Margin Trading from a to Z (2008 edition) | Open Library
Amazon.com: Margin Trading from A to Z: A Complete Guide
A Complete Guide to Cryptocurrency Trading for Beginners
Margin Trading: Your Step-by-Step Guide To Margin Trading
Since okcoin seems to go down if you so much as look at it the wrong way, what other exchanges offer margin trading with decently packed books?
They'll have to do something about their downtime if they want me back as a customer, but I'm not going to turn this into a rant. Bitvc and 796 look like the most viable alternatives, but maybe I'm missing a few. So if anyone has any experience with them (or others), how are they?
Finish the intelligent investor or find easier reads?
Hi, by the title its pretty self explanatory. This book is the hardest thing I’ve ever read. To understand it have to reread highlight and completely analyze multiple pages to attempt to see grahams points . What ive heard is that after chapter 8 which was amazing, that the book is all downhill. Im currently on chapter 11 and feel like trying to understand a snapshot of time for something like bond prices is taking too much brainpower and me too long for something that seems currently irrelevant. Is there anything else to look forward to, or should i pick up a newer modern book on finance?
PRPL earnings is tomorrow, 8/13, after hours. Any other date is wrong. Robinhood is wrong (why are you using Robinhood still!?!). I'm going to take you through my earnings projections and reasoning as well the things to look for in the earnings release and the call that could make this moon even further.
I make the assumption that Purple is still selling every mattress it can make (since that is what they said for April and May) and that this continued into June because the website was still delayed 7-14 days across all mattresses at the end of June. May Revenue and April DTC: The numbers in purple were provided by Purple here and here. April Wholesale: My estimate of $2.7M for Wholesale sales in April comes from this statement from the Q1 earnings release: " While wholesale sales were down 42.7% in April year-over-year, weekly wholesale orders have started to increase on a sequential basis. " I divided Q2 2019's wholesale sales evenly between months and then went down 42.7%. June DTC: This is my estimate based upon the fact that another Mattress Max machine went online June 1, thus increasing capacity, and the low end model was discontinued (raising revenue per unit). June Wholesale:Joe Megibow stated at Commerce Next on 7/30 that wholesale had returned to almost flat growth. I'm going to assume he meant for the quarter, so I plugged the number here to finish out the quarter at $39.0M, just under $39.3M from a year ago. Revenue Expectations from Analysts (via Yahoo) https://preview.redd.it/notxd6hhbng51.png?width=384&format=png&auto=webp&s=aa0453414f467aa6c5bf72ce8a8046c0ae6e62a5 My estimate of $244M comes in way over the high, let alone the consensus. PRPL has effectively already disclosed ~$145M for April/May, so these expectations are way off. I'm more right than they are.
I used my estimates for Q3/Q4 2019 to guide margins in April/May as there were some one time events that occurred in Q1 depressing margins. June has higher margin because of the shift away from the low end model (which is priced substantially lower than the high end model). Higher priced models were given manufacturing priority.
Marketing and Sales Joe mentioned in the Commerce Next video that they were able to scale sales at a constant CAC (Customer Acquisition Cost). There's three ways of interpreting this:
Overall customer acquisition cost was constant with previous quarters (assume $36M total, not $93.2M), which means you need to add another $57M to bottom line profit and $1.08 to EPS, or
Customer Acquisition Costs on a unit basis were constant, which means I'm still overstating total marketing expense and understating EPS massively, or
Customer Acquisition Costs on a revenue basis were constant, which is the most conservative approach and the one I took for my estimate.
I straightlined the 2.2 ratio of DTC sales to Marketing costs from Q1. I am undoubtably too high in my expense estimate here as PRPL saw marketing efficiencies and favorable revenue shifts during the quarter. So, $93.2M General and Administrative A Purple HR rep posted on LinkedIn about hiring 330 people in the quarter. I'm going to assume that was relative to the pre-COVID furloughs, so I had June at that proportional amount to previous employees and adjusted April and May for furloughs and returns from furlough. Research and Development I added just a little here and straight lined it.
Interest Expense Straightlined from previous quarters, although they may have tapped ABL lines and so forth, so this could be under. One Time and Other Unpredictable by nature. Warrant Liability Accrual I'm making some assumptions here.
We know that the secondary offering event during Q2 from the Pearce brothers triggered the clause for the loan warrants (NOT the PRPLW warrants) to lower the strike price to $0.
I can't think of a logical reason why the warrant holders wouldn't exercise at this point.
Therefore there is no longer a warrant liability where the company may need to repurchase warrants back.
The liability accrual of $7.989M needs to be reversed out for a gain.
What to Watch For During Earnings (aka Reasons Why This Moons More)
Analysts, Institutionals, and everyone else who uses math for investing is going to be listening for the following:
Warrant Liability Accrual
Capacity Expansion Rate
CACs (Customer Acquisition Costs)
New Product Categories
Cashless Exercise of PRPLW warrants
Margin Growth This factor is HUGE. If PRPL guides to higher margins due to better sales mix and continued DTC shift, then every analyst and investor is going to tweak their models up in a big way. Thus far, management has been relatively cautious about this fortuitous shift to DTC continuing. If web traffic is any indicator, it will, but we need management to tell us that. Warrant Liability Accrual I could be dead wrong on my assumptions above on this one. If it stays, there will be questions about it due to the drop in exercise price. It does impact GAAP earnings (although it shouldn't--stupid accountants). Capacity Expansion Rate This is a BIG one as well. As PRPL has been famously capacity constrained: their rate of manufacturing capacity expansion is their growth rate over the next year. PRPL discontinued expansion at the beginning of COVID and then re-accelerated it to a faster pace than pre-COVID by hurrying the machines in-process out to the floor. They also signed their manufacturing space deal which has nearly doubled manufacturing space a quarter early. The REAL question is when the machines will start rolling out. Previous guidance was end of the year at best. If we get anything sooner than that, we are going to ratchet up. CACs (Customer Acquisition Costs) Since DTC is the new game in town, we are all going to want to understand exactly where marketing expenses were this quarter and, more importantly, where management thinks they are going. The magic words to listen for are "marketing efficiencies". Those words means the stock goes up. This is the next biggest line item on the P&L besides revenue and cost of goods sold. New Product Categories We heard the VP of Brand from Purple give us some touchy-feely vision of where the company is headed and that mattresses was just the revenue generating base to empower this. I'm hoping we hear more about this. This is what differentiated Amazon from Barnes and Noble: Amazon's vision was more than just books. Purple sees itself as more than just mattresses. Hopefully we get some announced action behind that vision. This multiplies the stock. Cashless Exercise of PRPLW Warrants I doubt this will be answered, even if the question is asked. I bet they wait until the 20 out of 30 days is up and they deliver notice. We could be pleasantly surprised. If management informs us that they will opt for cashless exercise of the warrants, this is anti-dilutive to EPS. It will reduce the number of outstanding shares and automatically cause an adjustment up in the stock price (remember kids, some people use math when investing). I'm hopeful, but not expecting it. The amount of the adjustment depends on the current price of the stock. Also, I fully expect PRPL management to use their cashless exercise option at the end of the 20 out of 30 days as they are already spitting cash.
I've made some updates to the model, and produced two different models:
Warrant Liability Accrual Goes to Zero
Warrant Liability Accrual Goes to $47M
I made the following adjustments generally:
I reduced marketing expenses signifanctly based upon comments made by Joe Megibox on 6/29 in this CNBC video to 30% of sales (thanks u/deepredsky).
I reduced June wholesale revenue to 12.6M to be conservative based upon another possible interpretation of Joe's comments in this video here. It is a hard pill to swallow that June wholesale sales would be less than May's. The only reasoning I can think of is if May caused a large restock and then June tapered back off. The previous number of $19.0M was still a retrenchment from the 40-50% YoY growth rate. I'm going to keep the more conservative number (thanks again u/deepredsky).
I modified the number of outstanding shares used for EPS calculations from 53M (last quarters number used on the 10-Q) to almost 73M based upon the fact that all of the warrants and employee stock options are now in the money. Math below. (thanks DS_CPA1 on Stocktwits for pointing this out)
Now that we have established that coliseum still has not exercised the options as of july 7, and that purple needs to record as a liability the fair value of the options as of june 31, we now need to determine what that fair value is. You state that since you believe that there is no logical reason that coliseum won't redeem their warrants "there is no longer a warrant liability where the company may need to repurchase warrants back." While I'm not 100% certain your logic here, I can say for certain that whether or not a person will redeem their warrants does not dictate how prpl accounts for them.
The warrant liability accrual DOES NOT exist because the warrants simply exist. The accrual exists because the warrants give the warrant holder the right to force the company to buy back the warrants for cash in the event of a fundamental transaction for Black Scholes value ($18 at the end of June--June 31st that is...). And accruals are adjusted for the probability of a particular event happening, which I STILL argue is close to zero. A fundamental transaction did occur. The Pearce brothers sold more than 10M shares of stock which is why the exercise price dropped to zero. (Note for DS_CPA1 on Stocktwits: there is some conflicting filings as to what the exercise price can drop to. The originally filed warrant draft says that the warrant exercise price cannot drop to zero, but asubsequently filed S-3, the exercise price is noted as being able to go to zero. I'm going with the S-3.) Now, here is where it gets fun. We know from from the Schedule 13D filed with a July 1, 2020 event date from Coliseum that Coliseum DID NOT force the company to buy back the warrants in the fundamental transaction triggered by the Pearce Brothers (although they undoubtably accepted the $0 exercise price). THIS fundamental transaction was KNOWN to PRPL at the end Q4 and Q1 as secondary filings were made the day after earnings both times. This drastically increased the probability of an event happening. Where is the next fundamental transaction that could cause the redemption for cash? It isn't there. What does exist is a callback option if the stock trades above $24 for 20 out of 30 days, which we are already 8 out of 10 days into. Based upon the low probability of a fundamental transaction triggering a redemption, the accrual will stay very low. Even the CFO disagrees with me and we get a full-blown accrual, I expect a full reversal of the accrual next quarter if the 20 out of 30 day call back is exercised by the company. I still don't understand why Coliseum would not have exercised these. Regardless, the Warrant Liability Accrual is very fake and will go away eventually.
ONE MORE THING...
Seriously, stop PMing me with stupid, simple questions like "What are your thoughts on earnings?", "What are your thoughts on holding through earnings?", and "What are your thoughts on PRPL?". It's here. Above. Read it. I'm not typing it again in PM. I've gotten no less than 30 of these. If you're too lazy to read, I'm too lazy to respond to you individually.
Margin Isn't Dangerous & Why I'd Still Use It If I Had Less Than $25,000
Cash vs. Margin
TL;DR- Use Margin if you're trading securities and either above or below 25k. If you know how to size positions, it won't matter if you move $4,000 into a trade or $4,000,000. As long as you sized the position correctly. If you're limited to 3 trades, then take 3 PERFECT trades: https://imgur.com/a/SpPOERQ I see lots of people discussing contrasting ideas although they attempt to justify using both. Here are some things I see said and written frequently from people that doesn't add up for me:
"Use a cash account to avoid PDT" - (Totally fine, in some cases such as certain options traders. Not if you're trading securities.)
"Risk 1% of your account" - (So if your account is at $25,500, I risk ~$255 and if I lose 2R I'm below PDT. Doesn't sound too great to me if I were to lose the first 2 straight trades.)
"Margin is a double-edged sword" - (It's only dangerous if you don't set hard stops or size your positions correctly.)
"Never take on a trade that is worth more than your account" - (I can agree if you were swing trading but in terms of IntraDay trading, this is hindering your ability to grow your account. If you're risking $100 on a trade that costs less than your account value.. then $25 on a trade because of your account value.. then you're adding unneeded variables. Remember: "Consistency.")
If I were to go back to when I was below $25,000 some years ago. I'd still use a margin account while being limited to 3 trades per week. Here's why:
Formulas you have to know: Position size formula = Risk ÷ Stop Size Stop Size Formula = Entry - StopLoss
Stock ABC, Entry = $10.00 StopLoss = $9.90 StopSize = 10¢ Risk = $100 In Live Trading: $100 ÷ $0.10 = 1000 Shares 1,000 shares at $10.00 = $10,000 position
Stock XYZ, Entry = $385 StopLoss = $383.00 StopSize = $2.00 Risk = $100 In Live Trading: $100 ÷ $2.00 = 50 Shares 50 shares at $385 = $19,250 position. *$10,000 CASH account: CANNOT trade Stock XYZ and must wait 3 days for his entire account to settle after trading Stock ABC. If it was a margin account, they'd still be able to take 2 more trades this week. *$10,000 MARGIN account: CAN trade Stock XYZ and can trade both scenarios while still able to trade 1 more time in a 5 day rolling period.
Then the next point made is, "Just won't trade anything above $20".
Ok. great rebuttal, but why? Let's remember this: StopSizes aren't always directly correlated to the price of a stock. YES you're more likely to have a wider StopSize on a higher priced stock and a tighter StopSize on a lower priced stock. But remember this: 1¢ of slippage on 1,000 shares is 10% of his risk ($10)... It will be even more slippage if his stop loss market order is hit. Even a Sell-StopLimit order will have slippage within the amount you allow for when you enter a position. Stock XYZ would have to be slipped 20¢ just to equate the amount of slippage on Stock ABC.Highly liquid and available stocks such as AAPL, AMD, NVDA etc don't have 20¢ spreads. Not even 10¢. Rarely 5¢. Most of the time. Just a couple cents. Of course there could be more right out of the open but the spread in my years of experience is tightened within 2 minutes of the open. Yes, these small amounts in pennies do hold lots of merit if you're looking at having any longevity in this business, it WILL add up over the years.
Both trades have the same risk [in perfect world theory].
If both stop market orders were hit (StopLoss). Both traders would exit with a $100 loss on each. Although 1 trade required $10,000 in capital and the other trade required $19,250 in capital. Use margin. If I had to go back to when I had less than $25,000 in my account, I'd still do it the same way I did it with margin. I highly suggest using margin even if you’re limited to 3 trades per week. I get asked all the time when I began trading. If you watched my last video, I showed my first ever deposit with Scottrade (Old brokerage that was bought out by TDA a few years ago) in 2015 although I don't consider that's when I started trading because I didn't treat it the way I do today. I really consider myself starting as a trader in 2017 when I: •Wrote a business plan •Understood statistics •How to research. All this being said, slowly over time I noticed that I am taking less and less trades and increasing my risk size. Why? EV: Expected Value. - Margin has zero negative effect if you're sizing your positions the same every time. Margin allows you to take on more expensive positions that are showing your edge. Bonus: Being limited to 3 trades a week isn't fun, I remember that feeling from years ago. Just remember to take 3 perfect trades a week. Sometimes "Perfect Trades" don't work out in your favor while some subpar situations hit target. Some weeks you might take your 3 "Perfect Trades" by Tuesday. Some weeks you might take only 1 "perfect trade". If you follow my watchlists on Twitter (Same handle as my Reddit), I keep my Day Trading Buying Power transparent. Not always is it growing perfectly linear. And not always am I posting every single day because sometimes, my edge isn't there. Just because the market is open doesn't mean you HAVE to trade. My watchlists aren't littered with 15+ tickers. Rarely do they have more than 7. That may work for other traders, but for me, I demand quality. It's either there or it isn't. No reason to force a trade. I'd rather focus heavily on a few tickers rather than spread myself thin across multiple. Trading isn't supposed to be exhilarating or an adrenaline rush. It can be boring. I said that in the post I wrote back in April. Also if you make money, even if its just $20 in a month. Take that money out and buy something. Shrine it. Cherish it. You ripped that money out of WallStreet. Be proud of it. It takes a lot of courage to do this business. Realize that the P/L is real money. Sometimes even just buying a tank of gas or a book will help you realize that. Spend it from time to time. Get something out of your trading account. You may or not be trading for long, get something that is tangible to always remember the experience in case you don't last. Make it your trophy. That's all I've got for right now. Maybe I'll make another post or 2 before the year ends. I hit my 1 year full-time mark in September. Best wishes! -CJT2013
The Walt Disney Company (NYSE:DIS) es una compañía multinacional estadounidense dedicada principalmente a los medios de comunicación masivos y a la industria del entretenimiento. Su sede está en Burbank, California, EEUU. La compañía cotiza bajo el ticker DIS, en Nueva York, a un precio de US$ 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).
Not my work but tons of valid points are being made. My reaction to the Q2 results: a good quarter once you sift through all the noise. As I had mentioned in prior posts, beware of revenue recognition compared to the orders data. Little did we know it was a bigger impact (as mentioned on the earnings call, it appears the time between book to bill can be 2-4 weeks). What this means is that July will be a very strong month and August is continuing the momentum. On the call, the team mentioned that the company is "shipping each mattress as fast as they make them" and lead times for online orders are still 10 days despite increasing capacity. You can see this as cash increased $70MM in the quarter but operating income was only $30MM and inventory only explains $10M of the incremental benefit. Note that the company is also capping new retail locations until more capacity comes online - there is no question in their minds about sustainability as they make a big investment in production. Why is the stock declining AH? Simple - the top line miss surprised people including me given the news released on orders (though note not a fundamental change in demand, it is timing) and it seems people don't understand non-cash expenses. First is the warrants, second is the tax asset. These do not reflect the company's ability to generate cash and profitability but are rather accounting changes. The reality is the company generated $35M of EBITDA or nearly $0.60 cents adjusted EPS in one quarter. That means the company is runrating at $2-$2.50/year in EPS and $140MM in EBITDA (assuming Q2 is reflective, even though it included one shit month with April due to COVID). $2-2.50 x 20 PE still stands -> price target is $40-50. That also correlates to a mid teens TEV/EBITDA multiple. To summarize, revenues came in lighter than analyst expectations by about $10M; HOWEVER, EBITDA (operating cash flow) came in 2x estimates at nearly $35MM. This is what matters as the demand picture is as robust, if not more, than people expected, but just driven by the timing of orders to sales conversion. And this includes April, which was a shittier quarter. The true runrate of the quarter was probably closer to $45-$50MM. Some other tidbits: the business model is proving more scalable than thought - gross margins improved from the low 40s to nearly 50%. That is an outrageous improvement. Will it last through 2H? Not entirely, but my assumption is that we will still see 45-48% margins through year end. No one was modeling this. Separately, SG&A % of sales came down nearly 10% - again, it will increase, but much better than thought and will provide a tailwind into YE. Net net, Q2 was a good quarter, EBITDA much stronger than anyone anticipated, and Q3 will be incredibly strong as August is in the bag with backlog + the business maintaining DTC momentum while ramping up wholesale per the earnings CC. Those invested in shares and long term options/warrants will be rewarded. The recent short term investors in near term calls and other BS will likely lose out. Shares will trade lower tomorrow, likely remain depressed in the $20-$23 range for a week or two and then start building back up into the $25-$30 range and $30+ as analyst coverage updates their models and price targets. The biggest drawback of the call is that the leadership team completely sandbagged the story and made it seem unexciting (despite everything to the contrary). I know there is a balance of tempering good results with caution, though Jeff Megibow took it to a whole new level (margins will come down, advertising costs will increase, new GA facility will add cost and suck wind, etc etc). While this is true, it obfuscates the actual business improvements underway. Would strongly consider they reevaluate the communications strategy and believe they did this thinking that the reaction to the results was going to be overwhelmingly positive. And for the love of God if any senior leadership at PRPL read these forums, you should report an Adjusted EPS / Share so the headlines know what to report. This is what is leading to the AH trading disaster - report it as "adjusted net income per share was $0.60" and then you don't have this issue.
[Comic Books/Batman] A Death in the Family, or: How DC Comics Let a Phone Vote Kill Robin.
DC Comics has published literally thousands of Batman comics in the character's eighty-odd years of existence, but few are more infamous than A Death in the Family, when DC let fans decide whether Jason Todd, the second character to use the identity of Robin, lived or died. An apology in advance: many primary sources for this drama have been lost to the annals of history: this was the 1980s, the Internet wasn't really a thing yet, so fan discussion around comics mostly took place in Usenet newsgroups and comic book letter columns, both of which are very difficult to find archives of today. I've reconstructed the story as best as I can, but I wish I could find more quotes from fans at the time. Also, SPOILER WARNING. There are unmarked spoilers for Batman comics from the 1980s below this line. Don't say I didn't warn you.
Who was Jason Todd?
Jason Todd was a character introduced in 1983's Batman #357 by writer Gerry Conway and artist Don Newton and under the auspices of editor Len Wein, as a replacement for Dick Grayson as Robin. Grayson had outgrown the pixie boots and scaly shorts of the Robin identity, and graduated to his own identity as Nightwing, over in The New Teen Titans. But Conway felt that Batman still needed a Robin, so Todd was born:
Gerry Conway (writer, Batman and Detective Comics, 1981-1983): I always felt that Batman worked really well with a sidekick like Robin. My interest in the character was the version of Batman as a detective, the version of Batman as a guardian of Gotham. This was prior, I believe, to the deep-dive into the “dark knight” kind of concept of Batman, so, for that end, the idea of a younger sidekick who could bring out a little more levity in the character seemed useful. But Dick Grayson as a character had grown into a young adult and was integral to the Teen Titans series, and had his own life and his own storylines that were developing separately from Batman, and [he] couldn’t really play that secondary role that I was interested in exploring. 
Todd was introduced as the son of two acrobats who had been murdered by Batman's enemy Killer Croc, in a striking similarity to Dick Grayson's origin written forty years prior. Todd would officially become the new Robin in Batman #368, published February 1984, and would continue to go on adventures (written by Conway and then by Doug Moench) with Batman until 1986's Batman #400. During this period, he's probably best remembered for a. being involved in a custody battle between Batman and a vampire, and b. getting the drop on Mongul in the classic Superman story "For the Man Who Has Everything" by writer Alan Moore and artist Dave Gibbons. But then the Crisis happened, and everything changed for Jason.
You don't have a comic book company for almost fifty years without running into some hurdles along the way, especially where characters and continuity are concerned. In 1954, psychologist Frederick Wertham published Seduction of the Innocent, a book asserting that comic books were harming the children of the day, causing them to turn into delinquents. As a result, the bustling superhero genre of comics at the time slowed to a crawl, with most of DC's (then known as National Periodical Publications) characters, such as the Green Lantern and the Flash, ceasing publication and being replaced with comics about talking animals, romance stories, and giant alien monsters. Just a few short years later, in October 1956, creators Robert Kangher and Carmine Infantino would introduce a new version of the Flash in Showcase #4, and the Silver Age of comics had begun. Eventually, the Golden Age Flash was reintroduced, and it was established that the Silver Age characters resided on Earth-One, while the Golden Age characters were from Earth-Two. Everything was fine and dandy, until DC decided things had become too confusing and that they needed to kill their multiverse. In 1986, DC published one of the very first comic crossover events - Crisis on Infinite Earths, an earth-shattering story that pitted almost every hero in company history against the threat of the Anti-Monitor. The outcome was that all the characters and stories from Earth-One, Earth-Two, and several other alternate Earths that had appeared over the years were consolidated into a single, streamlined universe, and with that came changes for several other characters, Jason Todd among them.
The New Jason Todd
After Crisis, new blood was in the Batman editorial offices. Former Batman writer Denny O'Neil had taken over as editor of the Batman family of titles, and he had a different opinion on Robin than that of Wein and Conway before him.
O’Neil: There was a time right before I took over as Batman editor when he seemed to be much closer to a family man, much closer to a nice guy. He seemed to have a love life and he seemed to be very paternal towards Robin. My version is a lot nastier than that. He has a lot more edge to him. 
In keeping with the desire for a darker, edgier Dark Knight (it was the 1980s, after all), this version of Batman debuted without a Robin by his side. Dick Grayson was still Nightwing, but Jason Todd was nowhere to be seen. This darker interpretation of Batman was only solidified once Frank Miller put his touch on the franchise with "Batman: Year One" in Batman #404-407, and the standalone graphic novel The Dark Knight Returns, the impact of which cannot be understated.
The Dark Knight Returns was a pivotal moment in the formation of what we would consider a recognizably “modern” incarnation of Batman, someone who is brooding and dark, a loner who isolates himself from society to obsessively carry out his one man crusade by any brutally violent means necessary. It was also an important milestone for comics a medium when it landed on top of the Young Adult Hardcover New York Times bestsellers list—a feat it only qualified for thanks to its release as a trade paperback in bookstores. For the first time, mainstream audiences were zeroing in on Batman, and not because of a popular TV show or serialized movies, but because of a comic book. 2
Immediately following "Year One," O'Neil asked writer Max Allan Collins to reintroduce Jason Todd as Robin into the continuity, in a storyline titled "Batman: The New Adventures" starting in Batman #408. The new Todd was a delinquent orphan, caught by Batman when he tried to steal the tires from the Batmobile and taken in and trained to be the new Robin. At first, the change was controversial among the fandom, especially given the wildly contrasting takes between Mike W. Barr's softer portrayal of the Dynamic Duo in Detective Comics and the harsher portrayal from creators such as Collins, Jim Aparo, and Jim Starlin (best known now as the creator of Thanos) in Batman. But nobody was clamoring for his death yet, and the intensity of debates around the new Jason Todd, fought out through comic book letter columns, were milder in comparison to those around whether there should be a yellow oval on the Batsuit or not.  Over the next few years, fan hatred for Jason began to grow, as the new incarnation of the character was not only a replacement for a highly beloved character, but also had a lot of anger issues to sort through. But then came the boiling point - Batman #424, written by Starlin and pencilled by Mark Bright, released October 1988. In that story, Todd confronts Felipe, son of a South American diplomat who was heavily involved in the cocaine trade. Batman reasons that, because Felipe has diplomatic immunity, there's nothing he can do to stop him, but Todd thinks otherwise. Felipe falls from a skyscraper to his death, leaving Batman to wonder: "did Felipe fall... Or was he pushed?" (Starlin, for what it was worth, hated Todd from the get-go, and specifically wrote this story to play to the controversy:
Starlin: In the one Batman issue I wrote with Robin featured, I had him do something underhanded, as I recall. Denny had told me that the character was very unpopular with fans, so I decided to play on that dislike. 
He had also tried to have Todd killed beforehand, of AIDS:
Well, I always thought that the whole idea of a kid side-kick was sheer insanity. So when I started writing Batman, I immediately started lobbying to kill off Robin. At one point DC had this AIDS book they wanted to do. They sent around memos to everybody saying “What character do you think we should, you know, have him get AIDS and do this dramatic thing” and they never ended up doing this project. I kept sending them things saying “Oh, do Robin! Do Robin!” And Denny O’Neill said “We can’t kill Robin off”. 
A Death in the Family
By 1988, though, O'Neil had changed his tune. Alan Moore and Brian Bolland's The Killing Joke had left longtime supporting character Batgirl crippled and confined to a wheelchair, to major praise from fans and critics alike, and there was blood in the water. Sales for Batman were at levels not seen for over a decade thanks to the works of Miller and Moore, Tim Burton's Batman feature film was on the horizon, far removed from the camp aesthetic of Adam West and Burt Ward and entirely Robin-free, and fan hatred for Todd was at an all-time high.
Jenette Kahn (publisher, DC Comics, 1976-1989; president, 1981-2003; editor-in-chief, 1989-2003) : Many of our readers were unhappy with Jason Todd. We weren’t certain why or how widespread the discontent was, but we wanted to address it. Rather than autocratically write Jason out of the comics and bring in a new Robin, we thought we’d let our readers weigh in. 
O'Neil and his team of editors brainstormed how they could remove Jason from the story, and the answer was clear: kill him, just as Starlin had suggested time and time again. Recalling the success of a 1982 Saturday Night Livesketch in which Eddie Murphy let viewers vote via phone on whether he would cook or spare a live lobester, O'Neil proposed a similar system to Kahn, who loved the idea. So, A Death in the Family began in Batman #426, written by Starlin and illustrated by Jim Aparo. When Jason receives word that his missing mother is alive, he follows a set of leads across the world to find her, only to discover that she was being blackmailed by the Joker. Jason's mother hands him over to the Clown Prince of Crime, and that's how Batman #427 ends. On the back cover of that issue, DC ran a full-page ad, proclaiming: "Robin Will Die Because the Joker Wants Revenge, But You Can Prevent It With a Telephone Call" and giving two 1-900 numbers: one to call to save Jason, and one to kill him. Two versions of issue #428 were written and drawn. One where Jason lived, and another, where he died. Both went into a drawer in O'Neil's desk, and the fans would choose which one would ever see the light of day. The fans went rabid. One letter, published in Batman #428, read as follows:
"Dear Denny, I heard some of what you are planning for "A Death In the Family" story line, including the phone-in number wrinkle, and I don't want to take any chances whatsoever. Kill him. Your pal, Rich Kreiner."
From 9:00 in the morning on Thursday, September 15, 1988 until 8:00 in the evening on Friday, September 16, fans could call in to either of the two numbers for fifty cents a call and cast their vote. In the end, the votes were tallied: 5,271 voted for Todd to survive, and 5,343 voted for him to die. By a margin of 72 votes, Robin died in the pages of Batman #428, beaten to death with a crowbar by the Joker. The image of Batman cradling Robin's dead body became immediately iconic.
Fan reaction to the story was mixed, despite the seeming fervor for Todd's death and the blood that was on their hands. The letters pages for Batman #430 (1, 2) show a mixture of celebration over Jason's death, remorse over individuals' decisions to vote for death, and hope that Robin's absence would lead to more mature Batman stories in the future. However, every issue of A Death in the Family was a best-seller, and a collected edition was rushed out in early December of 1988, only a week after the final issue in the arc was released to stores. But now that the fan feeding frenzy was (mostly) over, the media feeding frenzy had begun. You don't just kill Robin and get away with it without media attention. USA Today and Reuters ran articles on the story, and DC was besieged with interview requests from radio and TV stations.
O’Neil: I spent three days doing nothing but talking on the radio. I thought it would get us some ink here and there and maybe a couple of radio interviews. I had no idea—nor did anyone else—it would have the effect it did. Peggy [May], our publicity person, finally just said, “Stop, no more, we can’t do anymore,” or I would probably still be talking. She also nixed any television appearances. At the time, I wondered about that but now I am very glad she did, because there was a nasty backlash and I came to be very grateful that people could not associate my face with the guy who killed Robin. 
Internally at DC, there were suspicions that the vote had been rigged in some fashion.
O'Neil: "I heard it was one guy, who programmed his computer to dial the thumbs down number every ninety seconds for eight hours, who made the difference." 
But regardless of whether it was or not, Jason Todd was dead, and he would remain dead for as long as O'Neil stayed at DC - long enough for the phrase to be coined: "nobody in comics stays dead except for Uncle Ben, Bucky, and Jason Todd." But he wouldn't remain dead forever.
Jason would be succeeded by a new Robin, less than a year after his death. In a crossover storyline between Batman and New Titans written by Marv Wolfman and illustrated by George Perez and Jim Aparo, entitled "A Lonely Place of Dying", the character of Tim Drake would be introduced. Unlike Todd and Grayson before him, Drake would challenge the assumptions made about the character of Robin - he figured out Batman's secret identity on his own, and deduced that Batman needed a Robin by his side, to ensure he wouldn't take unneeded risks. Gone were the short pants of yesteryear - Drake wore a full-body suit with an armored cape, and was more of a detective than a fighter. He debuted to mixed reactions, although fans soon grew to love him under the pen of Chuck Dixon, who would be one of the major architects of Batman in the 1990s. Todd would get a second chance at life seventeen years later. In 2005, writer Judd Winick wrote the storyline "Under the Hood," published in Batman #635-641, 645-650, and Annual #25. There, it's revealed that Todd returned to life thanks to an alternate version of Superboy punching reality (it's comics, don't ask) and the aid of R'as al Ghul's Lazarus Pits, and donned the identity of the crime lord the Red Hood in his quest for revenge against the Joker. Todd, as the Red Hood, persists as a popular character today, a lasting symbol of Batman's failure, as he operates as a pragmatic vigilante, willing to take risks Batman isn't. More recently, in July 2020, DC announced a Death in the Family animated interactive feature film in the vein of Black Mirror's "Bandersnatch" - again, viewers can choose whether Todd lives or dies, among other options. Edit: fixed a typo.
You may have heard about off-shore tax havens of questionable legality where wealthy people invest their money in legal "grey zones" and don't pay any tax, as featured for example, in Netflix's drama, The Laundromat. The reality is that the Government of Canada offers 100% tax-free investing throughout your life, with unlimited withdrawals of your contributions and profits, and no limits on how much you can make tax-free. There is also nothing to report to the Canada Revenue Agency. Although Britain has a comparable program, Canada is the only country in the world that offers tax-free investing with this level of power and flexibility. Thank you fellow Redditors for the wonderful Gold Award and Today I Learned Award! (Unrelated but Important Note: I put a link at the bottom for my margin account explainer. Many people are interested in margin trading but don't understand the math behind margin accounts and cannot find an explanation. If you want to do margin, but don't know how, click on the link.) As a Gen-Xer, I wrote this post with Millennials in mind, many of whom are getting interested in investing in ETFs, individual stocks, and also my personal favourite, options. Your generation is uniquely positioned to take advantage of this extremely powerful program at a relatively young age. But whether you're in your 20's or your 90's, read on! Are TFSAs important? In 2020 Canadians have almost 1 trillion dollars saved up in their TFSAs, so if that doesn't prove that pennies add up to dollars, I don't know what does. The TFSA truly is the Great Canadian Tax Shelter. I will periodically be checking this and adding issues as they arise, to this post. I really appreciate that people are finding this useful. As this post is now fairly complete from a basic mechanics point of view, and some questions are already answered in this post, please be advised that at this stage I cannot respond to questions that are already covered here. If I do not respond to your post, check this post as I may have added the answer to the FAQs at the bottom.
How to Invest in Stocks
A lot of people get really excited - for good reason - when they discover that the TFSA allows you to invest in stocks, tax free. I get questions about which stocks to buy. I have made some comments about that throughout this post, however; I can't comprehensively answer that question. Having said that, though, if you're interested in picking your own stocks and want to learn how, I recommmend starting with the following videos: The first is by Peter Lynch, a famous American investor in the 80's who wrote some well-respected books for the general public, like "One Up on Wall Street." The advice he gives is always valid, always works, and that never changes, even with 2020's technology, companies and AI: https://www.youtube.com/watch?v=cRMpgaBv-U4&t=2256s The second is a recording of a university lecture given by investment legend Warren Buffett, who expounds on the same principles: https://www.youtube.com/watch?v=2MHIcabnjrA Please note that I have no connection to whomever posted the videos.
TFSAs were introduced in 2009 by Stephen Harper's government, to encourage Canadians to save. The effect of the TFSA is that ordinary Canadians don't pay any income or capital gains tax on their securities investments. Initial uptake was slow as the contribution rules take some getting used to, but over time the program became a smash hit with Canadians. There are about 20 million Canadians with TFSAs, so the uptake is about 70%- 80% (as you have to be the age of majority in your province/territory to open a TFSA).
Eligibility to Open a TFSA
You must be a Canadian resident with a valid Social Insurance Number to open a TFSA. You must be at the voting age in the province in which you reside in order to open a TFSA, however contribution room begins to accumulate from the year in which you turned 18. You do not have to file a tax return to open a TFSA. You do not need to be a Canadian citizen to open and contribute to a TFSA. No minimum balance is required to open a TFSA.
Where you Can Open a TFSA
There are hundreds of financial institutions in Canada that offer the TFSA. There is only one kind of TFSA; however, different institutions offer a different range of financial products. Here are some examples:
The Canadian big 5 bank branches and most other financial institutions offer a TFSA that allows you to buy mutual funds, hold cash, GICs, term deposits, and possibly ETFs. This is a good choice if you want guaranteed returns or diversified investing.
There are a number of on-line banks such as Tangerine, Simplii Financial, Oaken Financial, and many more that offer the TFSA.
The discount DIY brokerage arms of the big 5 banks give you more choices, including stocks, warrants, bonds and options. There are also standalone brokers like IBKR Canada, Questrade, Qtrade, and Virtual Brokers, among others, that offer this.
Some brokerages and financial advisors also offer TFSAs that give you these investment choices, in different formats such as:
Traditional brokerage, where a stockbroker invests your money (BMO Nesbitt Burns, RBC Dominion Securities and others)
Financial advisor who will invest your money according to a plan you put together with the advisor (TSI Network and many others)
"Robo" advisors such as Wealthsimple, RBC InvestEase, BMO SmartFolio, or Wealthbar
BMO's AdviceDirect, which is a semi-directed hybrid between standalone DIY investing and fully-advised investing, where you operate on a DIY basis but have access to a registered investment advisor (a live person) who can give you suggetions and advice.
Your TFSA may be covered by either CIFP or CDIC insuranceor both. Ask your bank or broker for details.
What You Can Trade and Invest In
You can trade the following:
GICS, mutual funds, term deposits
individual common and preferred stocks listed on an "approved exchange" which is the TSX, TSX-V, NASDAQ, NYSE, and about 20 other exchanges worldwide, but not the US OTC pink sheets. Many examples, such as Suncor, Linamar, Apple, any of the big banks, and many thousands of others, when you want to buy into an individual company
stock-like securities like REITS, ETFs and ETNs, including 2x and 3x leveraged
gold and silver certificates
cash of many countries (CAD/USD/EUGBP/AUD/NZD/JPY/CHF and many others)
government bills and bonds of most countries, subsovereigns like Canadian provincial bills and bonds, and most corporations
options that trade on the Montreal Exchange or various options exchanges in the USA and the rest of the word (see FAQ for details)
gold, silver bullion certificates
shares in certain private companies -- but consult your tax advisor on this
What You Cannot Trade
You cannot trade:
commodity futures contracts
option spread positions (see FAQ for details)
anything that requires a margin account, meaning, a special kind of account that allows you to borrow money directly from the broker against the assets you have in your account and the assets you intend to buy.
crypto (although there exist crypto ETNs that you can buy)
Again, if it requires a margin account, it's out. You cannot buy on margin in a TFSA. Nothing stopping you from borrowing money from other sources as long as you stay within your contribution limits, but you can't trade on margin in a TFSA. You can of course trade long puts and calls which give you leverage.
Rules for Contribution Room
Starting at 18 you get a certain amount of contribution room. According to the CRA: You will accumulate TFSA contribution room for each year even if you do not file an Income Tax and Benefit Return or open a TFSA. The annual TFSA dollar limit for the years 2009 to2012 was $5,000. The annual TFSA dollar limit for the years 2013 and 2014 was $5,500. The annual TFSA dollar limit for the year 2015 was $10,000. The annual TFSA dollar limit for the years 2016 to 2018 was $5,500. The annual TFSA dollar limit for the year 2019 is $6,000. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Investment income earned by, and changes in the value of TFSA investments will not affect your TFSA contribution room for the current or future years. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributions.html If you don't use the room, it accumulates indefinitely. Trades you make in a TFSA are truly tax free. But you cannot claim the dividend tax credit and you cannot claim losses in a TFSA against capital gains whether inside or outside of the TFSA. So do make money and don't lose money in a TFSA. You are stuck with the 15% withholding tax on U.S. dividend distributions unlike the RRSP, due to U.S. tax rules, but you do not pay any capital gains on sale of U.S. shares. You can withdraw *both* contributions *and* capital gains, no matter how much, at any time, without penalty. The amount of the withdrawal (contributions+gains) converts into contribution room in the *next* calendar year. So if you put the withdrawn funds back in the same calendar year you take them out, that burns up your total accumulated contribution room to the extent of the amount that you re-contribute in the same calendar year.
E.g. Say you turned 18 in 2016 in Alberta where the age of majority is 18. It is now sometime in 2020. You have never contributed to a TFSA. You now have $5,500+$5,500+$5,500+$6,000+$6,000 = $28,500 of room in 2020. In 2020 you manage to put $20,000 in to your TFSA and you buy Canadian Megacorp common shares. You now have $8,500 of room remaining in 2020. Sometime in 2021 - it doesn't matter when in 2021 - your shares go to $100K due to the success of the Canadian Megacorp. You also have $6,000 worth of room for 2021 as set by the government. You therefore have $8,500 carried over from 2020+$6,000 = $14,500 of room in 2021. In 2021 you sell the shares and pull out the $100K. This amount is tax-free and does not even have to be reported. You can do whatever you want with it. But: if you put it back in 2021 you will over-contribute by $100,000 - $14,500 = $85,500 and incur a penalty. But if you wait until 2022 you will have $14,500 unused contribution room carried forward from 2021, another $6,000 for 2022, and $100,000 carried forward from the withdrawal 2021, so in 2022 you will have $14,500+$6,000+$100,000 = $120,500 of contribution room. This means that if you choose, you can put the $100,000 back in in 2022 tax-free and still have $20,500 left over. If you do not put the money back in 2021, then in 2022 you will have $120,500+$6,000 = $126,500 of contribution room. There is no age limit on how old you can be to contribute, no limit on how much money you can make in the TFSA, and if you do not use the room it keeps carrying forward forever. Just remember the following formula: This year's contribution room = (A) unused contribution room carried forward from last year + (B) contribution room provided by the government for this year + (C) total withdrawals from last year. EXAMPLE 1: Say in 2020 you never contributed to a TFSA but you were 18 in 2009. You have $69,500 of unused room (see above) in 2020 which accumulated from 2009-2020. In 2020 you contribute $50,000, leaving $19,500 contribution room unused for 2020. You buy $50,000 worth of stock. The next day, also in 2020, the stock doubles and it's worth $100,000. Also in 2020 you sell the stock and withdraw $100,000, tax-free. You continue to trade stocks within your TFSA, and hopefully grow your TFSA in 2020, but you make no further contributions or withdrawals in 2020. The question is, How much room will you have in 2021? Answer: In the year 2021, the following applies: (A) Unused contribution room carried forward from last year, 2020: $19,500 (B) Contribution room provided by government for this year, 2021: $6,000 (C) Total withdrawals from last year, 2020: $100,000 Total contribution room for 2021 = $19,500+6,000+100,000 = $125,500. EXAMPLE 2: Say between 2020 and 2021 you decided to buy a tax-free car (well you're still stuck with the GST/PST/HST/QST but you get the picture) so you went to the dealer and spent $25,000 of the $100,000 you withdrew in 2020. You now have a car and $75,000 still burning a hole in your pocket. Say in early 2021 you re-contribute the $75,000 you still have left over, to your TFSA. However, in mid-2021 you suddenly need $75,000 because of an emergency so you pull the $75,000 back out. But then a few weeks later, it turns out that for whatever reason you don't need it after all so you decide to put the $75,000 back into the TFSA, also in 2021. You continue to trade inside your TFSA but make no further withdrawals or contributions. How much room will you have in 2022? Answer: In the year 2022, the following applies: (A) Unused contribution room carried forward from last year, 2021: $125,500 - $75,000 - $75,000 = -$24,500. Already you have a problem. You have over-contributed in 2021. You will be assessed a penalty on the over-contribution! (penalty = 1% a month). But if you waited until 2022 to re-contribute the $75,000 you pulled out for the emergency..... In the year 2022, the following would apply: (A) Unused contribution room carried forward from last year, 2021: $125,500 -$75,000 =$50,500. (B) Contribution room provided by government for this year, 2022: $6,000 (C) Total withdrawals from last year, 2020: $75,000 Total contribution room for 2022 = $50,500 + $6,000 + $75,000 = $131,500. ...And...re-contributing that $75,000 that was left over from your 2021 emergency that didn't materialize, you still have $131,500-$75,000 = $56,500 of contribution room left in 2022. For a more comprehensive discussion, please see the CRA info link below.
FAQs That Have Arisen in the Discussion and Other Potential Questions:
Equity and ETF/ETN Options in a TFSA: can I get leverage? Yes. You can buy puts and calls in your TFSA and you only need to have the cash to pay the premium and broker commissions. Example: if XYZ is trading at $70, and you want to buy the $90 call with 6 months to expiration, and the call is trading at $2.50, you only need to have $250 in your account, per option contract, and if you are dealing with BMO IL for example you need $9.95 + $1.25/contract which is what they charge in commission. Of course, any profits on closing your position are tax-free. You only need the full value of the strike in your account if you want to exercise your option instead of selling it. Please note: this is not meant to be an options tutorial; see the Montreal Exchange's Equity Options Reference Manual if you have questions on how options work.
Equity and ETF/ETN Options in a TFSA: what is ok and not ok? Long puts and calls are allowed. Covered calls are allowed, but cash-secured puts are not allowed. All other option trades are also not allowed. Basically the rule is, if the trade is not a covered call and it either requires being short an option or short the stock, you can't do it in a TFSA.
Live in a province where the voting age is 19 so I can't open a TFSA until I'm 19, when does my contribution room begin? Your contribution room begins to accumulate at 18, so if you live in province where the age of majority is 19, you'll get the room carried forward from the year you turned 18.
If I turn 18 on December 31, do I get the contribution room just for that day or for the whole year? The whole year.
Do commissions paid on share transactions count as withdrawals? Unfortunately, no. If you contribute $2,000 cash and you buy $1,975 worth of stock and pay $25 in commission, the $25 does not count as a withdrawal. It is the same as if you lost money in the TFSA.
How much room do I have? If your broker records are complete, you can do a spreadsheet. The other thing you can do is call the CRA and they will tell you.
TFSATFSA direct transfer from one institution to another: this has no impact on your contributions or withdrawals as it counts as neither.
More than 1 TFSA: you can have as many as you want but your total contribution room does not increase or decrease depending on how many accounts you have.
Withdrawals that convert into contribution room in the next year. Do they carry forward indefinitely if not used in the next year? Answer :yes.
Do I have to declare my profits, withdrawals and contributions? No. Your bank or broker interfaces directly with the CRA on this. There are no declarations to make.
Risky investments - smart? In a TFSA you want always to make money, because you pay no tax, and you want never to lose money, because you cannot claim the loss against your income from your job. If in year X you have $5,000 of contribution room and put it into a TFSA and buy Canadian Speculative Corp. and due to the failure of the Canadian Speculative Corp. it goes to zero, two things happen. One, you burn up that contribution room and you have to wait until next year for the government to give you more room. Two, you can't claim the $5,000 loss against your employment income or investment income or capital gains like you could in a non-registered account. So remember Buffett's rule #1: Do not lose money. Rule #2 being don't forget the first rule. TFSA's are absolutely tailor-made for Graham-Buffett value investing or for diversified ETF or mutual fund investing, but you don't want to buy a lot of small specs because you don't get the tax loss.
Moving to/from Canada/residency. You must be a resident of Canada and 18 years old with a valid SIN to open a TFSA. Consult your tax advisor on whether your circumstances make you a resident for tax purposes. Since 2009, your TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada. Note: If you move to another country, you can STILL trade your TFSA online from your other country and keep making money within the account tax-free. You can withdraw money and Canada will not tax you. But you have to get tax advice in your country as to what they do. There restrictions on contributions for non-residents. See "non residents of Canada:" https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
The U.S. withholding tax. Dividends paid by U.S.-domiciled companies are subject to a 15% U.S. withholding tax. Your broker does this automatically at the time of the dividend payment. So if your stock pays a $100 USD dividend, you only get $85 USD in your broker account and in your statement the broker will have a note saying 15% U.S. withholding tax. I do not know under what circumstances if any it is possible to get the withheld amount. Normally it is not, but consult a tax professional.
The U.S. withholding tax does not apply to capital gains. So if you buy $5,000 USD worth of Apple and sell it for $7,000 USD, you get the full $2,000 USD gain automatically.
Tax-Free Leverage. Leverage in the TFSA is effectively equal to your tax rate * the capital gains inclusion rate because you're not paying tax. So if you're paying 25% on average in income tax, and the capital gains contribution rate is 50%, the TFSA is like having 12.5%, no margin call leverage costing you 0% and that also doesn't magnify your losses.
Margin accounts. These accounts allow you to borrow money from your broker to buy stocks. TFSAs are not margin accounts. Nothing stopping you from borrowing from other sources (such as borrowing cash against your stocks in an actual margin account, or borrowing cash against your house in a HELOC or borrowing cash against your promise to pay it back as in a personal LOC) to fund a TFSA if that is your decision, bearing in mind the risks, but a TFSA is not a margin account. Consider options if you want leverage that you can use in a TFSA, without borrowing money.
Dividend Tax Credit on Canadian Companies. Remember, dividends paid into the TFSA are not eligible to be claimed for the credit, on the rationale that you already got a tax break.
FX risk. The CRA allows you to contribute and withdraw foreign currency from the TFSA but the contribution/withdrawal accounting is done in CAD. So if you contribute $10,000 USD into your TFSA and withdraw $15,000 USD, and the CAD is trading at 70 cents USD when you contribute and $80 cents USD when you withdraw, the CRA will treat it as if you contributed $14,285.71 CAD and withdrew $18,75.00 CAD.
OTC (over-the-counter stocks). You can only buy stocks if they are listed on an approved exchange ("approved exchange" = TSX, TSX-V, NYSE, NASDAQ and about 25 or so others). The U.S. pink sheets "over-the-counter" market is an example of a place where you can buy stocks, that is not an approved exchange, therefore you can't buy these penny stocks. I have however read that the CRA make an exception for a stock traded over the counter if it has a dual listing on an approved exchange. You should check that with a tax lawyer or accountant though.
The RRSP. This is another great tax shelter. Tax shelters in Canada are either deferrals or in a few cases - such as the TFSA - outright tax breaks, The RRSP is an example of a deferral. The RRSP allows you to deduct your contributions from your income, which the TFSA does not allow. This deduction is a huge advantage if you earn a lot of money. The RRSP has tax consequences for withdrawing money whereas the TFSA does not. Withdrawals from the RRSP are taxable whereas they are obviously not in a TFSA. You probably want to start out with a TFSA and maintain and grow that all your life. It is a good idea to start contributing to an RRSP when you start working because you get the tax deduction, and then you can use the amount of the deduction to contribute to your TFSA. There are certain rules that claw back your annual contribution room into an RRSP if you contribute to a pension. See your tax advisor.
Pensions. If I contribute to a pension does that claw back my TFSA contribution room or otherwise affect my TFSA in any way? Answer: No.
The $10K contribution limit for 2015. This was PM Harper's pledge. In 2015 the Conservative government changed the rules to make the annual government allowance $10,000 per year forever. Note: withdrawals still converted into contribution room in the following year - that did not change. When the Liberals came into power they switched the program back for 2016 to the original Harper rules and have kept the original Harper rules since then. That is why there is the $10,000 anomaly of 2015. The original Harper rules (which, again, are in effect now) called for $500 increments to the annual government allowance as and when required to keep up with inflation, based on the BofC's Consumer Price Index (CPI). Under the new Harper rules, it would have been $10,000 flat forever. Which you prefer depends on your politics but the TFSA program is massively popular with Canadians. Assuming 1.6% annual CPI inflation then the annual contribution room will hit $10,000 in 2052 under the present rules. Note: the Bank of Canada does an excellent and informative job of explaining inflation and the CPI at their website.
Losses in a TFSA - you cannot claim a loss in a TFSA against income. So in a TFSA you always want to make money and never want to lose money. A few ppl here have asked if you are losing money on your position in a TFSA can you transfer it in-kind to a cash account and claim the loss. I would expect no as I cannot see how in view of the fact that TFSA losses can't be claimed, that the adjusted cost base would somehow be the cost paid in the TFSA. But I'm not a tax lawyeaccountant. You should consult a tax professional.
Transfers in-kind to the TFSA and the the superficial loss rule. You can transfer securities (shares etc.) "in-kind," meaning, directly, from an unregistered account to the TFSA. If you do that, the CRA considers that you "disposed" of, meaning, equivalent to having sold, the shares in the unregistered account and then re-purchased them at the same price in the TFSA. The CRA considers that you did this even though the broker transfers the shares directly in the the TFSA. The superficial loss rule, which means that you cannot claim a loss for a security re-purchased within 30 days of sale, applies. So if you buy something for $20 in your unregistered account, and it's trading for $25 when you transfer it in-kind into the TFSA, then you have a deemed disposition with a capital gain of $5. But it doesn't work the other way around due to the superficial loss rule. If you buy it for $20 in the unregistered account, and it's trading at $15 when you transfer it in-kind into the TFSA, the superficial loss rule prevents you from claiming the loss because it is treated as having been sold in the unregistered account and immediately bought back in the TFSA.
Day trading/swing trading. It is possible for the CRA to try to tax your TFSA on the basis of "advantage." The one reported decision I'm aware of (emphasis on I'm aware of) is from B.C. where a woman was doing "swap transactions" in her TFSA which were not explicitly disallowed but the court rules that they were an "advantage" in certain years and liable to taxation. Swaps were subsequently banned. I'm not sure what a swap is exactly but it's not that someone who is simply making contributions according to the above rules would run afoul of. The CRA from what I understand doesn't care how much money you make in the TFSA, they care how you made it. So if you're logged on to your broker 40 hours a week and trading all day every day they might take the position that you found a way to work a job 40 hours a week and not pay any tax on the money you make, which they would argue is an "advantage," although there are arguments against that. This is not legal advice, just information.
The U.S. Roth IRA. This is a U.S. retirement savings tax shelter that is superficially similar to the TFSA but it has a number of limitations, including lack of cumulative contribution room, no ability for withdrawals to convert into contribution room in the following year, complex rules on who is eligible to contribute, limits on how much you can invest based on your income, income cutoffs on whether you can even use the Roth IRA at all, age limits that govern when and to what extent you can use it, and strict restrictions on reasons to withdraw funds prior to retirement (withdrawals prior to retirement can only be used to pay for private medical insurance, unpaid medical bills, adoption/childbirth expenses, certain educational expenses). The TFSA is totally unlike the Roth IRA in that it has none of these restrictions, therefore, the Roth IRA is not in any reasonable sense a valid comparison. The TFSA was modeled after the U.K. Investment Savings Account, which is the only comparable program to the TFSA.
The UK Investment Savings Account. This is what the TFSA was based off of. Main difference is that the UK uses a 20,000 pound annual contribution allowance, use-it-or-lose-it. There are several different flavours of ISA, and some do have a limited recontribution feature but not to the extent of the TFSA.
Is it smart to overcontribute to buy a really hot stock and just pay the 1% a month overcontribution penalty? If the CRA believes you made the overcontribution deliberately the penalty is 100% of the gains on the overcontribution, meaning, you can keep the overcontribution, or the loss, but the CRA takes the profit.
Speculative stocks-- are they ok? There is no such thing as a "speculative stock." That term is not used by the CRA. Either the stock trades on an approved exchange or it doesn't. So if a really blue chip stock, the most stable company in the world, trades on an exchange that is not approved, you can't buy it in a TFSA. If a really speculative gold mining stock in Busang, Indonesia that has gone through the roof due to reports of enormous amounts of gold, but their geologist somehow just mysteriously fell out of a helicopter into the jungle and maybe there's no gold there at all, but it trades on an approved exchange, it is fine to buy it in a TFSA. Of course the risk of whether it turns out to be a good investment or not, is on you.
Remember, you're working for your money anyway, so if you can get free money from the government -- you should take it! Follow the rules because Canadians have ended up with a tax bill for not understanding the TFSA rules. Appreciate the feedback everyone. Glad this basic post has been useful for many. The CRA does a good job of explaining TFSAs in detail at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
Unrelated but of Interest: The Margin Account
Note: if you are interested in how margin accounts work, I refer you to my post on margin accounts, where I use a straightforward explanation of the math behind margin accounts to try and give readers the confidence that they understand this powerful leveraging tool.
The current turmoil in Belarus and its impact to Belarusian-Russian bilateral relations: A few points of consideration
Aleksandr Lukashenko was purportedly re-elected in Belarus's most recent elections. The current turmoil resulted. As is fairly common in certain Eastern European elections, the 80% margin by which he claimed victory gives rise to obvious doubts as to legitimacy. Mass protests and demonstrations resulted. Lukashenko has 'won' past elections by similar margins, at least 85-90%+. Lukashenko has arrested most of his political opponents, and jailed or exiled others. Journalists which report on the extent of his corruption (of which there is no shortage) tend to find themselves in prison. His title as Europe's so called 'last dictator' is well deserved. The Global Response to Lukashenko's Purported Re-Election The global response to Lukashenko's purported re-election has been largely as would be anticipated. Western countries -- and specifically the United States, through Mike Pompeo -- have expressed their reservations. The results are self evidently suspect. Despite this, Russia and China both endorsed the results and both countries have officially signaled their endorsement of the results. Notably, Russia historically has been Belarus's strongest and closest ally, the animosity between Putin and Lukashenko in the recent years notwithstanding. Uncertainty from Russia Despite the official endorsement from Putin, uncertainty remains as to the future of Russian and Belarusian bilateral relations. Several prominent Russians, including those inside Putin's inner circle, have signaled that the Lukashenko's backing from Moscow is not guaranteed. Several developments this year contextualize the current status quo. First, negotiations for discounted oil broke down in totality earlier in February 2020. Russia not only suspended deliveries to Belarus, but offered future sales at "market rates" on a purely commercial basis. Second, the oil negotiations broke down after Putin's proposal to merge the two countries was flatly rejected. Natural gas sales were still discounted somewhat, but the lack of a market rate discount for oil sales to Belarus was a significant blow to the integrity of their relationship. The basic idea here is that when global oil prices were high, Russia could with very little significant loss discount its sales to Belarus to gain favor and geopolitical influence. When oil prices bottomed out -- as they have in recent years -- the costs of that deal to Russia rose, so Russia sought to re-negotiate. In the past, Lukashenko made few concessions (and in fact used the potential of closer ties with the West to extract that concession from Russia, consistent with his historical maneuvering of the animosity between Russia and NATO to his distinct advantage). At the very least, Russia wanted closer economic (and by implication, political) integration; potentially, integration to the level of merging the two countries once Lukashenko left office. Lukashenko predictably rebuked any such proposal. Shrinking Russian Sphere of Influence From the outside looking in, it may not make sense why Russia would even want to integrate with Belarus. All doubt however is resolved in consideration of how the other near and distant dominoes seem to be lining up -- each of them to fall outside the Russian sphere of influence. Consider Kazakhstan, for example. Nazarbayev (Kazakh president) has made deliberate efforts to broaden its economic and cultural reach outside the sphere of Russian influence, even to the point that he changed the Kazakh alphabet from Cyrillic to Latin in 2017. The idea was to draw a line in the sand relative to the scope and extent of Russian influence in Central Asia in general and Kazakhstan in particular. The fact that Russia hemorrhaged allied states following the USSR's collapse is a matter of historical record. Thirteen Warsaw Pact countries have joined NATO. So, when Georgia endeavored to join the EU in 2007, Putin invaded Abkhazia and South Ossetia -- both of which remain allegedly "disputed" territories to this day. A highly deceptive analysis concluded Georgia was to blame; but the whole reason Russia invaded in the first place was because Georgia was actively seeking NATO membership -- of course, to prevent exactly such an invasion. In reality, Russia invaded a sovereign country for the purpose of preventing it from joining NATO. Putin's response shows that in Russia's analysis, Georgia is better as a fragmented state than a NATO ally or EU member. A similar pattern played out in Ukraine. As I have discussed before, when Ukraine sought closer economic and political integration with Western Europe and the United States, that was met with Russian meddling in Ukraine's domestic politics, even to the point of installing Yanukovych as Russia's puppet Ukrainian president. Thereafter, in the face of maidan, Putin invaded eastern Ukraine and seized Crimea. In the example of Ukraine as in Georgia, the outcome shows that Russia would prefer that Ukraine be a failed or fragmented state than a NATO ally or EU member. Recall that the goal here was for Putin to create an economic alliance in at least Eastern Europe and Central Asia to rival the EU, and ideally as an insurance policy against further sanctions. The first step in that process would be developing individualized economic integration projects among each of the former Soviet bloc states. Instead, Putin lost Kazakhstan, Georgia, and Ukraine in the span of less than a decade. Ukraine was the first such integration project -- and that resulted in then-president of Ukraine, Viktor Yanukovych's absconding Ukraine for Russia in disgrace. So is Belarus next? Perhaps. It's a question worth asking; especially considering what "being next" could mean. In a first set of possible worlds, Lukashenko is out because of his own decisions, or because he is forced out (potentially by the protesters, Russia or both). In 2018-2019, when Russian-Belarusian bilateral relations were at their worst, it's conceivable that Putin might have tried something like he achieved in Ukraine -- but highly unlikely. It isn't obvious that Putin would be unwilling invade, given in particular the fact that he invaded Georgia and Ukraine under somewhat similar circumstances and that at this moment Lukashenko is very weak. Lukashenko has never faced mass protests/demonstrations of this caliber before. Putin has, and he survived them, but the public's dissatisfaction with Lukashenko's "leadership" is amplified by the uncertainty surrounding the coronavirus, the consequential economic fallout attributable to the world's response to the coronavirus, and an increasingly ravenous lion to the east in its once-closer ally Russia. This combination of factors certainly suggests that if Moscow sees the opportunity to try to replace Lukashenko with someone more reliable to the Kremlin, that is exactly what the Kremlin would try to accomplish. In that situation, Moscow would be re-running the same play-book it ran to get Yanukovych elected as president of Ukraine. Even if such a far-fetched plan were to work -- and it almost certainly would not, in the short term or the long term -- who would take Lukashenko's place? There is no one that would not leave Moscow worse off than they would be with Lukashenko. While it's obvious why he's not ideal, given the recent history of strife between the two countries, there is no world where Russia's interests are -- at this time -- served by trying to replace Lukashenko with a Kremlin puppet. In the second set of possible worlds, Lukashenko remains and has to quell or pacify the Belarusian political unrest while maintaining ground against increasing Russian pressure. To accomplish this, Lukashenko could do something like seek a trade deal with the EU, as both Georgia and Ukraine did. But that would almost certainly would involve some kind of military response from Russia, just like Georgia and then Ukraine. While there's an argument to be made that Lukashenko's historically closer relationship with Russia (however complicated) insulates him from the kind of retaliation Putin visited upon Georgia and Ukraine, he would still be playing with fire. The Russian response to that kind of a bargaining chip from Russia would likely not come in the form of unwillingness to discount oil; it would come in the same form as was witnessed in Eastern Ukraine. To be clear, neither Putin nor Lukashenko benefit in that case. The remaining option is most likely: Lukashenko "cracks down" on the protests, and then everything goes back to normal. Why Belarus is Different from Ukraine & Georgia As I wrote before, Belarus is not Ukraine. Maidan in Ukraine was in direct response to Ukrainian government's preventing Ukraine from joining the EU. The Ukrainian government opted for a counter-agreement with Russia instead. In response, Ukrainians took to the streets and sought Yanukovych's resignation. He subsequently fled to Russia. There were other abuses that precipitated the demonstrations, like Yanukovych arresting his pro-democracy political opponents and arresting journalists who were reporting on the extent of his corruption, but the threshold moment was when Yanukovych tried to rebuke the democratic will of the Ukrainian people (shirk the EU in favor of the Kremlin). So, for Ukraine, the goal was a clear and decisive move towards the EU and the United States (and NATO, by implication). This was in response to decades of Kremlin meddling in Ukrainian domestic political affairs. Maidan there was Ukraine setting forth a future for itself that did not include Putin. Belarus also isn't Georgia. The purported underlying ethnic conflict behind the Russian invasion of Georgia was little more than an illusory pretext; Saakashvili's primary aim for Georgia was to become a NATO member and there was clear support for that in the Bush Administration because of the implications that would have to world oil markets. Specifically, despite the fact that Georgia has no reserves of its own, a pipeline across Georgia would substantially decrease Western dependence on Middle Eastern oil. Bush even outlined a pathway for both Ukraine and Georgia to join NATO. This was intolerable to Putin, and so he invaded as a result. Belarus and its present situation is almost wholly incongruous. Belarus is now and has always been a far more authoritarian regime than Ukraine ever was, even at its worst. Unlike Ukraine and Georgia, Belarus never made the initial step towards actual democracy that ultimately laid the foundation the Ukrainian maidan or the Georgian efforts to draw closer to the West. Belarus also does not have ambitions of closer ties with the West, and the EU and Untied States in particular -- which Ukraine has sought for some time. Lukashenko only ever used that as a bargaining chip to extract concessions from Moscow -- a fact of which Putin is invariably aware. The riots taking place now in Belarus are not oriented towards any goal in particular, either. It's arbitrary rage. Even if they were oriented towards democratic reform, and it is not clear that they are, Belarus has no intention of divesting itself from the Russian sphere of influence -- however high the costs of maintaining that relationship may be. Compromise / Cooperation best serve both Belarus's & Russia's Interests If both Belarus and Russia act rationally, they will cooperate and compromise. Russia will have little choice but to accept the fact that Belarus is not merging with Russia any time soon. The costs of Russia's invading would be inexorably high. There is no one in Belarusian politics that can replace Lukashenko that would be both able to preserve Belarus as a state and that would in the same instance be able to more effectively advance Moscow's interests. Likewise, it is in Russia's interest that these riots and protests throughout Belarus come to and end -- as quickly and expeditiously as possible. Political unrest in one totalitarian country has a tendency to spread to another; as Putin has experienced time and again, dating back to his time in Dresden through the present. Further, this all comes at a time when Russian public confidence in Putin is at an all time low -- and the potential for another Moscow maidan (and perhaps one that might actually be successful) is at an all time high. Given that, the more pertinent question in the final analysis might even be, if Lukashenko falls, is Putin next? Their fates are tied together, whether they like it or not.
5G is the next mobile technology standard, and is driven by our insatiable appetite to stream more content, faster and connect everything we own to the internet. As a result the market is expected to grow at almost 100% each year for the next 5 years, making it a great place to park your cash if you can find the right company to invest in. Ciena are a telecoms networking company based in Maryland, they employ 6,500 staff, 2,700 of which are R&D specialists, they have 2,000 patents, 1,500 customers operating out of 65 offices in 35 countries. 5G will require heavy investments in network infrastructure to handle the huge volumes of bandwidth, and with the growing sanctions against Huewai, this should open up significantly more business opportunities for Ciena (and they know it).
In the past 10 years Ciena’s share price has seen an average growth of 12.27% a year which is great, but in the past 3 years that’s more than doubled to 26.51% a year outpacing other major telecoms players T-Mobile, Ericsson, Verizon, AT&T and Nokia, demand for this stock is seriously ramping up. In the past 10 years their top line has seen growth of around 13.45% a year outpacing Crowncastle International, Skyworks and Nvidia In the past 5 years they’ve grown their bottom line by a whopping 28.26% each year, almost tripling that last year 78.79% which is just insane, and destroys competitors Vuzix, Apple and Broadcom In the past 5 years they’ve grown their free cash flow by a staggering 42.10%, more than doubling that in the last year by 84.34%, and beating Rogers, Qualcomm and Nokia. In the past 5 years they’ve grown their book value by 65.34% which is just mental, these guys have an appetite for acquiring assets that is unmatched in the industry and beat Verizon, Analog Devices and T-Mobile
Management, Margins and Balance Sheet
Last year Ciena saw a a return on invested capital of 14.78%, a return on equity of 14.71% and an ROA of 8.36% These numbers are growing and all of them (with the exception of ROA) are above the 10% number I’m looking for, I can forgive the ROA being a little below 10% as that number has been gaining serious momentum over the past 5 years. The management team have been doing a sterling job of finding good investment opportunities to get returns that I would like to see on my own investments. They have a monster gross margin at 44.53% which isn’t actually that typical for a networking company and more than doubles the 20% number I’m looking for and it’s been increasing over the past 3 years. The operating margin is good at 11.57% and just inches ahead of the 10% I’m looking for and has been increasing over the past 3 years. But the real success story here is that net margin at 8.78% which is almost double what I want to see in a stock, and is the most accurate indicator of a companies profit, and it’s come a long way since the 4.16% days of 2017. Ceina have almost no debt with a D/E ratio 0.34 and they in the past 12 months they earned enough in EBITDA to cover the interest on that debt by 10 times, in lamens terms they are managing that debt very well. They have a hell of lot of cash versus the next 12 months of liabilities, almost 3 times the amount I want to see in a company at 1.20%, and they own a bunch of stuff that they can use as collateral should they want to open extended lines of credit.
Future Growth and Price
In the short term Ciena is expected to see some mammoth growth at 37.40% this year, and in the long term that mammoth growth is set to continue as it expands its operations and market share in Data Center Interconnectivity, Optical Networking and Purpose Built Modular DCI, as over the next 5 years they are expected to grow at a rate of 23.20% a year which is far more than the double digit growth I want to see. At the time of writing CIEN is trading with a PE of 29.11 and a PEG of… get this, 0.91. Honestly anywhere between $60 and $65 dollars is a good entry point as in my opinion, but today it's trading well below that at $59.14 which makes this stock an absolute steal. Let me know if you agree/disagree, but I see a very healthy future for Ciena and have started to add it to my portfolio.
Earning Plays for Dummies: $UA is Under Water (Basic TA & Obvious Catalysts)
TL;DR: $UA is taking on a lot of debt because of historically low retail sales causing near bankruptcy cash flow. Largest athletic apparel retailer or not, when the business isn't making money it's losing it. Taking on LARGE amount of debt, to raise cash, to keep the doors open is not the nail in the coffin, but it is damn near close. ER this Friday 7/31 could be a historic miss and future projections, margins, growth and competition will cause a sell off. Super BEAR: 7/31 $8.50-$9 Puts Conservative BEAR: 8/14 $7.50-$8 Puts
To Bearish Autists,
Alright retards, this DD is not done by a professional CFA, CPA or single employee LLC day trading firm. I'm a college grad, with a BS in Chemistry, and i'm 100% self taught on trading for the last 5 years. It's a hobby that pays for other hobbies, not a job and definitely not a thing i do without being informed. That being said heres my hypothesis.
$UA Has Struggled
This is no secret as many of us have brand name recognition of $UA and many of us own it. We know its not Nike and it's a step above Champions and other retail store brands, but it is simply the cost efficient/value brand for people that want quality and but aren't willing to pay Nike prices or get chafed nipples from the $WMT brand. It's become the largest athletic apparel brand in the US, with growth potential in China, signing one of the NBAs biggest star Steph Curry. Heres the problem, the company is facing increased competition and Covid may of burned down the house when they closed retailers. $UA helped prove there is a middle ground between $NKE and $WMT in quality and price, but they failed to build beyond that, and now $AMZN and other other brands have saturated the market. When i need workout clothes, i look online, a small part of $UA business model. I look for value, and although i'm not buying Nike i'm not buying $UA either. There are tons of other brands that provide the same quality cheaper, and i don't care about brand at they gym, just comfort. $UA failed to build a signature style, they got Steph Curry, but i never hear a 24 year old sneaker head dying over their new pair of shoes. They failed to push online channels of distribution, "have you been to their website?", and some compare their pandemic model to $LULU but they are completely different brands by quality, price and consumer segment. The companies lack of success could be bad marketing, they have the largest athletic apparel market share, but they can't turn a decent YOY earnings report. So it comes down to poor financial management and high levels of competition driving lower margins. In 2016 $UA was nearly $50/share and its lost billions YOY. Now it's facing an unpredictable pandemic, and record low revenue on a house of debt.
Important Factors for ER
The pandemic closed retailers and one of the largest retailers of $UA is Kohl's ($KSS). Because nearly 80% of the companies worth is in their merchandise revenue, this is a major hit. The other 20% is a licensee program that they get from selling the right to 3rd party manufacturers to make and sell the brand. They get revenue from licenses, but i'm not sure about royalties. This means that wholesale manufacturers could sell to other online retailers at a lower competitive rate than $UA if they are crafty enough, and their is supposedly low oversight on this. You can buy $UA on $AMZN but that doesn't mean you will be buying directly from $UA, and this could be true in open retail stores now. from 2017 to Q1 2020 online sales on $UA website have only grown 4%. $UA has had a tough time to have a direct to consumer channel over the past two quarters. The pandemic has lead to huge losses in retail sales, and the brands themselves. This leads us to our next subject.
DEBT DEBT & More DEBT
$UA Market Cap: $4.837 Billion Liabilities: $3.387 Billion (Q1 2020) Assets: $1.550 Billion (Q1 2020) Cash is KING and $UA is in desperate need of it with a recent convertible note offering that raised over $400 million dollars. I'm not a finance expert, but here's a snippet that explains the liquidity crunch.
As of March 31, Under Armour had just $959 million in cash. Now, it recently raised another $460 million or so in a convertible note, so its total liquidity is about $1.41 billion. But if it burns through $400 million over the next two quarters, the balance would fall to $600 million or so. At that point, the company would likely have to raise permanent equity and/or a mixture of equity and debt. Right now the company’s tangible book value per share (TBVPS) is just $1.02 billion, or $2.26 per share, according to data compiled by Seeking Alpha.>So, here is the problem: By the end of Q3, with another $800 million in FCF loses, the tangible book value will fall to $224 million or so, and the TBVPS will be just 49 cents per share. If that’s the case, there is no way that UA stock would still be trading at $9.28 per share, where it was earlier this week.-InvestorsPlace (Mark Hake)
Simply put they need to be frugal and cut cost to prevent bankruptcy. this is shown further in the last two weeks when $UA announced they will sell their running/social app, MyFitnessPal. They also sought to break a sponsorship deal with UCLA to conserve cash (nearly $20mil/year). The price tag for MyFitnessPal in 2015 was $425million, i don’t think $UA will have a easy time getting anyone to buy it, much less gain on the investment. Also the sponsorship deal isn’t broken, yet, and if they do it may come with a huge monetary penalty....exactly what they want to avoid. This weeks earnings report will announce a huge amount of new liabilities along with massive reductions in revenue expectations. This is the most important part of the ER this week.
Good news this week for $UA is that they won a branding lawsuit in China this week...against a competitor that you nor I have and will never hear of. China is a very interesting component in the American economic and political world. They are a huge market, but politically they are neither our ally nor our foe. India will give us the same problem in 10-15 years. With increased tensions between DC and Beijing the risk of tariffs and american companies suffering are on the rise, especially retail and manufacturing. However, China presents a huge growth opportunity to whichever lucky retailers and brands can bribe the right officials and not get caught. $UA is one of those lucky companies, but they are competing in a tough sector. Nike, Adidas, New Balance, a zillion new brands that nobody has heard of and of course knock offs. I lived in Shanghai for a year in college, and theirs “Fake mall” everywhere selling the new Jorban’s and Rolex’s and of course $UA and the Chinese government will never stop it because they don’t practice fair trade practices, at least correctly. 30% of revenue for $UA is international business including several asian and european countries and Australia. China could eventually be more of a cash cow than the US for $UA. The international opportunity is real, but $UA may never see the light at the end of the tunnel due to this dark period of financial ruins and a competitive marketplace.
The ER for $UA is going to be devastating as it has been in quarters past. you’d be insane to think any differently as the company has only seen worse and worse circumstances with little navigational correction. The only thing that could prevent a total 15-25% downside is some sort of good news. What possible good news could they have, i personally can’t think of any if they are being honest and don’t give BS projections like $TSLA. IF you think of any, or i’m missing any honest upside to this ER please comment.
EPS: -0.4$ (Big miss) Revenue: $536mil (Near miss) Revenue is key, but the Cash flow and added liabilities will be the dagger.
A LITTLE TA & CHART PRICE ACTION
6 month Daily candle The price of $UA has been hovering around $6.40 & $10.60 for nearly 5 months. $UA has found a solid support at $8.25 and has an upward channel trend, and this has been a very slow recovery relative to other retail brands. RSI is inching toward overbought. MACD is unsure of the last two months progression and is looking to swing one way or the other after the ER, my bet is down. i expect that $UA will continue on trend nearing $10.60, if the stock price does not fall below the three day trend line(Lilac) then i will wait until thursday afternoon to buy the Puts for the morning ER Call. IF it falls below the lilac line before thursday afternoon i expect my downward channel to be correct and i purchase puts immediately. Still pondering my strategy for entry and optimizing the return, between there two option ideas. Super BEAR: 7/31 $9-$9.50 Conservative BEAR: 8/14 $7.50-$8 Puts $UA has a great value product. It has not done a good job financially due to massive oversight in fiscal management, not creating a better direct to consumer interface, and not being competitive enough in a market with stagnant margins and retail competition that can undercut and or be more popular than the other with celebrities and fashion. $UA is not $LULU, and its drowning in debt with no end in sight. Their model has failed, and their leadership has failed. I suspect retail traders who know $UA by name recognition are propping this up, not understanding their in trouble. As soon as institutional money abandons so will the pocket investors, not to poke fun at you retards. But hey, i may just be a fucking retard. P.S. - IF $UA goes under, or is bought out, which athletic apparel company gains the most? My guess is $NKE (long) or $AMZN. Edit: 7/27 today the SEC notified $UA that they will enforce action against the company for accounting practices seen as fraudulent in 2016 and 2017. It keeps getting worse. Edit: 7/30 today will most likely be the best opportunity to get cheap 10-20% OTM puts for Friday’s earning call. The stock is shrugged off SEC notices to top executives and a gloomy prediction for earnings. But the market isn’t rational right now, if it ever is, and the stock is looking to squeeze out of its channel past $10.60, and people will take profit before the crash after ER. Edit: 7/30 AH. 2500 shares pushed the stock up nearly 4%...still expecting big downward projection come morning. Bought 8/14 $8.50 puts this AM. Edit: 7/30 AH. 10,000 volume pushed the stock up 10% when it moves 1-2% on 5-7 million volume days. I smell stock manipulation by an insider who want to distract from the ER. Result: AH high of $12.80 and down to $10.25 pre market, I didn’t expect price action to play such a large role in this ER. Final: watching for 8/14 $8 put, won’t hold till expire most likely. AH/PM on 7/31 was wild and ruined the lotto for 7/31. I’m convinced it was manipulated, why else would a stock increase 25% AH before earnings and drop 27% thereafter from the AH high...in the first hour of trading...they wanted the stock to have buffer and show a new price action target/action...should of dropped below $9 but $9.49 from $12.80 high at least validates my opinion to some degree. $9.31 new support for monday, may blow past support channel at $8.90 and then drop to $8.20 soon after. OR there could be a retracement to the idiotic $12.81. All in all Lost 1% of my account on a yolo, truly retarded. Daily Candles 1min candles - Note AH pump...
Will Karaman | A Scammer Who Should be Avoided At All Costs[PSA]
I am posting this here as, many of you are new traders, with little capital in your brokerage account, exactly the type of person who would fall victim to this scam. Will Karaman(Other aliases: William Karaman, William Michael Karaman) is a person who opened multiple options trading "strategies" that do not give the trader an edge(hint: none do, there is no edge, sorry). Recently, in April, after the Mid-March-Meltdown, he opened two groups(options society and investors society) costing about $500 each. If you were unfortunate enough to pay for one of these programs, you would receive an invite to a Discord chat to the corresponding group. According to Karaman, he earned, about 70-75k from this scheme(140-150 users from both programs combined). Karaman had amassed a portfolio value of about 400-500k before the revenue from the webinar. After launching this webinar, he had hired a few different people - one of them 'infamously' named "Yanni". After hiring a 'team' of people to run this business. Karaman spent no time, spending his newfound cash on risky FD's(using margin & credit), lavish AirBnBs, renting exotic cars, and doing drugs(K2 & Xanax - He thought he was smoking marijuana and popping adderall?). This, of course, blew up in his face. On June 20th, everything went dark, Youtube channel was taken down, and all that remained, was a Snapchat story showing a loss of 106,000.00 or 101.5% of his portfolio value on the Robinhood app. He took out a 30K LOC from Chase, and essentially YOLO'd it on SQQQ calls and TSLA puts to achieve this accomplishment. He also lost 40k of his father's retirement money on similar risky options plays(citation needed). Yanni, evidently treated an employee of Modera Central(The apartment Karaman was living in at the time) with disrespect, and caused commotion well after "Night hours" set by the apartment, and the City of Orlando on multiple occasions. This ofcourse led to Karaman being evicted from the apartment. He flew his roommate he was living with at the time to California(citation needed), and he was going to live with him. The roommate, in an act of good judgement, decided not to rent with Karaman, rendering him homeless. The spice(K2) that was given to Karaman, apparently had some very bad health effects, that led to disastrous use of these two drugs(Xanax a CNS depressant and K2 a stimulant). At this point, he went to the only people who he knew would actually care about him, his parents. His parents very quickly sent him to a drug rehab center for a total of 8 days(Citation needed). While he was there he was prescribed Zyprexa, an antipsychotic used to treat schizophrenia and bipolar disorder; likely indicating his issues are not a direct result of an acute drug addiction. On July 15th, he announced he was no longer taking the Zyprexa, this led to his last few videos to showcase very unusual and manic, and unstable behavior. He announced personal details, that probably would be taboo or disrespectful to release, such as - Yanni's Parents own the Greek Corner in Downtown Orlando. He held a public meetup at the Robinson in Downtown Orlando, which only 1 of his personal friends showed up, while he claimed adamantly, he had a "whole team", which was discovered to be a lie. He later said, that he was approved for a penthouse apartment at 55 West, this in my logical belief, has to be a lie as well. The apartment in question is a 3 bedroom, 3 bathroom apartment that has a value of ~3,000 monthly rent, and since 55W requires 3x rent in monthly income; that means that Karaman would have to make 9,000/month to live there(notwithstanding his prior eviction, which would disqualify him for renting for 2 years regardless(citation needed). As of July 19th, his second new Instagram account has been removed, likely for harassing people who DM him for money. Nothing has been heard from Karaman since July 15th. It is likely he is staying in hotels/motels in the Downtown Orlando area, or he lives back with his parents(There is no evidence to support either claim). On or around July 21st, he allegedly passed out while in public, he was taken to a hospital where he pulled a fire alarm. He was subsequently placed under Florida Baker Act. Once released from the hospital, he made 2 Instagram posts totaling over an hour, trying to get his 'followers' to buy items that were purchased during his manic episode, such as computer parts, MacBooks, books and random electronic items he had accumulated. He claimed the funds would be used to trade option contracts, when he has -$30,000 balance with his Chase LOC, it is assumed he was living with his parents at the time. It is confirmed he was still trading with a $300 TD Ameritrade account, where he verified his losses, totalling over $100,000. On Tuesday July 28th, he was evicted/kicked out of his parents house by the police, rendering Will homeless. He spent the remainder of that day, wandering around, and later harassing the store manager at the Oviedo Publix, causing another police presence. It is assumed he moved back with his parents by that evening. Either later that evening, or the evening of the 29th, his parents(or Will himself) called the police. This led to the police placing Will under Florida Baker Act once again, where he was taken to a psychiatric treatment center. I did not pay for this program, but a few over at wsb did, and provided me with information to exactly what happened. On August 4th, Will Karaman announced his return to social media on his Instagram story. This is my Wikipedia timeline of this particular scammer. Will Karaman is not the only scamme"stock guru" out there, just the most interesting, we live in a time of incredible access to information, please do not give anyone money relating to any type of stock advice, or trading course.
Hey guys! It has been FOREVER since my last update and a ton has happened. Sorry for the long post, but hopefully some people appreciate a detailed dive into everything. A really really really brief recap of the past fifteen parts I started in December of 2018 with $1,165 with the goal of making $10,000 in one year. In 2019, I had bought and sold over $40k in baseball, football and various sports trading cards. I had a few great successes ($1,165 into $3,085 before fees - $2,771.20 into $6,200.10 before fees - $1,086.68 into $3,190.54 before fees) and a few duds. I generally sell my cards on ebay, but utilize auction houses every now and then. The biggest bottleneck I face is submitting cards to PSA (a third party grading company), a card might have a 2-4 month turnaround time. To successfully "flip" you need to balance some of these purchases with shorter flips. In 2019, I ended with a final profit of $9,262.28 – a tad bit short of my goal. In 2020, my goal is $20,000 (fitting). Using my margins from 2019, I would need to sell around $85k in cards. You can find the previous installment here PERSONAL UPDATE First, I hope everyone is doing well and staying sane. It has been an absolutely wild three months for me, I found out I’m going to be an uncle, I got a cat and I decided I was going to propose to my girlfriend this weekend! I have still been keeping up with this project, the prices for baseball cards have absolutely skyrocketed over the past couple months, so there hasn’t been the same amount of buying as usual. I am going insane with working from home and trying to keep my head above water with everything, but flipping has been (at times) a nice escape. I am fortunate enough to be flipping something that I am passionate about, baseball cards, so I am able to enjoy this and see a lot of neat cards along the way. In that spirit I have decided to begin keeping some cards for my personal collection as I go along. I read somewhere an interesting method of collecting, reducing your collection to 25 cards. I wanted to give it a shot with a bit of a twist, I want to keep a collection of 25 cards, but still make a profit along the way. So a couple ground rules I set for myself: * The collection is limited to vintage baseball cards (generally 1980’s and older). This was my first collecting passion and I’d like to try to keep to it.
The cards need to come from a set/lot that I turned a profit on. You won’t find me buying a single card for the sake of it and I won’t lose money on a lot because I kept the best card.
I will max out the collection at 25 cards. This doesn’t mean I won’t swap out or sell cards along the way, but I won’t ever eclipse 25 cards.
So, without further ado, here are the first four cards in this project. The 1949 Berra came from the Yogi Berra lot I bought from SCP in January. The grades finally came back last week and I did very well on a few cards, so I felt that I deserved to spoil myself a bit. The 1949 Bowman set holds a special spot in my heart for me, my best flip ever was a group of 1949 Bowman cards I purchased for $300 which included a Jackie Robinson rookie that graded PSA 8! I sold it for over $10k. This Yogi Berra card is well centered, nice registration and a great mid-grade example of a baseball icon. I love it. The Ted Williams card and the Willie Mays both came from the December Heritage lot that I had purchased. PSA took FOREVER on this order. I was a little disappointed in the overall grades, but am confident I will turn a profit. The 1956 Topps Ted Williams is such a cool card and a staple in post-war collecting. The Mays I always liked – it’s a little beat up, but the centering is near perfect and the color looks sharp. Finally, I nabbed the 1969 Yaz. This was mostly done because I love the set. 1969 Topps was the last set to feature Mickey Mantle, something that I think goes underappreciated. The set design has always been pretty crisp, it has a couple great rookies and great all-star rookie cards. I’m a fan. Anyways! None of these cards are permanent, I can sell them at any time, but I’d imagine they will be in the collection a while. Purchased
First up was something completely new to me, I purchased an entire PSA graded set to sell each card individually! At the end of May I bought this beautiful 1961 Topps Set for $5,791.60 after fees. I took a major risk on this because the auction house only showed 12 of 589 cards in the set, with the remaining essentially sight unseen. Usually, when an auction house sell a complete PSA graded set, they provide an excel sheet or link to the grades of each card. It makes a HUGE difference. For example, this set, with every card graded PSA 6 is worth approximately $8,000 the same set graded entirely PSA 7 is worth $13,000. I was hoping that this set was somewhere in the middle. Luckily it was! I sold each and every card individually (less 7-8 that they originally forgot to send and one I sent to PWCC) for $11,445.51, after fees I am going to make a little over $4k, my largest flip in this project to date. This was a ton of work. There are 589 cards in the set; scanning and listing each individually took close to 20 hours over the course of a week. Packaging the cards took another 4-6 here is a picture of the cards packaged. Luckily, with selling a set, plenty of buyers purchase multiple cards (one guy bought over 80). Overall I would definitely try it again, but probably not any time soon.
In July I bought this Aaron Judge rookie card for $1,940 after taxes and fees. The two most common questions I get are whether I ever buy single cards and whether I buy modern cards. The answer is yes, but when the price is right. This card was a steal! I am expecting to easily double my investment on this one, it has already been sent to PWCC.
Finally, I bought this group of signed cards at Lelands for $1,364.40. Many of these signatures are tough to get since the players died young. Lyman Bostock died at the age of 27 in a shooting, Nellie Fox (a Baseball Hall of Famer) died at the age of 47 from cancer and Steve Macko also at the age of 27. It’s kind of a strange and morbid auction offering. I bought the group and quickly sold the the Macko for $700, the 1965 Stengel for $225 and the 1965 Howie Reed for $195. I think the only card I would be interested in keeping from here would’ve been the Stengel, but I may hold on to one for my collection.
I FINALLY decided to list the rest of the wrappers at $.99 auction. They sold, bringing in around $1,500, led by the 1962 Fleer football wrapper. Overall, I was a little disappointed in the auction, but very happy with clearing out the inventory. Between the two wrapper lots, I made close to $2k.
I listed the last of the Huggins multi-sport group that I bought in November. Those cards came back with pretty decent grades, I consigned a few cards to PWCC, led by the Dick Butkus rookie, which sold for $1,125. With that sold, it leaves me left with just the 1951 Topps wax pack which is still with PSA. Hopefully that comes back authentic.
The B14 blankets still aren’t really moving that quickly. I sold four over the past two months. I may try to list these at auction, I’m in no rush.
I sold another one of the 1947 Bond Bread Jackie Robinson cards for $900. I sent the rest to PWCC.
The grades came back surprisingly quick for the 1954 Topps cards I purchased. I sold off the ungraded cards for $182.50 and the 1954 Topps Ted Williams Gray Back for $525. I essentially have broke even and still have the Hank Aaron rookie and Ernie Banks rookie to sell. Both are with PWCC.
PWCC also sold the 1973 Topps cards that I had sent them, bringing in an astonishing $4,340! It was led by the 1973 Joe Morgan, which sold for $1,185. I have cleared $3,483 on this group and still have 83 cards with PSA! This will be a great flip.
PSA Update Here is a link to the Google Doc with the status of all of my PSA cards. The spreadsheet also includes a summary of where the project is. PSA is still extremely backlogged. For this project, I have 276 items with them. Luckily I was able to get quite a few cards back from them recently! As I previously mentioned, I received back the Yogi Berra cards I sent them in January and the Heritage cards I sent in December. Overall I am happy enough with the grades. I think they were fair on the Berra cards and they were rough on the Heritage cards (they were separate orders). I already listed or consigned these cards, so I will have updates next month on these. Below is an updated summary: For items purchased in 2019 (denoted with a “*”), the “cost” column represents the ending 2019 inventory valuation. For items purchased in 2020, the cost column is the cost. In the Google Sheet I included an in-depth P&L with full results and 2019 details.
1936 Goudey Lot (8)
Hank Aaron "Odd-Ball" Collection
(16) Pre-WWII card lot w/ Cobb
(23) Sandy Koufax 1950's and 1960's lot
1977-1979 Topps Baseball Rack & Cello Packs (6)
1957 Swift Meats Game Complete Set (18)
(36) 1950s-2000s Multi-Sports Collection
1933-1989 Wax Pack Wrapper Hoard (650+)
1941-2004 Multi-Sport Group (33)
1912 B18 Blanket Find (100)
1962-63 Parkhurst Hockey Lot (45+)
1953 to 1969 Mickey Mantle Group (16)
1956-1959 Baseball Star Collection (48)
1961-1969 Baseball Star Collection (61)
1948-1965 Yogi Berra Collection (26)
Lot of (4) Signed Perez-Steele Postcards
1950's-1980's Football Wrapper Lot (42)
1953 Topps Partial Set (208)
1953-55 Dormand Postcard Set (47/52)
1959 & 1960 Venezuela Topps Lot (34)
1959 Topps Baseball High Grade Set
1970 Topps Super Proofs Lot (12)
1887 Allen & Ginter Boxing Lot (14)
1954 Topps Starter Set (119/250)
1947 Bond Bread Jackie Robinson Lot (6)
1934 R310 Butterfinger Ruth & Gehrig Lot (2)
1959 Topps Baseball Near Set (571/572)
1973 Topps Complete Set
1961 Topps PSA Graded Set
2013 Bowman Chrome Judge Black Wave Auto
1961-1982 Signed Card Lot (19)
*-denotes inventory purchased in 2019 valued at 2019 y/e figures. ^ -inventory on hand is valued at a conservative estimate of fair market value for remaining items. `-grading fees are expensed when the card is sent to PSA, fees are not paid until PSA has completed the order. Fees that are expensed, but not paid are sitting in Accounts Payable below. 2020 Grading Fees`: $2,944.79 Current On Hand Cash: $5,588.15 InventorySee the Google sheet ALSO! If anyone is interested in what the financials for this project would look like, see below. With 2019 officially in the book, I moved the final 2019 financial statement over for a year-over-year comparison:
As of 8/25/2020
Cost of Goods Sold
Fees (15% of Rev.)
FORECAST My goal is $20,000 profit for the year. Right now I’m $15,307.75 – PSA has dramatically slowed turnover, but I am definitely on pace to hit my goal, gross margins are up in 2020 compared to 2019 (56.1% vs. 43.8%) and net margins are also up (34.5% vs 23.1%). Sales more than doubled since the last installment and with orders finally coming back from PSA, I should continue to see steady sales. I look forward to continuing to update everyone on this. Hope you enjoy as much as I do. Jason
Margin trading amplifies the performance of a portfolio, for better or worse. There's the potential to make more money, compared to a cash-only stock trade, but margin trading also introduces the possibility that you lose more than you initially invested. 4.8 (6) Contents1 Margin Trading Definition:2 Margin Call:3 The Advantages of Margin Trading:4 Risks of Margin Trading: Margin Trading Definition: Margin Trading is purchasing stocks without investing the full capital. The trades have a systematized strategy for purchasing stocks in future market without having the capital. For example, Assume that you want to purchase 1000 … Margin trading is widely used in stock, commodity, and Forex trading, as well as the Bitcoin and cryptocurrency markets. In a more traditional setting, the funds borrowed are provided by an investment broker. When it comes to cryptocurrencies, the funds are typically lent by the exchange in return for a funding fee. Order books will differ Margin Trading from A to Z offers a step-by-step explanation of the mechanics of the margin account. Filled with in-depth insights and expert advice, this book uses a hands-on approach to show how a Regulation T Margin Call is arrived at; how it may be answered; and how an account looks once a call is issued and after the call is met. However, margin trading comes with significant risks, especially if used incorrectly or to double-down on individual trades, and can make managing your trading accounts more complex. Be careful to fully understand how margin works and spread your risk across a diverse portfolio before jumping headfirst into trading on margin.
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