Many of you took profits on tanker stocks ahead of earnings. That was dumb.
I originally posted about buying tanker stocks four weeks ago. We’ve since seen these stocks appreciate considerably. I again posted about tanker stocks again two weeks ago encouraging many of you to hold these stocks for longer than your usual holding period of two minutes. Many of you couldn’t resist the urge to take profit in advance of earnings. That was a mistake. Earnings is the catalyst that will drive these companies higher. It’s when management will reveal not only the extent to which they’ve already captured outsized profits on elevated day rates but also when they will guide the market on 2Q and 3Q earnings based on the date rates they’re currently contracted on. I happen to have access to that data, and those contracts happen to be at very high rates. In short, street estimates of earnings are still way too low. In my last post I made it clear that street analysts have been too conservative in raising their earnings estimates on tanker stocks. Finally today we have Jefferies analyst raising his PTs and estimates across every tanker stock in his coverage. Just before earnings, of course. DHT PT raised from $8 to $9, 2020 EPS raised from $2.20 to $2.89. EURN PT raised from $13 to $15, 2020 EPs raised from $2.66 to $3.89. FRO PT raised from $10 to $12, 2020 EPS raised from $2.82 to $3.87 TNP PT raised from $5 to $5.50, 2020 EPS raised from $1.50 to $2.13 STNG PT raised from $30 to $32, 2020 EPS raised from $6.04 to $10.59. My plan is to hold through 2Q earnings release, but I do expect this week to be a major week for tankers with multiple names reporting. Specifically, on the calendar this week we got DHT releasing tomorrow (5/5), then STNG (5/6) and EURN (5/7). Should be wild. LFG!
The Walt Disney Company (NYSE:DIS) es una compañía multinacional estadounidense dedicada principalmente a los medios de comunicación masivos y a la industria del entretenimiento. Su sede está en Burbank, California, EEUU. La compañía cotiza bajo el ticker DIS, en Nueva York, a un precio de US$ 127,44 al 23/8/2020. Goza de un tamaño prominente, teniendo 223 mil empleados y una capitalización de mercado de 230.292M de dólares. Disney integra el índice Dow Jones Industrial Average (DJIA) desde 1991, y también integra el S&P 100 y el S&P 500. Evaluando más en detalle el desempeño de la acción, la acción cotiza US$ 127,44 al 23/8/2020. Hace aproximadamente un año, el 26/8/2019 la acción cotizaba a US$ 137,26 lo que representa una caída aproximada del 7,15% anual (TTM). La caída es mas pronunciada YTD, Disney cotizaba US$ 148,2 a principios de año, por lo que al día de hoy la caída seria del 14%. No obstante, la acción a recuperado bastante valor después de la caída pronunciada que sufrió en Febrero-Marzo, llegando a cerrar a US$ 85,76 el 23/3/20 (habiendo subido un 48% desde entonces). Es para destacar que desde dicha caída se vio un significativo incremento en el volumen operado del papel. Mirando brevemente las medias móviles, vemos que la cotización actual esta por encima del promedio de 30 días (US$ 122,73), del de 90 días (US$ 115,98) y de 200 días (US$ 124,12). Con respecto al mercado, al 25/8, desde comienzo de año Disney se desempeñó por debajo del S&P 500 (5,7%), y del DJIA (-2,15%), con desempeño de -12,42% YTD. La compañía fue fundada en 1923 por los hermanos Walt y Roy Disney. A lo largo de su historia, Disney se consolidó como líder en la industria de animación estadounidense y luego diversificó sus negocios dedicándose a la producción de películas live-action, televisión y parques temáticos. A partir de 1980 Disney creo y adquirió diversas divisiones corporativas, para penetrar en mercados que fueran mas allá de sus marcas insignia orientadas a productos familiares. Disney es conocida por su división de estudios cinematográficos (The Walt Disney Studios), que incluye Walt Disney Pictures, Walt Disney Animation Studios, Pixar, Marvel Studios, Lucasfilm, 20th Century Studios, Searchlight Pictures y Blue Sky Studios. Otras unidades y segmentos de la compañía son Disney Media Networks; Disney Parks, Experiences and Products y Walt Disney Direct-to-Consumer & International. A través de estas unidades, Disney posee y opera canales de televisión como ABC, Disney Channel, ESPN, Freeform, FX y National Geographic, así como también venta de publicidad, merchandising y música. También tiene divisiones de producción teatral (Disney Theatrical Group) y posee un grupo de 14 parques temáticos alrededor del mundo. Es evidente la complejidad de las operaciones de Disney, por lo que vale la pena ir un poco mas a fondo en la composición de los segmentos operativos de Disney, en base al reporte anual de 2019 (mas representativo que el ultimo reporte trimestral en medio de la pandemia), donde encontramos cuatro segmentos relevantes. El primer segmento, denominado “Media Networks”, compuesto principalmente por los canales domésticos de TV, este segmento generó 24.827M US$ de ingresos en 2019 (un 34,7% del total). El segundo segmento es el de “Parks, Experiences and Products”, compuesto por los parques temáticos, resorts y cruceros de las compañías, así como también de las licencias de los nombres, personajes y marcas de la compañía y de los productos de merchandising propios, este segmento reportó 26.225M US$ de ingresos en 2019 (un 36,66% del total, el segmento mas relevante de la compañía). El tercer segmento, es el de “Studio Entertainment” que contiene las operaciones de producción de películas, música y obras de teatro, así como también los servicios de post-produccion. Este segmento reportó 11.127M US$ (un 15,55% del total). El ultimo segmento, quizás el mas interesante es “Direct-to-Consumer & International”, donde además de contener las operaciones internacionales de TV y servicios de distribución de contenido digital como apps y paginas web, se incluyen las unidades de servicios de streaming de Disney, compuestas principalmente por Hulu, ESPN+ y Disney+. Este sector reporto ingresos por 9.349M US$ (un 13,07%, enorme incremento respecto del 5,6% que reportó en 2018). Respecto a la distribución territorial de las operaciones, es notorio el bagaje del mercado doméstico (EEUU y Canadá) donde concentraron en 2019 el 72,6% de las operaciones. Vale destacar también que hubo un incremento significativo interanual de las operaciones en los mercados de Asia-Pacífico (del 9,3% al 11,2%) y en Latinoamérica y otros mercados (del 3,09% al 4,61%). En lo que respecta a la política de dividendos de la compañía, encontré registros de pago constante de dividendos desde al menos 1989. El ultimo dividendo fue el 13/12, habiendo pagado $0,88 y arrojando un dividend yield anual de 1,2%. La compañía decidió omitir el dividendo semestral correspondiente al primer semestre de 2020 por la pandemia del COVID-19. Evaluando un poco la posición financiera de la empresa, a junio de 2020, según el balance presentado, Disney tenia activos corrientes por 41.330M US$ y pasivos corrientes por 30.917M US$, lo que resulta en un working capital (activos corrientes netos, activos corrientes menos pasivos corrientes) de 10.413 US$. El working capital entonces representa el 33,68% de los pasivos corrientes (Con lo cual, el current ratio es de 1,34 apreciándose una mejoría respecto del 0,9 reportado en septiembre 2019). En relación con la deuda de largo plazo, la podemos estimar en 70.052M US$ (borrowings + other long-term liabilities), dado que en septiembre 2019 la cifra era de 51.889M US$, vemos que sufrió un aumento considerable (en el orden del 35%). Respecto a los flujos de efectivo de Disney, vemos que en lo que va del año fiscal (septiembre 2019-junio 2020) Disney reportó flujo de efectivo por operaciones por 5949M US$, casi lo mismo que reportó para todo el año fiscal 2019 (5984M US$). Viendo la evolución de 10 años del CF de operaciones:
CF de operaciones (mill. USD)
Dif. Anual %
Viendo la evolución en 10 años del flujo de efectivo de operaciones, vemos que en 2019 hubo una drástica reversión de la tendencia al alza que se venia reportando (con un 58,14% de caída interanual). Esto se debe en parte a la política de adquisiciones de la empresa, que vemos reflejado en el flujo de efectivo por inversiones, equivalente en 2019 a -15.096M US$ (muy por encima del promedio de 2010-2018, equivalente a -4179,4M US$). En lo relativo a las ganancias de la compañía, para el Q2 2020 Disney reportó pérdidas por 4721M US$ (contra una ganancia de 1760M US$ para el Q2 2019). La situación se atenúa considerando las cifras para los últimos nueve meses (Q4 2019-Q2 2020), donde Disney totalizó perdidas por 1813M US$. No obstante, la situación del COVID-19 distorsiona nuestro análisis a largo plazo, por lo que para analizar la evolución interanual desde los últimos 10 años, utilizare los datos de los reportes anuales (datando el ultimo de septiembre 2019).
Net Income (mill. USD)
Dif. Anual %
Como se puede ver en el cuadro, pese al revés sufrido por las obvias complicaciones de la pandemia, el historial de ganancias de Disney es sólido. La compañía tuvo en los últimos 10 años, 2 años de contracción en las ganancias (2017 y 2019), pero en términos generales, las ganancias crecieron a una tasa promedio del 13,02% los últimos 10 años. Para evaluar el crecimiento general estos 10 años, si tomamos el promedio de los primeros 3 años (2010-2012) y el promedio de los últimos 3 (2017-2019), las ganancias de Disney crecieron un 125,8%. Mirando un poco de ratios, analizaré el EPS (Earnings Per Share) de la acción. Para el Q2 2020, Disney presentó un EPS negativo, de -2,61, contra un 0,98 obtenido en el Q2 2019. Refiriéndonos al desempeño pre-pandemia, el EPS promedio anual de los últimos 5 años fue de 6,3 y el ultimo EPS anual reportado (septiembre 2019) estaba ligeramente por encima, alrededor de 6,68. En lo respectivo al Price/Earning, el P/E (TTM) al valor de la acción del 23/8 es de -208,9. No obstante, si eliminamos la distorsión producto de la pandemia, calculando las ganancias promedio de los últimos 3 años (de acuerdo con los reportes anuales), es de 18,38, lo cual es un valor aceptable dada la coyuntura de los últimos años. En lo que respecta al Price-To-Book (P/B) ratio, el book value a junio 2020, es de 50, por lo que el P/B (siempre al precio del 23/8) es de 2,54, un valor razonable dados los promedios de los sectores en los que Disney tiene incidencia. El ultimo ratio a analizar es Price/Assets (P/E*P/B) que, (usando P/E con promedio de las ganancias de los últimos 3 años) arroja un valor de 46,68. Sobre el soporte institucional de la compañía, Disney tiene un apoyo considerable, calculado en el 66,42% del flotante en manos de instituciones. Los tenedores líderes son Vanguard con el 8,22%; BlackRock (NYSE:BLK) con el 6,32% y State Street Corporation (NYSE:STT) con el 4,19%. Otros tenedores significantes (1-2%) son Bank of America (NYSE:BAC), MorganStanley (NYSE:MS) y Bank of New York Mellon (NYSE:BK). En lo respectivo al management de Disney, la primera consideración importante es respecto al legendario CEO de la compañía, Robert “Bob” Iger, quien, en febrero de este año, después de posponerlo por años, decidió dar un paso al costado como CEO de la compañía, dejando a cargo al director del segmento de Parques y Resorts, Bob Chapek. Esto duró poco, y en abril Iger volvió a tomar las riendas de la compañía. No obstante, es altamente probable que, una vez estabilizado el panorama Iger retome su frustrado plan de dar un paso al costado. En lo relativo a la compensación, Iger cobró 47.525.560 US$, los executive officers una remuneración promedio de 11.319.422 US$ y el empleado promedio de Disney cobró 52.184 US$. Una cosa que llama la atención del balance de Disney (septiembre 2019), es el incremento notorio del goodwill (de 31.269M US$ a 80.293M US$, un aumento del 157%). No obstante, este incremento puede deberse a la política de fusiones y adquisiciones de la compañía. Disney viene llevando en los últimos años una política de adquisiciones relativamente agresiva, ideada por el CEO Bob Iger, de las cuales podemos destacar 4 o 5 operaciones clave, la primera de ellas fue la adquisición de Pixar, la famosa empresa de animación que había despegado bajo la conducción de Steve Jobs y Ed Catmull, en 2006 por 7,4MM US$ (de esa adquisición se beneficiaron sacando películas muy exitosas como Up, Wall-E, Ratatouille, Toy Story 3, etc.). Otra adquisición clave, fue la compra de Marvel en 2009 por 4MM US$ (La última de sus películas Avengers: Endgame, la más taquillera de la historia de Disney, vendió entradas por 3MM US$). En 2012, Disney compró Lucasfilm (histórica productora de Star Wars), por 4,05MM US$, y posteriormente anunció una muy lucrativa tercera trilogía de Star Wars. Por último, en marzo de 2019, Disney concretó la adquisición de 2oth Century Fox, en marzo de 2019, por la extraordinaria cifra de 73MM US$, sus resultados aún están por verse. Analizar la competencia de Disney es algo trabajoso, dado la variedad de sectores en los que se involucra y la falta de compañías que abarquen tantos sectores como Disney. Considero que la compañía que más se aproxima en cuanto a sus operaciones y al volumen de las mismas es Comcast (NASDAQ:CMSCA), si bien Disney compite con numerosas empresas en numerosos sectores, como podrían ser, por ejemplo Cedar Fair (NYSE:FUN) o Six Flags (NYSE:SIX) en el negocio de los parques temáticos; ViacomCBS (NYSE:VIAC) o Discovery Communications (NASDAQ:DISCA) en el negocio mediático; así como Netflix (NASDAQ:NFLX) o Amazon (NASDAQ:AMZN) en el negocio del streaming, sobre los cuales hablare más adelante. También compite con segmentos de negocios de conglomerados grandes como Sony (NYSE: SNE) o AT&T (NYSE:T). Observando a Comcast, el acérrimo rival, vemos que la capitalización bursátil es similar, siendo de 198.301M US$ para Comcast y de 234.538M US$ para Disney, así como los empleados, teniendo 190.000 (CMCSA) y 236.000 (DISN). El desempeño de ambas acciones es parejo, en términos generales Comcast tuvo mejor performance, sobre todo YTD (-3,47% contra -10,26%). En los márgenes y ratios también gana Comcast, supera ampliamente en gross margin (TTM) a Disney, con 56,78% contra 27,95% y en net margin (TTM) con 10,91% frente a un pobre -1,91%. El EPS (TTM) da 2,53 para Comcast contra -0,6 para Disney. Consecuentemente, Comcast pudo mantener un P/E positivo de 17,56. Si bien los números parecen positivos en la comparación para el lado de Comcast, me parece relevante destacar que lo mismo que fue su mayor ventaja comparativa (la composición de sus segmentos operativos), puede ser lo que la haga perder en la comparación a futuro, dada la absoluta supremacía que tiene la operatoria relacionada con la televisión, así como la falta de un segmento de negocios dedicado al streaming de video (sobre el cual también me referiré mas adelante). Para analizar el futuro, creo que es relevante hacer unas breves conclusiones sobre la actualidad. En primer lugar, los segmentos operativos mas afectados fueron el segmento de parques temáticos, resorts, etc. y el segmento de los estudios cinematográficos con lo cual los ingresos de Disney este último trimestre quedaron a cargo, principalmente, de los canales de TV (que sufrieron una breve baja del 2%) y de los servicios de streaming. Empezando por los sectores más afectados, respecto a la producción fílmica (Studio Entertainment), me parece que la situación no es crítica, claramente la situación de la pandemia redujo fuertemente los ingresos del sector (al haberse reducido lógicamente la asistencia a salas de cine). No obstante, el manejo del sector viene siendo exitoso hace años (en los últimos 2 años lanzaron 3 de las 4 películas más taquilleras de la historia de la compañía, Endgame, Infinity War, y el live-action de El Rey León), y no hay indicios de que esto vaya a cambiar en el futuro (hay un esquema de estrenos futuros interesante). En lo que respecta a los parques, las perspectivas no son tan buenas. La caída para el Q2 2020 fue del 85% en relación al Q2 2019. Es evidente que al haber una cuestión sanitaria de por medio, el turismo va a ser uno de los sectores mas afectados, habiendo sufrido una caída increíble en la primera mitad del año.  Actualmente, la actividad comercial de los parques temáticos está empezando a reanudarse, habiendo reabierto las operaciones en Walt Disney World en Florida, y estando a la espera de reabrir Disneyland en California, dada la incertidumbre de la pandemia. No obstante, la recuperación fue peor de lo esperado y a partir de Septiembre Walt Disney World recortará los horarios de sus parques. Asimismo, comparativamente, el desempeño de Universal Studios (propiedad de Comcast), parece ser mejor que el de Disney en esta reapertura. No obstante, es importante destacar el carácter de líder absoluto de Disney en este sector, con una competencia que difícilmente pueda igualar su posición, con lo cual si bien el desempeño en el corto plazo puede ser inferior al de la competencia, es altamente probable que recupere su posición dominante en el mediano-largo plazo. Es interesante ver, en tercer lugar, el segmento “Media Networks” que consiste principalmente en los canales de TV que Disney posee. Este sector no tuvo una caída significante (solo del 2% para el Q2 2020 en relacion al Q2 2019) en el corto plazo, pero en el largo plazo, es evidente que la tendencia del sector es a desaparecer. Las encuestas y reportes muestran un lento descenso año tras año de la audiencia, tanto de TV en vivo, TV diferida y radio. Con lo cual, a largo plazo, es previsible que este segmento sufra una disminución considerable en su volumen de operaciones. También es previsible (y así lo reflejan las encuestas), que el reemplazo de la TV tradicional sea protagonizado por los servicios de video streaming (VOD), es decir, por las operaciones del cuarto segmento (Direct-to-Consumer). Disney tiene hoy 3 servicios de streaming, Hulu, ESPN+, y Disney+ (ofrece los tres en un bundle que cuesta US$ 12,99). Como ya dijimos, el incremento de los ingresos por estos servicios durante el FY 2019 fue significante. Veamos la evolución de los subscriptores a estos servicios en lo que va del FY 2020 (es decir, Q4 2019, Q1 2020 y Q2 2020).
$LPTH - DD - lightpath technologies - A company which is growing and will keep on growing
Overview: LightPath Technologies is a recognized leader in optics and photonics solutions, serving blue chip customers in the industrial, defense, telecommunications, testing and measurement, and medical industries, for over 35 years. LightPath designs, manufactures, and distributes optical and infrared components including molded glass aspheric lenses and assemblies, infrared lenses and thermal imaging assemblies, and fused fiber collimators. LightPath also offers custom optical assemblies, including full engineering design support for both optics and mechanics. This allows for the highest level of optical integration, lower cost, and ensures the highest level of quality, performance and manufacturability. Presence in multiple countries:.
Customers: Look at these customer list, detailed list in the pic. They are separated by Infrared and Visible light. Same can be found HERE
INFRARED OPTICS : Infrared lenses designed for thermal imaging cameras operating in the mid-wave and long-wave infrared (MWIR, LWIR) bands, for applications such as thermography, diagnostics, security and surveillance.
ASPHERES : Precision molded glass lenses for applications in the visible and near-infrared (NIR) wavebands, such as small beam collimation, focusing and fiber coupling.
COLLIMATORS : Geltech™ aspheric glass lenses mounted in standard fiber-connector housings, for use in coupling and collimating applications in the visible and near-infrared (NIR) wavebands.
ISP OPTICS: We are your source for the most unique selection of IR lenses, windows, beamsplitters and other IR optical components in the industry at the best prices.
Recent News, catalysts, facts:
LightPath Technologies Continues to Experience High Market Demand for its Molded BD6 Family of Thermal Lenses. Received New Orders Totaling More Than $1.7 Million in Asian Market for Medical and Sensing Applications. Details are HERE
Jul 21 - CEO Details Competitive Advantage to Fuel Rapid Growth LINK HERE
Inclusion in Russel Index: The company was recently added to Russell Microcap Index on Jun 29. Details can be seen HERE
Infrared lenses market is projected to grow to $750M by 2024, with Chalcogenide growing to 65% of the market
Lightpath molded lenses are used in telecom equipment in interfaces of light in and out of fibers, detectors and lasers
5G network architecture requires closer together network access points, leading to higher demand of lenses
Far outperforming their industry: LPTH demonstrates a +10.16% growth in revenue based on a trailing 12-month window, versus the entirety of the Electronic Equipment, Instruments & Components Industry in which they compete, which was down -2.22% on average. Lightpath knows how to operate in their industry and can create profitability even post-Covid-19. Even in this profitable sector, LPTH outshines many other earners with a gross profit margin of 44.9% in the trailing 12-month window, versus the industry’s 38.1%.
Job posting: A whole lot of new job posting than usual for this company in this quarter. details HERE
All-Time high sales: With recorded revenue of 33.75 Million, LPTH’s 2019 revenue has set new records every year for the past 5 years running, and (excluding Depreciation and Amortization expenses) record income each concurrent year. The team behind LPTH knows how to drive valuation and increase their company’s profitability and understand how to scale a tech firm. https://www.marketwatch.com/investing/stock/lpth/financials
Insider trading : On Jun 22 there was a purchase of 1,750,000 shares at 2$. details HERE .
Gross margin as a percentage of revenue was 46%, up from 39%
Net income was $816,000, compared to a net loss of $352,000
12-month backlog reached another record of $20.0 million at March 31, 2019, compared to $17.1 million at March 31, 2019
Operating expenses decreased to $2.9 million for the third quarter of fiscal 2020, compared to $3.1 million in the same quarter of the prior fiscal year.
Growth: Company uses Chalcogenide and its low cost and very high demand. see this article Increased mutual fund ownership Mutual funds have been increasing their positions in LPTH, with previous quarter increases exceeding 48.13% .These funds include Vanguard, Royce, and Fidelity – all moving their positions deeper with Royce now holding 4.4% of the company’s shares. This shows high interest from proven winners who understand the market and a confidence in the long-term profitability of the firm. https://eresearch.fidelity.com/eresearch/evaluate/fundamentals/ownership.jhtml?stockspage=ownership&symbols=LPTH Analyst opinions - Refinitiv/Verus has a strong BUY opinion, ranking it with their “SmartIndex” score of 37.41% - a very bullish signal that indicates a strong reasoning to increase positions. This has been upgraded by 3 firms from a Neutral position to a bullish BUY, with FBR indicating a 1-year history of nearly constant outperformance for the relative sector. Upcoming catalyst: Strong earnings this year, with earnings upcoming September 10th. – Q2 and Q3 have both met or exceeded EPS estimates, with current estimates indicating a repeat of this for the upcoming report. Higher earnings per share is one of the key factors to look at when evaluating the feasibility of any Price Target: This company has a solid growth. Here is a article which clearly explains thermal imaging market continues to rapidly expand and company has a great future. This is a low float once it gets the eyes it can be move a lot. Risks: LPTH has little demonstrated interest in the usual PR-spam that people interested in volatile growth like to see. They focus on their work, and not so much pumping the news cycle. This is both good and bad – when positive PR releases do happen, historical charts show growth is positive and quick – yet the inverse is likely also true. This does also present the benefit of being a safe-haven versus a highly volatile, high volume play. Relatively low-float – Shares are, by nature, subject to higher volatility and offerings once the prices begin to increase. In companies that stay under the radar such as LPTH, there are opportunities for both buyers and short-sellers, and there is ample opportunity to end up a bag-holder if responsible exit plans are not in place. (This hopefully is becoming a common practice for everyone – know when to leave before you get in! Stock History: Look at the stock history it has been constantly growing from last 6 month. It was at .63 and now trading around 3$. Its not a pump dump but a company which actually has a growth and a solid investment as well.
Purple Mattress Will Smash Earnings - 2 Million Dollar Bet DD
Sell Purple Puts - January 2021, 15 strike. Buy purple calls with a Strike of 17.5 January 2021. These Options just became available, so please be careful to place limit orders as they are still thinly traded. Warrants are more liquid but also more risky. Warrants have an 11.50 Strike and Feb 2023 Expiration. 2 warrants are required per share. These are traded on OTC markets like a stock. PRPLW is the ticker. The warrants have a large amount of intrinsic value already. Purple Mattresses are sold out everywhere, even with a recent 40% increase in manufacturing capacity. I currently hold a position worth ~2M. My position consists of stock, warrants and cash secured puts. I also sold 18 calls (a mistake). Increased DTC will improve margins and allow purple to continue to gain market share. My Positions: https://imgur.com/a/9OGkPSg Purple could easily trade above 20 dollars by year end. My analysis is found below. Web traffic to purple.com is through the roof and I expect we see that in their May Sales. April was a record and May's online traffic was 54% higher.
Purple is a hyper-growth company that went public towards the beginning of 2018. Purple has had immense growth over the last few years and there doesn't appear to be a slow down. Purple's first full year of business resulted in 65M in revenue, followed by ~185M, ~285M and last year's ~430M. Purple provided 2020 projections of 550-575M, but recent Covid Developments have greatly accelerated their DTC (Direct to consumer) growth. Their business went public through a reverse Merger (SPAC) with a public shell company. Purple didn't have the traditional IPO and has suffered from a low available float that has recently been mitigated with 2 non-dilutive secondary offerings. A larger float, increased online sales, increased capacity and a large short interest are the trifecta that could cause a large increase in share price over the next 2-3 months. Purple is trading ~50% higher than when it went public but it has achieved nearly a 300% increase in revenue and has become profitable in that same time period. The following post will dive into purple's business model as well as some of their competitors and or other businesses with similar strategies. Purple is estimated to provide Q2 earnings sometime in August but I expect a business update prior to August that will provide guidance in the 600-700M range ( 50-125M higher than their original guidance). Purple has ample room to grow and only commands 3-4% of the mattress market.
Digitally Native Companies are thriving during this lockdown
The Math behind the numbers using last years numbers and extrapolating for 2020.
Purple had 4.5 machines worth of production capacity in 2019, 4 from the start of the year and a 5th that went live mid year. This machine count leads me to believe that under typical sales conditions, a machine, when taking into account wholesale and DTC mix is capable of producing about 95M in revenue (428/4.5). Also, it should be noted that although wholesale only accounts for ~35% of Purple's revenue, it represents about 50% of their capacity due to the lower selling price of the wholesale business. Covid has pushed a larger portion of purple's business online and therefore the average capacity of each machine increases on a revenue basis. According to Joe Megibow, wholesale sales were down about 45% in April but they were showing sequential improvements week after week. For sake of this post, I am going to assume that wholesale is @ 75% of previous capacities, only down 25%. all of my numbers also assume that returns as a % of revenue holds steady. As of today, Purple now has 7 Machines online, a 6th that came online in late March and a 7th that we can assume came on in late May. All of this information was made public either via a filing, an earnings call or a public statement by Joe Megibow. When purple had their secondary offering, they submitted a prospectus that listed their average selling price of a mattress along with their total mattress revenue as compared to their ancillary offerings such as pillows and cushions. Using these numbers, we can get a rough idea of how many mattresses are manufactured per machine. Purple did 428M in sales, with ~93% of that revenue coming from mattresses. The average selling price per mattress was ~1900 USD. The Prospectus: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001643953/dd844b8b-3558-4921-9245-b148dfb811a0.pdf
Purple Mattress Revenue from Mattress sales:
93%* 428M = 398M, (~7% was other ancillary products like cushions)
Total Purple Mattresses manufactured:
$$$398,000,000/ $1900 USD = 210,000 mattresses made in 2019 with 4.5 machines.
Mattress Capacity per Machine:
210,000/ 4.5 Machines = 46,500 Mattresses per machine, per year. This equates to 11,625 mattresses per quarter, per machine. For Q2 2020, purple has 6.33 Machines worth of capacity. Also, we can assume that the average selling price per mattress is higher in Q2 as Wholesale is down and DTC is up drastically. My assumptions are fairly conservative and I believe we will meet or exceed the numbers below. Average Selling price: Stay with me here. We know that the manufacturing capacity by count was 50% wholesale and 50% DTC. I am going to use the purple king 3 as my baselines for DTC to give me a ballpark estimate for the average wholesale price that purple sells to mattress firm. .5*( 2549.00) + .5(Wholesale average) = 1900 - Solving for wholesale average we get that the average wholesale is ~ 1251.00 USD. I expect that this is extremely low and that the number is actually closer to 1500.00.
Q2 Mattress Sales Capacity:
6.33 Machines * 11,625 Mattress per quarter * average selling price of 2160. This leads me to believe that the mattress revenue alone will likely be in the 160M range. If we assume that mattresses only account for 93% of revenue then we can expect the total revenue to be in the 170M dollar range and this is on the conservative side. Please keep this number in mind as there is other potential upside. Last year, PRPL's Q2 revenue came in @ 103M. 170M in revenue would be a 65% increase as compared to last year which is realistic considering improved selling prices and 40% more capacity.
There was a post on Friday regarding PRPL and there were a lot of non believers. The following items are key as they help justify the expected growth. Web Traffic: Similar web estimated April Traffic was 2.3M- Similar Web estimates May traffic @ 3.5M, a 54% increase. Please keep in mind that April DTC sales were up 170% and May traffic exceed April's web traffic by more than 50%. With sales like this you would expect there to be a shortage. Well you're in luck, there is a shortage and here is the proof - A letter to Mattress Firm employees stating that purple demand is outpacing supply. Web Traffic Link:https://www.similarweb.com/website/purple.com#overview 170% DTC increase story: https://www.furnituretoday.com/bedding-manufacturers/purples-net-revenues-up-46-3-in-q1-net-income-improves-to-20-million/ Job Openings- Purple is offering signing bonuses for production/fulfillment workers. What kind of company needs to offer signing bonuses when there are 40M people out of work? A company that is strapped for production capacity and needs people ASAP. Job Postings with signing bonus:https://www.paycomonline.net/v4/ats/web.php/jobs/ViewJobDetails?job=22886&clientkey=0FD6FE79845086D9BD36D6EC936B7173 Vendor shortage: With online sales surging you would expect there to be wholesale shortages. This is indeed the case. As of right now, purple has discontinued manufacturing the original mattress so that it can manufacture the 2,3, and 4 inch model. An E-mail was released to Mattress Firm employees. Please see link.https://imgur.com/a/sa2aqrr Institutional Investor filings. In Q1, there were several institutions that took larger positions in PRPL, namely Vanguard, BlackRock and several Hedge Funds, etc. There were ~30 institutional investors that increased their positions See link. https://imgur.com/a/9Ivj1Vl Every single institutional investor increased their position.
The Future and the Upside Potential
Increased DTC Expansion and Ample room to grow wholesale will allow purple to grow even during an economic downturn. As of Q2, purple was in ~1700 stores. There are more than 30,000 furniture stores in the USA. Purple is currently in less than 5% of all furniture stores. See nationwide store count: https://imgur.com/a/mrmUpXK In Purple's job posting they indicate the Sunday is a volunteer day that pays a premium, It's my understanding that with the shortage, this is likely now a standard production day that will increase capacity from 170M to at least 184M. I'm assuming that they get an additional single 12 hour shift. 144 hours are contained in a standard 6 day production schedule . An additional shift on Sunday would make the total hours of production 156. 156/144 = 1.08X capacity. The temporary stoppage of production of the original will also likely increase average mattress sales price. The information regarding stoppage of original production was made available in the mattress firm memo linked above. All in all, there are ample opportunities for purple to gain market share.
Valuations as compared to Peers
TPX currently trades with an Enterprise Value / Sales Ratio of 1.8, purple has nearly the same ratio but is growing more rapidly and is thriving during this time, TPX is bleeding . The difference is that Tempur Sealy will have drastically lower sales in Q2 and PRPL is going to have drastically higher sales and they are trading at very similar multiples. If we assume purple achieves 650M in revenue in 2020 then their stock price would approach 22 dollars per share if we used the same EV/Sales Multiple. I believe PRPL should be at this price already as it is growing more than 40% per year and that should command a premium multiplier. TPX on the other hand is likely to shrink revenue on a YOY basis. Sleep Number is in the same boat as Tempur sealy and will likely feel some pain from their store closures. It's likely that online retailers will continue to gain market share while covid is still in the media.
Purple just expanded to City Furniture. https://www.cityfurniture.com/product/9721370/purple-hybrid-mattress-set Purple is now in Mattress firm, Macy's, Raymour flannigan, Denver Mattress and a handful of other smaller regional players Purple has ample room with existing vendors. Purple is in only 800 Mattress firms with another 1700 Mattress firms available for expansion. Purple has better online brand recognition than Casper and many other bed retailers. See Google trends. Purple has better brand recognition than tempur-pedic, Casper and is on par with Sleep number. Purple is achieving incredible traction with their marketing campaigns. Google trend graphs: https://imgur.com/a/Ac6FlFg
The MOAT, the analysts and Expected upcoming events
Purple's technology is used in a ton of products you may have heard of.
Dr. Scholls gel
Jansport gel backpack straps
Intellibed - Purple's founders licensed their tech to intellibed. although the chemistry is different, the concept is the same.
Striker Medical beds - burn victim technology used to relieve pressure on burn victims skin.
The Targets: Analysts currently have an average price target of 17.50 and Bank of America is likely due to provide updated recommendations in the coming days. The analysts: The analysts are all very familiar with the Industry with Brian Nagel, brad Thomas and Seth Basham being some of the most respected. Curtis Nagel has been holding out on providing a recent update and I believe that this will come this week and the price target will likely be in the 20 dollar range. Analyst Targets:https://imgur.com/a/P0brnui Imminent announcements: Purple has not provided new full year guidance. I expect in the coming days or weeks that at a minimum there will be May numbers released and potentially revised and upgraded full year guidance. If purple can maintain 60M in sales for the remainder of the year then they will achieve 662M in sales. The MOAT: this is the most important thing for investors, how hard is it to penetrate their business? Purple innovation has over 100 patents on their technology and their manufacturing machines are difficult to build. This is a moat that will make it difficult for competitors to mimic their product. I expect this is critical in ensuring long term growth. Purple truly is a different product.
Does vanguard buy your funds before it withdraws the money from your bank?
Yesterday I put in an order for some VTSAX in my vanguard brokerage account. The money has not come out of my bank account yet but it shows the funds in my brokerage balance? Wondering, because today the shares went up about $3 a share since I “bought” yesterday. Am I missing something here or does vanguard front you the money until they withdraw it from your bank days later?
ETFs "Don't look for the needle in the haystack. Just buy the haystack." (John Bogle)... ... “aforismo” del creador (o de última el popularizador) del concepto revolucionario del ETF pasivo. ¿Qué se busca? disminuir el riesgo inversor, a través de diluir el riesgo idiosincrático (relativo al activo) con un instrumento, el ETF, que permite exponernos al rendimiento de un sector (IBUY), grupo de activos con alguna particularidad deseada (VIG, VYM), mercado/país (USA, Nasdaq, Corea, B3, etc.) de esta manera si la medida del riesgo es medir la variabilidad o dispersión de rendimientos de un activo (Ej: Nike) transado respecto al SP500 (riesgo idiosincrático), bien podemos elegir invertir en un ETF que lo replique (SPY, IVV) y con eso el solo riesgo que queda es el del conjunto de 500 empresas Top ponderadas por su tamaño (riesgo sistemático; se retira Michel Jordan y no pasa nada, tengo también Adidas y Under Armour). Luego de la pandemia algunos riesgos idiosincráticos están más representados en SPY, por el peso sideral de 4 o 5 tecnológicas en SP500 pero para arrancar dejémoslo así porque va “casi casi” por ahí. Los ETFs se comercializan como las acciones por lo que es posible de ser adquiridos por todos aquellos que tengan acceso a una plataforma de trading de un mercado de valores más o menos evolucionado (Merval out por el momento, CEDEARS no conozco) La idea aqui es transmitir mi modesta experiencia con estos instrumentos anti-miedo. Los Exchange Traded Funds son unos fondos similares a los fondos mutuos (algo así como nuestros FCIs) que nos dan la posibilidad de estar diversificados de una manera práctica, accesible, con eficiencia impositiva y con una liquidez superior. Los hay de todo tipo y una grosera primera aproximación podemos dividirlos en: ETF Activos: son los que primero salieron al mercado y tienen una gestión de portafolio “activa”, es decir las proporciones de los diferentes activos son elegidas intentando sobrepasar un índice determinado que el fondo replique (El: SP500, FTSE 100, Russell, Nasdaq...etc). Su éxito o fracaso a menudo está relacionado con el de algún gurú proveniente de un hedge fund, family office u otra organización que lo avale y que actúe como “alquimista” del portafolio en busca de un rendimiento diferencial sobre el índice y que además le pague su jugoso honorario. Hoy en día este gestor termina muchas veces siendo el autor de un algoritmo que será la base sobre la que una computadora ejecuta las órdenes de compra-venta en el mercado. ETF Pasivos: acá lo que se trata es de copiar el rendimiento del índice o activo individual (benchmark) lo mejor posible, por esto la evaluación se hace en base a la dispersión de diferencias que tiene los valores del etf respecto al índice (tracking error). Para lograrlo el fondo compra, de mínima, los activos más representativos del índice objetivo en las proporciones que marca este último. Entonces, esta performance se ve positivamente afectada por dos factores principales, a saber, el costo de administración y la cantidad de dinero que tiene el fondo y que le permitirá representar adecuadamente a todo el universo de activos objetivo, que puede ser muy numeroso. Aquí es bien sencillo, el algoritmo es bien rígido y la eficiencia de costo es superlativa. Nota: en la actualidad es tal la cantidad de activos en poder de los ETFs, que hay quienes piensan que el sesgo ha creado un desbalance y con ello una deseconomía Independientemente de aquella división primaria podemos hacer una segunda que es la de los ETF que están “apalancados” (2X, 3X etc.) y los que no lo están (1X), en general para un ETF determinado 1X existe su versión apalancada contra crédito, aumentando mediante esto el volumen transado y permitiendo el magnificar “X” veces sus movimientos alcistas (o bajistas, sadly) Aburro, pero para finalizar esta intro tenemos también los que son inversos, que buscan moverse en dirección de rentabilidad contraria al activo o índice subyacente. Cada vez aparecen más clasificaciones, de hecho hace poco aparecieron algunos del tipo “filosófico” (pequeña licencia me tomo) que no replican la rentabilidad de un índice sino que siguen una filosofía determinada con una gestión activa (Ej. Contrarian, Dalio*, etc) . Deseo ante todo transmitir el uso que hago yo del instrumento ETF, la necesidad que cubro con los mismos. Yo los uso como si fueran efectivo líquido, dentro de un portafolio relativamente comprimido con pocas empresas, buscando la seguridad que me da su poca volatilidad y la tranquilidad que por precios relativos me permiten muchas veces no sufrir tanto las caídas por corrección ( menos, claro, el asteroide COVID-19). Por eso priorizo liquidez (volumen transado), performance ( traking error) y costo de gestión bajo (mi máximo ideal es 0.3%). La correlatividad entre estas 3 variables es alta por eso si buscamos usando un scanner ETF de alta liquidez y buena performance es probable que el costo de gestión sea bajo. Como mi negocio (el que genera mis ingresos día a día) es autofinanciado los ETF son lo primero que compro para ingresar dinero a la cuenta de inversión y lo primero que vendo para hacer retiros y enfrentar con esos fondos las diferentes contingencias que demanda mi actividad. Me ha servido de mucho y me ha permitido que en el largo plazo estos ciclos de compra-venta me dejen una utilidad marginal interesante, incluso con buenos dividendos si logro estar dentro en las fechas ex-dividend, claro. En diferentes momentos del mercado uso y he usado los siguientes: VTI (Vanguard Total Stock Market Index Fund) VYM Vanguard, empresas maduras con dividendos altos VIG Parecido al anterior pero con el agregado que tienen alto potencial de crecimiento GLD Con este y con el siguiente tenemos exposición al precio del oro, sin el riesgo de las empresas extractoras que a mi juicio es político y ambiental. En este caso el oro está en el Banco de Londres (como el de Maduro). Nota: Beta de 3 años -0.01 y es caro 0.4% BAR Idem anterior pero más barato, estando en 0.17%, tiene barras de oro en el London Vault. BOVA11 Brasil, B3 (ex-bovespa) tiene ETF y este es el más importante, replica el índice de la Bolsa de San Pablo. ..y últimamente *RPAR (Risk Parity): Es carito (0.5%). ETF de ETFs para hacerlo eficiente en el aspecto impositivo. Lo empecé a usar experimentalmente pues me parece interesante porque está basado en el muy disruptivo “All Weather Portfolio” de Ray Dalio, intentado justamente esto, seguir la exitosa “filosofia Dalio” de un ETF que simule un portafolio diversificado de manera que soporte todos los cuatro escenarios (estaciones) posibles de la economía (googleen, es espectacular la idea y seguro no va a ser el único de este tipo dentro de poco) Los de Sp500 SPY e IVV no los uso porque pesa FAANG que ya tienen su lugar en mi portafolio. Finalizando, creo que para un inversor con alguna aversión al riesgo son herramientas muy nobles ya que incluso con solo cuatro bien elegidos uno puede tener un lindo portafolio para aburrirse con él, cosa que es clave a mi modesto saber y entender para que la cuenta crezca, ideal si se van a hacer compras escalonadas a lo largo de una vida laboral. Sin ir mas lejos Warren Buffet, quien ha dicho que “la diversificación no tiene sentido si uno sabe lo que hace” a concedido que Bogle es “probablemente” el gestor de fondos más revolucionario de la historia porque ha facilitado el acceso a los mercados de acciones empresariales a mucha gente no especialista, a muy bajo costo y con muy buena gestión de riesgo, confesando que es la herramienta ideal para dejar fondos a resguardo en herencia para el común de los mortales, por encima de los riesgosos, caros y crípticos hedge funds. Disclaimer: Antes de invertir lean, esto es una intro. Al momento de escribir pienso así pero como diría Keynes “puedo cambiar si la circunstancia cambia” y "No hay nada más peligroso que la búsqueda de una política racional de inversión en un mundo irracional." Exitos.
Like communism, feminism ignores basic, natural rights. Communism, striving for the happiness of the proletariat, trodden among others property rights. Private property was to be abolished, everything was to be shared, and everyone was to receive from common property "as needed." It was necessary to make the unconscious working class aware that it was being exploited by the capitalists. The most conscious part of the proletariat - the communists - were to lead it and bring about a change of regime by abolishing property rights and abolishing the exploitation of the working class. One of the dogmas of communism was the theory of "class struggle". The victory of the proletariat would lead to the liquidation of the bourgeoisie as a relic of the previous epoch and the creation of a classless society. While communism was the ideology of one social class (and fascism - the ideology of one nation), feminism is the ideology of one sex. In seeking to "liberate" women, it ignores basic, natural laws, incl. ignores the fact that gender largely determines social roles. Feminism postulates, inter alia, introducing gender equality. To realize the ideals of feminism, women need to be made aware that they are abused by men. Feminists will be at the forefront of women, eliminating inequality and abolishing the exploitation of women. The victory of feminism will lead to the creation of an androgynous society - in which gender will not determine the social role. Instead of the communist dogma of "class struggle" in feminism, we find the dogma of the "eternal war of the sexes." In feminist magazines, on the other hand, we can find serious considerations as to whether a woman will still need a man in the new society. A feminist is someone who believes that there is such a thing as an "eternal war of the sexes." She is convinced that a patriarchal society oppresses women. He fights for a "brave new world" in which gender will not determine anyone's role in society. She calls for equality, seeing the discrimination against women in the different treatment of women and men. We who have experienced communism find it easier to understand feminism when we realize that feminist concepts are a carbon copy of the communist newspeak. This is illustrated by the following table: communism Feminism class struggle war of the sexes bourgeois white heterosexual men rotten capitalism, oppressive patriarchy classless society androgynous society (asexual) social justice equality points for origin of gender quotas imperialist warmongers, perpetrators of domestic violence class consciousness sense of belonging to the female "gender" class exploitation of women elimination of social inequalities; elimination of gender discrimination fideistic superstitions patriarchal stereotypes people's democracy parity democracy historical necessity (inevitable collapse of capitalism) human progress (inevitable collapse of patriarchy) communists in the vanguard of the world proletarian revolution feminists in the vanguard of the world women's liberation movement reaction Ciemnogród enemy of the people (class enemy) male chauvinistic pig In the case of the communist ideology, it turned out that property rights were the driving force of the economy and that their elimination led to widespread poverty. It turned out that the implementation of the postulates of communism is either impossible or leads to absurdities in social life. It also turned out that average workers generally do not want communist power and the communists lose in free elections. Likewise, in the case of feminism, roles are found to be generally beneficial to families and to society. Implementing the postulates of feminism is either impossible or leads to absurdities in social life. It also turns out that average women generally do not want the power of feminists, and feminists, having no chance to enter the Seym under their own banner, must join a group dominated by men. Alleged or real oppression of women as a pretext for feminism For feminists, the pretext for making absurd demands to meet "here and now" is the real or imagined suffering of women "somewhere and in the past," for example, the suffering of circumcised women in Africa may be the basis for feminists to make demands to improve the situation of women in Poland. Let us ignore the fact that the suffering of African women cannot be the basis for claiming compensation from men to women in Poland. Nor can it be denied that there have been situations in human history where women have suffered a lot. However, if we were to bid on who suffered the most in recent centuries and for what reasons, gender would not be the most important criterion for differentiating the amount of suffering. During the Vendée massacre in revolutionary France, women, children and men were murdered alike for their Catholicism. The Turks murdered millions of Armenians for their faith and nationality. Likewise, Jews were murdered for racial reasons. The communists, on the other hand, murdered according to the class affiliation of the victims. The gender of the victims was not a particularly relevant criterion, and if anything, women were often treated more leniently. The situation of women throughout the history of Poland and feminist propaganda Outraged by the "oppression of women", feminists in Poland disregard the real situation of women in Poland, as well as Polish history and Polish conditions, repeating mindlessly the slogans imported from the West. Meanwhile, if we look at the real situation of women and men in Poland, we can see that women in Poland have never been discriminated against. Although there was a division of roles, women have always enjoyed great social respect. Slavs, as a rule, respected women. Moreover, the adoption of Christianity (where a woman is considered to have a soul just like a man), Marian cult, chivalrous culture and the role of women in uprisings further strengthened the respect for women. A man who did not treat women with respect placed himself on the margins of society. For these reasons, feminism has never had any significant influence in Poland. Despite this fact, women in Poland gained the right to vote at the same time as men, simultaneously with Poland regaining independence, in 1918, by a decree of the Chief of State, as something obvious, without any debates on this matter (for example in such a "progressive "France only a few years after World War II). Feminists did nothing for Polish women. The right to vote for women in Poland was introduced not because feminism was so popular, but despite the fact that feminism in Poland never mattered. Similarly, in Poland, feminists did not have to fight for women's access to education. Also under partitions, women could take part in the general self-education movement, which could, inter alia, result in receiving the Nobel Prize by Maria Curie-Skłodowska. Current statistics indicate even a greater percentage of female students than students in Poland (perhaps men should demand the introduction of quotas?). Feminists who proclaim the slogans of defending women against discrimination cannot understand how it is possible that more women are gathered in Poland by any parish procession than by the feminist manifesto. They do not understand why women, even more than men, have traditional political views and are more attached to the Catholic Church. It is no coincidence that the League of Polish Families is the grouping with the highest percentage of women in a parliamentary club. To explain the fact that women do not feel discriminated against, feminists coined the concept of "false consciousness". If a woman claims that she wants what a patriarchal society is forcing her to do, feminists say she has "false consciousness." For example, a woman may think that she wants marriage, but in fact she is forced into it by the force of patriarchal stereotypes that say that a woman fulfills herself most fully in the family. So she marries against her real desires, secretly dreaming of a career as an aviator or firefighter. Who is really discriminated against in Poland? When repeating their slogans about discrimination against women, feminists try not to accept facts that could indicate the opposite - for example, discrimination against men. Meanwhile, a comparison of the real situation of both sexes in Poland shows that if we were to talk about discrimination, it would be more justified to say that men are discriminated against. Women in Poland enjoy the privilege of retiring five years earlier. Moreover, taking into account the fact that men live shorter and earn more - men earn money for long-term pension payments to women, using it themselves to a small extent. If the pension societies entered into agreements with future pensioners on market principles, determining the amount of the pension contribution based on the average life expectancy in retirement - the premium for men would be lower and the pension paid could be higher. Men are required to undergo military training and defend the country in the event of war - which women do not have. The Universal Defense Duty Act is clearly contrary to the constitutional principle of gender equality, and it is even strange that no dissatisfied conscript has yet requested The family code especially discriminates against fathers of illegitimate children. The woman then has a choice that the man does not have. He may decide to raise a child alone and sue the man for maintenance. She can also give up motherhood by leaving the baby in hospital or giving her up for adoption. In the latter situation, a man who is not the husband of the child's mother cannot recognize the child as his own - without the woman's consent. He cannot raise him alone (or sue the women for alimony). His child may be adopted by someone else, and he has no rights. Pregnant women enjoy specific privileges. The employer is obliged to transfer the pregnant woman to another position if she works in harmful conditions, and she is not allowed to work shifts. At the same time, he has the right to keep his current remuneration. On the other hand, a breastfeeding mother has the right to an hourly break for breastfeeding (instead of a break, she may leave work an hour earlier). Single mothers bringing up children are entitled to tax benefits. In addition to legal privileges, there are many customary privileges for women: passing the door, kissing on the hand, paying in the premises by a man, Women's Day, Mother's Day, Grandma's Day, marked places for mothers with a baby in their arms in buses, the privilege of serving out of order pregnant women, etc. ., etc. If the Government Plenipotentiary for Equal Status was really intended to deal with the implementation of equal status for women and men, she should first of all deal with real problems - for example reducing the very high and increasing excess of male mortality. The difference in the average life expectancy of men and women is already 8 years! Meanwhile, the analysis of the expenditure of the Ministry of Health shows that, despite the advantage of women in terms of life expectancy, still more funds are allocated to combating typically female diseases than typically male diseases. Absurdities and contradictions of feminism Feminism is against nature and against common sense. The implementation of feminist postulates leads to absurdities in social life. To meet feminists' demands that women have access to male professions, standards are being lowered so that women can meet them. In the USA, the cross section of fire hoses has been reduced so that women can bear them. As a result, they now pump less water, to the detriment of the firefighting speed. In Poland, when women were admitted to officer schools, the requirements for the fitness exam were lowered. However, it is difficult to count on the enemy to be equally generous in the event of war, adjusting the attack force to the gender of the soldiers. Promoting feminist slogans, considering whether a man is needed - leads to the weakening of the family. Some feminists choose to have children in advance, assuming they will not be with the child's father. A man is treated only as an object - as a donor of genetic material and provider of maintenance. Meanwhile, modern science unequivocally confirms that the best conditions for raising children are in full families. Of course, sometimes divorce is an unpleasant necessity, but no reasonable person marries, planning in advance the divorce and raising children alone. On the other hand, some feminists, especially those with lesbian inclinations, decide in advance for single motherhood. They use a man, treating him instrumentally - as a donor of genetic material, but most of all they hurt the child. Feminists often believe that a woman has the right to have an abortion because "only she can decide about her belly," and the legal prohibition of abortion is an expression of "a patriarchal culture that oppresses women." Let us ignore the fact that attitudes to abortion do not depend on gender, but rather on a system of values and the view at which human life begins. There are both women and men for and against. It can even be assumed that it is women who, in practice, find it more difficult to decide on an abortion than men. However, if, according to feminists, we recognize that only a woman has the full right to decide about the fate of the fetus, then it should be consistently assumed that only a woman bears full responsibility for her decision (full power = full responsibility). This would therefore release the father from responsibility for the child and from the maintenance obligation if the woman decides to give birth to the child. This is where feminists are already stopping - they demand full power for a woman, but they also want the man to be jointly responsible for her decision. The situation is similar in the case of parities. Feminists demand the introduction of quotas for women on the electoral lists, recognizing that women's participation in power is insufficient. On the one hand, they argue that women have the same governing abilities as men, and on the other hand, that they bring some undefined "new quality" to politics (this is difficult to reconcile, because if women have "the same abilities", then they do not can bring any "new quality"). They ignore the fact that this and no other participation of women in power is the result of a democratic decision of a society in which the majority are women. However, the principle of parity would require that it be introduced not only where the proportions of the participation of women are unfavorable to them, but also where women dominate - in studies, in education, in the middle-level state administration or among office workers - where women definitely prevail. . Consistent adherence to the principle of parity would require that parities also apply in professions such as miners, steel workers, soldiers, policemen, and also among prisoners - which would require taking into account gender when issuing sentences (the vast majority of convicts are men). The principle of parity should also be applied when making decisions on granting custody over a child after divorce - so that the percentage of children specified in the act would be taken over by fathers after the divorce. Meanwhile, feminists are calling for quotas only where women might gain - and are defending themselves against introducing quotas where they might lose. Consistent application of the principle of gender equality would require that this principle be introduced also in sport, eliminating the current gender segregation. Therefore, it would be necessary to lead to joint competitions of women and men in all sports. The belief that women have the same abilities as men, and the observed differences are the result of stereotypes - should also result in the introduction of gender parities in team games. For example, half of the players of any football team should be women. The captain of the Polish football team should be, for example, Edyta Górniak, who has already proved that she can bring a new quality to Polish football. Kinga Dunin, promoting gender equality in "Wysokie Obcasy", advanced the postulate that men should take a hormone - prolactin, in order to grow their breasts. He believes that they could then ease women by taking over some of the duties related to feeding infants, while women could fulfill their professional work to a greater extent. Unfortunately, she did not write whether instead, as part of gender equality, women should take testosterone, for example to increase their aggressiveness in the workplace. However, I'm afraid the idea of men with breasts and women with a mustache and beard will not be very appealing to the heterosexual majority. Rather, I think the average woman would rather devote herself to caring for a baby than sleep with a husband with large breasts and grow a mustache and a beard or shave their hair every day. Feminist hypocrisy Feminists generally do not try to live up to the ideology they preach. A feminist who demands to be treated as a human, not as a woman, forgets about it when invited to an elegant venue. He does not then demand that everyone pay for himself. Receiving a female version of the menu from the waiter (without the prices of the dishes), he does not protest against such discrimination, but treats it as a compliment ("apparently I don't look like a sponsor"). A feminist who laments that women are paid less for "the same job" in her own company also pays women less, arguing that she must do this to keep herself from going out of business. But if women work just as well as men, then it could hire only women, pay them less, and win against the stereotypical competition by employing men. Unfortunately, it turns out that this is impossible and the men in her company are essential, and to keep them, you have to pay them more (both examples are authentic and taken from an online discussion forum). Feminists who demand the introduction of quotas on electoral lists or condemn the Catholic Church for disagreement with the priesthood of women should start by introducing their demands in their own organizations. When such views are expressed, it would be fitting for half of the positions of board members of feminist organizations and the position of vice-chairman to be given to men. Unfortunately, at home - in the authorities of feminist organizations - they do not introduce parities. Women are also employed in the office of the Plenipotentiary for Equal Status in substantive positions. Where the balance is upset in favor of women, quotas are apparently no longer needed ... The desirability of discrimination against men is mentioned by some feminists explicitly, sometimes using the term "positive discrimination" or justifying it as the necessity of a transitional period. As we remember, leftist revolutionary ideologies have it to themselves that they "temporarily" approve all measures in the fight against "the enemies of the people", in the name of future universal happiness. The vision of a "bright future" for the next generations justifies the suffering of the present generations, and especially the suffering of "class enemies". In May 2002, at the invitation of Izabela Jaruga-Nowacka, the plenipotentiary of the Swedish government for equal status of women and men, Mrs. Lise Bergh, was in Poland. In an interview published on May 14, 2002 in Gazeta Wyborcza, Bergh made the following statement: "Yes, for a while, until a balance is achieved, men will have to be discriminated against. So that women will no longer be discriminated against and will not be discriminated against in the future." In this way, the spokeswoman for the alleged "equality" and the plenipotentiary for "equal status" - openly promotes discrimination against men. Feminism is therefore an ideology full of contradictions and hypocrisy such as "we want equal rights, but we don't want equal obligations." The slogan of discrimination against women is used by feminists completely instrumentally - either in the struggle for power or demanding additional, unlawful privileges. But they don't want any equality when it comes to responsibilities. The difference between men and women and social roles Feminists demand that "gender does not determine social role." At the same time, they deny the existence of differences between men and women, arguing that any perceived differences are the result of environmental influences. The social environment expects children to behave in accordance with the stereotype appropriate for their gender. The perceived differences between women and men are, according to feminists, the result of social expectations to which both women and men adjust. The remedy for this is to be a change in social awareness, which will make it possible to fully interchange social roles, regardless of gender. Free from the influence of stereotypes, women will be able to exercise power and work in men's professions, and men will be able to take care of the house, wash, clean and raise - depending on personal preferences. It is a fact that women have long been able to work in many male occupations and men have been taking care of the home, but still few families choose to do this. However, according to feminists, it is culturally conditioned and will change as social awareness changes. Meanwhile, human culture arises on a biological basis, and although it is quite plastic, it cannot be freely shaped. Human habits and behaviors often correspond to those of animals that are biologically conditioned. It is interesting to note that there is no equality among primates. Only males participate in the competition for control of the herd. The behavior of the monkeys in the herd - making tactical alliances, intriguing, provoking one another - is deceptively similar to the behavior of employees in the office. The seizure of power comes with certain privileges - priority in access to food, priority in access to females - but also with specific responsibilities. The march of the baboon herd follows specific rules that make it practically impossible for predators to kidnap the young or the female. The marching herd forms a triangle-shaped formation, headed by a dominant male, and at the other vertices of the triangle - males occupying subsequent positions in the hierarchy. This example illustrates well two regularities: (1) the differences between the social position of women and men are not only culturally but also biologically determined, and (2) each social position is associated with specific privileges and corresponding duties. The logical consequence of the first of these regularities is that it is impossible to change human culture to one that ignores human biological predispositions. Biology has a "higher priority" than culture, because while we can change culture to a certain extent, biology remains unchanged and it ultimately sets the framework for possible changes in culture. The second of these regularities says that it is not possible to enjoy the privileges of a particular social position on a permanent basis without taking on the corresponding, specific obligations. Meanwhile, feminists try to build a new society by ignoring both of these patterns. They want women to be treated the same as men where it pays them off, but they do not want to be treated the same where they might lose out. The differences between the sexes are revealed already in childhood. In Vasta, Haith and Miller's "Child Psychology," Chapter 15, "Gender Role Development and Gender Differences," we read that boys are better at reasoning math tasks and that the difference increases with age, shows greater spatial abilities, while girls show greater abilities verbal. When it comes to personality and social differences, boys are more active, more willing to explore their surroundings, and more independent of their mothers. Girls need more encouragement to dare to go out. Boys are also more aggressive than girls and are more likely to resolve conflicts using physical force, while girls prefer verbal persuasion. Feminists argue that the observed differences between boys and girls are the result of pressure from a patriarchal society that forces them into specific social roles from birth. Can the power of a patriarchal society be so great that it also affects monkeys? It turns out that male monkeys prefer to play with toy cars, and female monkeys prefer to play with dolls - just like human children. This suggests that a similar preference in children may be a congenital feature, not an acquired trait, says the American researcher in "Evolution and Behavior". The results of the research therefore challenge the belief that the preferences of boys and girls in choosing toys are shaped by upbringing in response to cultural and social expectations. Gerianne Alexander of Texas AM University, a specialist in the field of sex-related differences in behavior and their biological basis, tested the validity of this belief in studies on vervets. The observations concerned the reaction of monkeys to various toys. It turned out that, just like in children, animal preferences were related to gender. Thus, males spent much more time than females playing with toys traditionally considered "boyish", such as a soccer ball or a toy car. Females, on the other hand, devoted more time to dolls and toys imitating dishes. Moreover, toys assessed by the researchers as "gender neutral", such as a picture book or a teddy dog, enjoyed equal interest from both sexes. According to the researcher, the results prove that whether a toy is "boyish" or "girlish" is not related to cultural stereotypes or upbringing, but primarily to gender-specific preferences for toys of a different type. According to the researcher, preferences as to the choice of specific items have become established in the course of evolution in relation to the roles played by individuals of both sexes in the past, at the beginning of the development of the human species. Thus, boys show an innate tendency to choose objects that can move around in space and whose use requires physical activity. These preferences may be associated with such features as good spatial orientation, which made it easier for men to hunt game, search for food or a partner. Objects of this type also enable more aggressive and active play, characteristic of males of most species of mammals. In turn, the preferences of girls are largely based on the color of the object, which may reflect, among others, the role of women in caring for their offspring. For example, choosing a doll that is pink reveals a woman's desire for bodily contact, which increases the likelihood of survival of the newborn. Denying the role of genes and leftist utopias Denying the role of genes has a long tradition in leftist, utopian ideologies. It is worth returning to the sources of feminist views rooted in the beliefs of the Marxist biologist Trofim Denisowicz Łysenka. This Russian agrobiologist, in the years 1948-1956 chairman of the All-Union Academy of Agricultural Sciences of the USSR, denied the existence of genes and heredity in biology. He tried to transfer the ideas of Marx's dialectical materialism to the field of natural sciences. He argued that the physiological and morphological features of organisms are formed only in the course of their development and are acquired through similarity and adaptation to forms that coexist in a given environment, which in the animal world is known as social determinism. He believed, among other things, that wheat can grow rice (and vice versa) as long as these grains are sown in a rice field, hence he believed that plants can be hardened by planting thermophilic varieties in the vicinity of crops resistant to cold, he believed that it was possible to grow rice in Siberia, and domestic dogs released into the forest could give fox offspring under favorable conditions (without trying to mate them with foxes). Although it may seem improbable today, baldness was the dominant doctrine of agrobiologists in the Eastern bloc, and Lysenko himself led to the imprisonment of several dozen geneticists. For example, the chairman of the Institute of Genetics in Moscow, N. Wawiłow was imprisoned and then banished from the country. Polish geneticists who wanted to keep their positions also rejected Mendel's laws of heredity by going over to Łysenka's side. Fighting the traditional family The traditional family is sometimes portrayed by feminists as a modern form of female slavery and the source of all evil: violence, alcoholism and sexual abuse. What seems to us to be only a family pathology, a perversion of an otherwise good and necessary institution, for feminists is the very essence of patriarchal marriage. In their opinion, domestic violence results directly from the patriarchal culture and is allegedly universally accepted. As Anna Lipowska-Teutsch writes in her book "To raise, heal, liberate": A patriarchal culture is a culture of domination that does not respect differences related to race, age, gender, abilities, and preferences, but constantly uses these differences to dehumanize and exploit others. Violence is a fundamental element of patriarchal culture and serves to enforce obedience and maintain domination. Violence against women by their husbands and partners is a form of control and submission that is widely accepted in patriarchal society. The family is a microcosm that reflects the patriarchal order and is at the same time the foundation of a patriarchal society. Domestic violence is not an anomaly of this system, but is the essence of patriarchal power. At the same time, feminists idealize homosexual cohabitation, presenting it as a seat of pure love. Some feminists even claim that women are bisexual in nature and therefore may choose their sexual orientation. Sometimes they also treat sexual orientation as part of a feminist ideology, according to the slogan: "feminism is a theory, lesbism is a practice". Meanwhile, research shows that homosexual relationships are the most unstable. This is where changes of partners occur most often, and in such relationships the most violence (especially in lesbian relationships, where violence occurs in 50% of relationships). Without denying the fact that pathologies do occur in traditional families, it must be stated, however, that it is the traditional family that can best and fully satisfy human needs. Also the needs of women. Numerous studies show that a successful relationship with a man has a beneficial effect on the emotional balance of women and that this relationship is biologically determined. Feminists and normal, emotionally healthy women As has been shown many times, women are different from men and this difference determines (though not uniquely) their role in society or in marriage. Normal women understand and accept this fact, not wanting to trade roles with men for nothing. Feminists, on the other hand, feel inferior because of this, and to alleviate this feeling, they prove to themselves and to the whole world that they are just like men. Unlike a feminist, a normal woman: she likes men and expects that the chosen man will be the closest person to her (even closer than friends or children); has generally positive expectations of men, attracts, contacts and makes closer acquaintances with men with whom she feels good (despite all awareness that there are also brutes, alcoholics and deviants in the world - but these she generally tries to avoid); as a husband she willingly chooses a strong man who gives her a sense of security; is content to be a woman and takes full advantage of female privileges (adoring, dressing up and painting, coquetry, sex, etc.); does not envy men their privileges, or rather, on the contrary - would not like to trade with them for anything; she feels fulfilled as a woman when she becomes a mother; giving birth and raising children becomes more important to her than professional work; if she previously thought otherwise - such a re-evaluation takes place, for example, during pregnancy (possibly under the influence of hormones) or during breastfeeding; even when she works professionally, a close emotional bond with the child is a source of much greater gratifications for her than professional work. The feminist, on the other hand: he hates men, is afraid of them, is unable to make lasting, successful relationships with men; as a husband she willingly chooses a henchman whose submission gives her a sense of security, while towards a strong man she is distrustful and prepared for divorce (e.g. she secretly sets up a separate bank account from her husband, just in case); has generally negative expectations of men, perceives them mainly as brutes, alcoholics and sexual deviants - and indeed often attracts them to him; cannot enjoy the fact that she is a woman, even if she sometimes enjoys female privileges, her sex life is unsatisfactory due to fear of giving herself fully to a man; envies men of their privileges and would gladly swap with them (but without taking on male responsibilities); more than in motherhood he seeks fulfillment in power, prestige, or high professional position, sometimes he denies the existence of the maternal instinct. author Maciej Kołodziejczyk
New investor looking into jumping off points with a focus on eventually getting into options.
Context: I am 18 and have ~$1000 in stocks in a schwab account. If you count stocks I have not sold yet I have made about $300 (primarily though atvi) just by picking out singular stocks. I am fortunate enough that losing 100% of that won't affect anything worse than when I upgrade my pc and not mess up anything truly important like college. I started the account 2 years ago for fun and because of the comparatively little money I have in the account I am willing to take on a fair amount of risk, think options not anything leveraged or on margin but definitely spicier than a vanguard mutual. Start of the actual post: I have been doing decently despite knowing very little about stocks but I want to get a bit smarter about how I invest. At times I have tried to read proper guides and I have found the moment it starts to get dense my information retention and enthusiasm turn to zero. I think wallstreetbets has been a bad influence on me and I want to get into options soon but know I need the fundamentals before I even think of getting into options. What is some easy to digest reading material on the fundamentals which put me in a good position to start learning about options? Easy to digest guides on how to get into options for me to get into later are appreciated as well. Tldr; I want to get smarter about investing and learn about the fundamentals so I can start to think about trading options but I have a smooth brain so I want something easy to read.
John Vincent's analysis of Berkshire's Q2 2020 common stock portfolio, reproduced here in full
Berkshire Hathaway's 13F stock portfolio value increased from ~$176B to ~$202B this quarter. Their largest three holdings are at ~64% of the entire portfolio. Berkshire Hathaway eliminated the large stake in the big-four airlines and decreased several businesses in the financial sector during the quarter. This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway's (NYSE:BRK.A) (NYSE:BRK.B) 13F stock portfolio on a quarterly basis. It is based on Warren Buffett's regulatory 13F Form filed on 08/14/2020. Please visit our Tracking 10 Years Of Berkshire Hathaway's Investment Portfolio article series for an idea on how his holdings have progressed over the years and our previous update for the moves in Q1 2020. During Q1 2020, Berkshire Hathaway's 13F stock portfolio value increased ~15% from $176B to $202B. The top five positions account for more than three-quarters of the portfolio: Apple Inc. (NASDAQ:AAPL), Bank of America (NYSE:BAC), Coca-Cola (NYSE:KO), American Express (NYSE:AXP), and Kraft Heinz (NASDAQ:KHC). There are 41 individual stock positions many of which are minutely small compared to the overall size of the portfolio. Warren Buffett's writings (PDFs) are a treasure trove of information and are a very good source for anyone starting out on individual investing. Note: In Q2 2020, Berkshire Hathaway repurchased ~29M Class B Equivalent Shares for a total outlay of ~$5.1B. The average price paid was ~$176. Book Value as of Q2 2020 was ~$163 per share. So, the repurchase happened at ~108% of Book Value. Over the last few quarters, Berkshire has repurchased shares up to ~140% of Book Value. The Class B shares currently trade at ~$211. New Stakes Barrick Gold (GOLD): The very small 0.28% of the portfolio GOLD stake was purchased this quarter at prices between $18.50 and $28.25 and the stock currently trades at ~$27. Stake Disposals United Continental Holdings (UAL): A minutely small 0.18% UAL position as of Q3 2016 saw a huge ~540% increase in Q4 2016 at prices between $52.50 and $76. 2018 had seen a ~22% selling at prices between $63 and $98. The entire ~8% of the business stake was disposed at ~$28 in April. This is compared to their overall cost basis of ~$55 - lost around half their investment over a holding period of just over three years. The stock currently goes for $36.18. American Airlines (AAL): AAL stake was first purchased in Q3 2016. The original purchase was at prices between $28 and $39 and doubled in Q4 2016 at prices between $36.50 and $50. The entire ~10% of the business stake was disposed at ~$11 in April. This is compared to their overall cost-basis of ~$40 - lost around 75% of their investment over a holding period of just over three years. The stock is now at $13.33. Southwest Airlines (LUV): LUV was a ~1% portfolio stake purchased in Q4 2016 at prices between $38.50 and $51 and increased by ~10% in the following quarter at prices between $49.50 and $59. Q2 2018 saw another ~20% stake increase at prices between $50 and $57. The entire ~10% of the business stake was disposed at ~$30 in April. This is compared to their overall cost-basis of ~$42 - lost ~30% of their investment over a holding period of just over three years. The stock is now at $34.90. Restaurant Brands International (QSR): QSR is a 0.19% of the 13F portfolio position established in Q4 2014 at prices between $35 and $42. It started trading in December 2014 following a mergerename transaction between Tim Hortons and Burger King Worldwide. The stake was disposed during the quarter at prices between $33 and $60. The stock currently trades at $54.42. Note: Berkshire's stake in the business was ~4.2% as of last quarter. Delta Air Lines (DAL): DAL was a very small 0.19% position in Q3 2016. The stake saw a whopping ~850% increase in Q4 2016 at prices between $39 and $52. There was a ~20% increase in Q2 2018 at prices between $49 and $56 and that was followed with a ~8% increase in Q1 2019 at ~$49.50. The entire ~11% of the business stake was disposed at ~$22 in April. This is compared to their overall cost-basis of ~$44 - lost around half their investment over a holding period of just over three years. The stock currently trades at $28.95. Goldman Sachs (GS): GS was a minutely small 0.17% of the portfolio stake as of last quarter. It was established in Q4 2013. Berkshire received $5B worth of warrants to buy GS stock during the financial crisis (October 2008) at a strike price of $115 (43.5M shares) that was to expire October 1, 2013. Buffett exercised the right before expiry to start this long position. Recent activity follows: Q3 2018 saw a ~40% stake increase at prices between $220 and $243 while in Q4 2019 there was a ~35% selling at prices between $197 and $232. Last quarter saw another ~85% selling at prices between ~$135 and ~$250. The remainder position was disposed this quarter. GS currently trades at ~$208. Their overall cost-basis was ~$72 per share. Occidental Petroleum (OXY): The 0.32% of the portfolio OXY stake was purchased in Q3 2019 at prices between $42 and $53 and increased by ~150% next quarter at prices between $37 and $44. The disposal this quarter was at prices between $10.75 and $24.50. The stock currently trades at $14.64. Note: Berkshire also have warrants to purchase 80M shares of OXY at $62.50 per share. That came about as part of a $10B funding deal (perpetual preferred stock with 8% annual dividend) done in May last year. The dividend was paid in common stock rather than cash in April. Stake Increases Liberty SiriusXM Group (LSXMA) (LSXMK): The tracking stock was acquired as a result of Liberty Media's recapitalization in April 2016. Shareholders received one share of Liberty SiriusXM Group, 0.25 shares of Liberty Media Group and 0.1 shares of Liberty Braves Group for each share held. Berkshire held 30M shares of Liberty Media for which he received the same amount of Liberty SiriusXM Group shares. There was a ~40% stake increase in Q2 2017 at a cost-basis of ~$40 per share. This quarter saw another ~27% stake increase primarily through the $25.47 per share rights offering the company announced in May. The stock currently trades at $35.95. Note: LSXMA/LSXMK is trading at a significant NAV-discount to the parent's (SIRI) valuation. Kroger Co. (KR): KR is a 0.37% of the portfolio position established in Q4 2019 at prices between $24 and $29. This quarter saw a ~15% stake increase at prices between $30 and $34. The stock currently trades at $35.39. Store Capital (STOR): The 0.29% STOR stake was established in Q2 2017 in a private placement transaction at $20.25 per share. This quarter saw a ~30% stake increase at prices between $14.50 and $26.50. The stock is now at $25.26. Suncor Energy (SU): The 0.16% SU stake was purchased in Q4 2018 at prices between $26 and $40. Q4 2019 saw a ~40% stake increase at prices between $29 and $33. There was another ~30% stake increase this quarter at prices between $14.25 and $21.30. The stock is now at ~$17. Note: Suncor Energy has had a roundtrip in the portfolio. It was a 0.48% position purchased in Q2 2013 at prices between $27 and $32. That stake was disposed during Q2 and Q3 2016 at prices between $25.50 and $29. Stake Decreases Wells Fargo & Co. (WFC): WFC is now a ~3% of the 13F portfolio position. It is a very long-term stake. Recent activity follows: last year saw a ~25% selling at prices between $43 and $55. This quarter saw another ~27% selling at prices between $22.50 and $33.30. Berkshire's cost-basis is at ~$24.50 and their ownership stake is ~6%. The stock currently trades at $25.30. U.S. Bancorp (USB): The 2.40% USB stake has been in the portfolio since 2006. The original position was tripled during the 2007-2009 time frame. It was then kept relatively steady till Q2 2013 when ~17M shares were purchased at prices between $32 and $36. H1 2018 had seen a ~16% increase at prices between $49 and $58 and that was followed with a ~25% increase in Q3 2018 at prices between $50 and $55. The stock is now at $37.78 and Berkshire's cost-basis is ~$38. They control ~10% of the business. There was marginal selling this quarter. Bank of New York Mellon Corp. (BK): BK is a 1.38% of the 13F portfolio stake. The bulk of the original position was purchased in Q2 2012 at prices between $19.50 and $25. Recent activity follows: 2017 saw a ~180% increase at prices between $43.50 and $55 while 2018 saw another one-third increase at prices between $44.50 and $58.50. The stock currently trades at ~$37.53. There was a ~10% trimming this quarter. Berkshire's cost-basis on BK is ~$46 per share and ownership stake is ~9%. Charter Communications (CHTR): CHTR is a 1.31% of the portfolio position. It was established during the last three quarters of 2014 at prices between $118 and $170. In Q2 2015, the position was again increased by ~42% at prices between $168 and $193 and that was followed with another ~21% increase the following quarter at prices between $167 and $195. The stock currently trades at ~$605 compared to Berkshire's cost-basis of ~$178. The six quarters through Q4 2018 had seen a combined ~25% selling at prices between $250 and $395 and that was followed with a ~20% reduction in Q1 2019 at prices between $285 and $366. Q2 2019 saw a ~5% trimming and that was followed with a ~4% trimming this quarter. JPMorgan Chase (NYSE:JPM): The ~1% JPM stake was established in Q3 2018 at prices between $104 and $119 and increased by ~40% next quarter at prices between $92 and $115. There was another ~20% stake increase in Q1 2019 at prices between $97 and $107. The stock currently trades at ~$102. This quarter saw a ~60% selling at prices between $84 and $114. Sirius XM Holdings: The 0.15% SIRI stake was purchased in Q4 2016 at prices between $4.08 and $4.61. Q2 2017 saw selling: ~20% reduction at prices between $4.70 and $5.50. This quarter saw a ~60% selling at prices between $4.50 and $6.50. The stock is currently at ~$6. PNC Financial (PNC): The 0.28% PNC stake was established in Q3 2018 at prices between $134 and $146 and increased by just over one-third next quarter at prices between $110 and $140. There was a ~40% selling this quarter at prices between $95 and $131. The stock is now at ~$112. M&T Bank (MTB), Mastercard Inc. (MA), and Visa Inc. (V): These small (less than ~1% of the portfolio each) positions were sold down during the quarter. Kept Steady Apple Inc.: AAPL is currently the largest 13F portfolio stake by far at ~44%. It was established in Q1 2016 at prices between $93 and $110 and increased by ~55% the following quarter at prices between $90 and $112. Q4 2016 saw another ~275% increase at prices between $106 and $118 and that was followed with a stake doubling in January 2017 at prices between $116 and $122. There was another ~23% increase in Q4 2017 at prices between $154 and $176 and that was followed with a ~45% increase in Q1 2018 at prices between $155 and $182. Since then, the activity has been minor. The stock currently trades at ~$460. Note: Berkshire's overall cost-basis on Apple is ~$141 per share. They have a ~6% ownership stake in the business. Bank of America: Berkshire established this large (top three) ~11% of the portfolio position through the exercise of Bank of America warrants. The warrants had a strike price of $7.14 compared to the current price of $26.47. The cost to exercise was $5B and it was funded using the $5B in 6% preferred stock they held. There was a ~30% stake increase in Q3 2018 at prices between $27.75 and $31.80 and a marginal increase next quarter. Q2 2019 also saw a ~4% stake increase. Note: Regulatory filings since the quarter ended show them owning 1.032B shares. This is compared to 925M shares in the 13F report. The increase happened at an average cost of ~$25 per share. Berkshire's overall cost-basis is ~$14 and ownership stake is ~12%. American Express and Coca-Cola: These two very large stakes were kept steady during the last ~6 years. Buffett has said these positions will be held "permanently". Berkshire's cost-basis on AXP and KO are at around $8.49 and $3.25 respectively and the ownership stakes are at ~18% and ~9.5% respectively. Kraft Heinz Co.: KHC is currently a fairly large position at 5.13% of the portfolio. Kraft Heinz started trading in July 2015 with Berkshire owning just over 325M shares (~27% of the business). The stake came about because of two transactions with 3G capital as partner: a ~$4B net investment in 2013 for half of Heinz and a ~$5B investment for the acquisition of Kraft Foods Group in early 2015. Berkshire's cost-basis on KHC is ~$30 per share compared to the current price of $35.59. Moody's Inc. (MCO): MCO is a 3.35% of the 13F portfolio stake. It is a very long-term position and Buffett's cost basis is $10.05. The stock currently trades at ~$281. Berkshire controls ~13% of the business. DaVita Inc. (DVA): DVA is a 1.49% of the portfolio position that was aggressively built over several quarters in the 2012-13 time frame at prices between $30 and $49. The stock currently trades at ~$82 compared to Berkshire's overall cost-basis of ~$45 per share. Last quarter saw minor trimming. Note: Berkshire's ownership stake in DaVita is ~30%. VeriSign Inc. (VRSN): VRSN was first purchased in Q4 2012 at prices between $34 and $49.50. The position was more than doubled in Q1 2013 at prices between $38 and $48. The buying continued till Q2 2014 at prices up to $63. The stock currently trades at ~$207 and the position is at 1.31% of the portfolio (~10% of the business). Last quarter saw minor trimming. General Motors (GM): GM is a 0.93% of the 13F portfolio position that was first purchased in Q1 2012 at prices between $21 and $30. By Q3 2017, the position size had increased by around six-times (10M shares to 60M shares). Q4 2017 saw a reduction: ~17% selling at prices between $40.50 and $46.50. There was a ~38% stake increase in Q4 2018 at prices between $30.50 and $38.50. The stock currently trades at $27.86. Overall, Berkshire's cost-basis on GM is ~$32. Q4 2019 saw a ~3% stake increase while last quarter there was marginal trimming. Berkshire controls ~5.2% of the business. Amazon.com (AMZN): AMZN is a 0.73% of the portfolio stake established in Q1 2019 at prices between $1,500 and $1,820 and increased by ~11% next quarter at prices between $1,693 and $1,963. The stock currently trades at ~$3,148. There was marginal trimming last quarter. Liberty Global PLC (LBTYA) (LBTYK): The position was established in Q4 2013 at prices between $37.50 and $44.50 (adjusted for the 03/2014 stock-split) and increased in the following two quarters at prices between $38.50 and $46. The three quarters through Q1 2016 had also seen a combined ~30% increase at prices between $30 and $50. Q2 2016 saw a ~17% further increase at prices between $27 and $39. The stock is now at $21.54 and the stake is at 0.29% of the 13F portfolio. Axalta Coating Systems (AXTA): AXTA is a small 0.27% of the portfolio stake established in Q2 2015 at prices between $28 and $36 and increased by ~16% the following quarter at prices between $24.50 and $33.50. The stock currently trades at $23.90. Berkshire owns ~10% of the business. Teva Pharmaceutical (TEVA): TEVA is a very small 0.26% of the portfolio stake established in Q4 2017 at prices between $11.20 and $19.33 and more than doubled next quarter at prices between $16.50 and $22. The stock currently trades at $11.50. Synchrony Financial (SYF): SYF is a 0.22% of the portfolio position purchased in Q2 2017 at prices between $26.50 and $34.50 and increased by ~20% the following quarter at prices between $28.50 and $31.25. The stock is now at $24.93. Last quarter saw a ~3% trimming. Note: Synchrony is the private label credit-card business split-off from GE that started trading in August 2014 at ~$23 per share. RH Inc. (RH): The 0.21% of the portfolio RH position was established in Q3 2019 at prices between $119 and $174 and increased by ~40% next quarter at prices between $165 and $242. It is now at ~$314. Berkshire controls ~9% of the business. StoneCo Ltd. (STNE): STNE is a 0.27% position purchased in Q4 2018 at ~$21 per share compared to the current price of $48.21. Note: Berkshire has an ~11% ownership stake in StoneCo. In October 2018, WSJ reported that Berkshire had invested ~$300M each in two Fintechs - India's Paytm and Brazil's StoneCo (STNE). The Paytm investment was made in August 2018 while the STNE purchase was following its IPO in October 2018. Biogen Inc. (BIIB), Costco Wholesale (COST), Globe Life (GL), Johnson & Johnson (JNJ), Liberty LiLAC Group (LILA) (LILAK), Mondelez International (MDLZ), Procter & Gamble (PG), SPDR S&P 500 Index (SPY), United Parcel Service (UPS), and Vanguard S&P 500 Index (VOO): These very small positions (less than ~0.5% of the portfolio each) were kept steady this quarter. Note 1: Since November 2015, Warren Buffett is known to own ~8% of Seritage Growth Properties (SRG) at a cost-basis of $36.50 in his personal portfolio. It currently trades at $12.72. SRG is an REIT spinoff from Sears that started trading in July 2015. Note 2: Berkshire Hathaway also has a 225M share position in BYD Company at a cost-basis of ~$1 per share (~$2 per share in terms of ADRs - OTCPK:BYDDY). The ADR currently trades at $18.82.
Help - accidentally bought $12k in my Roth IRA with money I don't have.
As the title says I accidentally made a purchase of about $12k of ETFs on Friday in my Roth account instead of in my brokerage account. I got an email this morning saying that I don't have enough money in my settlement account to pay for the trade. What are my options here? Can I temporarily shift $12k into my Roth account until I can sell the shares at a break-even price and then transfer the funds back into the taxable account? If I don't do anything will Vanguard just sell the necessary amount of my target date fund (the only other assetI have in the Roth account) to pay for the purchase? Any advice is appreciated.
With the cities across Mozambique vacant for the time being while the population undergoes the Great Cultural Transformation, that leaves the cities open and ready for total remodeling. By remodeling, President Menete meant, bulldozing most of the city and starting over from scratch. While only a few streets of Maputo were considered truly modernized, not a lot of tears will be had about starting over. Which was once a city for 1,000,000, Maputo will be completely redesigned and planned from the ground up to have enough space for 2,000,000 people, who will be the upper crust of FRELIMO and the Government, the Vanguard cadre. Maputo was the exemplary colony of Portugal, and situated right next to Matola, the two cities are virtually inseparable. Just as Maputo will, Matola and Maputo will be combined, taking the name Maputo, and both will be created from the ground up. To maximize reusable resources, the buildings must all be carefully dismantled, and deconstructed so that most of the resources will be usable in the reconstruction of the new city. Maputo has a number of issues, being mostly huts, is not visually pleasing, no sewer, no metro-system, poor roads, poor electricity coverage, water integration, internet, the list goes on of the many issues Maputo has. The Maputo International Airport is poorly designed, and slapped in the middle of the city which awkwardly eats up a huge area of land. The only real redeeming part of the city is the port, but even then- it is definitely not ready for the level of trade that Maputo needs to hold. However, some token spots have been selected to not be destroyed, like the Samora Machel Statue, it will just be stored, as well as Vila Algarve building for the former Portuguese Secret Police, and Maputo Katembe Bridge. The Samora statue will be placed in protective storage for the mean time, while Vila Algarve will be completely preserved in its current status, as it will become the Portuguese Oppression Museum. Additionally, the railways will be retained, but the Maputo Railway Station will be destroyed and rebuilt in a different design. With approximately 100,000 workers from the People's Militia, this will take four months to complete, and when it is leveled- the construction of a new Maputo can begin. The new Maputo will become completely urban-planned like a true Soviet-style city. First, the city will be designed alongside Russian architects and urban planners to cross hatch all of the roads in the city north to south as names of FRELIMO revolutionary figures, and east to west as international socialist figures like Karl Marx, Josef Stalin, Vladimir Lenin, Xi Jinping, Kim Il-Sung, and the like. There will be two major roads in the city that will be larger and longer than the rest, namely General Menete Avenue which will be a completely modernized Avenida de Marginal, and Progress & Science Avenue which will take place of Avenida de Joaquin Chissano. With the exception of these two roadways, the rest of the city will be sectioned off into districts as follows:
Mpilo District - Maputo Port Authority, Industrial Area, President Menete Railway Station
Ganyah District - High-class residential area, State-Owned Enterprise HQs, Office Buildings, restaurants, local businesses
Ghakarhi District - Parks, light entertainment, shopping centers, sports centers
Phiwokwakhe District - Residential area, restaurants, local businesses
Induna District - Directly borders Maputo Bay, holds General Menete Avenue and the seat of government
Fokazi District - Embassies, universities, high-scale shopping centers
Spamandla District - Entertainment, High-class residential area, restaurants, local businesses
Bongani District - Residential area, restaurants, local businesses
Ilha Xefina District - Island off Maputo's coast, will only hold the new Maputo International Airport and hotel for foreign guests, Revolutionary Gateway Bridge will be created to connect Ilha Xefina District to Maputo proper
These will be the largest and most important districts in the new Maputo. Before any grand construction begins, the sewers must be dug, the water-pipes must be laid, along with internet cabling, and power-lines must be installed. This will prevent any over-ground wire-management and will keep it all centrally contained. At this time, the roadways can also be constructed three lanes on each side with clear dividers separating each side. Traffic light management systems will be installed along with roadway cameras which will be part of a greater "Security Network" project which will CCTV-capture the entire city, and prospectively cities in Mozambique. New signage in Xitsonga will be installed as well. Residences In the residential districts the land will be plotted off for the large scale apartment projects, so the foundation digging process can begin, because under the apartment complexes will be parking garages so that a parking ban can be enforced on the open streets, and keep them more empty during all day hours. The apartments will be constructed in the usual cookie cutter fashion, and will have integrated water systems, sewage, internet, electricity, and AC units as it is excessively warm in Mozambique. This will be standard across all residences in the city, both general and high-class. Because the capital city is for the most loyal supporters of FRELIMO and President Menete, they will be provided for the best. The roofs of each of the buildings will have solar panels on them to give back to the energy grid, while personal solar panels will be provided for each unit for use in their windows. Each unit will have three bedrooms, a kitchen, a common room, laundry room, two bathrooms, a dining room, and a study (Because this is the upper crust capital). The high-class residences that are apartment buildings will have a second story to each unit, and the other options for high-class residences include townhouses, and a select few mansions. The residences will all have gated entry, for apartments there will be three complexes per residential block, which will be gated off. Key card access on foot, or camera-parking pass access for vehicles. The entries and exits of the residential areas will be run by an officer from the Ministry of People's Security, the public law enforcement ministry. Visitors will have to check in and show identification upon entrance, mail will be delivered to the security entrances. There will be at least one officer manning the entry/exit 24 hours a day. Maputo Metro System At this time, the Maputo Metro System will be dug out as well at 500 ft deep, which will also serve as a bomb-shelter network. Three lines will be dug, two will be public, one will be for use of the military, government, and Presidency. The two public lines, Victory Line and Equality Line will provide basic ridership services. With around 2,000,000 people in the city, it is expected ridership will move around 500,000 to 750,000 in a day. No food or drinks will be allowed on the metro services to keep the system clean. Service will run from 6:00 AM to 12:00 AM. For riders, tickets can be purchased by stop at a kiosk when entering for a low cost, or by acquiring a Revolutionary Pass which covers transportation by bus, taxi, and metro. Revolutionary Passes can be tapped at the turnstile to give access to the subway and once again when leaving to calculate distance and rate. These cards can be topped up at the same ticket kiosks, but the Revolutionary Passes are only for party members and offer a lower rate than normal. The Maputo Metro System will use SFM16 CRRC Qingdao Sifang rolling stock cars. Service for each station will be monitored by television with expected arrival times listed, cars will rotate between stations no longer than five minutes. Maputo International Airport After the old Maputo International Airport is dismantled due to its unwieldy location, island reclamation projects will begin on Ilha Xefina island to hold the new Maputo International Airport, and the Grand Maputo Hotel at the south side of the island. The Maputo International Airport will retain its old IATA, ICAO, and WMO callsigns, just its location will be moved, and modernized. It will operate two concrete runways of 3,800 meters in length. The airport will consist of two terminals complete with duty free stores, business and first class lounges, gift shops and other amenities like internet. The future of travel to Mozambique is uncertain, and truthfully, the Ministry of National Development has no idea of what sort of traffic to see. Terminal 1 will be domestic flights, whereas Terminal 2 will be international flights, and considerably nicer. Extensive hangars and repair facilities will be constructed as a normal airport might have, as well as a baggage claim system. Revolutionary Gateway Bridge To connect Maputo proper to Ilha Xefina island, it will require a suspension bridge with cable-stay capabilities to span 1.5 miles. The bridge will be 90ft wide and support highway-scale traffic on both sides. Clearance below the bridge should account for 375 ft so that freighters, and military vessels can pass underneath the bridge as needed. China’s Shandong Gaosu Group has been invited to lead the designing and construction of the bridge, to be supported by the People’s Militia work teams. Grand Maputo Hotel Orascom has been invited by the President to construct the largest hotel in Maputo which will service foreigners, domestic government travellers, and heads of state in the future. Most notably, Orascom has built the Ryugyong Hotel in Pyongyang in the neo-futurist style- which is exactly the style that Mozambique is looking for. While Orascom will be given free reign on design, look, and features, the President has a list of specific requirements for the company to meet:
Built with Neo-Futurist Style
Between 1,900 Ft and 2,000 ft
Has a rotating restaurant
Between 100 and 170 floors
Can be completed by 2030
Costs under $2 Bn
Will hire Mozambican labor
Can display videos, images, or colors from the glass walls at night
Maputo Port Authority During this overhaul, the Maputo Port will be expanded and modernized to support a large export capacity that Mozambique will need to bring in its revenues. The Port Authority is looking for 35 container berths, quay length of 15,500 m, an area of 600 hectares of container facilities, 130 quay cranes, and supporting capacity between 20 - 30 million TEUs annually. The fact of the matter is, Mozambique is way too poor to construct this port by itself and will need China Merchants Port to construct it. To finance this, Mozambique is proposing the Gwadar Port standard, where China Overseas Port Holding Company creates a joint venture with the Mozambican Government, like Sino-Mozambique Port Management Corporation, which will give some revenue both to the Mozambican Government, and China to pay back for the costs of construction, which will pay off and transition to Mozambique in 20 years. General Menete Avenue General Menete Avenue will be the most important road in the country, the seat of the Mozambican Government and also the longest continuous road in the city. The presence of the road will revolve primarily around Revolution Square. Revolution Square is a proposed area in front of the new Presidential Residence- the Palace of the Revolution, where military parades and other celebrations will be held for viewing on a national and international scale. On the West side of the square, will be the Palace of the Revolution. President Menete has contacted Mansudae Overseas Projects and asked them to design and commission the Revolution Square, the Palace of the Revolution, National People’s Assembly- comprising the Great Hall of the Nation, and the FRELIMO Party HQ that all will comprise the square. The East side of the square will have a nice view of the ocean. The North side of the square will have the FRELIMO Party Headquarters, which is also the meeting building for the Central Committee, comprising the Hall of the Workers- where the Central Committee and the National Party Conference convenes. The south side of the square will have the National People’s Assembly, where the seat of the legislature is. Between the Palace of the Revolution and Revolution Square, General Menete Avenue will split the two, making it a perfect location for a military parade. At the center of Revolution Square, the Samora Machel Statue will be dug out of storage, cleaned off and placed there. Alongside it, a similar statue will be commissioned by Mansudae Overseas Projects to also be 31ft in height, depicting President Menete. The two statues will be placed side-by-side, and in front of it, will be the National Flagpole, which will be the world’s tallest flagpole at 565 ft. which will carry a super-sized national Mozambican flag. Flanking the Palace of the Revolution on the north and south will be all the headquarters of the various ministries, and the Central Military Commission. One of the Maputo Metro stops for the public, and for the private government line will be Revolution Square. Palace of the Revolution The Palace of the Revolution, upon its completion will currently be the most high-scale and luxurious residence in the country, fit for a President, dare I say- a king. The complex itself spans 4.6 square miles behind General Menete Avenue and behind the properties of the ministries surrounding the facility and is accessible by the private government Maputo Metro line. The main house itself has 300 bedrooms, 115 bathrooms, and 400 other rooms. While three floors are above ground, there are also two floors below ground for access in dangerous situations like war, nuclear attack, and the like. In addition to the Maputo Metro access, it also has an underground railroad (more about that coming soon). The underground levels are protected with layers of thick concrete covered in lead, walls reinforced with iron rods. On the facility grounds is a moderate-sized military base, for the protection of the President, while the State Security Department also has VIP protection units inside the house. The facility limits are surrounded by electric fencing, mine fields, and security checkpoints. For leadership, government figures, the main entrance is actually through the metro, train, or a non-descript back road and foot entrance, where most of the security checkpoints are. The grounds areas have a shooting range, a swimming pool with waterslide, a racetrack, horse stables and riding area, a manmade lake with a yacht, seadoos, its own private airfield, and a large garden. The interiors are about just in the same level of excess as its outside, with banquet halls, interior gym and track, a spa and sauna, interior shooting range, bowling alley, ice rink, and its own restaurants, in addition to several kitchens. President Menete has asked the Supreme Marshal Kim Jong-un for permission to open a Pyongyang Restaurant inside his Palace of the Revolution, in addition to a Samtaesong (DPRK-based fast food chain). Unlikely to get any US companies to bite, President Menete also asked Canada if it could have a single Tim Horton’s location in the Palace of the Revolution. Contrary to popular belief, the Palace of the Revolution is not strictly just for the President, but also consists of the Cabinet members and their families, as well as key individuals designated by the President. Basic Idea Map of Maputo
Lines of Navigation | Monthly Portfolio Update - July 202
Our little systems have their day; They have their day and cease to be - Tennyson, In Memoriam A.H.H. This is my forty-fourth portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars). This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary
Vanguard Lifestrategy High Growth Fund - $716 680
Vanguard Lifestrategy Growth Fund - $41 103
Vanguard Lifestrategy Balanced Fund - $77 788
Vanguard Diversified Bonds Fund - $111 667
Vanguard Australian Shares ETF (VAS) - $202 336
Vanguard International Shares ETF (VGS) - $54 872
Betashares Australia 200 ETF (A200) - $230 058
Telstra shares (TLS) -$1 785
Insurance Australia Group shares (IAG) - $6 449
NIB Holdings shares (NHF) - $5 316
Gold ETF (GOLD.ASX) - $124 756
Secured physical gold - $20 070
Ratesetter (P2P lending) - $9 881
Bitcoin - $173 010
Raiz app (Aggressive portfolio) - $17 258
Spaceship Voyager app (Index portfolio) -$2 619
BrickX (P2P rental real estate) - $4 471
Total portfolio value: $1 800 119 (+$34 376 or 1.9%) Asset allocation
Australian shares - 41.1%
Global shares- 22.2%
Emerging market shares - 2.2%
International small companies - 2.9%
Total international shares - 27.3%
Total shares - 68.4% (6.6% under)
Total property securities - 0.2% (0.2% over)
Australian bonds - 4.5%
International bonds - 9.1%
Total bonds - 13.6% (1.4% under)
Gold - 8.0%
Bitcoin - 9.6%
Gold and alternatives - 17.7% (7.7% over)
Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments The portfolio has substantially increased this month, continuing the recovery in portfolio value since March. The strong portfolio growth of over $34 000, or 1.9 per cent, returns the value of the portfolio close to that achieved at the end of February this year. [Chart] This month there was minimal movement in the value of Australian and global equity holdings, There was, however, a significant lift of around 6 per cent in the value of gold exchange traded fund units, as well as a rise in the value of Bitcoin holdings. These movements have pushed the value of gold holdings to their highest level so far on the entire journey. Their total value has approximately doubled since the original major purchases across 2009 to 2015. For most of the past year gold has functioned as a portfolio stabiliser, having a negative correlation to movements in Australian equities (of around -0.3 to -0.4). As low and negative bond rates spread across the world, however, the opportunity cost of holding gold is reduced, and its potential diversification benefits loom larger. The fixed income holdings of the portfolio also continued to fall beneath the target allocation, making this question of what represents a defensive (or negatively correlated to equity) asset far from academic. This steady fall is a function of the slow maturing of Ratesetter loans, which were largely made between 2015 and 2017. Ratesetter has recently advised of important changes to its market operation, and placed a fixed maximum cap on new loan rates. By replacing market set rates with maximum rates, the peer-to-peer lending platform appears to be shifting to more of a 'intermediated' role in which higher past returns (of around 8 to 9 per cent) will now no longer be possible. [Chart] The expanding value of gold and Bitcoin holdings since January last year have actually had the practical effect of driving new investments into equities, since effectively for each dollar of appreciation, for example, my target allocation to equities rises by seven dollars. Consistent with this, investments this month have been in the Vanguard international shares exchange-traded fund (VGS) using Selfwealth. This has been directed to bring my actual asset allocation more closely in line with the target split between Australian and global shares. Fathoming out: franking credits and portfolio distributions Earlier last month I released a summary of portfolio income over the past half year. This, like all before it, noted that the summary was prepared on a purely 'cash' basis, reflecting dividends actually paid into a bank account, and excluding consideration of franking credits. Franking credits are credits for company tax paid at the company level, which can be passed to individual shareholders, reducing their personal tax liability. They are not cash, but for a personal investor with tax liabilities they can have equivalent value. This means that comparing equity returns to other investments without factoring these credits can produce a distorted picture of an investor's final after-tax return. In past portfolio summaries I have noted an estimate for franking credits in footnotes, but updating the value for this recently resulted in a curiosity about the overall significance of this neglected element of my equity returns. This neglect resulted from my perception earlier in the journey that they represented a marginal and abstract factor, which could effectively be assumed away for the sake of simplicity in reporting. This is not a wholly unfair view, in the sense that income physically received and able to be spent is something definably different in kind than a notional 'pre-payment' credit for future tax costs. Yet, as the saying goes, because the prospect of personal tax is as certain as extinction from this world, in some senses a credit of this kind can be as valuable as a cash distribution. Restoring the record: trends and drivers of franking credits To collect a more accurate picture of the trends and drivers of franking credits I relied on a few sources - tax statements, records and the automatic franking credit estimates that the portfolio tracking site Sharesight generates. The chart below sets out both the level and major different sources of franking credits received over the past eleven years. [Chart] From this chart some observations can be made.
The level of franking credits has grown substantially over the past ten years - from a total of under $1 000 per year to around $8 000 annually.
Recent years have seen a particularly high accrual of franking credits - such that by value, over half of the total value of franking credits has been received over the past three financial years.
These credits now constitute a significant element in total realised returns - in the last financial year the value of franking credits represented a 12 per cent boost to the total level of cash distributions, and over the past two years they have contributed around $8 000 each year to the total level of after-tax returns. This is the equivalent of the portfolio paying nearly $700 per month in tax liabilities.
The key reason for the rapid growth over the recent decade has been the increased investment holdings in Australian equities. As part of the deliberate rebalancing towards Australian shares across the past two years, these holdings have expanded. The chart below sets out the total value of Australian shares held over the comparable period. [Chart] As an example, at the beginning of this record Australian equities valued at around $276 000 were held. Three years later, the holding were nearly three times larger. The phase of consistently increasing the Australian equities holding to meet its allocated weighting is largely complete. This means that the period of rapid growth seen in the past few years is unlikely to repeat. Rather, growth will revert to be in proportion to total portfolio growth. Close to cross-over: the credit card records One of the most powerful initial motivators to reach financial independence was the concept of the 'cross over' point in Vicki Robins and Joe Dominguez's Your Money or Your Life. This was the point at which monthly expenses are exceeded by investment income. One of the metrics I have traced is this 'cross-over' point in relation to recorded credit card expenses. And this point is now close indeed. Expenditures on the credit card have continued their downward trajectory across the past month. The three year rolling average of monthly credit card spending remains at its lowest point over the period of the journey. Distributions on the same basis now meet over 99 per cent of card expenses - with the gap now the equivalent of less than $50 per month. [Chart] The period since April of the achievement of a notional and contingent form of financial independence has continued. The below chart illustrates this temporary state, setting out the the extent to which to which portfolio distributions (red) cover estimated total expenses (green), measured month to month. [Chart] An alternative way to view the same data is to examine the degree to which total expenses (i.e. fixed payments not made on credit card added to monthly credit card expenses) are met by distributions received. An updated version of this is seen in the chart below. [Chart] Interestingly, on a trend basis, this currently identifies a 'crossing over' point of trend distributions fully meeting total expenditure from around November 2019. This is not conclusive, however, as the trend curve is sensitive to the unusual COVID-19 related observations of the first half of this year, and could easily shift further downward if normal expense patterns resume. One issue this analysis raises is what to do with the 'credit card purchases' measure reported below. This measure is designed to provide a stylised benchmark of how close the current portfolio is to a target of generating the income required to meet an annual average credit card expenditure of $71 000. The problem with this is that continued falling credit card spending means that average credit card spending is lower than that benchmark for all time horizons - measured as three and four year averages, or in fact taken as a whole since 2013. So the set benchmark may, if anything, be understating actual progress compared the graphs and data above by not reflecting changing spending levels. In the past I have addressed this trend by reducing the benchmark. Over coming months, or perhaps at the end of the year, I will need to revisit both the meaning, and method, of setting this measure. Progress Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets Portfolio objective – $2 180 000 (or $87 000 pa) 82.6% 111.5% Credit card purchases – $71 000 pa 100.7% 136.0% Total expenses – $89 000 pa 80.7% 109.0% Summary One of the most challenging aspects of closing in on a fixed numerical target for financial independence with risk assets still in place is that the updrafts and downdrafts of market movements can push the goal further away, or surprisingly close. There have been long period of the journey where the total value of portfolio has barely grown, despite regular investments being made. As an example, the portfolio ended 2018 lower than it started the year. The past six months have been another such period. This can create a sense of treading water. Yet amidst the economic devastation affecting real lives and businesses, this is an extremely fortunate position to be in. Australia and the globe are set to experience an economic contraction far more severe than the Global Financial Crisis, with a lesser capacity than previously for interest rates to cushion the impact. Despite similar measures being adopted by governments to address the downturn, it is not clear whether these are fit for purpose. Asset allocation in this environment - of being almost suspended between two realities - is a difficult problem. The history of markets can tell us that just when assets seem most 'broken', they can produce outsized returns. Yet the problem remains that far from being surrounded by broken markets, the proliferation appears to be in bubble-like conditions. This recent podcast discussion with the founder of Grant's Interest Rate Observer provided a useful historical context to current financial conditions this month. One of the themes of the conversation was 'thinking the unthinkable', such as a return of inflation. Similar, this Hoover Institute video discussion, with a 'Back from the future' premise, provides some entertaining, informed and insightful views on the surprising and contingent nature of what we know to be true. Some of our little systems may well have had their day, but what could replace them remains obscured to any observer. The post, links and full charts can be seen here.
20 years old. 10k total savings. About 3k in stocks currently and 3k in a CD that ends in October. Currently working full time and college is paid by employer. Considering opening a Roth IRA but stuck debating between Vanguard and Fidelity. I’d like to trade a bit in my Roth IRA so my gain wouldn’t be taxed since I wouldn’t care to much about pulling it out now. It is a retirement account after all. Dividend stocks worth investing in once I do open an account? Any major stocks I should add to my portfolio while the market is down? Thanks for any advice and comments!
This will allow you to take full advantage of the Vanguard’s lowest-cost offerings while avoiding the more expensive Vanguard services. Vanguard Margin Rates Disclaimer Vanguard margin account fees are as of 2020 and are subject to change. For the most recent information on Vanguard margin interest rates visit their website. Margin investing can protect against trading violations in your account. For additional information about margin investing, including the risks involved, read the Vanguard Brokerage Initial Margin Risk Disclosure Statement or visit the FINRA External site and U.S. Securities and Exchange Commission External site websites. Use this process to open a brokerage account for an organization to invest in Vanguard mutual funds, ETFs (exchange-traded funds), and other securities. Additional forms: Apply for Margin or Option Trading. Use this process to request margin or option trading for your Vanguard Brokerage Account. Margin Account Application (DocuSign) Use this form to request margin trading for your Vanguard Brokerage Services account. Before conducting margin trading, you must obtain approval from Vanguard Brokerage Services. View and Print: Complete Online: N/A Vanguard options trading requires a margin account, so you’ll need at least $2,000 to get started. Most clients will only be approved for Level 1 and 2 options trading, but that’s still enough
How to buy ETF on Vanguard EZ TECH CLASS - YouTube
In this video, learn about the five biggest mistakes that investors make when buying ETFs, or exchange-traded funds. To learn the basics about ETFs, visit ht... After the Robinhood incident, lets discuss how they make money - what this means for the company - and how this might affect their potential IPO. Enjoy! Add ... Vanguard" is a Japanese animation which revolves around the trading card game with the same name. For more information about the game and the world of "Cardfight!! Vanguard", go to the official ... We're once again talking Vanguard and ETFs! I love ETFs and these are cheaper than any other and pays massive dividends. Buy buy buy! visit www.investingforall.net for more information on how to ... In today Video I share with you guys how to buy ETF through your Vanguard Brokerage Account (https://investor.vanguard.com/home/) . ETFs are very low basic c...