. We already know that a hit to print is a meaningful cut against the top-line revenue.

https://preview.redd.it/4tfxvcu0v2751.jpg?width=767&format=pjpg&auto=webp&s=f7689eaab46c9662c6fe3ef91cd713761e56aabe
Source: Google Finance
The price still hasn't recovered, and until the UK is back to work it's unlikely to. Reach won't be able to replace the missing revenue, but they can speed up their digitalisation.
It's worth noting the high intangible assets will inflate any figures for value hunters, and Reach has used this to help them raise more debt. Assuming we think these assets do hold their value, what does that mean for Reach's numbers?
A price to earnings of 2.55x is extremely attractive compared to the rest of the UK market, this is being boosted by a strong EPS of 31.50x. Looking elsewhere the numbers are much lower. Enterprise value to sales of 0.32x, and a price to book of 0.39x.
This gives us some nice headway in terms of the assets they hold, but it comes down to your belief in their balance sheet and how successfully will they bounce back.
What About The Future?
Reach-ing into the future the sell-side analysts are optimistic but not sold. In terms of the share price growth, the expectation is recovery is incoming. For a one year position, this makes Reach very interesting.

https://preview.redd.it/3m908em1v2751.png?width=1080&format=png&auto=webp&s=7e64b6ea4c0427c7b1a44b2d78cf9d760f623f5c
Source: Genuine Impact
To turn this growth into hard numbers, we are looking at a target price of £1.25~ versus the current price of £0.80~, a 55%+ increase. However, this is not enough to push all analysts into a buy position.

https://preview.redd.it/26plxxc2v2751.png?width=1080&format=png&auto=webp&s=1d6d0467f8b6abf5124a75be89296f1edc4b3d32
Source: Genuine Impact
With no clue about when the UK will return to normal, and will the UK buy as many papers again, this is a dark cloud above the share price.
Analysts are moving into a more defensive position to wait and see, for either the momentum to pick back up again or until Reach announces more promising news in future trading updates.
Summary Pros
Summary Cons
My Thoughts?
It's an old business which is trying to go digital but it still makes so much money through print. Will COVID-19 make them change their ways and drive forward with more digital innovation?
Long term the debt can get out of control, and being the biggest doesn't mean being the best. They have a strong digital appeal but they aren't making the most of it.
As a long term investment, it comes down to what they can do digitally and turning digital into a meaningful revenue stream.
Short term if you are hopefully about the UK returning to "normal" then we can expect a spike with more people returning to work. If working from home becomes the new normal, there will be long term damage to Reach.
What do you think? Is this a hopeful buy based on the UK returning to work, or do they have more to offer on the digital side? Or maybe they are an old company which has seen their day?
Let me know what you think, I always welcome any feedback!
Thanks for reading and stay safe.
submitted by kano2005 to UKInvesting [link] [comments]

$SHOP - analysts mostly bullish into Q2 results on Wednesday

Oppenheimer (July 27, 2020): " we are positive into the print, as we believe Shopify will post results that will beat Street estimates. As such, we are raising our revenue and profitability forecast for SHOP today. Our positive tactical stance is supported by our proprietary tracker data, correlation analysis, and scenario analysis, which suggest there is good upside (i.e., ~7%) in our "Mid" scenario to the 2Q consensus total revenue estimate. Bottom line: We carry a positive tactical view into SHOP's 2Q results. However, we maintain our 12- to 18-month Perform rating on SHOP, as its premium valuation compared its Tier-1 SaaS peers (i.e., ~50x vs. ~29x EV/2020 revenue) keeps us on the sidelines for now."
RBC (July 24, 2020): " Based on intra-quarter data points and our model sensitivity work, we view Street estimates for the June quarter and balance of 2020 as likely conservative. Third-party data, industry checks, and our proprietary data suggest that e-commerce sales have accelerated in Q2 from March levels and we believe SHOP will fully participate."
Credit Suisse (July 23, 2020): "We anticipate another quarter of strong results from Shopify as the company continues to benefit from an acceleration in the secular migration toward e-commerce. We see upside to ouconsensus estimates though believe much if not all of the anticipated outperformance is priced into the share price with SHOP +40% since the last earnings call (+141% YTD) vs. the IGV Software Index +21% and 26%, respectively. We increase our TP to $850 as our DCF now assumes more sustainable GMV growth. We maintain our Neutral rating due to valuation."
Piper Sandler (July 23, 2020): "We are raising estimates and our PT to $1,015 (from $843) based on new data-driven inputs using digital downloads of the Shopify eCommerce application as a proxy for near-term digital adoption. While download activity doesn't directly correlate with revenue growth, we view it as a directional input. Shopify downloads rose 78% y/y and 72% q/q during Q2 suggesting a strong recovery after an initial COVID related slowdown in March. As the global retail operating system for 1M+ merchants today with an expanding product offering, SHOP remains one of the best positioned digital beneficiaries for the next decade."
DA Davidson (July 22, 2020): "We project 31.8% sales growth to $477.1M, which is below the consensus figure of $504.9M. Note, in April, the company withdrew its full-year guidance and did not provide any outlook for 2Q20 (see Figure 1 on page 2 for our operating forecasts). Shopify’s sales have topped the consensus forecast in all 20 quarters since its IPO; with this being the first quarter the company has not given guidance. On profitability, we look for $11.1M of adj. EBITDA (a 2.3% margin); our estimate is above the Street projection of $8.9M. Lastly, we forecast adj. EPS of a loss of $0.07, compared to the consensus estimate of $0.01. "
Roth Capital Partners (July 20, 2020): "Our 2Q checks suggest strong underlying growth from our surveyed customers of ~50%. As such, we have raised 2Q, as well as FY2020/2021 estimates. While our outlook improves, and SHOP and its stock should continue to benefit from e-commerce tailwinds from Covid-19, valuation remains very stretched at ~53x/40x EV/20E/21E sales, respectively. We reiterate our Neutral, as our PT improves to $800. "
Barclays (July 16, 2020): " SHOP’s 2Q results are likely to reflect healthy demand for its ecommerce offerings over the past few months. Intra-quarter data-points on ecommerce activity indicate that volume growth on online channels has remained strong despite many markets reopening over the last few weeks. SHOP is likely to be one of the primary beneficiaries of this trend and the company’s 2Q revenues and GMV growth should come with a nice acceleration. We forecast total revenues of $573m, or 58% y/y growth (vs. 47% in 1Q). Shares of SHOP have traded up +34% since 1Q print (vs. Nasdaq +17%), and investor sentiment is largely bullish. While this positioning doesn’t leave a lot of upside opportunity on the print, we don’t expect material downside given the potential for a nice beat on consensus and an upbeat commentary on the call. However, we remain Equal Weight as we struggle to justify $115B market cap using traditional frameworks."
submitted by street-guru to investing [link] [comments]

Every announcement Binance made today with links to each (July 30th 2020)

Multiple BUSD, USDT and BKRW Trading Pairs Added on Binance - 2020/07/30
[https://www.binance.com/en/support/articles/043fc71cdcce4fcfbdae133d8d0f35aa]
Isolated Margin Trading for STORJ and BAND Enabled on Binance
(https://www.binance.com/en/support/articles/282ee1b995864b37a359b463db60fa62)
Binance Futures Will Launch RLC/USDT Perpetual Contract With Up to 50x Leverage
(https://www.binance.com/en/support/articles/7efe93a63b364f039319fcf5313874e4)
Upcoming BitShares (BTS) and Solana (SOL) Network Upgrades Supported on Binance
(https://www.binance.com/en/support/articles/45bac20c1ee246c9bf9989247b14e4f1)
Binance Launches 26th Phase of Binance Savings - Special USDT Event
(https://www.binance.com/en/support/articles/511392c031ac467c82e11b1c0f006b8e)
Notice of Removal of Trading Pairs - 2020/07/31
(https://www.binance.com/en/support/articles/233bd25b1a0f432fbb1f3fb9d373dd15)
submitted by Darc_BinanceAngel to binance [link] [comments]

Every announcement Binance made today with links to each

Isolated Margin Trading for RLC, FTM, HIVE and DGB Enabled on Binance
https://www.binance.com/en/support/articles/5440bf7c4b9a4e5895fe8f4f031c7625

Binance Futures Will Launch BAND/USDT Perpetual Contract With Up to 50x Leverage
https://www.binance.com/en/support/articles/ea85b877da3f4bebaf17922f32f58dbc

Binance Pool Users Will Now Receive Binance Exchange VIP Trading Benefits
https://www.binance.com/en/support/articles/bca80a86abaa4b6ab2cea3306485fdc0

Trade SNX on Isolated Margin with Zero Interest on SNX Borrowings, $50,000 in SNX to Be Won!
https://www.binance.com/en/support/articles/fcc562f47d9148fd88ae0af3a5ed1818

Augur (REP) Token Swap to Augur (REPV2) Will Be Supported on Binance
https://www.binance.com/en/support/articles/a480e52438bd44fdb06703abc76ec84c
submitted by Darc_BinanceAngel to binance [link] [comments]

Take profits in your tech stocks NOW

This is an objective take on things from a value investing perspective. I’ve been a value investor my whole life. Granted, this hasn’t served me well in the last couple of years. But overall, my value investment strategy has outperformed the market significantly over the years. I make investment decisions based on facts and numbers and hold cheap stocks long-term, regardless of current sentiment, FED buying, etc. This is what Warren Buffett does. I have been watching tech stocks becoming extremely expensive compared to usual over the last two years, so I hope to issue a warning to people investing in this space.
Take ADBE, for example: its price-to-earnings ratio is 50x. A normal stock over a long period of time trades at an average Price-to-Earnings ratio of about 15x. So this is a very expensive stock from a value investing perspective, but they do dominate the market and make good profits. However, there are many so-called “growth” stocks in the NASDAQ today that have negligible profits (if at all). Think AMZN, UBER, SNAP, LYFT, and of course, TSLA. AYX is another one, trading on 296x earnings. These “growth” stocks trade on the sole basis of future growth, which is then supposed to lead to market domination one day, at which point the company is supposed to start making profits.
So people are paying eye-watering prices for dominant players like ADBE and MSFT, but they are ALSO paying even more eye-watering prices for “growth” stocks which will become profitable “one day”. There is a major flaw in this logic: “growth” stocks will never become profitable if the current dominant players continue to be dominant. They cannot both win. Profit margins for all tech stocks are currently very elevated, and the sector can only grow at the pace the economy is growing. It’s simply not possible for ALL of these tech stocks to increase their market share and their profits.
After it became clear that the US was heading into a recession thanks to COVID, people started piling into these already expensive tech stocks. A big part of the reason why is that tech did well in the previous financial crisis. People want somewhere to “hide” from COVID, to wait it out. However, what these people may not have realized is that the situation today is very different to 10 years ago, when the tech sector was relatively un-impacted by the recession. Many of today’s big names, such as AAPL, TSLA, NVDA, are involved in selling luxury items to consumers. This will take a bit hit. Other names such as FB and GOOGL will also take a massive hit, as the economic slowdown impacts online advertising revenue. You can think of FB and GOOGL as the real estate of the internet – back in 08/09 online retail was too busy expanding from a very low base to be hit by a generalised slowdown – but now these Tech stocks are too big not to be affected by prevailing economic conditions. The online advertising complex has a similar dichotomy to software. GOOGL and FB make all the profit. AMZN and other retailers are meant to be much more profitable one day – but that profitability would come at the expense of the online landlords. Again, it doesn’t make sense for EVERYTHING to be on a high valuation!
You might be thinking: the NASDAQ has been exceptionally strong recently. Why don’t I just buy a few stocks and see what happens. What can go wrong? The problem is that when there is a crash, things will go down VERY fast. You will likely not have the opportunity to get out of your stocks once things start going down properly.
Many companies will be reporting their Q1 numbers soon. Many of them will avoid giving guidance for Q2, saying that their future performance is uncertain. However, one thing is certain: Q2 performance will be catastrophic across the board. Companies (especially tech companies that pay their employees in stocks) will try to keep the stock price up for as long as possible. However, they will have to report these bad numbers at some point. We don’t know when the market will lose confidence in the sector as a whole – it’s not possible for anyone to time this, even Warren Buffett. However, we can be sure that an actual decline in performance is coming, and when the market reacts to this, things may drop faster than you can react.
TL;DR, tech stocks were already expensive pre-COVID, and are not the “safe haven” that some people believe them to be. This is not the time to buy tech stocks, or hold them with the intention of selling in the near future. The whole sector is set up for a significant dip, as COVID-19 impacts are not yet priced in.
submitted by HyperInflation2020 to stocks [link] [comments]

Micro Focus International $MFGP - Undervalued Tech - Refinanced through 2024,

What do you think about this company?What do you guys think about this stock right now?
Currently trading $4.11
Market Cap : 1.37 B
Enterprise Value : 5.7 B (4.6 billion of term debt, 2024 soonest maturity)
P/B : 0.26
P/S : 0.44
Normalized free cash flows of about $400 million+ per year, against Market Cap of $1.37B.
The market doesn't believe it is real due to some of the reasons listed below. So either:
  1. the free cash flow numbers will drastically change over the next 5 years negatively, and the stock is fairly priced today, or,
  2. The free cash flow will be stable or stable-down, in which case the stock should achieve any of the following upside possibilities. Aka reversion to the mean prior valuations.
Based on a normalized Price to Operating Cash Flow of 7x (PtoOCF has reanged between 8x-30x) the stock has about about 200% upside.
Based on a normalized PS ratio of 2 (PS has ranged as high as 8x), the stock has 450% upside.
Based on a normalized PB of 1 (normally ranges between 1 - 1.50x), the stock has 384% upside.
Not sure what it will take to change the momentum, maybe the stock needs to go down another 15-50%.
Lot's of debt $4.4 b, but o debt maturities until 2024, having recently refinanced one $1.4b term loan last year.
Recent financial performance reflects M&A related costs of acquiring HPE Software.
Company has marked down intangible assets making net income more ugly than the cash flows of the business really are.
Some revenue declines due to integration costs and winding down less profitable operations.
UK exposure has been another reason for selling and some investors to remain hands off.
Covid will marginally impact their business.

I think the company is severely undervalued based on every metric I can identify. This research is mostly based on a quick reading of a 10K and Gurufocus.com
submitted by barjamin1 to Undervalued [link] [comments]

The MUST DO's and DONT's of Leverage/Margin Trading (Plus a Short Intro on Margin Trading)

The MUST DO's and DONT's of Leverage/Margin Trading (Plus a Short Intro on Margin Trading)

Let's quickly describe what trading using leverage means.
Let's say you have $100 in BTC and want it to grow in terms of SATs (small pieces of a BTC). You don't have money to buy more BTC but want to try to predict if the price will go up or down.
So you take that $100 and decide to trade using leverage, 1-100x. For this example I'll use 10x. If you are using 10x leverage your $100 gives you access to $1000 in trading $$. If the price of BTC is $8,000 and you go "long" because you expect the price to go up, you have a position worth $1000 in BTC now open 'long.'
Because you only 'own' 10% of the money you are using to buy/sell BTC if the price of BTC drops 10% you are liquidated (whole position lost). However, similarly if BTC goes up 10% your $100 becomes $200. Leverage can work very well in your favor or against it. For this example of BTC at $8,000 if BTC moves $800 in either direction you lose the whole position, or gain 100% (and all the small incremental %s in between). Once the position is ready to be closed you ALWAYS pick "limit" and enter a price, even if higher than the actual price because the fees for "market" orders are usually 5x the price.

NOW THE LIST of to DO's and DONT's of Leverage Trading
  1. ALWAYS USE LIMIT ORDERS, the fees for market orders are MUCH higher.
  2. ALWAYS set the stop limit (where it sells automatically) $2 away from your actual liquidation point, if liquidated the fees are MUCH higher, like $50 vs $5.
  3. PATIENCE is a virtue. If you enter a position and it goes the wrong direction for an hour, STOP watching it. Enter the position, the point of selling (limit order) if it goes UP or DOWN, and walk away. Your anxiety will NOT impact the price.
  4. Buy or go long on major dips into support, sell or short on major pumps into resistance.
  5. Fade what your "instinct" tells you to do. The whole world has that same 'instinct.'
  6. Understand 100x is basically gambling, 50x too, but they can provide immense returns (or losses).
  7. Long positions on BTC ALWAYS make more than short positions. This is because if you long BTC and the price goes up, you have more BTC at a higher price. If you short it, and it goes down, great now you have 2 BTC instead of 1 but the price is 30% less. You make more with 2 BTC when the price is 30% higher (in terms of USD).
  8. Emotionless. You will loose AND win trades. Understand what you risk you MAY loose also understand how to profit similarly.
  9. Stick to under 10x leverage unless you want a real gamble (it's exciting though).
  10. DM any questions!
submitted by JakeTheCryptoKing to CryptoCurrencies [link] [comments]

A detailed discussion of using futures contracts to obtain leverage; holding a long position of the S+P 500 index

In another post, I reviewed some of the ways to obtain leverage in your portfolio. Here, I discuss futures specifically.
Futures may be the most cost-effective way of obtaining leverage, or are at least comparable to options. With index futures, you enter into a contract to buy or sell the index at a future date (NOT optional), and the notional value contract can be 5x, 50x, or 250x the underlying index (in the commonly traded CME group contracts). Depending on how much capital you commit to the margin (a sort of good faith deposit), leverage can be anywhere from almost 0x up to 25x if your margin requirement was 4%. This position can be rolled forward quarterly, and leverage will increase if the index loses value and decrease if the index gains value.
You do not earn dividends, although this is reflected in the futures price (Future Price = Spot Price * e^((Financing Cost – Continuous Dividend Rate)*Time to Maturity). When interest rates are high, the exponent is positive and the futures contract trades at a premium; you can end up paying a significant amount of roll adjustment in a market in contango. When interest rates are lower than the dividend rate, the exponent is negative and you get a discount for buying a futures contract; a market in backwardation is helpful for those looking to hold a contract long-term. Note that this roll adjustment does not occur when rolling a contract forward, but rather gradually over the life of the contract.
While all that might sound complex, the effect of contango/backwardation has not been substantial over the past 20 years as a whole because interest rates have been both higher and lower than the dividend rate. Let’s say we decide to trade the E-mini S+P 500 contract, where the contract size is 50x the index. If you were to enter into a futures contract in 2000 when the index value was ~$1400 and roll it quarterly, you would be forced into a margin call and essentially wiped out in 2008 with any amount of leverage >1.5x (starting balance of ≤~$47000). If you “rescued” your account and injected enough cash to avoid margin calls, you would have had to put up ~$4500 at the worst of the recession, and turned your $47,000 into ~148,000 in December 2019. This sounds great, but if you had simply invested your initial capital plus the $4500 in an S+P 500 index fund and reinvested dividends, you would have ~$164,000 with much less risk. “Rescuing” your account when starting with higher leverage has similar results, with higher ending balances, higher “rescue” requirements, and similar returns to the S+P 500 with dividends reinvested. By the way, releveraging or hedging your account by going long or short on Micro contracts (contract value 1/10 the Emini), you would do even worse.
Of course, if you started with $47,000 in 2010 and rolled forward 2 E-mini futures contracts (2 because this results in starting leverage of 2.36x compared with 1.2x for 1 contract) until 2020, you would have ended with ~$269,000 compared with the S+P’s return of ~$165,000. So, if you could somehow time the market, leverage obviously does well.
The only way I found of consistently beating the passive index holder since 2000 was to “double down”, or invest more money AND increase your leverage by buying additional contracts every time the index drops significantly. Let’s say you decided to start at 3x leverage with ~$24,000 committed, then trade an additional contract (increasing your leverage, requiring extra money to be injected into your account to avoid margin calls) every time the index dropped to 2/3 of its starting value ($952 for our example of starting in 2000 with the index at $1429), and wait at least a year to “double down” again. You would have started trading 2 E-mini contracts after the dot-com bubble burst in 2002, 3 during the 2008 Great Recession, and maintained those 3 contracts until December 2019. You would have injected ~$36,000 (more than the value of the initial account!) and ended with a final value of ~$427,000, compared to just investing your original $24,000 + $36,000 in the S+P 500 (reinvesting dividends) and ending with ~$191,000. Of course, this requires serious resolve and access to extra cash when the economy is at its worst. My next plan is to test this strategy over many time periods.
The final consideration is taxes. If you invest in a taxable account, you will be on the hook for only the long-term capital gains tax of 15% with stocks and ETFs, and you can realize those gains at the end of your investing period. LEAPs and futures are subject to the 60/40 rule, where 60% of your gains are taxed at the long-term rate of 15% and the other 40% is taxed as short-term gains (taxed as income), and you have to do this every year (although you can tax-loss harvest).
TL;DR Leverage results in greater gains and greater loss, but can be expensive to obtain. Options and futures are the most cost-effective way of obtaining leverage. Holding a leveraged long position with options and futures is possible, but can be completely wiped out with severe drawdowns. An aggressive futures trading strategy of increasing your leverage and cash committed every time the index loses significant value could be profitable if the value of the index increases over time.
Does anyone here use futures to obtain leverage?
Edit: Some of you are misunderstanding how leverage changes over time. Here is the link to some of the data (https://docs.google.com/spreadsheets/d/1hF1IXWXWZLZraVevnkL0oWVKuQMCQs6dXO46o8E7Zmw/edit?usp=sharing). It's easier to see with all the numbers. Let me know if you have any feedback or catch a mistake.
submitted by devdevdev51 to investing [link] [comments]

$SHOP - analysts mostly bullish into Q2 results on Wednesday

$SHOP - analysts mostly bullish into Q2 results on Wednesday
Oppenheimer (July 27, 2020): " we are positive into the print, as we believe Shopify will post results that will beat Street estimates. As such, we are raising our revenue and profitability forecast for SHOP today. Our positive tactical stance is supported by our proprietary tracker data, correlation analysis, and scenario analysis, which suggest there is good upside (i.e., ~7%) in our "Mid" scenario to the 2Q consensus total revenue estimate. Bottom line: We carry a positive tactical view into SHOP's 2Q results. However, we maintain our 12- to 18-month Perform rating on SHOP, as its premium valuation compared its Tier-1 SaaS peers (i.e., ~50x vs. ~29x EV/2020 revenue) keeps us on the sidelines for now."
RBC (July 24, 2020): " Based on intra-quarter data points and our model sensitivity work, we view Street estimates for the June quarter and balance of 2020 as likely conservative. Third-party data, industry checks, and our proprietary data suggest that e-commerce sales have accelerated in Q2 from March levels and we believe SHOP will fully participate."
Credit Suisse (July 23, 2020): "We anticipate another quarter of strong results from Shopify as the company continues to benefit from an acceleration in the secular migration toward e-commerce. We see upside to ouconsensus estimates though believe much if not all of the anticipated outperformance is priced into the share price with SHOP +40% since the last earnings call (+141% YTD) vs. the IGV Software Index +21% and 26%, respectively. We increase our TP to $850 as our DCF now assumes more sustainable GMV growth. We maintain our Neutral rating due to valuation."
Piper Sandler (July 23, 2020): "We are raising estimates and our PT to $1,015 (from $843) based on new data-driven inputs using digital downloads of the Shopify eCommerce application as a proxy for near-term digital adoption. While download activity doesn't directly correlate with revenue growth, we view it as a directional input. Shopify downloads rose 78% y/y and 72% q/q during Q2 suggesting a strong recovery after an initial COVID related slowdown in March. As the global retail operating system for 1M+ merchants today with an expanding product offering, SHOP remains one of the best positioned digital beneficiaries for the next decade."
DA Davidson (July 22, 2020): "We project 31.8% sales growth to $477.1M, which is below the consensus figure of $504.9M. Note, in April, the company withdrew its full-year guidance and did not provide any outlook for 2Q20 (see Figure 1 on page 2 for our operating forecasts). Shopify’s sales have topped the consensus forecast in all 20 quarters since its IPO; with this being the first quarter the company has not given guidance. On profitability, we look for $11.1M of adj. EBITDA (a 2.3% margin); our estimate is above the Street projection of $8.9M. Lastly, we forecast adj. EPS of a loss of $0.07, compared to the consensus estimate of $0.01. "
Roth Capital Partners (July 20, 2020): "Our 2Q checks suggest strong underlying growth from our surveyed customers of ~50%. As such, we have raised 2Q, as well as FY2020/2021 estimates. While our outlook improves, and SHOP and its stock should continue to benefit from e-commerce tailwinds from Covid-19, valuation remains very stretched at ~53x/40x EV/20E/21E sales, respectively. We reiterate our Neutral, as our PT improves to $800. "
Barclays (July 16, 2020): " SHOP’s 2Q results are likely to reflect healthy demand for its ecommerce offerings over the past few months. Intra-quarter data-points on ecommerce activity indicate that volume growth on online channels has remained strong despite many markets reopening over the last few weeks. SHOP is likely to be one of the primary beneficiaries of this trend and the company’s 2Q revenues and GMV growth should come with a nice acceleration. We forecast total revenues of $573m, or 58% y/y growth (vs. 47% in 1Q). Shares of SHOP have traded up +34% since 1Q print (vs. Nasdaq +17%), and investor sentiment is largely bullish. While this positioning doesn’t leave a lot of upside opportunity on the print, we don’t expect material downside given the potential for a nice beat on consensus and an upbeat commentary on the call. However, we remain Equal Weight as we struggle to justify $115B market cap using traditional frameworks."
https://street-guru.com/
https://preview.redd.it/u3l4wbixdmd51.png?width=640&format=png&auto=webp&s=a48c065ae659cd757b5f79fa68770b8ccc5361c4
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submitted by street-guru to streetguru [link] [comments]

Maker Fee Vs Taker Fee for trader looking for scalping

As an exchange Bitmex is quite lucrative as it offers a fee credit for maker trades, which is not very common. If you are a maker while buying and selling at the same price, you already gain a minimum of 0.05% for XBT and 0.01 for ALT coins.

However in a trending market, the contracts cannot be bought as your maker order bids may never get filled. So sometimes, you have to go for taker trades, especially when market is going against your favorable direction and you have a stop-loss or need to market stop. This also applies to take profit cases where market is retracing from your profitable position.

This brings us to the question what should be reasonable break-even price (or a %) which you are willing to pay, considering that you have placed your bid but know that waiting further may deteriorate your position further.
At max leverage (100x) fox XBT perpetual , this is 0.0250% + 0.0750% = 0.1% ==> 0.1% x100 = 10% of current price
At max leverage (50x) for ETH quarterly, this is 0.05% + 0.250% = 0.3% x 50 = 15% of current price
At max leverage(20x) for XRP quarterly contract, this is 0.05% + 0.250% = 0.3% X 20 = 6% of current price

Obviously these cases are extreme and any leverage over 5x is toxic.

How do you guys deal when faced with such a situation, please share your comments.
submitted by RunningOftimeout to BitMEX [link] [comments]

Rant on certain questions asked in the trading community

There are certain questions that get repeated in the trading community
What is the capital required? Capital deployed?
These questions make 0 sense and serve no purpose.
Eg: If i make 1 lac and i share the screenshot. And i caption it on twitter as "Look I had 20k in my zerodha account before the day started , and now it is 1 lac" PAISA 5x ho gaya.
That invites a lot of attention. But let's break this further.
The importance of risk management:
Maximum traders are trading with a risk of 1-2% of TOTAL capital. That means if their capital is 1lac, they are risking close to 1-2% of overall capital.
Maximum traders trade with a risk:reward of 1:1, 1:2, 1:3 (proper autists only)
That means they are risking 1000rs to make 1000rs reward . Risk to reward=1:1 (RR=1:1)
Now. Let's go back to my first retarded example. "I MADE 1 LAC WITH 20K. LOOK AT MY ZERODHA BALANCE"
Now, to make 1 lac I would be risking say 1 lac. RR=1:1 To risk 1 lac i would have to have a capital of 1crore (assuming i trade at 1% risk per trade)
Cool?
Now maximum traders have funds in various accounts- equity account , commodity accounts , and with some other brokers, just in case to prevent random buttfucking from a broker.
So, if you see a profit screenshot, STOP asking "What is the capital required" That doesn't make sense. The person could be trading with 50x margin. It does not make sense.
The only logical question that makes sense is: 1.On average what kind of Risk:Reward are you playing with? 2. How much of your total capital do you risk per trade?
It's all probabilities With 1% risk per trade you get to YOLO 100 times before you lose everything With 2% risk per trade you get to YOLO 50 times before you lose everything
With 5% risk per trade you get to YOLO 20 times before you lose everything
With 10% risk, just don't .STOP.
submitted by grilledburger to IndianStreetBets [link] [comments]

There has been a ton of discussion about leverage lately. In this post I discuss obtaining leverage via personal loans, buying stock on margin, leveraged ETFs, options and futures.

The belief that the US stock market always increases in value over the long term is a central tenet of many investing strategies (read about the equity risk premium).
Exposure to the an index fund beyond 100% can be achieved via leverage:
Personal leverage such as home equity loans or personal loans are limited by capital available and high interest rates.
Buying stock on margin also usually has unacceptably high interest rates and a market downturn can lead to a margin call.
Leveraged ETFs perform well in bull markets, but due to the “implied interest rate” due to borrowing costs and management fees, still lead to significant costs for obtaining leverage. In addition, because many of these are rebalanced as frequently as daily, your returns can be greatly diminished and you effectively buy high and sell low in a sideways market. However, in a market with consistent momentum, either negative or positive, the frequent rebalancing can actually work in your favor. This means you will lose significantly more in down years, but not 2x or 3x or whatever your leverage is. The oldest leveraged ETFs I could find (RYNVX 1.5x, SSO 2x) are compared with the S+P 500 here.
Options are an effective way of obtaining leverage without the same costs inherent to the strategies above. However, costs such as premiums, theta decay, and not receiving a dividend will limit returns. This 2008 paper advocates buying deep in the money Long-Term Equity Anticipation Securities (LEAPS), which equates to an implied interest rate of LIBOR + less than a percentage point for 200% exposure, although higher amounts of leverage had higher implied interest rates. I won’t explore options fully in this post, but they are a reasonable choice and are described in detail in the paper.
Futures may be the most cost-effective way of obtaining leverage, or are at least comparable to options. With index futures, you enter into a contract to buy or sell the index at a future date (NOT optional), and the notional value contract can be 5x, 50x, or 250x the underlying index (in the commonly traded CME group contracts). Depending on how much capital you commit to the margin (a sort of good faith deposit), leverage can be anywhere from almost 0x up to 25x if your margin requirement was 4%. This position can be rolled forward quarterly, and leverage will increase if the index loses value and decrease if the index gains value. The costs inherent to futures include small trading fees, the lack of dividend reinvestment (although this is priced in to the futures contract), and the cost of financing (usually near the risk-free rate). In addition, interest rates and dividend yields affect the pricing of futures contracts. Large drawdowns can also result in margin calls.
A future post will describe a detailed analysis of using S+P 500 index futures contracts to obtain leverage.
TL;DR Leverage results in greater gains and greater loss, but can be expensive to obtain. Options and futures are the most cost-effective way of obtaining leverage. Holding a leveraged long position with options and futures is possible, but can be completely wiped out with severe drawdowns.
What do you think? Is leverage too risky, or a valuable part of a young person's portfolio?
submitted by devdevdev51 to investing [link] [comments]

Some interesting news in the stock market this week

Value Stocks (Bed Bath and Beyond, Subaru and Express)
Barron’s round table last weekend highlighted a couple of interesting opportunities, namely Bed Bath and Beyond and Subaru.
After years of poor performance, that has seen the stock price fall by 80%, Bed Bath and Beyond ($BBBY) appointed a new CEO Mark Tritton in October last year. Mr Tritton has an outstanding track record, having previously helped turn around Target and Nordstrom. His speciality is improving merchandise and reducing the cost of private label.
That’s particularly relevant for Bed Bath who have seen their margins fall to just 3%. If Mr Tritton does what he’s demonstrably good at and implements better sourcing, cost-cutting, and sales growth -- then margins could double, earnings should grow to about $4 to $5 a share and the stock could rise from $16.35 on Friday to $45 or higher.
That sounds very achievable on paper. However, what makes it more interesting is that Mr Tritton is backing himself with an equity heavy package. Instead of looking for cash he has taken $1 million - $2 million in cash with the remaining $8 million - $10 million in stock. That means his interests are aligned with stockholders and that he sees upside in owning shares.

Also highlighted by Barron’s was Subaru ($FUJHY). Subaru is one of the lowest-cost car producers and yet one of the most profitable, with 9% margins.
Its stock is very cheap (trading at nine times next year’s earnings, with a 5.4% dividend yield and 30% cash-to-market cap) because the market is concerned that volumes are about to peak. However the economics look good. Subaru’s cars are taking more market share (4% in the US) and consumers are shifting to sport utility vehicles which cost more.

Elsewhere, clothing retailer Express ($EXPR) shares jumped 20% on Wednesday following plans to shutter 100 stores by 2022. The move is expected to cut costs by $80 million and boost profits by $15 million annually. Additionally, over the same period, operating lease obligations are expected to drop by $85 million.
These are both significant amounts for Express and should provide a significant boost to its $80 million trailing EBITDA.
It’s no surprise then that the stock price rose 20%. However Express’ valuation still looks incredibly cheap -- even after the increase. Its enterprise value is just $142 million with a market cap of $309 million, $167 million of cash and no debt the enterprise value.

Growth Stocks (Ollie’s Bargain Outlet and eHealth)
Ollie’s Bargain Outlet ($OLLI) shares hit a 52 week low on Tuesday before rebounding. However, as of Friday’s close, the stock was still down 40% from the all time highs set in May last year.
I am not surprised the stock is rebounding. The company had a bad start to the year in Q1 and Q2 as poorly-timed inventory decisions led to an excess of out of season goods and rapid expansion led to some cannibalization of sales. However Management’s assurances that set backs were temporary proved to be true as strong Q3 results in December beat expectations. Net sales increased 15.3%, operating income increased 22.0%, adjusted net income increased 28.3% and the company reaffirmed full year guidance.
Longer term, the potential for growth is very good. The company has 345 stores in 23 states and plans to increase its store count nationally to over 950.
The stock is currently trading on 26x trailing earnings. That looks cheap for a fast growing “off price” retailer with big plans that is (once more) executing well.

Shares of eHealth ($EHTH) jumped 27% on Friday after the online health exchange provider announced that preliminary Q4 revenue will be between $257.5 million and $259.5 million with earnings between $53 million and $55 million (c.$2.34 per share). Consensus estimates were for Q4 revenue of $194.9 million and EPS of $2.15.
Business is picking up for eHealth and the trend seems likely to continue. An ageing U.S. population, with the 65+ population expected to increase from 40 million in 2010 to 80 million in 2030, will mean more people buying private health insurance to enhance Medicare for decades to come. Additionally, its likely that those purchases will be made increasing online, where eHealth has established itself as a leader in a very fragmented market.
The stock is priced on 50x 2019 estimates but with 50% growth and a bright outlook the valuation looks very reasonable.
eHealth CEO Scott Flanders said, "We remain excited about the Medicare market opportunity and significant growth potential ahead of us and are looking forward to sharing our outlook for 2020 as part of our fourth-quarter earnings release next month."

Pharmaceuticals (TherapeuticMD)
TherapeuticMD ($TXMD), a commercial-stage biopharma focused on women's health, jumped over 20% on Tuesday after it was reported that JP Morgan had taken a 7% shareholding.
The company has three drugs on the market (Imvexxy, Bijuva and Annovera) with combined peak annual sales estimated at $1.85 billion. Be that as it may, TXMD is still in the early stages of building demand with trailing revenues of just $40 million.
The investment by JPM is important as the company burns through its $155 million of cash and investors look for signs that management is capable of delivering commercially. Reassuringly JPM’s move follows recent purchases in the past six months of $300,000 by the CEO and $400,000 by the company President.
Considerable risks remain with TherapeuticMD and its plans to develop commercial sales. However, I would say that with a market cap of $672 million compared to forecast peak sales of $1.85 billion, the rewards should significantly outweigh the risks.

"Follow" me if you would like to receive updates during the week.
This is not a recommendation to buy or sell. Stocks are not suitable for everyone. Some of the stocks mentioned are risky small cap and/or highly speculative. Please do your own research.
submitted by InterestingNews1 to stocks [link] [comments]

High leverage opportunities

With RH shutting down the infinite leverage trick, I figured I'd share a simple way to leverage up to your PRT, that's endorsed by the SEC! 2 words... Futures Trading. For example... if you look at the Day Trade Margin requirments, 1 ES contract requires $500 margin to hold a position. But 1 ES contract represents 50x leverage to SPX (when SPX moves $1, the ES contract changes by $50). So... 50x$3000 is $150,000. $150,000/$500 is 300x leverage. Boom!
You can also trade things like oil (CL). 1 Contract is for 1000 barrels of oil. At ~$55/barrel, that means your 1 contract is for $55,000. Margin requirements are $1000 for day trade, so that's 55x leverage.
Or 2 year treasury bonds (ZT). 1 Contract is for $200,000 of bonds, and only requires $300 day trade margin, for a leverage of 666.67x!
Using this one simple trick called futures trading, you can lose money as fast as you like, right up to your PRT!
submitted by rs6866 to wallstreetbets [link] [comments]

Margin Trading  Trading Terms - YouTube Margin Trading How To Trade Using Borrowed Funds What Is Buy Big Trade Plus, Sell Big Trade Plus, Buy EMF,Sell EMF Orders In Sharekhan? #36 Trade With Sharekhan At 50X Margin With New Bigtrade+ Plus Feature Intraday Trading Kotak Securities Provide 50X Leverage

50X. 50x.com distributes 80% of the collected commissions (excluding expenses) between 50X token holders, and this is not a benefit that will lessen over time - it will stay with you for as long as you hold your 50X tokens! Update October 2019: Kraken had extended its leverage for up to 50x for eligible traders on Kraken futures.. How to open a margin position on Kraken. Opening a position happens when the user receives advanced funds (the margin) which will help them execute a leveraged trade. Risk on leveraged futures trading on the platform is managed via Forced Liquidation process in the Instant Margining System. Liquidation occurs on the margin account level (of which multiple Contracts can be trading in) when the required Maintenance Margin across contracts exceeds the Equity (Portfolio Value). No limits. Claim back your trading freedom today! More than 720 trading pairs. Trade crypto without KYC in any directions on 50x.com Deribit is currently the most popular margin trading platform which is open for the citizen of all the countries including the USA. When trading Bitcoin futures, you can take advantage of up to 100x leverage. The company is based out of the Netherlands and CEO is John Jansen.

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Margin Trading Trading Terms - YouTube

If you are a trader, are you interested in cryptocurrencies and earning on them, the possibility of investment and receiving dividends? If you got bankers wi... TRADE WITH SHAREKHAN AT 50X MARGIN WITH NEW BIGTRADE+ PLUS FEATURE. ... How To Make $100+ A Day, Trading With A $1000 Account - Duration: 17:33. Riley Coleman 72,212 views. 17:33. What is margin trading? What is a margin? What is the difference between a cash account and a margin account? In episode #34 of Real World Finance we dive de... Margin trading with leverage The possibility of multi-collateral and multi-loans And of course, the world’s first Any2Any technology that is available only on the 50x.com exchange #36 Trade With Sharekhan At 50X Margin With New Bigtrade+ Plus Feature - Duration: ... What Is Option Trading In Stock Market? - Duration: 18:15. A TO Z ABOUT FINANCIAL MARKET 1,141 views. 18:15.

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