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ValueArb

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  1. Question asked of Michael Dell at 1997 Gartner Symposium. "What would you do if you were running Apple Computer?" "What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives. Maybe he meant to say: "I'd give myself a ton of new options with a strike price well below liquidation value, and then shut it down and give the money back to myself, er, shareholders". Dell Market Cap is now $73B, Apple $2.5 Trillion. And Dell has an Apple quote that will live forever in the all time greatest Apple haters quotes alongside: Ed Colligan of Palm Computing when asked about the impending announcement of Apple's iPhone. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.” Steve Ballmer's take on the original iPhone: "There's no chance that the iPhone is going to get any significant market share. No chance." Slashdot founder Rob Malda’s day one dismissal of the original iPod — “No wireless. Less space than a nomad. Lame.”
  2. Money market funds are audited. You can be highly confident that the assets are there. One criticism of Tether was that they claimed to own a significant amount of the assets in certain instruments but couldn't be detected doing any transactions in those markets. So maybe there is a suspicion they are now claiming ownership of a wider number of instruments across many larger markets to prevent the fraud from being discovered. Either way, you will only be able to get evidence of fraud post-collapse. Tether could virtually eliminate fraud allegations by undergoing a full audit, the fact they won't do that when a clean audit would be hugely financially beneficial for them makes it highly likely some level of fraud is occurring. My bet is a bunch of related party loans to other crypto companies rather than an outright ponzi.
  3. This was a net benefit for BTC miners. I own MARA calls, so first China shuts down their Chinese competitors and now this, it's just making me more bullish on their near term prospects.
  4. How will Tether collapse without causing substantial drawdowns in BTC and other crypto? What happens to Saylor and other large leveraged holders if BTC drops to $20k or $10k? If he's a billion underwater on his BTC loans, does the the board force liquidate their BTC (Saylor is down close to $500M the last 6 months on BTC)? How many other large holders have substantial margin loans? It seems like a lot of the BTC increase was accompanied by holders margining to buy more. Reading Burry and others I correctly timed the housing bubble. Being unwilling to sell my home, and totally mis-estimating how low housing prices would go, I pulled all my equity out at the peak to invest in the stock market, where I was earning 25%+ returns. Since I planned to stay in my house for decades seemed like a no brainer to sidestep the damage in housing while leveraging cheap money in what had been an easy market for me to make a far higher return. Obviously I didn't understand that the housing collapse would lead to the stock market dropping 50%, and that my portfolio of illiquid micros would do even worse. Owning half as many stocks as I had levered up to buy was painful for a very long time. A collapse in one large instrument or market frequently bleeds over to other markets. If I owned a significant amount of BTC I'd also want to own a significant number of puts at $10k or $20k to protect me from a rapid unrolling of overleveraged holders, and position me to buy in at the bottom and take advantage of the rebound.
  5. For me this is the worst screener I’ve ever used… it induced me to spend hours creating ever more complex screens across different countries, exchanges, styles, etc (60,000 stocks, my lord!) and I don’t think the distraction is over, today I came even more ideas how to use its power to create even more unique screens. this is a disaster for my professional focus!
  6. I bought a smaller position in a merger arb a couple months ago, NEWA, trying to pick up a 9% return from $3.35 to cash sale price of $3.65 in hopefully less than 6 months. But wierdest thing happened today. This weekend they announced shareholders had overwhelming approved merger, and it opened over $5. By the time I found out I was able to dump all my shares at $4.77. Announcer: It was not all his shares. Too late I figured out I had a bunch of shares in a account I had taken out of my trading group and was only able to get $3.87 for the rest. Still no news to explain this. It can't be a trading error, the trades went on for hours. This is the weirdest market ever.
  7. This is a very good point. But if corporate rate goes up to 28% AND inflation/interest rates increase, that's a double whammy to the market that could start a slow avalanche. The way I look at it is given near zero interest rates and record low tax rates the Schiller PE should something like 50% higher than normal, but instead it's more than double. I believe that happens because as prices gradually rise to their correct valuations for lower interest and tax rates, they tend to overshoot. Everyone is making money in the market so money piles in and people take lower yields because thats whats winning (and FOMO from those late to the game), and thats how we get to a Schiller 38. But when those valuation factors reverse and people start dealing with losing months and a losing year, it works in reverse. Even if interest rates only go up to 3% and taxes to 28% and a "fair" average PE is still around 20 or so once the market hits that level it might keep going down for a while as no one wants anything to do with stocks after a 50% loss.
  8. Focused Compounding by Andrew Kuhn and Geoff Cannon is easily the best value investing podcast I've found yet (even better than The Acquirers Multiple with Tobias Carlisle). I listen to it exclusively while I work out. I'm trying to work my way all the way through their entire episode history. https://podcasts.apple.com/us/podcast/focused-compounding/id1352422076 They are also members here, so "welcome! welcome! welcome!" if they read this..
  9. I’m really enjoying QuickFS.net, it makes it super quick to review the companies recent by and long term before investing time in reading its filings.
  10. Thanks, I'll read that article and hopefully it gives me a better framework for valuing BTC.
  11. What's BTC's intrinsic value? Not being snarky, obviously it's not backed by the PV of a DCF, but it's utility as a medium of exchange does give it value. Question is how do we estimate a reasonable value (or range of values) for it's utility? $100,000 would be close to $2 Trillion, does the world need $2 Trillion of BTC for remittances, protection of net worth in oppressive countries like Venezuela, etc? I owned a small amount of BTC when it was $400 and remember making the argument that it had utility for those uses so it wasn't going away. But I don't cry over selling it at $450 because I've never been able to figure out what even a broad range of value was for it. Obviously its a lot more than the $8 Billion it was then, but even if I had come up with what seemed at the time to be a ridiculous valuation like $100B, I'm out before $5,000.
  12. Thanks IceCreamMan! those are good tips, especially the Text Box. I know enough Excel that I don't know why I didn't think of it myself but am grateful you did.
  13. Thanks for the draftable tip! I really want to use Google sheets for all the reasons you've given, but Excel is just so far superior in all the little things like data formatting and entry that I gave up on Google and paid for Excel. Right now I have three excel files, "2021 A-L", "2021 M-Z", & "Dashboard Summary". First two files every idea gets it's own tab by ticker symbol, Dashboard Summary keeps a list of my currently active positions with estimated returns at current price. I'd kill for a way to store individual spreadsheets along with free form notes, right now I keep one column super wide and paste in key notes and quotes from thier SEC filings in their tab, which leads to some awkward formatting when I also paste along side the notes financials and create FCF and tangible equity estimates.
  14. This may not be a strategy question per se, as much as a dumb question on something I've never understood. What is the point of stock dividends? It seems to me that if I own 1,000 shares of a million share company and it issues a 10% stock dividend, it becomes a 1.1M share company, I have have 1,100 shares now but the exact same 0.1% ownership stake. What are the shareholder benefits of a stock dividend? Do they ever offer any trading/arbitrage opportunities, and if so how would they work?
  15. There was a mask shortage a year ago. Fauci and others said the masks should be reserved for medical personnel, because if lots of doctors and nurses got sick, it would make treating people that much harder. It’s seriously not that hard to understand what happened if you aren’t trying to play the gotcha game. "Fauci and others said the masks should be reserved for medical personnel, because if lots of doctors and nurses got sick, it would make treating people that much harder." - That is only part of what Fauci and others said. The surgeon general said - "STOP BUYING MASKS" .. "They are NOT effective in preventing the general public from catching #Coronavirus ..." Fauci said in March 2020 - "There’s no reason to be walking around with a mask. When you’re in the middle of an outbreak, wearing a mask might make people feel a little bit better and it might even block a droplet, but it’s not providing the perfect protection that people think that it is. And, often, there are unintended consequences — people keep fiddling with the mask and they keep touching their face." Fauci and the surgeon general's comments went well beyond simply stating that masks should be reserved for medical personnel. They definitely changed their public statements on masks. Maybe they changed their minds. Maybe something else. Regardless, it is not a gotcha to point out that their public statements on masks changed. That's what happened. https://www.reuters.com/article/uk-factcheck-fauci-outdated-video-masks/fact-checkoutdated-video-of-fauci-saying-theres-no-reason-to-be-walking-around-with-a-mask-idUSKBN26T2TR In the clip, Dr Fauci says “There’s no reason to be walking around with a mask. When you’re in the middle of an outbreak, wearing a mask might make people feel a little bit better and it might even block a droplet, but it’s not providing the perfect protection that people think that it is. And, often, there are unintended consequences — people keep fiddling with the mask and they keep touching their face.” "Fauci made this comment on an interview with 60 Minutes on March 8, during the early stages of the novel coronavirus outbreak in the United States ... The interview predates the CDC’s updated guidance on the use of face coverings. " ... "As Fauci told the Washington Post here , at the beginning of the COVID-19 pandemic, masks were not recommended for the general public, as authorities were trying to prevent a mask shortage for health workers and the extent of asymptomatic spread was unknown."
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