Even though Ryan did an impeccable job at explaining shorting stocks, I just thought of an even simpler explanation using candy bars instead of stocks. @MattJonesRadio @DrewFranklinKSR @ShannonTheDude @ryanlemond

If you buy a candy bar for $1 and sell it for $1.50 you make $.50 profit. Everyone understands that. You expect that the price of candy bars will go up. But what if you expect the price of candy bars to go down? That is where shorting stocks comes into play.

Shorting a stock is like bumming a candy bar worth $1 from a friend with the promise that you will replace it in a week. You then decide not to eat it, but to sell it to someone else for $1. So you have $1 in your pocket, but you owe a candy bar worth $1 so there is no gain.

But, if the price of candy bars drops to $.50 during the week, you have $1 in your pocket from the original sale but the replacement candy bar only costs you $.50, so you make $.50 profit overall.

Buying stock has unlimited profit potential, but low risk. You can only lose your original cost. Say you buy a $1 candy bar to sell, but your stupid brother eats the candy bar before you could sell it. The most you could lose is the original price of the candy bar or $1.

The stock market is not a neutral arbiter of real value.
The stock market is not a neutral arbiter of real value.
The stock market is not a neutral arbiter of real value.
The stock market is not a neutral arbiter of real value.
The stock market is not...

Most of the banks whining about Reddit would be more bankrupt than Gamestop if the government wasn't constantly propping them up with easy money.

It's all an artificial construct. Which is fine, as long as we stop pretending it's an objective marketplace governed by natural law.

We've set up a system where everyone depends on too big to fail finance companies, public policy doesn't work without them, but they're ALSO allowed to be predatory and they're never allowed to lose money.

Citigroup doesn't get to decide who lives and who dies.

We apparently aren't allowed to decide with our VOTES that hedge funds should die and brick and mortar companies should live if possible.

And now they're freaking out if we literally start deciding it with our *money* in their "free" market.

They don't get to decide! /3

Goldman Sachs, Citgroup and Manhattan hedge funds are not sober, responsible judges of who deserves to live or die according to real capitalist value.

If the rules were fairly and equally applied, Goldman Sachs and Citigroup would be bankrupt and stripped to the bone. /4

1 Introduction

Fascism: what is it and why does it get such a bad rap?

This thread is for information purposes only

2 Fascism itself is used as a pejorative and most, whether on the right or left, lack conception of Fascism’s origins. ‘Fascist’ is a curse word in much the same vain as Nazi.

3 Fascism is a much maligned ideology/philosophy which makes sense only when those origins are understood. Likewise, the zeitgeist which prevailed at the time must also be understood, stripped down and thoroughly analyzed.

4 Whilst Fascism bears some similarities to National Socialism, they are really only close cousins.

5 The style of Fascism prevalent in the 1920s and 1930s is different from the ‘Fascism’ prevailing in the 2020s, and then it must be distinguished from that which existed, or still exists, in most Third World countries.

Mkt view :
Only 290 companies trading above dec 2017 prices which was top of overall broader market. If one looks at nifty which is concentrated in 5 stocks, then it may scare them. Whereas individual stocks have yet lot of room to grow.

In history of markets, when interest rates can not grow and remain so low for another 1 year minimum then stock prices are bound to soar.

How to play in current markets :
1. Debt free and low working capital companies ( as% of sales) with less receivable days and small cash conversion cycles . This ensures company always has money to operate n stay afloat.

2. High growth companies with above 1st condition. Top line of 10% plus and bottom line of 25% plus consistently with increasing or stable operating margins make the company do better in robustness of share price.

In such pandemic corona conditions or earlier demonetization, nbfc liquidity crunch, ilfs, small & midcap dwnfall from 2018: if all of these situations can not stop these companies then What will?

‘Billions will be wiped off the stock market!’

‘Project fear’

‘There will be chaos at ports!’

‘Project fear!’

‘Supermarkets and shops will struggle to get products’

‘Project fear!’

‘Medicinal supplies could dry up!’

‘Project fear!’

‘Brexit will detrimentally affect the value of the pound’

‘Project fear!’

🚨Weekly Market Update #1🚨

I go through a daily and weekly process that helps me maintain a higher level perspective on markets and not lose the forest for the trees.

I use @KoyfinCharts for essentially this entire process - thank you @koyfman!

Time for a thread 👇

1/ Domestic Markets

Note: I look at many time periods for everything presented here. For convenience I show trailing 3 months in this thread.

Nasdaq outperformance vs. the S&P and Dow is narrower when compared to T6M. Over the T12 period, the Nasdaq has outperformed by 26%.

2/ European (+Brazil) Markets

Germany (DAX) has lagged both the French (CAC) and UK (FTSE) markets. Including Brazil (Ibovespa) here - it has been outperforming Europe.

The DAX and IBOV have fully recovered from the March 2020 drawdown while the CAC and FTSE continue to recover

3/ Asian Markets

The KOSPI (Korea) has been on absolute fire, with the NKY close behind. The SHCOMP has lagged of late.

The KOSPI has also outperformed since the pandemic, with the NKY and SHCOMP lagging by 17% and 21%, respectively, over the T12 period (HSI is breakeven).

4/ US Sectors

Energy and Financials have been on a tear lately (economic recovery). Materials have also performed well, playing the recovery.

Technology and Consumer Discretionary have led over the T12 period, but are in the bottom half T3M.

Healthcare has held up strong.

I'll just put this out there:

1. This is classic liquidity crunch and has happened many times.

2. RH/etc. will turn out to have made mistakes, didn't plan for any of this, ultimately lose big.

3. Reform will center on how services are offered/advertised to retail investors.

4. Lots of coverage will center on class warfare narrative and the 'game being rigged'.

5. That same coverage will make 3 seem like the answer and a fair resolution to the problem.

6. The real culprit, as always, was leverage and incentives.

7. In the US financial institutions that accept deposits insured by the federal government (FDIC etc) are allowed to hold positions in risky assets, though this is regulated.

8. Other even less regulated institutions (funds etc) hold shares in the guys referred to in 7.

9. The REAL problem is those institutions are allowed to make leveraged bets that, if they go badly enough, could affect the value of 'safe' assets like savings accounts and pension funds.

10. Thus the ultimate incentive problem: Big funds ultimately insured by taxpayer dollars

11. Ultimately the ONLY real reforms that matter are:

i) Reserve requirements, i.e. how much banks/funds/etc are allowed to borrow to invest in risky assets

ii) Trade restrictions, i.e. some institutions (commercial banks) not allowed to hold some assets/positions (short)

THE ONE WHO STAYED BEHIND

Dimitar Berbatov & Christiano Ronaldo played for Manchester United in the 2008/2009 football session.
That was the only season both players were on the books of Manchester United at the same time...

Berbatov said of Ronaldo; “I was lucky to play alongside Ronaldo for a season. He was 100% professional, on the training pitch & off it.
I don't remember him ever being late for training...

He was always preparing in the gym, after training he would stay & do extra work like working on his shooting, then he would go swimming & go to the gym again…”
The club had strict training sessions. The players had to fit into the training schedules to stay fit & competitive...

They all wanted to excel.
They stuck religiously to these training schedules.
Their lifestyles- their training, eating, drinking, sleeping- everything was under scrutiny.
They were professional athletes, their physical fitness was very key to their success...

So they aligned themselves to these rigid training schedules.
when the training sessions were over, the players would leave for home.
BUT RONALDO WOULD STAY BEHIND!
He would train more.
He would practice more.
He would go swimming to tone his muscles more...

How to manage risk in Option Selling?

10 frameworks to improve your risk management in 1 month:

Collaborated with @niki_poojary

In this thread you'll how to manage risk with:

1. Directional markets
2. Range-bound markets
3. Mtm stop loss
4. Booking profits
5. Overnight hedging
6. Event Risk
7. Position Sizing
8. No leverage
9. Reducing positions when wrong
10. Calculating risk upfront

Let's go ↓

Directional markets:

There is no point in the market being directional and you adjusting a non-directional trade.

As a general rule, you should only adjust once or maximum twice and then give up on firefighting.

Then you should side with a directional move.

Mistake of a non-directional trader:

Non-directional traders face heavy losses in directional markets.

If you are able to limit your losses in such scenarios, your risk management will improve.

The "I can adjust any move" mindset has to vanish for this to improve.

Big Range:

Moves in a big range are usually violent, and this is where non-directional traders lose money despite the fact that they are correct in assuming that the market is range bound.

Level-based stops work best in such an environment with reduced quantities.

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

A friend posted a photo of Woodstock from overhead as a demonstration of what 400,000 people look like. Its a huge number...hard to visualize.

I've been using citites.

For my friends back home, the day after my birthday (November 18) was the day a St Clair County's worth of people were dead. Imagine Belleville, O'Fallon, Fairview, and all the little farmtowns inbetween, empty.

Not even a month later (Dec 14th), you could have upgraded to the population center across the river; imagine the entire city of St. Louis, empty.

But, I've lived other places, and I know people from all over, many of whom have traveled quite a bit.

So, as we hit 400,000 Americans dead, lets put this in perspective.

Yesterday, it was the city of Arlington, 49th largest city in the US.

By the end of today, it will be Tulsa, Oklahoma.

Tomorrow, it will be Tampa, Florida, instead.

By next week probably (at this rate), Oakland, then Minneapolis a few days later.

About two weeks from now Virgina Beach, followed by Colorado Springs, Long Beach, and Miami...theres a few more cities between Miami and the next milestone (500,000), but...

William's Alligator is probably the most underrated indicator in moving average category.

Alligator follows the premise that market is sideways for 70% of the time and trending only 30% of the time.

This is where William's Alligator can be a great tool for traders.

Why William's Alligator can be a great tool for traders?

It can identify Bullish, Bearish and Sideways market pretty easily. Problem is, traders don't know how to use it effectively. Alligator has three lines:

1. Lips - Fastest Line
2. Teeth
3. Jaws - Slowest Line

Book Interpretation is when Lips Crosses above Jaws, it's a buying opportunity and when below its a shorting opportunity. And when three lines are crisscrossing, instrument is sideways.

BUT this does not make it a tradeable indicator in practice. Here is what should be done.

Firstly, when all the Alligator lines are moving up or down and are widening, this phase is called "Alligator eating with its mouth wide open". When the lines are crisscrossing, this indicates the alligator is sated.

Now, how to use it? with Basic TA and Indicator like MACD

Rules to remember:
1. As long as price is above Alligator, BANKNIFTY is bullish.
2. As long as MACD is trading above 0 line, BANKNIFTY is bullish.
3. Horizontal Lines are the only S&R.
4. CONGESTION is followed by TREND is followed by CONGESTION.