Gregmal

Gregmal - can you expand on Hilltop / RBC / Axos...I'm curious how you're using these institutions as I don't see those discussed often. I'm also not sure if you are able to open accounts directly with those firms, or whether you need something like an "introducing broker" - I can't say I'm familiar with that process other than I've heard the term (not sure if I'm using it 100% correctly here). Are there specific instances in which you use each of these? Are these cost effective options for an individual investor? (I understand it probably depends on the type of trading, but curious to hear any further thoughts you can share) Theres a couple ways to go. For those you would either need a direct clearing arrangement, or an introducing broker. It is indeed largely dependent upon your needs. The biggest advantage is that if one gives you a hard time or presents problems, you have backups. But Ive found it helpful because each can provide their own benefits. Pricing is typically negotiated. You're probably paying anywhere from $5-$45 per trade. Margin rates are in between what you'd pay at IB and what you'd pay at a Fidelity. The main differences and areas of use Ive found relates to things like what types of accounts you have, if you manage money for others- where the individual with the account resides, the types of securities you can buy/sell and/or transfer in, and purchasing ability, ie, some of these firms you can buy up to, lets say, $500k in stock without a penny in available funds, and you'll have 5 business days to fund it- good for unexpected opportunities. Axos for instance, you can own anything under the sun and margin pretty much anything under the sun. Although regulators have been giving them some issues lately. Hilltop is friendly to foreign investors and Canadian investors, whereas many firms, including ironically enough, RBC, will not touch non-retirement Canadian accounts because of jurisdictional burdens with the provinces. RBC Ive found is generally good enough at everything but the best at nothing. If you are someone who heavily invests in specific types of arcane securities or securities the regulators would flag, ie low volume, OTC, micro cap, there is probably a big advantage to using these types of firms and paying the extra few bucks. If you are just buying Apple and Google, its not as necessary and you're probably better off with traditional names.

I am not sure I fully understand the specific issue relating to Interactive; I have accounts there are have had my share of inconveniences, but not relating to this. Typically however, it would appear this to be more an issue relating to the security, vs the amount owned. I use IBKR, Hilltop, Fidelity, RBC, and Axos. All have their own quirks and inconvenient features. At the end of the day it always comes back to cover your ass regulatory bullshit. And the two biggest triggers are penny stocks(sub $10 shares occasionally and definitely anything under $5)/OTC positions, and AML. I think I mentioned in a previous thread, but even Fidelity would not transfer in(from an outside firm) shares in LAACZ and HTL. Two companies that are hardly "high risk" but when judged by their covers, fit the profile. I do believe there is a high correlation between industry wide fee reduction, and lack of risk a firm in willing to take. The motto in the biz used to be that paying regulatory fines was just a cost of doing business. But as fees get driven down I'd imagine the number of favors firms are willing to do for clients contracts, and the degree to which they are willing to dedicate resources to potential compliance matters, dwindles. As such, they just throw many of these issues on the compliance "lists". Which just inconvenience the fuck out of us. Now its our "cost of doing business".

Its funny you mention tech, but I was looking through some stuff over the weekend and just continued to be amazed at truly how much market cap some of the tech companies have. Not just the Googles and the Amazon's or Saleforces... not even the top 10-20 per say. I am hardly a tech investor, at all. But when looking at, say, ADSK, SPLK, TWLO, WDAY...thats 4 companies and well over $100B in market cap! And I'd wager 9/10 everyday Americans dont even know what they are, and probably even a big number of investors couldn't give you all that great of an answer on what each one does and how it differs from the next tech co. But dont stop there, you can easily continue to find more... ADBE, VMW, NOW... there another quarter trillion... Its utterly remarkable.

From afar, it seems a combination of, on average, lower quality companies compared to S&P 500 as some have mentioned, lower interest in equities from the average European(possibly because of a greater reliance of socialist programs to subsidize ones retirement), and probably also something to do with the financial system/banks there being a mess. Negative rates are probably also a factor. I know of a surprising number of EU investors who look at US Treasuries and CDs as gold mines and its solely because of the risk free comparable over there. Some still seem to do ok, again showing its a game of skill. I've found few better at it here than John Hjorth. Every once in a while whipping out a stud of a stock pick plucked from his neck of the woods. But otherwise, its tough hunting it seems.

Bought a little more GRIF. If nothing more, because the divergence of GRIF's value relative to the general market melt up, and the lack of SWAN stocks currently available.

I think risk adjusted return is much more important for comparison than absolute return over one year. I could have levered up and gone 120% long SPY and sold puts on the SPY and generated "alpha" but I took on considerable risk. Maybe somebody generated 20% but had 30% in cash or hedged. Only times I hear "risk adjusted return" is when a money manager justifies his lackluster performance due to holding too much cash. They never mention this when the performance is the other way around. Yup lol. Holding cash through 2019 was the WRONG move. Pretty black and white. Not really an honest way to rationalize it.

Shorted some PLUG. Mainly because Ive got a bearish itch and many of the other candidates are impulsive and valuation based shorts. So, because Unilife is no longer with us, PLUG becomes the de facto, I just need to short some piece of shit eventual 0 outlet.

What is your expectation for EZPW? Seems with Cohn back in charge and paying himself well, no incentive to common stock value? So it's cheap, but seems the market doesn't trust him on account of his past actions, and the financing last year was probably also so expensive because nobody trusts the guy. Thanks! I'd concur with that assessment. I think saying the bar is low here is an understatement. The guy is a world class scoundrel. I was absolutely floored by the stock awards they hand out as well. But at the current prices, I believe that is well reflected. This company, even with its mismanagement, hasn't spent a whole lot of time trading below a 7 handle. The Cohen thing I think really seemed to be the last straw for many people. So my feel there was that you had a point of capitulation. I certainly wouldn't expect improvement as far as governance goes, but the buyback is important and if used should put a floor under this. And then, again because expectations are so low, I think give this thing a pop once its confirmed they've actually been using it. For a company thats exceptionally cheap, that'll move the needle. My tipping point to jump in a little was the glorious public beating Aaron English put on these guys during the latest call. No I dont think it will change these scumbags, but I think at least temporarily, everyone kind of has an incentive to at least get this back to the pre Cohen announcement levels. Many times Ive found that these hucksters like to remain in the dark and control the narratives. When they get called out like this, sometimes, there may be enough of an ego involved that it compels them to make minor(and usually temporary) adjustments to save face a little bit.

Gartman has had some absolutely epic moments and flip flops/embarassingly poor on timing calls, particularly during the oil crash in 2015-16. He is in many circles thought to be a contrarian indicator. One week he was making profound statements about we're definitely headed lower, only to mark the bottom, and then a few days later, profoundly declaring the bottom was in, only to see the bottom fall out...round and round for a good while. He's also one of those, "I'd be long emerging market equities but only hedged via mid duration sovereign debt, in yen denominated terms" kinda guys. A real goof. But yea, IDK know and totally agree with you guys, this stuff is getting kinda batshit crazy. Apple gapping up the way it has and continues to do. MasterCard, Now even GE +7% for no reason. I was long in the camp of "youre a dope if you think we're in a bubble", but the last few months have been displaying all of the signs and textbook markings of one. Whether in 2-3 years I sound bitter about getting it wrong like Gartman, as the party rocks on, IDK. But I think the moves in a lot of stuff is unhealthy.

I have seen few folks as consistently wrong and outlandishly stupid as Dennis Gartman over the years. He may deride those making money as "“young, brash, utterly naive, ill-educated, egregiously overconfident, neophyte-yet-fearless ‘investors.’” .... but Dennis is unequivocally "“old, brash, utterly naive, ill-educated, egregiously overconfident, and fearful’” Its like the guys who have been wrong just feel the need to get louder rather than look for ways to invest. While things have definitely changed IMO over the past few months, it wasn't long ago you could find TONS of quality companies trading at very reasonable valuations. That number has recently declined substantially, but that still doesnt mean there arent opportunities. I mean, even a 100% layup for these dopes would be Berkshire. I dont find it the most compelling investment at the moment, but for shits sake, it is undoubtedly a 100% better option than just sitting on cash. And I dont think anyone can make the case its "expensive". So what are people like Gartman whining about?

You are assuming that they are 100% long all the time, which is not the case with hedge funds. When the index went down 20% last year, they were probably down 8%. The index fell 5% last year, and the smart folks "only" lost 4%. Thats a big 90 basis points of outperformance during a bad year if it means sacrificing 20%+ during a good one. Overall, the industry saw its biggest annual loss since 2011, declining 4.1 percent on an a fund-weighted basis, according to Hedge Fund Research Inc. https://www.bloomberg.com/news/articles/2019-01-09/hedge-fund-performance-in-2018-the-good-the-bad-and-the-ugly

Or put another way, the "we dont try to beat the index" only became a marketing pitch after years of futility. If the mostly widely accessible, highly endorsed, liquid product, available to absolutely anyone, did 30%, and you did less, YOU made the wrong call. Now I say that lightly, because strategies change and no one gets it right all the time. In fact, I dont even think every fund manager, should consistently be expected to beat an index all the time, but performance like what many of these guys put up is inexcusable. And to make matters worse, they cant ever say "we were wrong". So instead they dishonestly move the goalposts around and pay healthy sums of your fee extracted money to marketing folks to come up with clever new spin and sales speak. I know plenty of folks who manage money and who dont always "beat the index". I know plenty of folks, who do. None of them "need" all these super fancy offices, and suites, watch, shoe ensembles to do their jobs. They dont need the fancy degrees from waspy universities either. In fact, I think the story of Bill Ackman is a pretty informative one to observe. He got caught up in his fame, his arrogance and ego became his undoing, his celebrity status and wealth became the product, and he sucked a big one. He then commits to get back to basics, downsized his firm, kept quiet, basically became simplified and long only...and voila, his returns this past year basically resembled those of many of the fine folks here who do those returns from home/normal people offices, AND CRUSHED "the market". I think a lot of the "highly complex" stuff is also just marketing bullshit. There s a line in the Big Short, something to the extent of "its meant to be that way to make everyone feel stupid"...and I think a lot of that applies with these funds. There are obvious exceptions...despite blowing up, the LTCM guys for instance probably warrant their weight in gold, as do others. But the majority are judge ultra advanced hucksters.

Because these same "hedged" funds, also get walloped and underperform big time on the way down, as was evident last year and in previous choppy years as well. Over the years, many "hedge" funds have evolved into largely long only or active in esoteric trading strategies, but certainly not hedged. If anything, as you insinuated, the "hedge" has just been salesmanned up to rationalize poor performance. You can justify doing 8% against 30% for the index when you did 10% vs -5% for the index the previous year, or something to that effect. It doesnt fly when you've underperformed the index by a huge margin for a decade. Further, in relation to 2019, it is also surprising given how, basically starting in q2, there was a noticeable capitulation amongst many of the smart money funds; the FANG stuff literally started showing up everywhere in the August and November filings. So somehow, even with the outperformers, these geniuses found a way to suck wind again. This, plus, assuming you didn't totally get played last December, everyone, period, no matter what "strategy" you used, got a 10% bump just holding onto the same stuff they owned for the first couple weeks of January.

I'm kinda mixed on this because I feel its(like everything) situation dependent. Spek is probably right though, a lot of the recent "fund manager wisdom" IMO stems from capitulation and is influenced by one of the greatest bull market stretches in history. I try to do a bit of both. I have a core of investments I literally never sell. I have additional allocations to those core positions that I allow myself to trade. Then I also have a percentage of capital that is purely for trading. It varies on a short term basis with regards to what works better. I wouldn't recommend falling in love with either strategy, just staying flexible and open minded. Earlier in the decade I made a lot more money on the buy and hold stuff. The last few years its been trading. This year in fact my core stuff was pretty abysmal, with the top 5 maybe doing half of what the S&P did. Whereas I did triple digits trading. Things like CLF did virtually nothing on a buy and hold basis, but generated solid returns via trading. MSG I held and even added to, but never sold a share, and it returned like 10% for the year. The flaw with this managers analogy with compounding, is that buying and holding is not the only way to compound capital. Not even close. I'd probably argue in fact, thats its easier to compound(ignoring taxes) just bouncing around to the highest conviction ideas. Theres something mentally, that prohibits valuation sensitive investors from ever being involved in a 10 bagger or 100 bagger. You will NEVER own a NFLX or AMZN or TSLA all the way through if you pay attention to those things. But, you can fairly easily, consistently(like on a regular basis) find ways to pick up a quick 3-5%, over and over and over again.

https://nypost.com/2019/12/31/steve-cohen-one-of-few-bright-spots-in-bad-year-for-hedge-funds/ "The average hedge fund this year is up 8.5 percent" How is this even possible? Just bouncing back moderately from last November/December should have had folks in low-mid teen return area. Would have thought for sure the returns would have been similar to what a lot of folks are posting in the 2019 returns thread. Truly incredible the degree to which "the pros" just completely fail.

Something I do, trying to capture and detail many different things of use to me both from an investing standpoint, and a life perspective, is document or remember how things happen and how I respond to them. One of the neatest is the Annual Letter to myself. We all love reading the Buffett Letters, as well as probably quarterly or annual letters from our favorite managers. It helps spark thoughts, puts things into perspective, and tracks the evolution of "something" that obviously is of interest to us. Also a great way to detail things like "am I on track with my "guidance" from previous years?" "Am I typically consistent or all over the place year to year?" "What do my previous forecasts look like and where were they right/wrong?" "What is my forward outlook?" "What did I do well, and what could I have done better?" Curious if others do anything similar.

Added a good amount of PCYO the past week, EZPW, added some CTO, got some GRIF today, and for shits, got into some $5 calls on TAST as there seems to be a reasonable chance this'll bounce over the next Q. Like last year, dont think I really need to do very much in order to do very well in Q1.

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Sitting here watching the final tickers trend of 2019, I come to the realization we all missed the most obvious one....pot stocks.

What an awesome post Castanza, thanks. In relation to your trade, this has to be one of the best posts Ive ever read on this site and should really be a nice starting point/primer for anyone looking at the framework of the perfect investor. Take a fundamental understanding of a business, watch it play out, anticipate certain catalysts, holding through speculated momentum surges, and then flipping into the crescendo. Especially impressive allowing your understanding of the share price driver to trump your itch as a value guy to bail on a richly valued security. Value, momentum, and timing=$$$$$. Hard to fuse all 3 but when done, its a beautiful thing. Well done.

Started venturing into SPCE with some puts.

To truly answer the question, we can likely deduce the average value investor is not an Uber driver but rather a white collar worker who earns a reasonable amount more than the Uber/lyft driver. Therefor, the answer is Lexus and Acura’s.

I'd echo Subaru's and also add Mazda. Both are totally underrated, high quality yet affordable cars that dont get talked about enough.

Or.....enter black swan... not unheard of in the world of professional boxing. The fight is fixed and Mayweather takes a flop, and all of our observable data points were irrelevant. Those that wagered correctly, lose big. And then you get "the rematch", which pays Floyd and Conor for round 2! Often following the money/financial incentives is pretty useful as well. In which case McGregor's weighted odds would have been higher than the ones purely based around the data set above. Which one is the correct one? If this happens 100 times, what is the distribution? Subjective and interesting nonetheless.