As 2020 as 2020 was (no typo here), 2020 was a great year for some investors. If you invested in some stocks, you could have gotten 10 times your money. Crypto got more adoption etc

Going into 2021, the phrase “regression to the mean” has been on my mind. The phrase simply means

that life averages out, or life tends towards a steady average. That is, years of high gains or huge wins are often followed by years of lower ones such that when we look back, growth maintains a steady average

What does this mean? 2021 might not be as great a year for the stock

market and other high-risk investments as 2020 was. It also means that if you’re going into the stock market or buying crypto because you want to double/triple your money in a few months as some people did in 2020, that might not happen.

If you’re looking to invest, do it for

the long term. Don’t take high risk or invest in things you don’t understand. Take your time. Do the research.

“When the student is ready, the teacher will appear” - Lao Tzu
When the time is right, the right opportunity for you will present itself. You just have to prepare

yourself (get ready)

2020 has given some of us a taste of supernormal returns. People were doubling their funds in days/weeks etc. When we see returns like these, it isn’t easy to rate any investment that’s not offering something close to that in a similar time frame

But here’s

How to become a SUCCESSFUL investor: a guide 1/n

1) Diversify but don’t. Diversification is for idiots, but it is also a free lunch.

2) Stay consistent but don’t. Have a consistent repeatable process, but also adapt to changing markets.

3) Read outside research but don’t. The best investors think for themselves and are lone wolves but they also talk to others to learn and copy ideas.

4) Use the sell-side but don’t. Your time is valuable and using the sell-side saves time, but it is also low quality and will add needless noise – don’t use them.

The baby wakes me up at 5am these days, so let’s talk about $RH. I’ve been following $RH for half a decade now, and I started off with a profound misunderstanding of the company. When $RH started its membership program back in 2016, I thought it was a stupid idea and 1/

a half-assed way to graft a Costco membership dynamic onto what was supposed to be a high-end furniture store. Very confusing. Of course, I was the one who was stupid because my girlfriend at the time (now wife) was an interior designer, and I didn’t bother to ask her about /2

it. $RH employs a bunch of interior designers to help you with your design needs, and you get access to them for the $100 membership fee + you get 25% off all full-priced items. What’s going on here? $100 to save hundreds of dollars + you get interior design services? You 3/

might think it’s $100 fee to have the interior designer upsell or sell more products, and it… sort of is? But what I didn’t know and hadn’t bothered to ask my gf/wife was how interior designers worked. It turns out that if you’re a licensed interior designer, you get 20-25% 4/

off high-end furniture for your clients anyway. And once she told me this everything clicked. The $100 rate was a way to aggregate clients for their internal RH interior design folks, and these interior designers were going to get a 25% discount on their purchases anyway, so 5/

#Global #ETF Weekly & Month-end (thread): 29 Jan 2021

- 2020 worst perf #sector making comeback in 2021 $IXC

- This is helping #oil producing countries with #Nigeria & #UAE in top5 #Country ETF YTD performers in USD $NGE $UAE

- #SouthAfrica $EZA moved into top15 YTD performers

2/12

#EmergingMarkets #ETF still storming ahead against #DevelopedMarkets ETF, still not relatively "overbought" yet, but getting close.

#SouthAfrica might need a lot of catch up, but $EZA YTD performance in USD (+0.2%) continued 2nd half on 2020 recovery against $URTH (-0.8%)

3/12

#Global #Value #stocks still making short-term recovery, with $IWVL #ETF still looking strong relatively over the short-term. Over 3yr period it is however still lagging quite substantially.

4/12

This one is worrying, but then again, it's been for some time. #Global #Tech #stocks relative to #MSCI All Country World Index is definitely creating some concern. Be very careful.

$IXN vs $ACWI

5/12

#Internet companies still big driver on performance, with US Internet Co's #ETF growing 1.8% in January (YTD) in USD versus #MSCI World $URTH losing 0.8% over same period

#Chinese Internet Co's $KWEB however grew 13% in Jan. Wow! That helped #Naspers/#Prosus & also SA $EZA

Unpopular opinion: CentOS switching to Stream is not a bad thing at all.

When you wanted to run Openstack on CentOS in 2015, you needed to enable https://t.co/paegQ99rAj to even begin an install. The first thing that did was literally replace every single package in the install.

That was, because CentOS at that time was literally making Debian Stale look young.

And we see similar problems with Ubuntu LTS, fwiw. LTS comes out every 2 years, and that's kind of ok-ish, but it lasts 5 years, which is nonsensical.

It was not, in the past. So what changed?

Software Development.

We have been moving to a platform based development approach, leveraging the wins from DevOps.

"Kris, that's corporate bullshit."

It's not, though. Let me spell it out in plain for you.

People these days do not program in an editor, with a compiler.

They use Github or Gitlab, with many integrations, and a local IDE. They commit to a VCS (the VCS, it's spelled git), and trigger a bunch of things.

Typechecks, reformatters, tests, but also code quality metrics and security scanners.

Starting a new programming language in 2020 is not as easy as it was in the past, because you do not only need a language, but also a JetBrains product, SonarQube support, gitlab-ci.yaml's…

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/

(1) BELGIUM: @alexanderdecroo @GLBouchez @ducarmedenis Number of false PCR positives of asymptomatic people still high and obviously not showing right picture. Deaths way down and show the absolute uselessnes of mass testing.

(2) On top of that, overall mortality during expected winter resurgence not nearly as high as during first wave whatever the media may tell you. Excess mortality clearly above average for ONE MONTH in autumn.

(3) Graph missing last month so would be even more normal. The BE curve follows all models for new viruses that we saw ONE YEAR AGO. Measures have had extremely limited impact - arguable made the curves sharper and harder to deal with for hospitals (pp locked up = indoors).

(4) Mortality in BE within the usual threshold (Covid replacing influenza) for at least one month. Compare below to the narrative and you see that the virus is well on its way to becoming endemic. The winter "wave" has been over for a long time.

(5) Include in this the faulty PCR (most estimate 35% false positives and many declared + after they died, or when they died from other conditions, and a couple of things become obvious:

Friend: Suggest me a battery stock for long term.

Me: Why do you want to invest in battery stock?

Friend: Future is about EV so.

Me: Good :)

Me: Battery is going to be huge portion in EV price.

[1/n]

2/

Me: Since batteries is going to be major cost component I feel like big companies source raw materials like lithium, Nickel, Iron and setup their own plants for manufacturing those.

I would rather play passive on EV like embedded and IOT devices in EV, Charging stations etc.

3/

Companies like Tesla already have Gigawatt factories and planning to setup Terawatt factory within this decade.

Researching extensively on all life cycles of battery, from structure to packing.

Researching alternatives to lithium batteries, since lithium is scarce.

4/

Already Tesla found few potential replacements for Lithium, working on few challenges that are pised by potential elements and mentioned the same during this year investor meet.

If you guys know Elon then you'll be already knowing that he just doesn't give up.

5/

Indian companies like Tata Chemicals investing 4k Crores for plant and another 500-1000 crores for Battery recycling plant.

Big companies like Maruti already acquired land in Gujarath for this EV purposes.

Hitachi ABB power has fast charging technology.

Checking in on the energy investing framework as we approach year end 2020

First we revisit the rules. 1) Equities follow crude

2) Crude timespreads momentum dictates crude price momentum. Strengthening timespreads = strengthening crude price

3) Over the medium term, crude follows a) global inventories & b) Emerging Markets (BRICS) growth.

In a nutshell, as goes the global business cycle, so goes the energy cycle

#1 Crude vs OECD inventories #2 Crude vs BRICs GDP

The energy cycle consists of inventory build & draw periods

Draws=bullish
Builds=bearish

Energy equities (red, inverted) and crude inventories

There's just days until the Northern Ireland protocol enters into force on 1 Jan. The Joint Committee has made it's decisions, the UK and EU have agreed an FTA (the TCA), and the UK have announced lots of new schemes, but what does this all mean for the Irish Sea Border ⛴️🚛🧵

Tariffs💵The Joint Committee already agreed that most goods moving GB-NI that are for sale or final use in NI will not be subject to tariffs. Businesses will need to register for the UK Trader Scheme to certify that their goods qualify.

Registrations for the UK trade scheme opened on 15 December so cutting it a bit fine. But the JC decision allows for any applications to the scheme to be provisionally approved for up to 4 months. The zero-tariff UK-EU deal has relieved some of the strain on the scheme because..

A lot of goods moving GB-NI will qualify for tariff-free access whether the goods are staying in NI or going to the EU, so many businesses may not bother using it. But it could still be important for goods who don't meet the Rules of Origin threshold

Customs formalities 📑 The same paperwork, including customs declarations, will be required on goods going GB-NI as going GB-EU. The UK-EU have agreed some simplifications in the TCA & UK officials applying EU law in NI will no doubt be as light touch as possible.

1/ Thread on Bill Foley

Over the last ~40 yrs, Foley has been one of the most successful investor-operators

Using the public markets Foley has built, invested in, and driven the growth of 6 generational fintech companies

In some ways, he is the John Malone of Fintech/Software

2/ The Beginnings:

Foley began his as a lawyer in AZ, where he came across Fidelity National (FNF), which was an under-optimized title insurance co.

Title insurance was (still is) a fragmented and arcane industry

Foley saw an opportunity ripe for optimization & consolidation

3/ In 1984, Foley led a $21mm LBO of FNF and got to work

He ruthlessly optimized and professionalized the co. Under his leadership, FNF's title margins avg'd 300-500 bps better than its closest competitor

At the same time, FNF executed a massive roll-up strategy to mrkt-share

4/ Between 1984-2020, tiny FNF acquired 90+ companies and became the country's largest title insurance and settlement services co.

But that wasn't all...

Ever the multi-tasker, during this period Foley used FNF's regulatory capital to invest in generational fintech companies

5/ With the FNF's regulatory capital, Foley created companies that are now standalone public companies:

- Black Knight
- FIS
- Ceridian
- FNFV / Cannae

Price + Open Interest (OI) + Volume = Deadly Combo

There are many tools for Open Interest. Options Decoder from @TrueData2 is one of the simple yet powerful tools on options and OI.

Below are the 10 Powerful Features of Options Decoder

Thread 🧵🧵

(1/N)

#1 - PE CE Difference

This feature combines the OI of call options and put options and plots against each other.

At one glance, we can know what big players are doing!

(If they are selling more CE means, they are bearish on the underlying instrument)

(2/N)

#2 - Advance/Decline

This feature displays all the F&O stocks in one place.

In one click, we can see the stocks in any order (like an increase in price, increase in OI, or decrease in volume, etc).

A highly useful feature for options traders!

(3/N)

#3 - Open High

This feature displays all the strike prices that have an open high (or open low) for the selected instrument.

If many CE strikes show "Open Low", then the market is bullish!

(4/N)

#4 - IV Price-OI Chart

This feature plots CE and PE vs. Open Interest (OI) for the ATM strike price.

Always Remember:

CE Long Build Up + PE Short Build Up = BULLISH

PE Long Build Up + CE Short Build Up = BEARISH

CE Short Build Up + PE Short Build Up = SIDEWAYS

(5/N)

Important update regarding the 'Trades I liked' chart:

I'M GOING NAKED 😱

Don't worry, there is method behind the madness 😉 This is a thread, grab a coffee or a glass of wine. Or you could just have an Irish Coffee instead, cover all bases😊

I used to take trades all the time off various levels & vwaps. All these give off some great trades! However more recently, the majority of my trades have been off the naked bars. Not a lot beats trading wicks for me, it's a simple setup that repeats all day long!

As Matt used to say in the room "If you're not using something, why the fuck is it on your chart"? I found myself thinking the same thing tonight when explaining my chart to someone.

Now altho I haven't been taking that many trades off levels or vwaps, I still want to know where they are. E.G. If I'm long & I can see we're going to run into the PSH (Previous Session High) or Day 3 VWAP, I'll think abt adding-on (to bring target below) or killing trade there.

Context is so important. The 15m chart with the levels and vwaps on give me what I need to see (the overall picture with where the potential road blocks for the day will be). For the 1m chart, I don't actually need them on there.

🚨🚨🚨
1/ #Smartmatic partnered with Haiti in 2012 (for a ~$53M project); this email (& thread) directly connects four key members of the Clinton Foundation to that decision and much much more.

@GenFlynn
@CodeMonkeyZ
@LLinWood

Remember the date this was sent: May 17th 2010

Since @SEBI_India has imposed new decisions for peak margins, making Retail Traders suffer the most and big players take advantage by doing easy manipulation of the market.
#SEBIagainstRetailTraders

After this decision trading in derivative segments will be done by a handful of big players. It seems like they are working in favor of HNIs or big players in the stock market.
#SEBIagainstRetailTraders

It is a worldwide practice that more than 90% of trade volume comes from retail traders(small traders), who utilize leverages from brokers in order to make money from the stock market.
#SEBIagainstRetailTraders

Since the start of the lockdown period, there was only 1 industry that was still grooming, this was indeed the stock market. Many people who lost their jobs, businesses during this tough time, saw a ray of hope in trading to support their livelihood in a dignified way.

It seems their last hope to earn livelihood in a dignified manner is also fading away.
#SEBIagainstRetailTraders

Educational Thread :

#trading

1/1
Section 1 — Supply and Demand

Basic Trading Principles
Demand = Buyers
Buyers = Support

Supply = Sellers
Sellers = Resistance

Support will be the level at which demand will outweigh supply, causing the price to rise/increase.

1/2

Resistance will be the level at which supply will outweigh demand, causing the price to fall/decrease.
Supply and demand zones in trading are usually liquidity pools.
When an asset illustrates a sharp rise or decline large institutional players (whales in the case of crypto)

1/3
sometimes miss the entry or exit because of the size of the orders. When this happens they leave pending orders to buy or sell at the base of the liquidity zones, with the expectation that the price will return there to fill the remaining orders.

1/4
A high price rise zone is the demand zone (support) and the zone where price has made a sharp decline is the supply zone (resistance).
Demand Zone (Buyers Present)
Technical Analysis Term = Support

Are stocks overpriced? How much growth is required to justify a P/E of 100?

In this article, we shall explore how the one- and two-stage Gordon Growth Models, and Dividend Discount Model, relate growth rates, valuations, earnings, dividends, inflation, and return on investment.

Let
E = earnings
d = dividend
P = price
r = discount rate
g = (terminal) dividend growth rate

Then
y = d/P is dividend yield
Y = E/P is earnings yield
P/E = 1/Y
p = d/E is dividend payout ratio

According to the Gordon Growth Model (GGM),

y = d/P = r - g.

Hence,

Y = y/p.

So, for example, if r = 10% is the required return, and growth rate is g = 3%, then dividend yield should be y = 7%.

If also the payout ratio is 70%, then the P/E must be 10.
If the payout ratio is p = 100%, then the P/E can be ~14.

It may appear counter-intuitive that higher retention requires a lower P/E. But remember that we are talking about dividend growth rates, g, not earnings growth rates.

So if a firm is able to grow dividends without retaining earnings, this likely means that it benefits from pricing power, protecting from inflation, or that it has conservative accounting.

However, when the dividend is zero, g cannot be measured, and the model breaks down.