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Get a cup of Bru coffee.

Today I will help you understand a simple implied growth calculator to find a stock buy level. Let's get started.

(A short thread)

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As you might know, The value of a stock is the present value of its lifetime cash flows.

For the long term buy and hold investor, the real cash flow from the stock is dividend income over its lifetime.

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In 1959, M J Gordon proposed a formula for this. The formula is

Value = D/(r-g)

Whereas

D = Expected dividends.
r = Required rate of return.
g = Dividend growth rate in perpetuity.

A detailed derivation of the formula is given at the end.

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Now, let's be honest, it is next to impossible to predict the growth rate in perpetuity for a firm.

So we twist the formula a little bit. Rather than finding out value, we find the *implied growth rate* This helps us to make deals with Mr. Market.

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Here is some math:

Value = D/(r-g)

r-g = D/value

D/value is nothing but dividend yield, so we substitute the same.

r-g = Dividend yield

g = r-Dividend yield

*Implied growth = Required rate of return - Dividend yield*

0/ We've highlighted FinTech infrastructure co's like BR, FIS, JKHY, MA, V, ICE, NDAQ, etc. as companies w/ a variety of moats that have led to dominant mkt share & outperformance despite being 50+ years old on avg.

$FISV had their investor day yesterday and laid out the why.

1/ $FISV highlights the fact that they have #1 market share in core accounting processing for $1-$50B FI’s; they are doing $1.0B in global e-Commerce revenue, and have more than $30B available for capital allocation over the next 5 years (read more M&A for FinTech co's)

2/ They have global reach with clients in more than 100 countries, more than 1,000 products & services, 10,000+ FI clients, & 6M merchant locations.

All while being #1 as a core account processor, merchant acquirer, bill pay, P2P payments, etc...

3/ This business model + market positioning has led to incredibly strong outperformance since inception ~35 years ago with cumulative $FISV shareholder returns of +42,171% vs. the $SPY at 3,327% & Nasdaq at 4,355%.

4/ $FISV has grown via a series of acquisitions over the past 30 years most recently the $22B tie up w/ First Data.

They highlight the progress on the deal & new goals post integration.

M&A is a skill & FISV has it financially; tech integration leaves something to be desired

It's Sunday morning and I'm grumpy 😑😑 and bored 🥱🥱

Why you ask? It's the weekend, everybody loves the weekend. Time to chill and relax and unwind!!

Yeah talk to a Trader!! We hate weekends and Love Mondays 😂🤣😋

So anyway, my threads on real life practical trading seem to be helping you guys and getting lots of good questions

One which I'm getting asked a lot and a traders biggest dilemma is "WHEN TO SELL"!!

I mean we first look thru a 1000 charts, then we select one to enter, get the entry correct nd wowza it's moving in th right direction nd we're in some profits

Shud be super happy rite?

Unfortunately that's a traders worst nightmare!! Why you ask? Cos goddamit when do we sell?

If we sell too early we risk losing big profits

If we wait too long it might just reverse and we lose most of our profits and most likely even end up in a loss

If we do nothing then our blood pressure goes up cos hey we're traders and that's how we are 😋😋

So here's a "DEEP DIVE WITH DEEPS" on "When To Sell"

** Took me several days to come up with this catch phrase for my learning threads. I hope you guys like it

1/ A primer on how I achieved end to end automation via algos.

First up, Why?

Trades execute the moment your setups trigger. No hesitating/panicking/worrying/overthinking when you need to take a new trade daily. That's why. Also, spend less screen time going fwd.

2/ How long for the whole process?

3 to 4 weeks for your easier/easiest strategies if you have some (bare minimum is enough) amount of coding experience. Even basic experience writing loops helps the process.

3/ Honestly tho, like seriously, can we do this in under 4 weeks? Yes, for simple strategies that don't use too many indicators. You can slowly build your other strategies later on once the simpler stuff is up and running.

4/ Costs involved:
- Zerodha API subscription (2k per month).
- Historical data subscription (2k per month). You can unsub after the first month if you don't need it.
- Udemy course (Price keeps changing but it's 490/- right now).
- AWS (Free tier for the first year)

5/ What language?

Python as it is relatively easy with a lot of inbuilt libraries. C++ is better and faster I'm told but it's not like you are running nanosecond HFT strategies with your peasant like retail capital.

Some thoughts on tick data for long to medium-timeframe trading

1/n

First, let's get the facts straight.
Other timeframe traders (investors) can be visible on micro timeframe data but micro timeframe traders(locals) cannot be visible on other timeframe data(>daily)

So obviously if you have the access then the logical choice is using micro-timeframe data (tick).
Theoretically sounds great but practically if you're hunting for a pattern that goes beyond days or weeks in tick data then it requires huge data to evaluate such patterns.

The workaround is to compress the tick data based on information gain rather than transforming the data based on a fixed timeframe like 1 m 15 minute and then do the evaluation.

Remember the timeframe is just for our convenience so we can read the market induced information. There is no magic timeframe and if it exists then it most likely a curve-fitted one. Ofc that's my own observation and not a ground truth

Everything that I’m about to say is coming from someone that has been in the investment management industry for well over two decades now and knows the inner workings of trading and compliance. I also worked for Morgan Stanley early in my career.

1/15

As a registered representative who is fully licensed by FINRA, SEC, and other regulatory agencies, we are tasked with ongoing education, the bulk of which deals with compliance, anti-money laundering and other kinds of malfeasance that may occur while working with clients.2/15

The recent trending of #HunterBiden’s name on Twitter got me thinking back to when #LaptopFromHell was the big story. Some of the material that was released included investment/banking statements that belonged to him. The BD that custodied Hunter’s account was Morgan Stanley.3/15

This is not a conspiracy theory. I’m a believer that there’s truth and then there’s a not quite the truth. Now, every year I must attend a few Anti-Money Laundering (AML) courses to stay current on my continuing education. This is a BIG FUCKING DEAL in the investments world. 4/15

Rarely trust what you hear and always verify everything...including this tweet. MS’s internal trade review desk and other compliance groups SHOULD HAVE FLAGGED Hunter Biden’s accounts for suspicious activity. As far as we know, they didn’t. Why???

5/15

A reminder of the Newsnight expose on The Tavistock.

Homophobia was a factor in the resignation of over forty staff over a three year period.

Girls openly telling staff they suffered homophobia in the family and at school.

Eventually they ended up identifying as trans.

Parents openly stated they would prefer a trans kid rather than a gay one subject to parental pressure? Director of GIDs pushing prescribing despite clinical concerns.

This FT piece on deb #cancellation is interesting and poses a few interesting questions.

Let me begin with what I do not like.

The case against cancelling debt at the #ECB https://t.co/o0Vvvf6leU

#monetization 1/

The excessive focus on Italy is off the mark. Any serious discussion on sterilizing this exceptional debt linked to the pandemics should concern all EMU countries. All have had a spike in deficit

2/

Nor I like the argument that debt sterilization would not bring fresh cash. It would not, and of course it would not be needed. EMU public debt is today (and for a long period to come) in excess demand. On top of that the ECB will keep the PEPP umbrella open for a while

3/

Sterilizing the EMU pandemics-related public debt is a medium term issue, related to future fiscal space. Will this exceptional stock of debt that built in 2020 constrain EMU countries in their ordinary fiscal policies in the future? This is the question to ask
4/

If the answer is yes (I believe it is), then sterilizing that debt is eventually going to be an issue to be dealt with. And the ECB will have to be part of the solution
This is what the FT seems to suggest too (this is why the piece is more complex than it seems)
5/

Open letter to all S&P 500 benchmarked managers:

On Friday 12/18 at market close, $TSLA will enter the S&P 500 Index at an approximate 1.5% weight - the sixth largest weight in the S&P 500 index after $AAPL, $MSFT, $AMZN, $GOOGL, and $FB.

2/Goldman says 90% of you don’t own $TSLA, and you probably never had much interest in owning it, since it trades at 169x consensus 2021 EPS, and is +665% YTD. Surely you can ignore it for a little longer, and wait for it to come back down to Earth.

That would be a huge mistake.

3/ CNBC talking heads who know nothing about $TSLA have long proclaimed it to be overvalued. Celebrity shorts and sell side analysts who blindly compare it to other auto companies have been wrong about TSLA for years. Investors who I think are smart sound like empty suits...

4/ when they try to explain why $TSLA keeps going up.

I’ll tell you why $TSLA keeps going up, and why it could double again in 2021 (at 1.5% wt, a double will cost you 150 bp performance).

First, EVs will soon replace gas-powered cars, yet EVs today are just 3% of global SAAR.

5/ As with IPhone, once a customer goes EV, he/she never goes back. By 2025, EVs are likely to be 20% of global SAAR. Do the math: 20/3 = 6.7x = 46% CAGR.

Second, $TSLA is by far the global EV market leader, with 25% YTD global EV share. TSLA continues to grow its share...

Short thread on emotions in trading

A common meme is that the best traders are the least emotional. I’m calling BS on this.

I’ve analysed the Psychological make-up of many brilliant traders over many years using psychometrics. And whilst this isn’t scientific research.

1/9

I’ve not found a correlation between people’s emotional intensity & their performance. Some of the very best traders I come across are highly emotional.

Risk is felt, it’s not something that can be quantified despite the failed attempts of many. 2/9

Of course allowing your emotions to control your trading is unhelpful, but some of the ‘emotional’ types have learned to master this and have become incredibly adept at it.

The fact that they don’t suppress their emotions aids this process.

They use their emotions as

3/9

clues and triggers on their internal radar. It’s a skill which great traders learn to do.

Feeling their emotions & being aware of them enables them to identify opportunities & threats with great haste, giving them an edge over ‘less emotional’ types who are not able to

4/9

recognise some signals.

By contracts the less emotional types can tend to be overconfident & don’t always see (because they don’t feel) the degree of risk or threat in situations.

I am not saying emotional or unemotional is superior. Both types can and do succeed.

5/9

1. Does the new trade deal deliver for the UK and the EU automotive sectors? I and other colleagues have been working tirelessly over Christmas to answer this question – thanks @mattogg @Mulk_Lloyd!!. Here are my thoughts - warning, very long 🧵ahead!

2. First, a necessary clarification. Comparing the UK-EU FTA with the status quo is simply futile. Even the most ambitious FTA cannot – and it is not intended to – deliver the benefits of the EU Single Market and Customs Union.

3. There is only so much an FTA can deliver. No FTA could avoid creating a customs border. No FTA could waive origin rules. No FTA could avoid new non-tariff barriers. It is no mystery that UK Automotive would have preferred other options precisely because an FTA has limits.

4. To compare apples with apples, a fairer question is not whether the FTA is better than the Single Market - it isn’t - but whether this is the most ambitious FTA we could get for the sector. And I hope the rest of the thread can shed some lights on this point.

5. Having a deal is, in itself, a major positive. The idea that having an FTA or not having one makes little difference could be true for some sectors. This is certainly not the case for Automotive. Without an FTA, tariffs would certainly apply.

Save The Economy, Not The Stock Market. https://t.co/Q1V0k04zVY business information

If you need a profession inside sales and advertising with an international perspective then get a High-up Bachelor’s diploma in International Gross sales and Marketing. It is a rare thing to attain AND preserve B2B gross sales and marketing alignment”,

Threat 1/ 👇: One of the characteristics that differentiate good investors from bad investors is the ability to identify OPTIONALITY in companies and their discipline to either get it for free or pay very little.

2/ Think about it as buying out of the money options, if you pay too much for something that has very small odds of happening you lose money. This is what happened in the 2000's crash, people bought internet stocks based on illusions, very few of them had any real business.

3/ The markets assign "perceived" higher valuations to some businesses and lots of investors scream how expensive everything is. Some are, but a lot are not, and not being able to identify the optionality of some businesses can destroy your opportunity to have outsize returns

4/ Estimating the odds of something that does not exist or it is very small to succeed and grow is very hard. For something new to work it is needed: The technology, the infrastructure, and the distribution, then new ideas can come which use those, they'll have + odds of success.

4/ Optionality gets "cheaper" once you find the above characteristics as the odds of a company with a new idea/project are higher. The thing is that anything that will come from the new ideas/projects won't be reflected in the financials, but that is where the opportunity lies

1) The Ecosystem, Part 1:

Getting Dressed

2) NOT INVESTMENT ADVICE

and even more importantly, not clothing advice

3) This story ends with @bonfida, but it starts with @SushiSwap.

By now pretty much everyone knows the story:

The meteoric rise, the sudden crash, the dormant period, and the recovery.

This story starts at the lowest point: right after the migration.

4) See, the lowest point *should* have been right after nomigate.

But of course there was negative sentiment then! That was expected.

The brutal part for the project was after the fires were put out--the dev funds returned, the migration successful.

5) That should have been the recovery.

But instead, Sushiswap endured a month of the most negative sentiment I've ever seen a project have.

There was a chat, as the major builders and multisig holders got things off their chest.

According to S3 Partners, $TSLA shorts have lost $35B in 2020. I talk with many TSLA shorts, and have been on the other side of their trade all year. Here is where $TSLAQ got it wrong: Way under-estimating TSLA TAM, and in thinking ICE-branded EV launches would hurt TSLA.

2/ Street estimates are soaring. $TSLA 2020 and 2021 EPS ests have almost doubled this year, as Y has quickly become TSLA ‘s best selling model with less than 20% cannibaliz’n of M3. Model Y is now being taken global. Meanwhile, China volumes will be 50% of TSLA volume in 2021.

3/ When I argued with shorts about Model Y, they missed that Y was a small SUV and M3 was a small sedan. The two don’t compete. And yet, shorts would argue Y would massively cannibalize M3. Y more than doubled $TSLA ‘s US TAM, from 25% to 66%, and will do the same globally.

4/ From my $TSLAQ discussions, I gathered that few had taken the time to drive the various TSLA models, esp the new Y. None did focus groups with TSLA owners, or very few discussed TSLA with rival dealers, all which shocked me. Their research consisted mainly of current year...

5/ ...and backward-looking financials, and their best materials were charts comparing $TSLA mkt value to ICE mkt values - mindless since going forward TSLA’s competitors are AMZN, GOOG, AAPL, NIO, and RIVN. $TSLAQ would make fun of my forecasts to 2025, saying it was impossible.

Few terminologies you should know before you buy any share.

A Thread 🧵👇

When you're buying your first share, you placed an order than your Demat account. There are many terms should be aware of :

1/ Order - It is a show of intent to buy or sell shares in a given price range.

For example, you may place an order to buy up to 100 shares of Company A, at a maximum price of ₹80 per share.

2/ Bid - Your bid is the amount that you are willing to pay for a share.

3/ Bid-ask spread - This is the difference between the amount people are willing to spend to buy a share and the amount at which the shareholders are willing to sell a share. A trade can only happen when this spread is resolved.

Thread: Bull Case on $FSRV

$FSRV is a great investment due to strong balance sheet, incredible growth in both earnings and revenue, and serve a competitive niche within this fintech market. I am very excited to be apart of this, undervalued, long term investment opportunity:

What does Katapult do?

They’re a fintech lending, e-commerce focused, service that allows nonprime customers to borrow money and purchase durable goods such as: Fridge’s, Tables, Couches, etc

Why they are competitive?

Some consumers with little to no credit often times don’t get approved, and it can be costly. Katapult leverages AI and ML to allocate money to them CHEAPER and faster than ever before.

Has this been profitable?

They have both grown revenue AND EBITDA at astounding rates. They hit profitability this year and grew 171% YoY. They project they will have a CAGR of EBITDA and Net Income at 75% 🤯🤯

This is a profit and growth monster, an investors dream!

Can they maintain this growth?

Lending isn’t a new service, and neither is leveraging AI/ML. But Katapult’s customer segment is niche, as nobody else wants to do it. They stand in their own quadrant, providing a long runway for niche growth.