What is Margin Trading? Definition of Margin Trading
What is Margin Trading? Definition of Margin Trading
SHARETIPSINFO.com: What is meant by margin trading?
Buying Stock on Margin - dummies
What is meant by margin in trading?
What is Margin Trading? definition and meaning
Not sure if this is allowed, but fuck it, we're hurting and desperate times create desperate people who do desperate things. TL;DR: Local butcher shop with cheap prices. Trying to keep afloat and keep folks fed. Address at bottom. Sup ya'll, it's your favorite local meat boy (for those that don’t get it, here's my first post: original NYC meat boy post). Despite COVID cases in NYC having dropped a fair amount, a lot of businesses that have opened up aren't doing so hot, and still some are not going to open up ever again. While there's unemployment insurance for individuals, there really isn't much for small local businesses. I also know that the pandemic boost for UI is about to run out end of month, so if you're sweating about how you're going to eat, I got you. Most of America's economy began to feel the effects of The Rona around March of this year, but businesses located in Chinatown were fucked as early as January. America's reporting on COVID centered around China being the bad guy, which trends to loop all Asian Americans as "others" and "not really American." Chinese businesses tanked and hate crimes shot up. People within the community began their own self-imposed quarantine due to increased fear of being caught slacking by some racist fuckstick. Then came the formal lock down in March, which really flipped us over, bent us over the couch for good leverage, and fucked us deep and hard. At the time of 14JUNE2020, less than half of Chinatown's restaurants are open, and less than a third of total businesses are open (Bloomberg article supporting claim). Most funds meant as relief for small businesses got snagged by large corporations. And now all the SMEs are floundering. As of now, the end of July, still less than a third of Chinatown businesses have opened up, especially since most of them couldn't apply for any assistance due to language barriers. So again, here I am peddling my wares. I also have $9.75 left from someone that wanted to pay it forward earlier in the year for what it’s worth. We’re a small local meat shop. A butcher shop. A boutique culinary protein throwback to simpler times. Whatever the fuck you want to call it. We sell meat. You get the idea. Our prices are real fucking low. Lower than your self esteem. Lower than what your parents think of you. And that’s a good thing. Cause you like cheap things, you cheap fuck. Save all the money you can. While I can’t guarantee that we’re the cheapest you’ve ever seen, I can guarantee that we’ll be top five in cheapest prices in NYC. What do you want? Cause more likely than not, we got that shit. POULTRY. We got all kinds of birds. Chicken, silkies, qual, squab, duck, goose, stewing hens. Fuck you want? Still debating on whether drums or mid’s are better with your friends? Fuck around and cop a pound of each for under $5 per person: mid-wings are $3.89 a pound, drums are back to $.69/lb. Want more meat? Fine. A whole ass chicken leg and thigh, $.89/lb. You fuck with feet? It’s 2020, more power to you my guy. Chicken feet stands at $1.69/lb, duck feet at $1.49/lb. You into titties? Of course you're into titties: chicken breast coming in hot at $4.95 for a 2.2lb net weight bag. Into retirees and GILFs? All you Jack Black: Stewing Hens are two for $5.95. Haven’t gotten neck and head in a hot minute cause of COVID, or your Tinder and Hinge profile is just that basura? Say less: duck heads and necks at $1.39/lb. Into spawn kill? My guy: we got a dozen eggs for $2.95, 30 pack for $6.50. Duck eggs, six for $3.95. PORK. My man, let me tell you something. You fuck with pork chops? Even if you don't, for $2.39/lb, you fuck with pork chops. We got tenderloins for $3.19/lb. Bones for stock? $.99/lb. Let me guess, you miss eating authentic char siu over rice with the sauce from Chinatown. At $2.69/lb for char siu meat, you can afford to fuck up three times and still come out ahead instead of buying it from a restaurant. Since it's getting hot, you're going to want to throw BBQs, right? Hopefully they're socially distanced, everyone is responsible and wearing a mask, and all you motherfuckers got COVID tested prior. Got you some ribs for $2.89 a pound. You want some of them dim sum ribs? Them itty bitty, little tiny cuts of ribs? Small just like your feelings when your ex left you? $3.59 a pound. You been going through a rough time and need an ear to listen to you. $3.39/lb for pig ears buddy, say more. If you been fucking with feet and chicken and duck feet don't cut it, do it like J. Cole "so big it's like a foot is in yo' mouth" cause I got pre-cut pig trotters for $1.49 a pound. Oh, you deadass want the whole foot in your mouth? Weird, but we're being open-minded here: whole uncut pig trotters at $1.79/lb. BEEF. Let me guess: you haven't gotten enough foul language from this post and need a better tongue lashing? You filthy, sick, sorry, piece of shit. Beef tongues will run you $6.99 a pound. Or you want to boss up, but instead of being bad and boujee, you've been sad and boujee cause of COVID. Well, fear not, cause with femur bones at $1.95/lb, you can split them right down the fucking middle to get to that sweet, sweet, succulent marrow and feel like you're out brunching, spending $80 you don't have for a meal you can't afford to flex on hoes you couldn't really give less of a shit about. What's that? Pig trotters don't cut it? You trying to deepthroat the shit? I mean, do mama proud I guess. I got beef trotters/feet at $1.89 a pound. I mean, with skills like that, why you even buying from me? You belong on the yacht of some old rich man. But do you. Oh what's that? Your girl says your stroke game shit and you falling short of getting up in her guts? No fix for that, sorry, but you can cop honeycomb tripe or stomach at $3.39 a pound and know for a fact you can absolutely beat the ever living fuck out of these guts. You trying to fuck with flank steaks? $7.45 my guy. New York Strip? $8.99. T-Bone? $7.99. My bone? Ten camels. Where my Jamaicans at? Waa gwaan? I know oxtail is AT LEAST $6.75/lb where you’re at. We have them on deck for $5.99/lb. Or maybe you’re a rapper. You’re on SoundCloud pushing music and living out your mama’s crib. No shame, it’s rough out here King. Want to know how to really blow up? What did Eminem call himself in 8 Mile? That’s right, B-Rabbit. And you know what I got? Rabbit for $4.69 a pound. You are what you eat man. I’m not saying that eating rabbit will immediately blow your rap career the fuck up and give you the lyrical genius of Eminem, but I’m not saying it won’t either. For less than $5 a pound, you really gonna chance it? What if the other rappers cop it and you don’t and they blow up? Don’t get left behind my guy. You a King and King’s gotta do what they don’t want to do sometimes for the betterment of the folks. And the folks want to hear your music. Or maybe rabbit not your thing. You right, it’s too lean and lacks fat. Eat too much rabbit and nothing else and you’ll starve your body of fat. So how about goat? You want to be the GOAT, don’t you? Reddit’s even got a badge for it. If you want to be the Goat, guess what you gotta do? That’s fucking right, you are what you eat and here I am, your fucking pusher man for goat. You're fancy and trying to be boujee. Let me guess: lamb? Say less, I got you that bonjour hon hon hon rack of of lamb chops. Want a quarter of lamb? Got that too. All you gotta do is ask. I'm not going to really keep going down the list. You get the idea. I work at a fucking meat shop, I'm going to sell meat. I sell wholesale to restaurants and retail to walk-in folks. It's a pretty simple fucking concept. Is our meat fresh? As fresh as, if not more so, than any large chain due to constant turn over on wholesale side. Why are our prices so low? Because we're a small mom-and-pop brick and mortar shop. We're located in Chinatown. Ever heard of FUBU? Same concept: we're built by Chinese immigrants, for Chinese immigrants. Unfortunately, the Chinese population in NYC is one of, if not THE poorest communities we have. Raising prices will price out the community and jack the reason why we're even here: to feed the community. This also means that our margins are fucked, but we're making it work. Yes, we look janky asf. I know, we're not "modern" and our aesthetic looks like some tossed together shit from the 60's. Shit, our band saw is from the 80's. But we're clean, we're sanitary, we pass all health standards and inspections, and we're doing our fucking best. We're literally the definition of "no frills." To hear some say it, we'd be considered ghetto. I prefer the term resourceful, so fuck you. Because we're local and serve local, we only accept cash, EBT, SNAP, and debit. We don't do credit. Venmo is @FourSevenDivisionStreetTrading. PSA as the last one: if you think you can roll up to squeeze us, find out if you're a better shot than I am. Not my job to judge your life choices, but I will send you to someone who will. I'm the only person here that is fluent in English, so unless you're feeling real brave about pointing at shit and figuring it out, you speak a dialect, know how to read Chinese, or know what cut you're looking for, come on Tuesday and Thursday afternoons (02:00pm - 06:30pm) since that's when I'm directly on the floor. If you're a restaurant and you're looking to keep overhead low, PM me, I'll work something out with you. Our location is: 47 Division Street Ground Floor New York, NY 10002 B/D to Grand Street, F to East Broadway Our hours are: Monday - Saturday 0800am - 0630pm 23JUL2020 0323AM Edit: Added beef and lamb, added venmo acc, schedule and times. 25JUL2020 0015AM Edit: Changed schedule to add in Saturday.
PRPL earnings is tomorrow, 8/13, after hours. Any other date is wrong. Robinhood is wrong (why are you using Robinhood still!?!). I'm going to take you through my earnings projections and reasoning as well the things to look for in the earnings release and the call that could make this moon even further.
I make the assumption that Purple is still selling every mattress it can make (since that is what they said for April and May) and that this continued into June because the website was still delayed 7-14 days across all mattresses at the end of June. May Revenue and April DTC: The numbers in purple were provided by Purple here and here. April Wholesale: My estimate of $2.7M for Wholesale sales in April comes from this statement from the Q1 earnings release: " While wholesale sales were down 42.7% in April year-over-year, weekly wholesale orders have started to increase on a sequential basis. " I divided Q2 2019's wholesale sales evenly between months and then went down 42.7%. June DTC: This is my estimate based upon the fact that another Mattress Max machine went online June 1, thus increasing capacity, and the low end model was discontinued (raising revenue per unit). June Wholesale:Joe Megibow stated at Commerce Next on 7/30 that wholesale had returned to almost flat growth. I'm going to assume he meant for the quarter, so I plugged the number here to finish out the quarter at $39.0M, just under $39.3M from a year ago. Revenue Expectations from Analysts (via Yahoo) https://preview.redd.it/notxd6hhbng51.png?width=384&format=png&auto=webp&s=aa0453414f467aa6c5bf72ce8a8046c0ae6e62a5 My estimate of $244M comes in way over the high, let alone the consensus. PRPL has effectively already disclosed ~$145M for April/May, so these expectations are way off. I'm more right than they are.
I used my estimates for Q3/Q4 2019 to guide margins in April/May as there were some one time events that occurred in Q1 depressing margins. June has higher margin because of the shift away from the low end model (which is priced substantially lower than the high end model). Higher priced models were given manufacturing priority.
Marketing and Sales Joe mentioned in the Commerce Next video that they were able to scale sales at a constant CAC (Customer Acquisition Cost). There's three ways of interpreting this:
Overall customer acquisition cost was constant with previous quarters (assume $36M total, not $93.2M), which means you need to add another $57M to bottom line profit and $1.08 to EPS, or
Customer Acquisition Costs on a unit basis were constant, which means I'm still overstating total marketing expense and understating EPS massively, or
Customer Acquisition Costs on a revenue basis were constant, which is the most conservative approach and the one I took for my estimate.
I straightlined the 2.2 ratio of DTC sales to Marketing costs from Q1. I am undoubtably too high in my expense estimate here as PRPL saw marketing efficiencies and favorable revenue shifts during the quarter. So, $93.2M General and Administrative A Purple HR rep posted on LinkedIn about hiring 330 people in the quarter. I'm going to assume that was relative to the pre-COVID furloughs, so I had June at that proportional amount to previous employees and adjusted April and May for furloughs and returns from furlough. Research and Development I added just a little here and straight lined it.
Interest Expense Straightlined from previous quarters, although they may have tapped ABL lines and so forth, so this could be under. One Time and Other Unpredictable by nature. Warrant Liability Accrual I'm making some assumptions here.
We know that the secondary offering event during Q2 from the Pearce brothers triggered the clause for the loan warrants (NOT the PRPLW warrants) to lower the strike price to $0.
I can't think of a logical reason why the warrant holders wouldn't exercise at this point.
Therefore there is no longer a warrant liability where the company may need to repurchase warrants back.
The liability accrual of $7.989M needs to be reversed out for a gain.
What to Watch For During Earnings (aka Reasons Why This Moons More)
Analysts, Institutionals, and everyone else who uses math for investing is going to be listening for the following:
Warrant Liability Accrual
Capacity Expansion Rate
CACs (Customer Acquisition Costs)
New Product Categories
Cashless Exercise of PRPLW warrants
Margin Growth This factor is HUGE. If PRPL guides to higher margins due to better sales mix and continued DTC shift, then every analyst and investor is going to tweak their models up in a big way. Thus far, management has been relatively cautious about this fortuitous shift to DTC continuing. If web traffic is any indicator, it will, but we need management to tell us that. Warrant Liability Accrual I could be dead wrong on my assumptions above on this one. If it stays, there will be questions about it due to the drop in exercise price. It does impact GAAP earnings (although it shouldn't--stupid accountants). Capacity Expansion Rate This is a BIG one as well. As PRPL has been famously capacity constrained: their rate of manufacturing capacity expansion is their growth rate over the next year. PRPL discontinued expansion at the beginning of COVID and then re-accelerated it to a faster pace than pre-COVID by hurrying the machines in-process out to the floor. They also signed their manufacturing space deal which has nearly doubled manufacturing space a quarter early. The REAL question is when the machines will start rolling out. Previous guidance was end of the year at best. If we get anything sooner than that, we are going to ratchet up. CACs (Customer Acquisition Costs) Since DTC is the new game in town, we are all going to want to understand exactly where marketing expenses were this quarter and, more importantly, where management thinks they are going. The magic words to listen for are "marketing efficiencies". Those words means the stock goes up. This is the next biggest line item on the P&L besides revenue and cost of goods sold. New Product Categories We heard the VP of Brand from Purple give us some touchy-feely vision of where the company is headed and that mattresses was just the revenue generating base to empower this. I'm hoping we hear more about this. This is what differentiated Amazon from Barnes and Noble: Amazon's vision was more than just books. Purple sees itself as more than just mattresses. Hopefully we get some announced action behind that vision. This multiplies the stock. Cashless Exercise of PRPLW Warrants I doubt this will be answered, even if the question is asked. I bet they wait until the 20 out of 30 days is up and they deliver notice. We could be pleasantly surprised. If management informs us that they will opt for cashless exercise of the warrants, this is anti-dilutive to EPS. It will reduce the number of outstanding shares and automatically cause an adjustment up in the stock price (remember kids, some people use math when investing). I'm hopeful, but not expecting it. The amount of the adjustment depends on the current price of the stock. Also, I fully expect PRPL management to use their cashless exercise option at the end of the 20 out of 30 days as they are already spitting cash.
I've made some updates to the model, and produced two different models:
Warrant Liability Accrual Goes to Zero
Warrant Liability Accrual Goes to $47M
I made the following adjustments generally:
I reduced marketing expenses signifanctly based upon comments made by Joe Megibox on 6/29 in this CNBC video to 30% of sales (thanks u/deepredsky).
I reduced June wholesale revenue to 12.6M to be conservative based upon another possible interpretation of Joe's comments in this video here. It is a hard pill to swallow that June wholesale sales would be less than May's. The only reasoning I can think of is if May caused a large restock and then June tapered back off. The previous number of $19.0M was still a retrenchment from the 40-50% YoY growth rate. I'm going to keep the more conservative number (thanks again u/deepredsky).
I modified the number of outstanding shares used for EPS calculations from 53M (last quarters number used on the 10-Q) to almost 73M based upon the fact that all of the warrants and employee stock options are now in the money. Math below. (thanks DS_CPA1 on Stocktwits for pointing this out)
Now that we have established that coliseum still has not exercised the options as of july 7, and that purple needs to record as a liability the fair value of the options as of june 31, we now need to determine what that fair value is. You state that since you believe that there is no logical reason that coliseum won't redeem their warrants "there is no longer a warrant liability where the company may need to repurchase warrants back." While I'm not 100% certain your logic here, I can say for certain that whether or not a person will redeem their warrants does not dictate how prpl accounts for them.
The warrant liability accrual DOES NOT exist because the warrants simply exist. The accrual exists because the warrants give the warrant holder the right to force the company to buy back the warrants for cash in the event of a fundamental transaction for Black Scholes value ($18 at the end of June--June 31st that is...). And accruals are adjusted for the probability of a particular event happening, which I STILL argue is close to zero. A fundamental transaction did occur. The Pearce brothers sold more than 10M shares of stock which is why the exercise price dropped to zero. (Note for DS_CPA1 on Stocktwits: there is some conflicting filings as to what the exercise price can drop to. The originally filed warrant draft says that the warrant exercise price cannot drop to zero, but asubsequently filed S-3, the exercise price is noted as being able to go to zero. I'm going with the S-3.) Now, here is where it gets fun. We know from from the Schedule 13D filed with a July 1, 2020 event date from Coliseum that Coliseum DID NOT force the company to buy back the warrants in the fundamental transaction triggered by the Pearce Brothers (although they undoubtably accepted the $0 exercise price). THIS fundamental transaction was KNOWN to PRPL at the end Q4 and Q1 as secondary filings were made the day after earnings both times. This drastically increased the probability of an event happening. Where is the next fundamental transaction that could cause the redemption for cash? It isn't there. What does exist is a callback option if the stock trades above $24 for 20 out of 30 days, which we are already 8 out of 10 days into. Based upon the low probability of a fundamental transaction triggering a redemption, the accrual will stay very low. Even the CFO disagrees with me and we get a full-blown accrual, I expect a full reversal of the accrual next quarter if the 20 out of 30 day call back is exercised by the company. I still don't understand why Coliseum would not have exercised these. Regardless, the Warrant Liability Accrual is very fake and will go away eventually.
ONE MORE THING...
Seriously, stop PMing me with stupid, simple questions like "What are your thoughts on earnings?", "What are your thoughts on holding through earnings?", and "What are your thoughts on PRPL?". It's here. Above. Read it. I'm not typing it again in PM. I've gotten no less than 30 of these. If you're too lazy to read, I'm too lazy to respond to you individually.
You may have heard about off-shore tax havens of questionable legality where wealthy people invest their money in legal "grey zones" and don't pay any tax, as featured for example, in Netflix's drama, The Laundromat. The reality is that the Government of Canada offers 100% tax-free investing throughout your life, with unlimited withdrawals of your contributions and profits, and no limits on how much you can make tax-free. There is also nothing to report to the Canada Revenue Agency. Although Britain has a comparable program, Canada is the only country in the world that offers tax-free investing with this level of power and flexibility. Thank you fellow Redditors for the wonderful Gold Award and Today I Learned Award! (Unrelated but Important Note: I put a link at the bottom for my margin account explainer. Many people are interested in margin trading but don't understand the math behind margin accounts and cannot find an explanation. If you want to do margin, but don't know how, click on the link.) As a Gen-Xer, I wrote this post with Millennials in mind, many of whom are getting interested in investing in ETFs, individual stocks, and also my personal favourite, options. Your generation is uniquely positioned to take advantage of this extremely powerful program at a relatively young age. But whether you're in your 20's or your 90's, read on! Are TFSAs important? In 2020 Canadians have almost 1 trillion dollars saved up in their TFSAs, so if that doesn't prove that pennies add up to dollars, I don't know what does. The TFSA truly is the Great Canadian Tax Shelter. I will periodically be checking this and adding issues as they arise, to this post. I really appreciate that people are finding this useful. As this post is now fairly complete from a basic mechanics point of view, and some questions are already answered in this post, please be advised that at this stage I cannot respond to questions that are already covered here. If I do not respond to your post, check this post as I may have added the answer to the FAQs at the bottom.
How to Invest in Stocks
A lot of people get really excited - for good reason - when they discover that the TFSA allows you to invest in stocks, tax free. I get questions about which stocks to buy. I have made some comments about that throughout this post, however; I can't comprehensively answer that question. Having said that, though, if you're interested in picking your own stocks and want to learn how, I recommmend starting with the following videos: The first is by Peter Lynch, a famous American investor in the 80's who wrote some well-respected books for the general public, like "One Up on Wall Street." The advice he gives is always valid, always works, and that never changes, even with 2020's technology, companies and AI: https://www.youtube.com/watch?v=cRMpgaBv-U4&t=2256s The second is a recording of a university lecture given by investment legend Warren Buffett, who expounds on the same principles: https://www.youtube.com/watch?v=2MHIcabnjrA Please note that I have no connection to whomever posted the videos.
TFSAs were introduced in 2009 by Stephen Harper's government, to encourage Canadians to save. The effect of the TFSA is that ordinary Canadians don't pay any income or capital gains tax on their securities investments. Initial uptake was slow as the contribution rules take some getting used to, but over time the program became a smash hit with Canadians. There are about 20 million Canadians with TFSAs, so the uptake is about 70%- 80% (as you have to be the age of majority in your province/territory to open a TFSA).
Eligibility to Open a TFSA
You must be a Canadian resident with a valid Social Insurance Number to open a TFSA. You must be at the voting age in the province in which you reside in order to open a TFSA, however contribution room begins to accumulate from the year in which you turned 18. You do not have to file a tax return to open a TFSA. You do not need to be a Canadian citizen to open and contribute to a TFSA. No minimum balance is required to open a TFSA.
Where you Can Open a TFSA
There are hundreds of financial institutions in Canada that offer the TFSA. There is only one kind of TFSA; however, different institutions offer a different range of financial products. Here are some examples:
The Canadian big 5 bank branches and most other financial institutions offer a TFSA that allows you to buy mutual funds, hold cash, GICs, term deposits, and possibly ETFs. This is a good choice if you want guaranteed returns or diversified investing.
There are a number of on-line banks such as Tangerine, Simplii Financial, Oaken Financial, and many more that offer the TFSA.
The discount DIY brokerage arms of the big 5 banks give you more choices, including stocks, warrants, bonds and options. There are also standalone brokers like IBKR Canada, Questrade, Qtrade, and Virtual Brokers, among others, that offer this.
Some brokerages and financial advisors also offer TFSAs that give you these investment choices, in different formats such as:
Traditional brokerage, where a stockbroker invests your money (BMO Nesbitt Burns, RBC Dominion Securities and others)
Financial advisor who will invest your money according to a plan you put together with the advisor (TSI Network and many others)
"Robo" advisors such as Wealthsimple, RBC InvestEase, BMO SmartFolio, or Wealthbar
BMO's AdviceDirect, which is a semi-directed hybrid between standalone DIY investing and fully-advised investing, where you operate on a DIY basis but have access to a registered investment advisor (a live person) who can give you suggetions and advice.
Your TFSA may be covered by either CIFP or CDIC insuranceor both. Ask your bank or broker for details.
What You Can Trade and Invest In
You can trade the following:
GICS, mutual funds, term deposits
individual common and preferred stocks listed on an "approved exchange" which is the TSX, TSX-V, NASDAQ, NYSE, and about 20 other exchanges worldwide, but not the US OTC pink sheets. Many examples, such as Suncor, Linamar, Apple, any of the big banks, and many thousands of others, when you want to buy into an individual company
stock-like securities like REITS, ETFs and ETNs, including 2x and 3x leveraged
gold and silver certificates
cash of many countries (CAD/USD/EUGBP/AUD/NZD/JPY/CHF and many others)
government bills and bonds of most countries, subsovereigns like Canadian provincial bills and bonds, and most corporations
options that trade on the Montreal Exchange or various options exchanges in the USA and the rest of the word (see FAQ for details)
gold, silver bullion certificates
shares in certain private companies -- but consult your tax advisor on this
What You Cannot Trade
You cannot trade:
commodity futures contracts
option spread positions (see FAQ for details)
anything that requires a margin account, meaning, a special kind of account that allows you to borrow money directly from the broker against the assets you have in your account and the assets you intend to buy.
crypto (although there exist crypto ETNs that you can buy)
Again, if it requires a margin account, it's out. You cannot buy on margin in a TFSA. Nothing stopping you from borrowing money from other sources as long as you stay within your contribution limits, but you can't trade on margin in a TFSA. You can of course trade long puts and calls which give you leverage.
Rules for Contribution Room
Starting at 18 you get a certain amount of contribution room. According to the CRA: You will accumulate TFSA contribution room for each year even if you do not file an Income Tax and Benefit Return or open a TFSA. The annual TFSA dollar limit for the years 2009 to2012 was $5,000. The annual TFSA dollar limit for the years 2013 and 2014 was $5,500. The annual TFSA dollar limit for the year 2015 was $10,000. The annual TFSA dollar limit for the years 2016 to 2018 was $5,500. The annual TFSA dollar limit for the year 2019 is $6,000. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Investment income earned by, and changes in the value of TFSA investments will not affect your TFSA contribution room for the current or future years. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributions.html If you don't use the room, it accumulates indefinitely. Trades you make in a TFSA are truly tax free. But you cannot claim the dividend tax credit and you cannot claim losses in a TFSA against capital gains whether inside or outside of the TFSA. So do make money and don't lose money in a TFSA. You are stuck with the 15% withholding tax on U.S. dividend distributions unlike the RRSP, due to U.S. tax rules, but you do not pay any capital gains on sale of U.S. shares. You can withdraw *both* contributions *and* capital gains, no matter how much, at any time, without penalty. The amount of the withdrawal (contributions+gains) converts into contribution room in the *next* calendar year. So if you put the withdrawn funds back in the same calendar year you take them out, that burns up your total accumulated contribution room to the extent of the amount that you re-contribute in the same calendar year.
E.g. Say you turned 18 in 2016 in Alberta where the age of majority is 18. It is now sometime in 2020. You have never contributed to a TFSA. You now have $5,500+$5,500+$5,500+$6,000+$6,000 = $28,500 of room in 2020. In 2020 you manage to put $20,000 in to your TFSA and you buy Canadian Megacorp common shares. You now have $8,500 of room remaining in 2020. Sometime in 2021 - it doesn't matter when in 2021 - your shares go to $100K due to the success of the Canadian Megacorp. You also have $6,000 worth of room for 2021 as set by the government. You therefore have $8,500 carried over from 2020+$6,000 = $14,500 of room in 2021. In 2021 you sell the shares and pull out the $100K. This amount is tax-free and does not even have to be reported. You can do whatever you want with it. But: if you put it back in 2021 you will over-contribute by $100,000 - $14,500 = $85,500 and incur a penalty. But if you wait until 2022 you will have $14,500 unused contribution room carried forward from 2021, another $6,000 for 2022, and $100,000 carried forward from the withdrawal 2021, so in 2022 you will have $14,500+$6,000+$100,000 = $120,500 of contribution room. This means that if you choose, you can put the $100,000 back in in 2022 tax-free and still have $20,500 left over. If you do not put the money back in 2021, then in 2022 you will have $120,500+$6,000 = $126,500 of contribution room. There is no age limit on how old you can be to contribute, no limit on how much money you can make in the TFSA, and if you do not use the room it keeps carrying forward forever. Just remember the following formula: This year's contribution room = (A) unused contribution room carried forward from last year + (B) contribution room provided by the government for this year + (C) total withdrawals from last year. EXAMPLE 1: Say in 2020 you never contributed to a TFSA but you were 18 in 2009. You have $69,500 of unused room (see above) in 2020 which accumulated from 2009-2020. In 2020 you contribute $50,000, leaving $19,500 contribution room unused for 2020. You buy $50,000 worth of stock. The next day, also in 2020, the stock doubles and it's worth $100,000. Also in 2020 you sell the stock and withdraw $100,000, tax-free. You continue to trade stocks within your TFSA, and hopefully grow your TFSA in 2020, but you make no further contributions or withdrawals in 2020. The question is, How much room will you have in 2021? Answer: In the year 2021, the following applies: (A) Unused contribution room carried forward from last year, 2020: $19,500 (B) Contribution room provided by government for this year, 2021: $6,000 (C) Total withdrawals from last year, 2020: $100,000 Total contribution room for 2021 = $19,500+6,000+100,000 = $125,500. EXAMPLE 2: Say between 2020 and 2021 you decided to buy a tax-free car (well you're still stuck with the GST/PST/HST/QST but you get the picture) so you went to the dealer and spent $25,000 of the $100,000 you withdrew in 2020. You now have a car and $75,000 still burning a hole in your pocket. Say in early 2021 you re-contribute the $75,000 you still have left over, to your TFSA. However, in mid-2021 you suddenly need $75,000 because of an emergency so you pull the $75,000 back out. But then a few weeks later, it turns out that for whatever reason you don't need it after all so you decide to put the $75,000 back into the TFSA, also in 2021. You continue to trade inside your TFSA but make no further withdrawals or contributions. How much room will you have in 2022? Answer: In the year 2022, the following applies: (A) Unused contribution room carried forward from last year, 2021: $125,500 - $75,000 - $75,000 = -$24,500. Already you have a problem. You have over-contributed in 2021. You will be assessed a penalty on the over-contribution! (penalty = 1% a month). But if you waited until 2022 to re-contribute the $75,000 you pulled out for the emergency..... In the year 2022, the following would apply: (A) Unused contribution room carried forward from last year, 2021: $125,500 -$75,000 =$50,500. (B) Contribution room provided by government for this year, 2022: $6,000 (C) Total withdrawals from last year, 2020: $75,000 Total contribution room for 2022 = $50,500 + $6,000 + $75,000 = $131,500. ...And...re-contributing that $75,000 that was left over from your 2021 emergency that didn't materialize, you still have $131,500-$75,000 = $56,500 of contribution room left in 2022. For a more comprehensive discussion, please see the CRA info link below.
FAQs That Have Arisen in the Discussion and Other Potential Questions:
Equity and ETF/ETN Options in a TFSA: can I get leverage? Yes. You can buy puts and calls in your TFSA and you only need to have the cash to pay the premium and broker commissions. Example: if XYZ is trading at $70, and you want to buy the $90 call with 6 months to expiration, and the call is trading at $2.50, you only need to have $250 in your account, per option contract, and if you are dealing with BMO IL for example you need $9.95 + $1.25/contract which is what they charge in commission. Of course, any profits on closing your position are tax-free. You only need the full value of the strike in your account if you want to exercise your option instead of selling it. Please note: this is not meant to be an options tutorial; see the Montreal Exchange's Equity Options Reference Manual if you have questions on how options work.
Equity and ETF/ETN Options in a TFSA: what is ok and not ok? Long puts and calls are allowed. Covered calls are allowed, but cash-secured puts are not allowed. All other option trades are also not allowed. Basically the rule is, if the trade is not a covered call and it either requires being short an option or short the stock, you can't do it in a TFSA.
Live in a province where the voting age is 19 so I can't open a TFSA until I'm 19, when does my contribution room begin? Your contribution room begins to accumulate at 18, so if you live in province where the age of majority is 19, you'll get the room carried forward from the year you turned 18.
If I turn 18 on December 31, do I get the contribution room just for that day or for the whole year? The whole year.
Do commissions paid on share transactions count as withdrawals? Unfortunately, no. If you contribute $2,000 cash and you buy $1,975 worth of stock and pay $25 in commission, the $25 does not count as a withdrawal. It is the same as if you lost money in the TFSA.
How much room do I have? If your broker records are complete, you can do a spreadsheet. The other thing you can do is call the CRA and they will tell you.
TFSATFSA direct transfer from one institution to another: this has no impact on your contributions or withdrawals as it counts as neither.
More than 1 TFSA: you can have as many as you want but your total contribution room does not increase or decrease depending on how many accounts you have.
Withdrawals that convert into contribution room in the next year. Do they carry forward indefinitely if not used in the next year? Answer :yes.
Do I have to declare my profits, withdrawals and contributions? No. Your bank or broker interfaces directly with the CRA on this. There are no declarations to make.
Risky investments - smart? In a TFSA you want always to make money, because you pay no tax, and you want never to lose money, because you cannot claim the loss against your income from your job. If in year X you have $5,000 of contribution room and put it into a TFSA and buy Canadian Speculative Corp. and due to the failure of the Canadian Speculative Corp. it goes to zero, two things happen. One, you burn up that contribution room and you have to wait until next year for the government to give you more room. Two, you can't claim the $5,000 loss against your employment income or investment income or capital gains like you could in a non-registered account. So remember Buffett's rule #1: Do not lose money. Rule #2 being don't forget the first rule. TFSA's are absolutely tailor-made for Graham-Buffett value investing or for diversified ETF or mutual fund investing, but you don't want to buy a lot of small specs because you don't get the tax loss.
Moving to/from Canada/residency. You must be a resident of Canada and 18 years old with a valid SIN to open a TFSA. Consult your tax advisor on whether your circumstances make you a resident for tax purposes. Since 2009, your TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada. Note: If you move to another country, you can STILL trade your TFSA online from your other country and keep making money within the account tax-free. You can withdraw money and Canada will not tax you. But you have to get tax advice in your country as to what they do. There restrictions on contributions for non-residents. See "non residents of Canada:" https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
The U.S. withholding tax. Dividends paid by U.S.-domiciled companies are subject to a 15% U.S. withholding tax. Your broker does this automatically at the time of the dividend payment. So if your stock pays a $100 USD dividend, you only get $85 USD in your broker account and in your statement the broker will have a note saying 15% U.S. withholding tax. I do not know under what circumstances if any it is possible to get the withheld amount. Normally it is not, but consult a tax professional.
The U.S. withholding tax does not apply to capital gains. So if you buy $5,000 USD worth of Apple and sell it for $7,000 USD, you get the full $2,000 USD gain automatically.
Tax-Free Leverage. Leverage in the TFSA is effectively equal to your tax rate * the capital gains inclusion rate because you're not paying tax. So if you're paying 25% on average in income tax, and the capital gains contribution rate is 50%, the TFSA is like having 12.5%, no margin call leverage costing you 0% and that also doesn't magnify your losses.
Margin accounts. These accounts allow you to borrow money from your broker to buy stocks. TFSAs are not margin accounts. Nothing stopping you from borrowing from other sources (such as borrowing cash against your stocks in an actual margin account, or borrowing cash against your house in a HELOC or borrowing cash against your promise to pay it back as in a personal LOC) to fund a TFSA if that is your decision, bearing in mind the risks, but a TFSA is not a margin account. Consider options if you want leverage that you can use in a TFSA, without borrowing money.
Dividend Tax Credit on Canadian Companies. Remember, dividends paid into the TFSA are not eligible to be claimed for the credit, on the rationale that you already got a tax break.
FX risk. The CRA allows you to contribute and withdraw foreign currency from the TFSA but the contribution/withdrawal accounting is done in CAD. So if you contribute $10,000 USD into your TFSA and withdraw $15,000 USD, and the CAD is trading at 70 cents USD when you contribute and $80 cents USD when you withdraw, the CRA will treat it as if you contributed $14,285.71 CAD and withdrew $18,75.00 CAD.
OTC (over-the-counter stocks). You can only buy stocks if they are listed on an approved exchange ("approved exchange" = TSX, TSX-V, NYSE, NASDAQ and about 25 or so others). The U.S. pink sheets "over-the-counter" market is an example of a place where you can buy stocks, that is not an approved exchange, therefore you can't buy these penny stocks. I have however read that the CRA make an exception for a stock traded over the counter if it has a dual listing on an approved exchange. You should check that with a tax lawyer or accountant though.
The RRSP. This is another great tax shelter. Tax shelters in Canada are either deferrals or in a few cases - such as the TFSA - outright tax breaks, The RRSP is an example of a deferral. The RRSP allows you to deduct your contributions from your income, which the TFSA does not allow. This deduction is a huge advantage if you earn a lot of money. The RRSP has tax consequences for withdrawing money whereas the TFSA does not. Withdrawals from the RRSP are taxable whereas they are obviously not in a TFSA. You probably want to start out with a TFSA and maintain and grow that all your life. It is a good idea to start contributing to an RRSP when you start working because you get the tax deduction, and then you can use the amount of the deduction to contribute to your TFSA. There are certain rules that claw back your annual contribution room into an RRSP if you contribute to a pension. See your tax advisor.
Pensions. If I contribute to a pension does that claw back my TFSA contribution room or otherwise affect my TFSA in any way? Answer: No.
The $10K contribution limit for 2015. This was PM Harper's pledge. In 2015 the Conservative government changed the rules to make the annual government allowance $10,000 per year forever. Note: withdrawals still converted into contribution room in the following year - that did not change. When the Liberals came into power they switched the program back for 2016 to the original Harper rules and have kept the original Harper rules since then. That is why there is the $10,000 anomaly of 2015. The original Harper rules (which, again, are in effect now) called for $500 increments to the annual government allowance as and when required to keep up with inflation, based on the BofC's Consumer Price Index (CPI). Under the new Harper rules, it would have been $10,000 flat forever. Which you prefer depends on your politics but the TFSA program is massively popular with Canadians. Assuming 1.6% annual CPI inflation then the annual contribution room will hit $10,000 in 2052 under the present rules. Note: the Bank of Canada does an excellent and informative job of explaining inflation and the CPI at their website.
Losses in a TFSA - you cannot claim a loss in a TFSA against income. So in a TFSA you always want to make money and never want to lose money. A few ppl here have asked if you are losing money on your position in a TFSA can you transfer it in-kind to a cash account and claim the loss. I would expect no as I cannot see how in view of the fact that TFSA losses can't be claimed, that the adjusted cost base would somehow be the cost paid in the TFSA. But I'm not a tax lawyeaccountant. You should consult a tax professional.
Transfers in-kind to the TFSA and the the superficial loss rule. You can transfer securities (shares etc.) "in-kind," meaning, directly, from an unregistered account to the TFSA. If you do that, the CRA considers that you "disposed" of, meaning, equivalent to having sold, the shares in the unregistered account and then re-purchased them at the same price in the TFSA. The CRA considers that you did this even though the broker transfers the shares directly in the the TFSA. The superficial loss rule, which means that you cannot claim a loss for a security re-purchased within 30 days of sale, applies. So if you buy something for $20 in your unregistered account, and it's trading for $25 when you transfer it in-kind into the TFSA, then you have a deemed disposition with a capital gain of $5. But it doesn't work the other way around due to the superficial loss rule. If you buy it for $20 in the unregistered account, and it's trading at $15 when you transfer it in-kind into the TFSA, the superficial loss rule prevents you from claiming the loss because it is treated as having been sold in the unregistered account and immediately bought back in the TFSA.
Day trading/swing trading. It is possible for the CRA to try to tax your TFSA on the basis of "advantage." The one reported decision I'm aware of (emphasis on I'm aware of) is from B.C. where a woman was doing "swap transactions" in her TFSA which were not explicitly disallowed but the court rules that they were an "advantage" in certain years and liable to taxation. Swaps were subsequently banned. I'm not sure what a swap is exactly but it's not that someone who is simply making contributions according to the above rules would run afoul of. The CRA from what I understand doesn't care how much money you make in the TFSA, they care how you made it. So if you're logged on to your broker 40 hours a week and trading all day every day they might take the position that you found a way to work a job 40 hours a week and not pay any tax on the money you make, which they would argue is an "advantage," although there are arguments against that. This is not legal advice, just information.
The U.S. Roth IRA. This is a U.S. retirement savings tax shelter that is superficially similar to the TFSA but it has a number of limitations, including lack of cumulative contribution room, no ability for withdrawals to convert into contribution room in the following year, complex rules on who is eligible to contribute, limits on how much you can invest based on your income, income cutoffs on whether you can even use the Roth IRA at all, age limits that govern when and to what extent you can use it, and strict restrictions on reasons to withdraw funds prior to retirement (withdrawals prior to retirement can only be used to pay for private medical insurance, unpaid medical bills, adoption/childbirth expenses, certain educational expenses). The TFSA is totally unlike the Roth IRA in that it has none of these restrictions, therefore, the Roth IRA is not in any reasonable sense a valid comparison. The TFSA was modeled after the U.K. Investment Savings Account, which is the only comparable program to the TFSA.
The UK Investment Savings Account. This is what the TFSA was based off of. Main difference is that the UK uses a 20,000 pound annual contribution allowance, use-it-or-lose-it. There are several different flavours of ISA, and some do have a limited recontribution feature but not to the extent of the TFSA.
Is it smart to overcontribute to buy a really hot stock and just pay the 1% a month overcontribution penalty? If the CRA believes you made the overcontribution deliberately the penalty is 100% of the gains on the overcontribution, meaning, you can keep the overcontribution, or the loss, but the CRA takes the profit.
Speculative stocks-- are they ok? There is no such thing as a "speculative stock." That term is not used by the CRA. Either the stock trades on an approved exchange or it doesn't. So if a really blue chip stock, the most stable company in the world, trades on an exchange that is not approved, you can't buy it in a TFSA. If a really speculative gold mining stock in Busang, Indonesia that has gone through the roof due to reports of enormous amounts of gold, but their geologist somehow just mysteriously fell out of a helicopter into the jungle and maybe there's no gold there at all, but it trades on an approved exchange, it is fine to buy it in a TFSA. Of course the risk of whether it turns out to be a good investment or not, is on you.
Remember, you're working for your money anyway, so if you can get free money from the government -- you should take it! Follow the rules because Canadians have ended up with a tax bill for not understanding the TFSA rules. Appreciate the feedback everyone. Glad this basic post has been useful for many. The CRA does a good job of explaining TFSAs in detail at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
Unrelated but of Interest: The Margin Account
Note: if you are interested in how margin accounts work, I refer you to my post on margin accounts, where I use a straightforward explanation of the math behind margin accounts to try and give readers the confidence that they understand this powerful leveraging tool.
Why should you vote YES on the additional 60 million share proxy request?
In January of 2010, I sent an e-mail to MicroVision CEO Alex Tokman and shared with him the following blog post that I had written about MicroVision (MVIS). As a retail investor, I asked Alex a simple question: “What is Your Business Growth Strategy?” http://mirro7.blogspot.com/2010/01/microvision-whats-your-business-growth.html This opened a channel of communications with AT and I was recognized as a serious investor of MicroVision… and a strong supporter of LBS as the future growth technology that could spawn hundreds of billion dollar consumer and industrial applications. However, I never got a straight answer from Alex… In my frustration as the serious MicroVision Investor, I wrote… "Perhaps, just perhaps, there are many other options. Models are made to be broken. The choices may be beyond anything that has been done before. That choice, if indeed one is open to it, certainly does not appear to be with-in the reach of current management. I believe the technology at MicroVision will succeed. Management may just be along for the ride." "If this sounds harsh… it is not meant to be. How many companies have management? How many have leadership? My hope is management can simply steer the ship. Anything beyond that will be a bonus." Over the next few months in 2010, I was able to piece together MicroVision Business Development Strategy, or the lack of it, and wrote another blog post in October 2010. Once again, I shared this blog post with Alex [and his Board of Directors], and asked the question: “What is Your Business Growth Strategy?” Here's the blog post from October 2010... http://mirro7.blogspot.com/2010/10/microvision-what-business-growth.html Excerpt from the article… MicroVision: What Business Growth Strategy? Every business has to plan for growth and executives should make sure their growth plans are consistent with their dynamic business plan. A dynamic business plan is an updated version that is kept current to reflect the ever-changing business-operating environment. Especially in the technology and DOT.com businesses, where the product cycles are so short and consumer preferences are mostly dependent on the next hot product or service. When it comes to growth plans, the two ends of the spectrum are, for example, should a company grow quickly and unprofitably, like Amazon and Hotmail─ before it got acquired by Microsoft for $480 million, or slowly with a careful eye on the bottom line, like Ben & Jerry's ice cream parlors? It all depends on how much venture capital you have access to and what the competition is doing! The worst thing you can do is fail to decide whether you're going to be a Ben & Jerry's company, or a Hotmail company, or an Amazon company. There are three possible scenarios when focusing on the challenges of growing a business and picking the right growth model that is consistent with your business plan and positions you for whatever your ultimate goal is… Number one: you want to be the gorilla of your industry in a hurry like Amazon.Number two: you want to ramp-up your business fast and position for an acquisition like Hotmail.Number three: you want to be a brick and mortar company producing steady profits like Ben & Jerry’s. Regardless of what your business model is, the CEO and the CFO of the company need to formalize their business growth strategy and evangelize to the man in-charge of running the day-to-day operation of the business. Building a company is no small task? You've got one very important decision to make, because it affects everything else you do. No matter what else you do, you absolutely must figure out which camp you're in, and gear everything you do accordingly, or you're going to have a disaster on your hands. THE DECISION MAKING PROCESS: Whether to grow slowly, organically, and profitably, or whether to have a big bang with very fast growth with lots of capital spent in a hurry, that is the question? The first model, popularly called "Get Big Fast" (a.k.a. "Land Grab"), requires you to raise a lot of capital, and work as quickly as possible to get big fast without concern for profitability. I'm going to call this the “Amazon”, because Jeff Bezos, the founder of Amazon, has practically become the celebrity spokes-model for Get Big Fast. The second model is called "Hotmail for Sale or Fail". As for the name of our model “Hotmail for Sale or Fail”, I just made it up to make the point. This model requires you to raise only a small amount of capital, position for acquisition, and work as quickly as possible to build momentum to show there is promise of getting big fast… without concern for profitability. I'm going to call this “Hotmail” model, because Hotmail fits this model very well. The third model, organic growth model, is to start small, with limited goals, and slowly build a business over a long period of time. I'm going to call this “Ben & Jerry’s” model, because Ben & Jerry’s fit this model pretty well. Now the question is: “where on earth does the MicroVision business model fit-in?" The short answer is... "Nowhere" MicroVision’s current business growth strategy (in 2010) was either non-existent or was severely flawed after the green laser debacle of late… that still continued to haunt MicroVision even after 4 years (in 2014). Here’s one clue to the non-existent, or flawed, business growth strategy up until recently (in 2014)… In early 2007, Alex Tokman, CEO of MicroVision, was quite aware of the following facts… \ Embedded pico projector was to be the holy grail for MicroVision.* Without diode RGB lasers; the power, size, and cost of the laser light source based on SHG green lasers would be prohibitive for embedded applications.* In 2007, diode green lasers were 4 to 5 years away… as like in 2011/2012 time frame.* If you were to assume correctly, and AT was aware of these facts as early as in 2007, then why in hell his management team carried-on with an army of personnel in SG&A [and R&D] to continually spend over $12 million dollars every Qtr for the last four years [from 2007 to 2012]. If AT had used this readily available information and some gumption to control costs to say $6 million per Qtr… today there would be lot less pressure to raise money to continue with operations─ while still waiting for diode/SHG green lasers, because MicroVision would have saved over $96 million dollars in costs without sacrificing much. MicroVision management should have either changed their business growth strategy to “hunker down” and coast on a low cost/low profile basis until the green laser technology was mature enough with more plausible cost and performance metrics… or let someone else run the company, instead of pushing the company hard on the downward spiral of financial gloom and doom while waiting for diode/SHG green lasers. MicroVision’s current business growth strategy [in late 2010] assures that they will continue to lose money-- as they are now… and continue to do so all of the next year and five years from now. The cost and availability of green lasers today [in 2010], or a year or two from now, plays a role but its financial impact on the bottom-line profitability is very small when you consider the vicious [large volume/lower cost/lower absolute dollar margin] cycle associated with commodity products such as PDEs and IPMs that are sold to consumer product OEMs. As long as MicroVision corporate management is fixated on just selling their laser light based PDEs and IPMs in an OEM market that has all the makings of a commodity market… they will be at the mercy of the OEMs; for consumer product introduction time-lines, consumer product pricing, product marketing, and commodity component pricing with no pricing power. Just look around and tell me if you see any embedded mobile phone camera makers or the touch screen makers [for things like iPad or iPhone] making any money worth crowing about. On the other hand, consumer product OEMs like Apple, with vision and gumption, come to market with one consumer product at a time─ on their terms, and rake-in billions in revenue and profits. The current MicroVision business model [as of 2010] calls for hundreds of millions in sales of PDEs and IPMs to make a few million dollars in net profit in a commodity type pricing environment … and that too, if and when the OEM customers let that happen. MicroVision still has time [in 2010] to re-configure its business growth model and seriously consider launching its own branded consumer products ─ possibly in partnership with large OEMs; and be the shaker, baker, and maker of its own destiny. Just take the current situation [in 2010] of MicroVision patiently waiting on its hands and feet─ and spending $12 million dollars per Qtr; while the OEM for the High End Media Player (HEMP) procrastinates on product configuration, product introduction time-lines, and product marketing and pricing issues. In the best case scenario, the current MicroVision business model can, in a year or two, only produce modest earnings growth of perhaps 12% per years for many years to come… and may never come even close to the hyper growth in revenue and earnings that we once believed was possible. End of excerpt from the 2010 article. Now fast forward to 2020… After ten years [in the middle of 2020] and over seven hundred million dollars in sunken cost later, I would ask the current CEO Sumit Sharma: “What is Your Business Exit Strategy?” Or should I change my question and ask: “What is Your Exit Strategy with a Staff of 30 Managing the Viewing at MicroVision?” Here’s my opinion… Anyone on this board will tell you, I am no fan of this Management team and this Board of Directors. I believe many of them are out of their depth. Historically, the various Corporate Executives at MicroVision have been, shall we say, less than comfortable in their positions and less than qualified to make the decisions they have made over the 14 years. Historically, no one can really argue with that; given the fact, as a team, they have spent well in excess of 700 million dollars of shareholder value and created a company which, just a few months ago, had a market cap of around $30 million [trading at around $0.20]. I have also stated that the deal CEO Sharma and the Board might make with a potential partner is not necessarily the deal THEY will end up with. Having said that, I do realize even a stopped clock is right twice a day. Again, depending on what additional information is given by CEO Sharma and the Board, I am willing to vote YES on the additional 60 million share requested. I also believe that MicroVision Technology, in the hands of the right partner company, is certainly worth Multiples of a Billion Dollars. We shall see if CEO Sharma and CFO Holt can live up to their titles. So far they are making all the right noises; and comparing them with the C Suite Executives at some of the mega corporations is not fair… because, both can be successful on their own scale and modus operandi. The recent notice from the class action lawyers trying to drum up a lawsuit against MicroVision… is a sure sign that there are some VERY nervous short sellers out there. Why should you also vote YES on the additional 60 million share request? Sumit Sharma has been the new CEO for only four months; and the multi-year mess [from 2007 to early 2020] he inherited was enormous and sticky. He is doing, and has done a lot, more for the investor community than any of us will ever know. He is the right person for this job, other CEOs wouldn't have had the gall to cut the cord and set the company free to realize its full potential by going the M&A route. He has options and he is exploring all of them and not taking the easy and quick route. The end game is, in my opinion, the long investors will be handsomely rewarded and can happen when nobody expects it. To give credit where credit is due… · Sumit Sharma made a pact with retail longs to not precipitously do a reverse split… and he has kept that promise by clearly announcing that there will be no S. · SS never promised he wouldn't come back for more shares later. He quite clearly said he understood he COULD come back in August or September. Now it's August. See the Fireside Chat thread. · SS brought Dr. Mark B. Spitzer to MicroVision BoD. If you don't actually grasp the importance of that… read-up on Dr. Spitzer’s CV and his patent portfolio in AR technology space. · When SS took over as CEO, the company was under not one but TWO deficiency notices from NASDAQ that could result in losing their exchange listing. Today, there is none. · SS had the guts to tell us about this 60 million new shares proxy before the CC and then stood up and defended it on the conference call. If you knew anything about the previous practice of this company, a Press Release would have been dropped on Friday, two days after the CC, so the management could avoid talking about it in person for as long as possible. Sumit Sharma has done some impressive work in a short period of time; bringing others on Board with expertise and clout, trimming production liability, cutting operating expenses to 1/3rd, acquiring government PPP loan for keeping the employees so their LiDAR kits could be completed, ensuring company has the cash for opex until end of year 2020 (possibly beyond if they can clear the liability from the PPP loan), reverse split approval without using it, and a clear vision to sell [or merge] the company or sell one or more of its 4 core technology verticals to the highest bidder. You know how long and arduous M&A can be, and achieving it in less than 6 months would have been absolutely incredible... especially, considering the 12 year of mess that he inherited some 4 months ago. It is easy to speak strongly on such a topic, but harder to actually do it. Maybe, we all should reach out and try assisting SS and his team, and at the very least give the corporate management the tools they need to execute the best “exit strategy” that, for once, has the retail investor in mind. Anant Goel (a.k.a. Mirro7) [Curated content based on excerpts from posts, blogs, media articles, and sponsored research]
Edit: Thank you for all the comments and chat messages! I'm trying to go through each one. Writing thoughtful comments in the midst of having a full-time job is HARD WORK. I think I've missed a few questions, drop me a message if you're interested in continuing a discussion, I'm open to listening! There has been a lot of good comments, a few with great perspectives, and now I have a whole lot of things to read up on. --- Now that the 2020 General Election is firmly in our rear-view mirror, there is something that I have been meaning to write about: institutionalized racism affecting the minorities, especially the Malays, in Singapore. If you are groaning at this thinking you have been misled by this post’s title, I assure you that by the end of this post you will understand the caveat behind the above-mentioned title. I plead for a little of your time and patience. We have seen many discussions online about majority privilege and systemic racism impacting the minorities. Many of you may have even participated in some of these discussions. I will not try to explain those terms for they have already been repeatedly debated to death. What this post aims to achieve is to bring to light Singapore’s history and government policies that have either benefited the majority race or kneecapped the minority race. Or both. Why am I doing this? It is frustrating to see some Singaporeans fully buying into the narrative that Singapore is a truly meritocratic society; that the government’s policies do not discriminate against minorities, or if a Singaporean worked hard enough he or she will succeed (whatever the definition of success is), or that we have anti-discriminatory laws that protect the minorities. Some even claim that the Malays enjoy special privileges due to Section 152 of the Constitution describing the special position of Malays, and that the Malays are blessed with free education in Singapore. Section 152, “Special Position”, free education for all Malays?
Minorities and special position of Malays 152.—(1) It shall be the responsibility of the Government constantly to care for the interests of the racial and religious minorities in Singapore. (2) The Government shall exercise its functions in such manner as to recognise the special position of the Malays, who are the indigenous people of Singapore, and accordingly it shall be the responsibility of the Government to protect, safeguard, support, foster and promote their political, educational, religious, economic, social and cultural interests and the Malay language.
"The aim of the government is not to turn out a few well-educated youths, nor a number of less well-educated boys; rather it is to improve the bulk of the people, and to make the son of a fisherman or a peasant a more intelligent fisherman or peasant than his father had been, and a man whose education will enable him to understand how his lot in life fits in with the scheme of life around him".
"The great object of education is to train a man to make a living.... you can teach Malays so that they do not lose their skill and craft in fishing and jungle work. Teach them the dignity of manual labour, so that they do not all become krannies (clerks) and I am sure you will not have the trouble which has arisen in India through over education"
eBay DD Due Diligence, Coronavirus is about to reboot this stock to what it should have been worth years ago
*Authors note* Attempted to post this in WSB but it kept being rejected by the AUTOMOD because it said the title was too long. IDK what the issue is but I am posting it here if that is okay as I spent a lot of time on it. Apologies it was written in the voice of WSB. This is a great stock to buy as well so I think the people on this sub would appreciate the DD. I don't post here much, for those that don't know me I'm the one who posted a very in depth HUYA DD (Now taken down by the WSB mods I suspect because I made a post earnings update talking about some shenanigans) I sold my Huya 10/16 strikes for 800% profit last week. I will leave my options recommendations in the DD. I know Options are not a big thing here but TBH 1/15/21 $85 strikes are a very conservative investment. I have dysgraphia and dyslexia so my writing style can be brutal but the message should come across. *End Note* eBay could SOON become pound for pound one of the most profitable enterprises outside of gambling and drugs. TLDR Bad Leadership at eBay for YEARS Corona flips the script. Bull Case $180 Bear Case $220 Future Price Target maybe more. We will see how peoples mind changes when we see earnings. BUY 11 – 101 – 1001 Shares Depending on Bankroll (I like shares on this one as I expect the company to pay dividends) X Multiples of 100 for future CC. 7/31 $80C (These look the juiciest RN) (8/21 $90C if made available) 1/15/21 $85C Ebay is an online auction house. Look up your local auction house and spend an evening or day at the Auction. It is fun and will help you understand why previous CEO’s tanked this awesome company with their stupidity. Hammering a Diamond into a square hole. Worked for an auction house 4 years. If you go to a well run local auction you will see diverse people, successful auction houses have a customer makeup like this: 30% Hustlers and People involved with the auctions (Consignees etc) 20% Rich people (Rich people love auctions and I’m not talking about Sotherbys I’m talking about a normal sized city weekly auction there will be lots of rich people there) 40% Normal people that either like the thrill or value seekers. 10% Poor People. This is important when we talk about bad CEO decisions. You have to know your audience. Ebay started out with this dude selling a broken laser printer, Pierre Omidayer. It grew quickly and he brought in professional help. This can be a good thing as founders can get in the way of growth. In 1998 Meg Whitman was hired to be CEO. Her tenure was unimpressive and she was responsible for the first of two massive blunders that decapitated eBay growth. Ebay was growing and the internet was starting to get widespread use. By the early 2000s people started to talk about WEB 2.0 and for some reason certain people thought that WEB 2.0 meant being fancy. Ebay did a massive redesign that was hated by most people. Broadband internet was in it’s infancy and the focus on form over function was frustrating for low bandwidth users as the fanciness was more complicated and took longer to load. Additionally it stunted the pathway that would eventually appear for mobile growth. The remnants of this design linger today. Screen Cap of the AOLfication of eBay late 2003 I believe one of the big problems was rendering the menus in AJAX or something similar, very slow to load in that era Here we can see the failure in line graph form, (These things lag) eBay share price got hammered. One the reasons for the hammering was lackluster earnings, many ebay users attribute this to the redesign failure as it turned off existing and new customers. Link to image as it loos like this sub doesn't allow embeded images Project Ugly-ify and Slow-ify eBay looks to have lopped off growth and momentum for the share price. Meg Whitmans tenure at ebay neutered growth. One could blame Whitman for doing a lot of damage to eBay growth but she will largely be forgotten after you learn about the FLAMING DUMPSTER FIRE OF A CEO that is John Donahoe. In 2008 eBay hired Donahoe to be CEO. This could possibly be the worst hire in the history of all hires. Don’t take my word for it. In 2014 Carl Icahn said eBay was the worst run company he had ever seen. Carl Icahn says eBay is the worst run company he has ever seen Donahoe had series after series of bad decision. He basically went to war with small and medium sellers (eBay’s actual bread and butter customers) and went to great lengths to attract large corporate clients. (The worst type of business for eBay) and run away his most profitable customers. eBay is a market place. Donahoe gave steep discounts in fees in order to attract corporate customers. Companies like Target started to sell on eBays platform. (Most are now gone because within a few short years the internet was mature enough that they could start their own platforms) Link to no longer existing eBay Target Store Fee discounts to corporate customers angered existing sellers. In early 2013 he implemented eBay’s search algorithm (Cassini I believe it was called) Previous to this Algo eBay was just a dumb search engine. With the Algo, eBay could control visibility of items on the site via built in preferences like Best Match. With this Donahoe is about to fire maybe 20% of his most profitable customers and give the Amazon marketplace a flood of new users. This idiot was trying to turn an auction house into the next Amazon. Instead he just put Amazon growth on steroids and shoots himself in the foot. Cassini was used to ban eBay's customers. DROVES OF THEM Donahoe decided that any problems on eBay were caused by sellers and he declared war on the people that were his customers. Enter DSR. Detailed seller ratings was eBay implementation of strict guidelines for their sellers. DSR = 4 categories, each category was rated 1-5 with 5 being good. The system treated 1&2s as a failure. For Example Customer was unhappy with an item they received for whatever reason. If someone rated a part of the transaction a 2 they would get a ding against their DSR. Problem is they treated all categories the same and the thresholds were very stringent. For every 1000 transactions a seller had to have LESS than 10 dings in order to participate with Cassini without a search penalty. If the 10 threshold was crossed (Which is 98.9% or less good rating) they would be penalized in the search standing and go under probation. If they crossed 20/1000 or 97.9% or less positive approval rating they would BAN YOU FROM THE PLATFORM. YOU READ THAT CORRECTLY John DONAHOE in is infinite wisdom decided that sellers with as high as a 97.9% positive transaction rating were disposable. I've NEVER SEEN SOMETHING SO STUPID IN MY LIFE. I kid you not. Donahoe implemented a system where a 98.9% POSITIVE rating has a penalty and 97.9% positive is a ban. (Check the feedback on tons of Amazon marketplace sellers and you will see how ridiculous a threshold this was) What was even more ridiculous was in the beginning all categories were treated the same. For example Books were treated the same way as used women's clothing. Certain categories like womens clothing were DECIMATED by sellers being banned. People who had been on the platform for a decade and had say a 97% positive feedback selling USED WOMENS CLOTHING were banned left and right. It gets worse, remember how at 98.9% they would put you on probation? Some people called this the DEATH SPIRAL as if you were on probation the new “Best Match” system would lower your search standing. So if you were some poor schmuck who had sold 397 used pieces of womens clothing that year and just 4 of them were unhappy with the experience. You’d go on probation with little to no hope of anything other than the ban hammer. I’ve read many period era messageboard posts of long time sellers in probation trying to do EVERYTHING they could to raise their DSR to get out of probation but had zero visibility with the new algo, they were just left to wither on the vine hoping fruitlessly to turn things around. Most of them didn’t know it YET but eventually as people started putting the pieces together there was no chance of them escaping the Death Spiral. Gaggles of people spent MONTHS trying to save their accounts and eventually most of them realized they were screwed, there was nothing they could do about it because of the Algos. These sellers turned on ebay and took others with them. If you notice during this time period AMAZON marketplace took off. Daddy Bezo’s had a flood of experienced online traders who simply shifted their operations to the less popular (at the time) and more expensive platform (at the time). It was either that or close shop. MANY CHOSE TO CLOSE SHOP. The stupidity of all this was the Small and Medium sellers were the real money makers. eBay charges around a 9% fee with a cap of $250 per transaction. Which is more profitable? Target selling 50,000 items or 5,000 small to medium size sellers selling 100 items? The answer is in the nature of marketplaces. Target sells to 5,000 customers and that is the end of the story. Small to medium sized sellers tend to keep the money in the marketplace. User A sells to user B for $100 User B can turn around and take that $100 and buy something he needs for himself or his business from user C, user C can then do the same. Wash, Rinse, Repeat. Target selling $100 is a one way street while Small to Medium users can be a continuous money carousel. Donahoe in his infinite ignorance ran off many of his prime sellers. Ultimately sellers are your customers as they are the one’s who pay the fees. He jump started his competition whom he was stupidly trying to emulate. The important thing to understand about eBay is their product (An Auction) is easily scaleable and cheap to run For example this Rolex costs about the same to service this listing for a rug The Target deal, illustrated with a bathroom rug Chasing these corporate dollars was infinitely stupid.
They gave these corporations steep discounts to use the platform
The internet was maturing and we were just a few years from all these corporations having their own web presence
Robbed dollars and eyeballs from your bread and butter. Auction and Store listings of small to medium sellers.
Robs future revenue from carousel customers who return money to the marketplace and gives it to corporate customers who do not return dollars and are using the dollars they make off you to build the infrastructure to replace you. DING DING DING
This dude declared war on some of his best customers and tried to make eBay an ugly corporate shill and would eventually lead to the invasion of cheap Chinese stuff (eBay is now combating that) We can see the results of his war on customers with this graph. eBay’s growth and revenue was decimated by this idiot and you can see the results once the earnings were reported (Which lagged the implementation of his stupidity) War on customers displayed via line graph Donohoe decapitated ebay right during what would have been it’s prime growth years and funneled those customers to his biggest competitor. eBay can make far more with less because of the nature of it’s bread and butter customers. Many auction enthusiasts are high income types. eBay has better demographics financially than it’s competitors. There is even a fairly large industry of arbitrage where people sell items they source elsewhere (Like amazon) and basically drop ship them off as eBay sells because some stuff sells at a premium on eBay. eBay CAN make more money per transaction compared to similar industries and can capture a significant amount of money to return within the marketplace. Similar to sales tax, that dollar can bounce around within the marketplace and eBay can take it’s 9% cut every time it switches hands. Interesting side rabbit hole that arises during the Donahoe years. Donahoe was obsessed with attacking his own customers. This was commonly followed in an industry blog called AuctionWeb and then eventually named ecommercebytes. Run by the Steiner Couple Here is an article their website published about them getting rid of sellers They reported on all of eBay’s policy changes and basically called them out for being the giant window lickers they were. It ruffled a few feathers within the organization and now 6+ employees of eBay are being charged with crimes like harassment and stalking. Really a crazy story. DONAHOE is to blame for the policies and culture that allowed this to happen. He should go to jail over just what he did to the share price. Crazy eBay Criminal Stalking More Crazy eBay Harassment During all of this foot shooting was when Carl Icahn said that eBay was THE WORST RUN COMPANY HE HAD EVER SEEN One of the problems was the incestuous nature of eBay’s relationship with Paypal and the board members who presided over both. They basically spent a decade doing what was best for the board and not what was best for the Shareholders, employees and customers of eBay. This is now not so much a problem because many of those relationships no longer exist. In the aftermath the other pieces have found increased market value and eBay has been suppressed due to it being stuck with all the burdens of the Donahoe administration and bad perception. eBay should have been worth more as an individual piece and it’s was the one who took the financial hits. PayPal Split in 2015 PayPal has a 113 P/E (I’m not saying this is the best metric to judge a company I’m just using it for illustration) If eBay traded at Paypal P/E it would be worth $660 So what’s the catalyst to the eBay Rocket Ship that is about to take off? CORONA. Corona is shaking up the whole economy and this shake up will jolt eBay to it’s full potential. Alexa 90 days, even better at 140 and this growth is against the normal ebb of seasonal business Over the past 4 months as far as I can tell eBay has increased traffic by as much as 18%+ which is pretty AMAZING for a very mature internet company. Even more amazing when you take into account that this is normally eBays slow period. Traffic is normally on the downturn. YOY I am curious how much busier they have been I'm guessing 45% YOY increase in traffic for the Month of May & June April May June July are eBay’s 4 slowest months and the July 28th earnings will encompass 3 of those 4 months. During the slowest time of year eBay went from the mid 50’s to the lower 40’s for it’s spot in total Internet Traffic. A HUGE shift against the normal tide of business cycles. Traffic for last 90 days. Up much more over entire Corona Period the increase looks more bigly when you view 150 days out I've spent a few hours trawling eBay seller message boards. Within this quarter I have heard of increases in per transactions and a decrease in "Best Offers" which means better margins for sellers and more fees for eBay. I attribute this to Corona disrupting normal supply chains. eBay has been established for many years so boomers when they can’t find something are like "Oh Yeah EBAY." Many sellers report increased sells in business related categories and more aged inventory being sold as parts of the market shift towards online from some of the traditionally Bricks and Mortar industries. eBay has a very successful and well made app. Sellers are seeing increased usage amongst younger buyers/sellers whom are either bored with the lockdowns or looking for side income after losing their jobs. Remember when we mentioned 500 small sellers being worth more than one big corporate client? This will be obtained with an army of people using the app on their cell phones. Corona is going to get the attention of customers they lost over the years as they come back to the platform they remember, millennials and new users when they discover the well made app will come online. I've added the eBay App to my phone it is very good and has very customizable search features. The Bear case for eBay is even more, if Corona turns out to be worse (It’s not) everything online just becomes more valuable. So what is eBay worth? Well it’s a better investment IMO than Paypal eBay valued like Paypal is worth $660 Mercardo Libre is worth more than eBay (This is a Crime) as it is not even a top 1000 worldwide website while eBay is top 50. Plus it doesn’t even turn a profit. If you have any MELI stock sell half of it and buy eBay in addition to whatever you would buy if you didn't own MELI do the same for PayPal as well IMO. If eBay was valued like MELI it would be worth Tesla numbers Mercardo Libre has a 25% bigger market cap than eBay and doesn’t turn a profit. Ebay would be $76 a share just to be on par with MELI and it shouldn’t even be in the same ballpark. Etsy is just outside of the Top 100 for web traffic and has a 181 P/E if eBay was trading like ETSY it would be trading at $1090 a share If eBay was valued like ETSY it would trade for $1090 Channel Advisor is a company that grew out of offering services for eBay and while it works on multiple platforms it’s use was born from eBay and it has a 60 P/E If trading like Channel Advisor it would be worth $363 Corona shifted a lot of users to the eBay marketplace because of busted supply chains. They now have an Okay website and an EXCELLENT APP. This increased use comes during the traditional low tide of eBay traffic and if eBay leans into the coming quarters their revenue is going to skyrocket. Corona was the catalysts to wake everybody up to what eBay could do and what it should be worth. EBAY should be one of the most profitable companies in the US economy with lots of room to improve the bottom line. It has all the pieces. Like Selling off some of the MANY side projects under the eBay umbrella Streamlining Employment Just this month they are integrating their own payment platform which should add 1-2% more to every sell which is a big deal considering that the average fee is around 9%. We are talking about maybe 20% added to revenue with not much changing. BIG MONEY Winning back Small to Medium sellers and improving the per item transaction is eBay's ticket to tendie town. All the new growth they are experiencing is exactly what they need and want. They have a good App that can capitalize on the reboot. eBay has ample room for growth and I suspect the income levels of buyers in the marketplace is higher than competitors like Amazon, Etsy, Overstock, Stitch Fix. eBaY has more people with money paying attention. New CEO seems to be a bright guy. All he has to do is not SHOOT HIMSELF IN THE FOOT like the Donahoe CEO. If successful eBay will be on the moon mission of all moon missions MOST UNDERVALUED TECH COMPANY IN AMERICA. As always my DMs are open and I do mercenary stuff. I have my position and I am currently buying shares with a goal of 303 shares before earnings. I suspect this thing will have VERY little resistance upon takeoff Little Resistance BUY 11 – 101 – 1001 Shares Depending on Bankroll (I like shares on this one, I like the company and I'm expecting dividends) Once this rocket settles it is covered call selling time. (This is why you want multiples of 100 You should be at least a 80/20 Options/ Share split. Got to water the seed Options 7/31 $80C (8/21 $90C if ever made available) 1/15/21 $85C (Also I'd buy higher but they are not currently available, if BEFORE earnings Higher Strikes appear I would go up in strike A LOT. If earnings are up big this is ONLY THE BEGINNING as this is eBays SLOW PERIOD. Earnings for the fall will be CRAZY if Traffic continues to hold and if it has the normal Santa Claus Tax increase 🚀🚀🚀🚀🚀
Idol-Rapper Analysis #1 - 4th Gen Boy Groups 1: ATEEZ, Oneus, A.C.E
Hello! i thought it would be fun to start trying to do some technical analyses of kpop idol-rappers and enough other ppl seemed to enjoy the idea so here i am! Very self centered of me to think you care about my opinion but if you don't care about it you don't have to read this! It costs zero dollars to click away from here!
here is my original post outlining a lot of Hiphop terminology/concepts/analysis
here is my post where ppl submitted the rappers they wanted to see analyzed
Some Disclaimers: This post is fxckin long This post will cover both technical aspects of rapping and some more critical analyses including my own personal opinion. I will try and justify my opinion as best possible but in the end, the opinion belongs to me and only me, if you enjoy a rapper I don't, or if you don't enjoy a rapper I do, that is all ok! Additionally if you are uncomfortable seeing your faves criticized this might not be the post for you! All of our faves have flaws and room for growth and pointing them out does not diminish their talents or hard work. If you disagree with my analysis I'd love to hear your thoughts! If i get something incorrect please feel free to correct me in the comments! I am open to criticism and correction! !!!!!!I will do my best to point out both an idols strengthsandweaknesses, but I will not water down my opinion to do so. !!!!!! My preparation for this post was listening to ALL the tracks the group had available on streaming, if the rappers have their own subunit or solo work i looked at that too. I didn't watch all of their live performances, but if there was a track i was referencing and it had a live version i tried to watch that for reference. Many of these rappers are very limited in the amount of long-form work they've put out. All my analysis should be taken with a grain of salt because of this.
Today's analysis will break down:
ATEEZ's Hongjoong and Mingi
Oneus' Ravn and Leedo
ACE's Wow and Byeongkwan
ATEEZ: Hongjoong + Mingi
About ATEEZ: Their music is highly dramatic, heavy emphasis on drops and a real "world music" feel with sounds derived from Australia, the Middle East, Latin America, and the Caribbean all with strong trap beats and more recently industrial style beats as a pillar of production. Their songs are usually composed with the focus on the performance and so have longer instrumental sections. Lyrically the majority of ATEEZ songs center around reaching their dreams and one day being the best. Standard stuff for an idol group. The two rappers of the group are also known for their "tom and jerry" style delivery meaning they often trade off verses one after the other and have two radically different sounds. Hongjoong: High C/Low B tier Hongjoong is the leader of ATEEZ and has been involved in writing every song they've released and had a growing production role throughout ATEEZ's time as a group. He has a pretty high timbre and usually prefers well defined stacatto deliveries mixed with a lot of well defined melodic movement in his verses. Strengths:
Good breath control/placement which allows him to do some longer passages without getting off or losing the beat. A good example of him doing this live and acapella is right here, no clue what this performance is from or why he was doing an Eminem cover. It's not mind-blowing performance or anything but it's a good show of consistent breath placement while still being high energy.
Really excellent rhythmic sense, doesn't fall off the beat and is probably the best in this post at riding the beat on a regular basis which relates back to having really good breath control. Even if he needs to pause to breath he immediately gets back on without fumbling. I haven't seen a single performance by him where he gets off.
Consistently uses his melodic range as a feature of his rap verses and has made that his signature style and flow. It works for him, it stands out among other idol rappers, and he changes it up enough in response to each song that it doesn't become boring or repetitive for the most part. Of all the folks in this post Hongjoong is definitely the one with the strongest and most consistent style across his group's work.
Despite many ATEEZ songs relying on a similar underlying beat or instrumental motif Hongjoong really pushes himself to give something different for each song. His flows don't sound super repetitive and are changed up to suit each songs he's not perfect, there are some verses that sound very similar but overall I never found myself thinking that I'd heard that verse a million times before. He always adds little flourishes to make them distinct
Unexpected and fun transitions between straight and melodic deliveries and another, like here on Twilight or here on Mist (which is one of his best verses by far imo)
I just love his delivery on Illusion.... i don't really have anything else to say, it reminds me a lot of what I used to love about E'dawn in Pentagon songs, almost childish and singsongy not because it's basic but just because it's a lot of fun.
Hongjoong is able to get into a good groove which works well with Ateez's tropical groove based songs. He always knows how to stress the downbeat to achieve truly bouncy goodness like here in If Without You. Despite his fast delivery he's still paying good attention to where he puts emphasis rather than just delivering it all straight without any variation
I only hesitate to give Hongjoong a full B tier not for technical reasons but because I just haven't seen enough variety from him yet. If he were to start releasing solo or unit tracks in different styles, or if Ateez branched out a bit more in sound and he still sounded good I think he'd be well into B-tier. Hopefully as his production skills continue to grow we get to see more of that experimentation.
Because of his high tinny voice when he does attempt to sound higher energy he can end up sounding quite childish and very un-powerful. The Kcon Thailand is a good example of this. It's high energy but very juvenile in sound Another example would be in the live performance of Dazzling Light, he starts the verse fairly strong albeit pretty out of tune, but his yelling at the end sounds like a kid's. The recorded version doesn't have this problem so it seems to be something he falls into more during live performances than while recording. A better example of him going loud and passionate without sounding childish would be here on Desire where he throws in some growling and doesn't stay at a high pitch.
Although his play with melody and rhythm is good and provides interest, Hongjoong still struggles with a full dynamic range. He rarely goes very quiet and, as mentioned, his loudest setting sounds awkward. This means he usually finds himself stuck in a middling volume and relies entirely on changing rhythm to convey the energy flow of a song. He still does that fairly well but he could definitely work to improve his ability to move through his dynamic range more fully.
There are times when the beat he's on provides SO MUCH amazing stuff to play off of that gets underused because he chooses to play it safe. A great example of this is on Horizon which is not a bad verse by any stretch but THIS is what the beat of that song sounds like and he chose to strip it away entirely in favor a really basic trap section. It's less that the result is awful and more that he's not using the song or instrumental to its full potential.
Although I enjoy his melodic delivery overall, Hongjoong is not a singer... and sometimes he veers far into the singer territory and ends up sounding very weak or even unpleasant such as here in My Way. He is also occasionally out of tune which, if you're going to be a melodic rapper causes issues.
A problem that he falls into as a result of ATEEZ's rather limited sonic and emotional palette is that I have almost no idea how good his emotional delivery/range or his versatility on different types of genre/concepts is overall. This obviously isn't a weakness for him per se, because he's not in total control of ATEEZ's concept or sound, but it limits his potential to be ranked any higher because I've can't begin to judge how he would handle beats outside the standard ATEEZ realm.
Mingi: Mid E tier Mingi is credited as a writer on all the ATEEZ tracks on which he appears. He is considered the lead rapper and leans heavily on his distinctive low vocal timbre. Mingi's delivery is very centered on a focused and continuous amount of power, occasionally he uses melodic lines but usually he prefers straight delivery with some higher inflections thrown in. He has a very low and throaty tone to his voice and sometimes ranges into an almost spoken delivery. Strengths:
Mingi has a voice that stands out a lot in his group, it often provides the backbone to ATEEZ songs with his parts in the chorus and when he uses his voice almost like a percussive instrument.
His voice has, I think almost a "foreign" feel? I don't really know how else to say it, but he definitely has a vocal tone that Korean media seems to associate with rappers and specifically with non-korean rappers. His sound reminds me most of a Latin trap artist which makes him fit in well with the sound and worldwide aesthetic that ATEEZ usually presents. Sometimes you can even hear other members of the group try and imitate that in songs by tightening their throat and widening their vowels but for him that seems to be the way his voice naturally sounds.
Although Mingi is not considered the top performer of ATEEZ (mostly because ATEEZ are some of the strongest performers currently active) he is no doubt a very good performer and is most definitely able to sell a lot of his delivery through charismatic live performances and his excellent dance skills.
When he wants to he has the capability to do lower volume and more whispery tones which are quite pleasing to listen to like his performance in Treasure (though admittedly he switches back to shouting not 15 seconds later but i'll take what i can). He has another laid back delivery on Pirate King during the first verse which works quite nicely with the track as well. Sunrise is another example where he starts the track at an appropriately low level.
Because ATEEZ does have quite a few purely hype tracks, Mingi's voice and delivery works perfectly well in plenty of situations. Inception is an example where listening to him makes me feel a ton of energy and excitement at an appropriate place in the song
I noticed while listening to ATEEZ's tracks start to finish that he does seem to be improving. On their most recent album I heard the most variety from him on more than one track, and it seems like he's clearly interested in getting better and more time and effort is only doing good things for him. Fever was a good example of his slightly more melodic sound coming out that doesn't sound just like it's him doing Hongjoong's lines for him. Thanxx probably having my favorite verse from him so far, short but dynamic, and the last two lines of To the Beat being honestly, kind of addictive in the almost slimy way he delivers them. I like that and i hope he goes into it more.
Weaknesses (this is gonna be a little brutal... Atinys proceed with caution) :
GOOD LORD he sounds the same in almost every song. This is not just a problem with his vocal tone (although that can be a factor, because his voice is almost overwhelming to other stylistic decisions he makes) but the man almost never changes it up dynamically, in his phrasing, he never really plays around with enunciation or melody to any notable extent.
SHOUTY BOYS! Which is the term i use for kpop boys who shout the majority of their rap lines and Mingi suffers from this to a pretty large extent. This is true both on wax and in live performances and it means that his dynamics are very weak in the majority of songs. Mingi seems to have exactly 3 settings: loud talking, full shouting (his default), and EXTRA LOUD SHOUTING usually reserved for live stages. There's rarely any smooth transition between these, in fact he is likely to use only one of them in any given song.
Relating to that last point, what is the worst side effect of this is that REGARDLESS of the vibe of the song Mingi remains almost identical in how he performs. As I was listening to some of their songs it would start and be a chiller more downbeat track and I'd think "oh no he's still gonna shout isn't he" and then Lo and Behold, the shouting man would enter
A particularly egregious example of this can be found in Mist, i'm not even going to timestamp to his verse, listen to that beautiful Wooyoung intro and then listen to the way he chooses to deliver his verse immediately after... someone pls try to make that choice make sense artistically. This is the true issue of having a rapper who doesn't change things up, it's not that the style he does have is out and out terrible or inappropriate in all contexts, but it simply isn't what all of their songs require. It's absolutely throws the feeling of the song out of the window and genuinely makes, what could be one of Ateez's best songs into something almost frustrating to listen to.
Here's an example where he does his loud delivery it multiple times in a song, one which works and one which doesn't just so i can demonstrate the difference. In Treasure he has this shouting high energy delivery right in that first verse when the song and instrumental hasn't moved anywhere yet. Right after he finishes the song actually starts to build for the prechorus but the energy is already off because he was SO high energy before the prechorus began. Then during the prechorus he comes back for a short shouted line which does work because that's the place you're supposed to be building up the energy. basically his energy is all over the place regardless of where in the song we are and it makes the flow of the song messy
Although his vocal tone is really recognizable it's not what I'd call uncommon. Other examples of this vocal tone in kpop are Wooseok of Pentagon, Leedo of Oneus (also in this post) and IM of MonstaX. Being a "deep voiced rapper" simply is not enough to stand out.
He consistently loses the beat during live performances often because of poor breath control and placement, here he is on MixNine sprinting after the beat and not really making it back on. Here he is doing a live street busking performance and sounding breathless after about 2 lines, i. There are songs where i really like his verse, like Dancing Like Butterfly Wings where his rap is groovy and bouncy in the official recording but when performed live he still loses the beat and can't keep his breath even... it is genuinely baffling to me to see someone sound out of breath, 4 bars in, at the START of the song, Even in recordings he sometimes has issues finding the beat like on Desire where he never seems to quite hit the right mark.
I know some people are going to get on me or feel hurt for placing him so low, it's not that I think Mingi is hopeless, untalented, or without any potential, nor do I think every bar of his is terrible when viewed in a vacuum. However I find that his parts consistently mess up the flow of the song and they tend to stick out in a negative way when viewed in the context of the track, that is why I ranked him this way but I really only hope to see him get better as time goes on.
ONEUS: Ravn + Leedo
About Oneus: Before writing this I had not listened to a full Oneus album but i'd really enjoyed their title tracks and was pretty stunned by their RTK performances. I had heard a lot about member involvement in a lot of the elements of their work, overall I was really excited for this post as a prompt for me to go and fully listen to their B-sides. Anyways all that said I am about to trash on Oneus' music a little so ToMoons I'm sorry. I have a lot of good things to say about them too, I promise. ........ ok I know I'm here to review rapping but I promise this is relevant..... the beats to the vast majority of Oneus b-side songs are quite boring and same-y like that vaguely trop-house/dancehall/electro-house sounds with a trap breakdown occasionally thrown in (there are a few exceptions obviously). Looking at the track producers it starts to make sense since most of them are RBW inhouse producers and they stay the same on most of the non-title tracks. Again I know I'm not here to do a music review but I think a big takeaway from Oneus is how much a good or great beat can elevate even a mediocre rap performance, or really pull the best possible material from its performers, and how, on the flipside boring generic beats can turn what could be a fine rap performance into something totally unremarkable. Oneus tends to have much stronger production on their title tracks but the b-sides keep almost none of that energy and it really hurts their overall ranking and ability. By FAR the most interesting officially released song they've had from and beat/rapping perspective is Crazy & Crazy which is produced by the Onewe member Cya who honestly impressed a lot, he definitely outdid the other two on that track. But this isn't about Onewe so i'll get on to actually talk about the Oneus members. Ravn: High C tier Ravn is the lead rapper for Oneus and has participated as a writer on every single song they've released thus far and participated as a producer on Hero from their debut album. He released a number of songs and projects on Soundcloud under his tag pls9ravn starting in 2017 Some of them are rap tracks, some of them are vocal covers, some instrumentals, and a lot of the originals are alongside the aforementioned CyA of Onewe. The songs tend to be lofi or related genres with a big emphasis on vibe and more laidback delivery. Ravn's voice is midtone and fairly husky. He often incorporates intentional vocal fry and melody as notable parts of his style. (On a non-rap not i'm also huge fan of the production on his instrumental SC tracks, i hope Oneus releases a whole track in that vein at some point i feel like it would really fit their vibe) Strengths:
"Ra spit out flames" is objectively the best rapper tag an Idol rapper has ever had. That's just a fact.
On his soundcloud tracks, which fall largely into the lofi/cloud/chillhop/occasional synthwave or vaporwave tracks are an excellent match to his style. Genuinely, listening through his Soundcloud was a real joy, probably the biggest treat of working on this project so far. So many gems on there and so very in my style
Ravn has shown an ability to play around with weird and unconventional deliveries like on the track flame.... i mean he's obviously taking a lot of inspiration possibly even ripping directly from other rappers like Juice Wrld (rest in peace) or Vinxen but I don't mind it. I particularly like what he does starting at 0:45 like... throwing his voice forward really suddenly, it gives the track a lot of tension and weird emotion and then into the section where he's basically just speaking with only a barely there adherence to the rhythm. It's really cool I dig it
I don't really know what the emotion of bufferingonmymind is supposed to be but I felt it
Good ability to switch flows while keeping the track continuous like here on LIKEACHEEZ (great title btw)
He has shown potential in more vibey but somewhat energetic and party oriented tracks like here on Billboard. Admittedly i think the vocal effects are a little over the top on this one but i would absolutely vibe to this song while getting drunk no question. Similarly Like a has an excellent vibe. Eraser sounds like it could be a jhope solo release for all that bouncy energy. And Good life is meant for smoking a blunt by the beach. All of these songs have such excellent and clearly defined vibes and Ravn's production and voice work very well in tandem.
Ravn on some of Oneus' groovier tracks is excellent. That's clearly the lane he is most comfortable, well-versed and personally interested in and it shows, he thrives on songs like Plastic Flower Plastic Flower is easily my favorite he's ever sounded on a full group track, but the second verse of Hide and Seek shows this off as well.
Ravn is one of the only idol-rappers whose shouting voice i like, heard in his opening in Warriors Descendent he uses it as an occasional tool like god intended. it's very effective and piercing I actually wouldn't mind if he used this more in the future s p a r i n g l y
I'll mention this with Leedo as well but I think the C rating might be misleading when it comes to the ability he's shown. The issue is not that Ravn doesn't have talent nor that there isn't proof of his talent out there. I really do think his work releasing work independently speaks very well to his creativity and ability, it just isn't the whole story.
Even his most exciting and experimental choices are well within the lane of expected flows and deliveries. I won't call them totally basic but i think he has potential to push the envelope more than he does. A good example is his verses in Come Back Home which had a lot more potential than he pulled out of them. There's something to be said for making the most of every line but I feel like Ravn has a rather unfortunate amount of throwaway verses for someone of his talent level.
I often feel like Ravn is floating somewhere over the beat rather than fully sinking into it. I don't really have an example for this it's just something i notice.
One of his best verses, Crazy & Crazy, commits the cardinal sin of using "hakuna matata" in his lyrics and then trying to end the line with "bibitibobity boo" which not only doesn't rhyme, but also sounds corny as hell. The rest of the verse is great but that ending does spoil it a bit.
When he tries for that real ~emotional~ delivery it lacks almost any real punch and mostly sounds very cheesy, other emotional songs see him falling into the same problem i mentioned with Hongjoong of sounding sort of unenthused rather than any other emotion, his verse in Now is a good example it just sounds very impersonal and unemotional overall.
He also suffers from something very common to idol rappers which is that, they might be able to do one style well or even really well, but they lack a lot in the way of versatility and struggle to find a place within the music their group makes. The job of kpop artist is being able to adapt to different contexts, and Oneus has a very clear sonic signature which I don't think Ravn has found a way to thrive in or fully adapt to. That to me is a major issue and severely downgrades where he could be.
Leedo: High D tier Leedo is ... apparently the Main Rapper (i assumed that was Ravn but idk) apparently NOT a lead dancer, and also can sing like this!!! Basically the man is full of surprises. He has written lyrics for every Oneus track on which he has appeared and also featured on some predebut soundcloud releases with Ravn and Cya. He is a deep voiced rapper with about half and half melodic and straight delivery and a powerful but more restrained style. Strengths:
Leedo seems to have a strong sense of musicality and quite a bit of creativity. Although as I said, many Oneus tracks are pretty bland in basic in production and don't lend themselves as well towards experimentation of the performers, when given the chance Leedo has shown an aptitude for coming up with new ways to deliver. He plays around with melodic delivery, he has a lot more dynamic range than one might expect, and he doesn't rely 100% on his deep voice as the main or only feature of his rapping. That said his voice is a feature he uses, Light Us being a good example of him using it to good effect and atmosphere.
On the topic of musicality he's very responsive to the type of track he's rapping on. His Lit verse is very well paced and full of excellent little details and changeups that make it really quite fun to listen to.
Despite having a voice that would lend itself strongly to shouty boy rap, Leedo is actually very non-shouty for the most part. Like his verse in Now is nothing revolutionary but i was 100% anticipating full yell power and instead got a pretty good little segue section.
There's a real sleepy quality that he can take on, tracks like wrkwrkwrk at 2:15 show this off. It's not fully developed at this point but it's something I'm interested to see him play with more and a cool direction to hear him go in.
Leedo on a fucking OLD SCHOOL EAST COAST BEAT i actually screamed. the track Sh#t is the shit, VERY similar in sonics to A Tribe Called Quest's Electric Relaxation but I don't care. the beat, the delivery, the way the two of them contrast, the whispered refrain. MORE OF THIS GOD PLEASE MORE OF THIS, more of this in Kpop more of this for Leedo and Ravn pls i am begging
His more melodic deliveries are some of his most enjoyable probably because Leedo is, as discussed, a really great vocalist, Crazy & Crazy being probably him at his best in this respect. It's very pleasing to listen to but his work with Cya in general usually hits the mark on melodic flows
Honestly he's probably the one on this list that surprised and impressed me the most and the one i see the most potential in. I don't think it shows in the rating but I actually find a lot of his work quite enjoyable and I see him growing and pushing himself. So for me a Mid-D just represents where I think he is RIGHT NOW with the tracks they've released thus far, but I wouldn't be surprised to see him get a lot higher than that
Although I can sit here and praise his delivery on the best tracks, the fact is that the vast majority of Oneus' catalog is not that. For every good performance that i referenced here there are 4+ absolutely forgettable songs with forgettable deliveries. The songs being bland is not completely an excuse for the rappers to be bland. It's obvious to me that they do their best work when they have a song or instrumental that pushes them to be creative, but without that drive Leedo simply slips back into being a low-tone rapper without much of a trademark.
I think his flows and experimentation are still quite rudimentary for the most part and his individual style is limited on the majority of tracks. In many cases this is to the point that he could be mistaken for other rappers of a similar ilk like Felix or Mingi.
Even on his best tracks Leedo has not shown an overall aptitude towards emotional delivery.
This list of weaknesses might seem rather short for someone in D-tier, but i'm going to lay out his main issue: while Leedo has great potential he just doesn't have an established and consistent individual voice. I'm not going to take the time to link a bunch of things that aren't there, instead i'm just going to link a bunch of songs that i think show what i'm talking about which is a general lack of a uniqueness or ability to really stand out on the track:
This is his biggest problem by far in my opinion, and if he can overcome that and find his individuality more consistently I think he has really excellent potential. He's already shown potential and ways in which his voice can differ from others, but he needs to be confident enough to commit to it and actually take some risks in order to actually reach the potential he has. This is probably a note that could be given to a lot of idol-rappers but its one i think that is particularly apt in Leedo's case.
A.C.E: Wow + Byeongkwan
About ACE: First of all this is one of my favorite groups, so if you were wondering whether I'm willing to talk smack on my faves hopefully this section answers that question. ACE has a much smaller discography than others but they also tend to be much less keyed into one particular concept and have gone all over the place in both title and bside tracks Additionally with only a few exceptions, members have not yet expressed much interest for lyric writing or production. The only song where I saw any writing credit to the members is Wow on Take Me Higher. Wow: Mid/High D tier Wow's official position besides main rapper is main performer and that is where much of his strength as an idol lies, he is a really dynamic and talented performer. As a rapper he has a mid to low tone and a pretty straightforward style of delivery usually not melodically driven and usually fairly lowkey. Strengths:
Probably Wow's best strength and the thing that makes him (to me) much more enjoyable to listen to than even some B tier rappers is that he has a good sense of dynamic control and really good sense of a songs energy at a particular moment and has good sense in how to match that through his delivery.
Some examples of this are Holiday with a more laid back delivery, Take Me Higher where Wow performs the bridge is a great display of less in-your-face sort of confidence (and his best verse to date by quite a sizable margin), and Savage is a good example of him using both a softer delivery initially and then later a full volume/energy delivery for the benefit of the song. He also manages to rhyme Meenie Miny Moe, Kawi Bawi Bo, and Rock and Roll without it being a total cringefest. WOW!
He has a very pleasant slightly husky mid-tone voice to listen to which lends itself well to delivery and fits into ACE's songs nicely. I never feel undersold by his lines in their songs nor do I feel that they are misplaced. In other words, he feels comfortable in his role, he's not overly forcing it, and his sections don't feel awkwardly short or awkwardly delivered. Under Cover is a good example of this, he puts just enough individual flair on it that it stands out, but it's not overbearing and it doesn't overstay its welcome.
Even his longer sections flow nicely. Here's a section from If You Heard where he goes for !!!!8 bars!!!! there's nothing really stand out about it but it really works in the song and transitions in and out nicely.
Wow is really good at emotional delivery overall and his rap is surprisingly adept at it too. Even if the bars aren't complicated they do a good job conveying the overall feeling of the song. So Sick is like half rap half sung but it's a good example of this.
Wow's main weakness is that he doesn't seem to have any desire to go beyond the bare minimum of rhythmic delivery. His flows are very easy and predictable, Almost every weakness I could name, could be summed up as: he's doing basic stuff in a basic way. He's not pushing any boundaries. And technically when it comes to his abilities in speed, rhyming, wordplay or use of emphasis and alliteration he's simply not playing the game. His focus is purely on presentation, not technical skill.
Although I mentioned his dynamics being his strongest suit, there are times when he loses grips on this. Black and Blue is a great example, he goes full shouty boys on this track and it's exactly what that instrumental doesn't need and it's weird because he almost never does this otherwise. Truly a baffling decision. but you can't win them all.
There's plenty of boring stuff that he does when the song doesn't have a clear emotional edge or conceptual backing. In Holiday he has twoverses that sound nearly identical and go nowhere. This is where being very unobtrusive is a real fault because that track needed some spice that Wow simply could not provide.
Wow is like tofu, if there is not already spice (via the song) he will sound very bland, if there is spice he will soak it up and take on the correct flavor of the dish but he does not bring the spice.
Unlike the other folks i've talked about in this post, i don't get the sense that Wow is actively and aggressively trying to get better as a rapper. I don't notice a great deal of improvement over releases and I don't really expect to going forward. I think he's in a comfortable enough spot and not really interested in experimentation as a rapper. He's always getting better as a performer but I think rap is very secondary for that. It's not surprising and honestly, he could stay at this level and it wouldn't really effect the overall quality of any of their songs.
Byeongkwan: E tier Byeongkwan is perhaps the best representation this post has of "dancer who they made a rapper because they needed a second rapper", he's not outwardly awful... sometimes???, but rapping is clearly not his passion. Byeongkwan is an EXCEPTIONALLY good dancer (put him in your 4th gen top 10 cowards!!!) and he's also a really skilled vocalist, so the rapper role feels especially secondary for him. Still, he's rapped enough times on enough tracks that it deserves comment Strengths:
Like the majority of dancers-turned-rappers in kpop Byeongkwan has a very well developed rhythmic sense and tends to find the pocket without trouble. Now... does he do anything interesting or good in the pocket? No. But you cannot deny that he's in it :)
Because of Byeongkwan's unique vocal tone I actually think the less he tries at rapping the more he sells it. So there are parts of Savage where... I don't know if he's technically rapping or not but his delivery is somewhere in between rap and vocal and those parts work well for the vibe of the song like here, or here in If you Heard where he acts as a segue and it's nice.
One time he did this and it was pretty good but i can't find the full performance and also it's a cover
Unfortunately Byeongkwan does not write his own raps and the raps that he gets are... so basic. Painfully basic. That combined with the fact that his delivery skills are preschool level makes for a lot of uninteresting sections to songs
When BK really puts it on as a rapper he sounds like a try-hard in the truest sense. That opening verse to Under Cover..... wacks up the beginning of an otherwise perfect song, it's rough, it's trying way too hard, it is not doing a great job of selling it
Dynamics emotional delivery and variety are almost non-existent across tracks. After saying Wow had pretty good emotional sense on So Sick here's BK's verse, very flat in comparison with no emotional edge to it whatsoever.
I am not going to absolutely cream this man into the ground because A) he actually doesn't rap that much overall and B) he doesn't really present himself as a rapper. His inclusion here is really only because someone requested it and all i have to say about him is... rapping is like 4th on his list of roles (1: dancer, 2: vocalist 3: best boy 4: rapper) so..... I hope he stays being vast majority a vocalist!!!! Pls!!!
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