The Baltimore Stockbroker Parable

How one stockbroker managed to achieve a 100% success rate in predicting stock movements

/THREAD/

1/ One day you receive an unsolicited newsletter from a stockbroker in Baltimore.

It contains a tip that a certain stock will soon rise sharply.

A week passes, and as he predicted, the stock goes up.

2/ The next week, you get another newsletter from the stockbroker, this time with a tip about a stock that will fall.

And next week, the stock craters.

3/ Ten weeks go by, and each week you receive a tip about a stock that will go up or down.

Every time the prediction comes true.

4/ On the 11th week, you get a solicitation to invest your money with the Baltimore stockbroker for a hefty commission, justified by his successful predictions.

That sounds like a great deal, right?

Here are some of the big investors that track:

Altarock Partners
AKO Capital
Appaloosa
Akre Capital
Broad Run
Dorsey Asset
Duquense
Ensemble
Fundsmith
Polen Capital
Third Point

Here are their current top 10 holdings (in order) and links to their latest buys/sells ⬇️

Altarock Partners

Top

AKO Capital

Top 10 (in

Appaloosa: (David Tepper)

Top

Broad Run

Top

Circle of Competence 101:

@SahilBloom x @jackbutcher

↓

1/

A Circle of Competence is the set of topic areas that align with a person's expertise.

If the entire world of information were to be expressed in a circle, an individual's Circle of Competence is the small sub-circle that represents their expertise.

2/

The idea surfaced in the 1996 BH annual letter.

"You don’t have to be an expert on every company...you only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital."

3/

A Circle of Competence is built over time.

It is built through experience, reading, dedicated study, and effort.

It is dynamic, not static.

It can expand as you deepen your knowledge in new areas. It can contract if you fail to nurture your existing areas of expertise.

4/

To engage this mental model in your life, there are two key processes to go through:

(1) Identify what falls within your circle
(2) Identify the boundaries of your circle

(1) is all about figuring out what you know, while (2) is about humbly admitting what you don’t.

"Start your Trading day with a fresh and empty mind."

Ever faced stress and strong emotions after having loss day and under-performance for a long time after that?

Thread on Emotion and how to control them with help of trading journal

Poker players calls it TILT.

Tilt is pretty much any reason for you to trade sub-optimally.

Greed and fear are tilts in trading.

When normally you have a stressful day (not in trading) and you go to bed with a bad mood, the next day you wake up fine without much stress .

So where did the emotion go?

The brain absorbs and digests all the emotions.

But, when you have a big emotional and loss day , and then a sleepless night, the brain cant digest those emotions as easily.

The next day you wake up to trade , you don’t feel quite right, you feel fear.

So, now you are not starting with an empty cup.

Now your tilt threshold level ( the level where your decision making ability reduces and you take bad decisions ) decreases.

Now, you will be angry a little faster then normally and feel fear more then you do.

So,how to empty your mind after having a bad or even a good day?

By using a Trading journal.

1/ If you've felt like stock market has been disconnected from reality for the past few days, you're not alone

this is the story of the magic bubble created by amatuer traders that broke a multibillion dollar hedge fund

2/ To understand the market right now is to understand r/WallStreetBets

it's a 2.3 million person subreddit dedicated to memes and YOLO Tesla calls that relishes in the massive swings that come with risky trades

aka heaven for the hyperactive amateur trader

3/ The other main character in this saga is GameStop

it's a mall-based retailer that is saddled with debt ($450 million as of Q4 2020) and falling sales (down 40% in last 2 years)

essentially, it's the Blockbuster of video games waiting to be eaten by a Netflix

4/ So hedge funds have been shorting it

the pros on Wall Street saw a failing business and took positions where they would profit if the stock falls

in fact, it's the single most shorted stock in the entire Stock and S&P 500

5/ One hedge fund in particular called Melvin Capital held a $55 million short position against GameStop

Melvin also held large short positions against National Beverage, iRobot, and Bed Bath & Beyond

big mistake

@majinsayan Let us begin:

1) Defendants operated an undisclosed Insider Trading Desk managed by Gregory Dwyer with at least three key employees, including Stuart Elkington and Nick Andrianov.

This desk operated to continuously manipulate markets on the BitMEX platform and cause artificial prices for BitMEX derivatives, including derivatives of
Bitcoin and Ethereum

The operators of the Insider Trading Desk had what BitMEX internally referred to as “God Access” that allowed them to see all of the information of all trader accounts, including any hidden orders and the liquidation points for all orders and open positions.

They were also provided with automated systems, built by BitMEX, leveraging this highly sensitive insider information to enable their manipulation that told them how the market was likely to move by assessing the impact of the hidden orders and liquidations, when they triggered.

Thus, based on the sensitive insider information of BitMEX traders, the automated system was able to predict a potential profit for BitMEX from liquidating its traders, triggered by a potential manipulation.

On Seeking Alpha, "Integrator" (not sure about Twitter presence) is one of my favorite authors along with
@FromValue
@andrescardenal
@EconomyApp
Bert Hochfeld
👏👏

Few of my fav articles of his.

1⃣ The 5 Elements That Make For An Outstanding

2⃣ On Lessons from Buffett.

-Seek Economic Moats in any investment
-Having an awareness of your circle of competence
-Investing for the ultra long term
-Take advantage of a bargain hiding in plain sight
-Preservation of Capital, Above

3⃣ 5 Common Mistakes In Evaluating High-Growth Companies

-It has already gone up so much.
-Fearing short interest
-Fearing future Competition
-Fearing stock dilution due to secondary offerings
-Fearing current

4⃣ Ways Investors Cheat Themselves Out Of Long-Term Wealth Creators

-This business doesn't make any money!
-Thinking that you're too late
-Stock volatility
-High Valuation
-About Voting rights
-Aversion to 'averaging

5⃣ The 5 Important Rules For Surviving A Major Economic Downturn

-Strong cash reserves
-Low debt levels
-Good cash flow generation
-An absence of secular headwinds
-Transparent and easily understood

Companies to AVOID

/THREAD/

Some tips by Peter Lynch, one of the most successful investors of all time, on which companies to avoid investing in

1. Hottest stock in the hottest industry, with nothing but hope and thin air to support them (MJ stocks in 2017, internet stocks in 2000, electric vehicles in 2020)

Deteriorating balance sheet.

When analysts predict double-digit growth forever, the industry goes into decline.

2. Product/service, not protected by patent or niche, easy to be replicated by competitors, especially in a high-growth industry.

3. The "Next Something"

Everyone wants the next $TSLA, $AMZN, $GOOG

Most likely you won't find a company to replicate their business with that success.

4. Diversification = companies wasting capital on foolish acquisitions, in new sectors they do not understand, and in companies that are overvalued.

1/12 Valuing a Disruptive Businesses: Naked Wines ($WINE) Case Study. In my intro last week, I promised examples of using ROIIC & reinvestment rate to value disruptors. $WINE is an eComm D2C wine model with SaaS-like outcomes. EXCELLENT DISCLOSURE makes it a good case study

It began as an online wine retailer with many SKUs/low loyalty, but then pivoted at a pivotal moment when a top exec realized a cohort of consumers were super loyal – those that enjoyed supporting independent winemakers. @_inpractise Feast your eyes on this glorious disclosure:

Naked Wines is forecast to report approximately zero EBIT this year. As we will see, the company is not worth zero, nor does it mean Value Investors are allowed to cavalierly toss it in the “too hard” pile. Here’s a way to value Naked Wines with discipline:

Variable (1): $WINE discloses Standstill EBIT, boosted by COVID. Loyalty of $WINE’s “angels” makes EBIT stickier than some other eComms. Astute SaaS observers will note revenue retention (I assume ~78% on avg) is below B2B SaaS (95-130%). My standstill NPV implies 6.3x EV/EBIT.

Variable (2): A disclosure triumph. If slides could talk, “we reject simpleton requests to under-invest & produce 123% IRR for shareholders that truly like value creation.” Value investors, note what the V stands for in LTV. PV it. I assume payback holds 5 yrs, then slow decay

Note: This thread is ‘Fictional’

Baki Aap Samjdar ho!

This thread is all about Bollyw**d, A grade actresses, ISI, Politicians, IAS officers, Judges, Journalists and Industrialists!

Duration 2004 to 2016

Pakistani ISI used their contacts in bollyw**d to bring many of A grade actresses to UAE, UK and USA.

They have paid them to spend nights with Big Pakistani Army officers, ISI officials and Pakistani Politicians

They have recorded this special moments and started to use that a grade actresses as per their agenda!

They have sent them to Ministers of that time, IAS officers, Journalists, Judges, big industrialists and other politicians (CM of States, Party Presidents) as honey trap!

ISI succeed in this and they have now clips of all of them!

New government established in 2014 and people thought that, corrupt people will be in the jail very soon!

But ISI have started to black mail IAS officers, Judges etc… to save culprits of scams and force them to work against India!

California Gold Rush, the biggest get-rich-quick scheme in American history

How Sam Brannan became the wealthiest man in California without selling a single ounce of gold

/THREAD/

1/ On January 24, 1848, a carpenter named James W. Marshall discovered gold at John Sutter's Mill in Coloma California (close to present-day Sacramento), where he was employed.

Californian residents were the first to rush into the area in late 1848.

2/ By 1849, the word had spread around the world with almost 100,000 gold-seekers and merchants immigrating to California from across the US and abroad, being named forty-niners.

By 1855 the number reached 300,000. It was the biggest immigration movement at the time.

3/ The gold influx into the money supply system rejuvenated the country's economy giving statehood to California.

The rise in population led to an expansion in various sectors, such as agriculture, ranching, and merchandising.

4/ The San Francisco population exploded from 200 residents in 1846 to 30,000 in 1852.

Many cities and infrastructure was built across California.

New methods of mining and transportation were developed creating a technological boom.

An important Thread 🧵👇

✅ An introduction to Price and Volume Action.

Retweet and Like to help Beginners and others !!

There is a saying in the indian stock exchange " Bhav Bhagwan Che ! " which forms the basis for price action and ultimately technical analysis.

Price Action is basically looking at price and the actions/ patterns it made during the tug of war betweern bulls and bears.

Price action helps us identify proper buy and sell areas.

It helps us understand supply and demand zones and based on the patterns we can assume who is going to take ground either bulls or bears.

We use candlestick to understand price action. Candlesticks are technical tools which helps us by providing sessions Open, High, Low & Closing price of that candle in a graphical representation which looks like a candle.

A candle stick is a tug of war between bulls and bears. We come to know who when when looking at closing price. So if the closing is above opening then bull have won and if cloing below open then bears have won. By this you must have understood how important is closing price

When tops are formed , two things happen The public is buying and the big boys are selling, and vice-versa when bottoms are formed.

In simple words Volume climax is the last "AHA" movement for the public before the stock make a top or bottom.

Thread-

What is Volume climax?

• Volume climax appears at the extreme of a trend, or when top or bottoms are formed.

• Most of the time volume climax appears when breakouts happens after a long extending move, and then fails to hold at higher levels.

• In this, at time of breakout we see big volumes (atleast 2-3X more then normal volume) coming in stock when the stock is already extended.

• More volume is not always good, though retail traders doesn’t distinguish between them.

• After the Volume climax we may see a top/bottom or at-least the trend becomes sideways.

• The best setups are those in which we see full reversal candles with big range.

Example of volume climax-

1. The stock was in Uptrend, And has give a quite good run , Stock was giving a big move as you can see in last 2 candles, they were super extended.

2. But at the top candle, the bulls lost the control and the stock closes with a weak candle,

Grab a coffee. This thread will be informative & long.

An exchange infrastructure that offers ZERO trading fees and DEEP liquidity - Meet @wootraderS

In a way, Wootrade is to exchanges what #Ethereum is to #DApps 🔥

..And they have a token, $WOO

Here are my findings👇

Wootrade was incubated by Kronos Research. (Similar to $FTX being incubated by @SBF_Alameda )

Kronos Research is a quantitative investment research institution.

Its daily volume is over $1 billion!

Wootrade offers traders, institutions and exchanges deep orderbooks and best trade execution.

The problem: Exchanges have to pay high costs for market makers.

The solution: Wootrade removes that need for them + lets their clients enjoy trading free of charge.

Exchanges need to stake a tiered amount of $WOO for some of the usage.

This generally offsets the costs for market makers. Plus, exchanges earn staking rewards from the token!

Here are some that use it already: @MXC_Exchange, @Hoo_exchange, @gate_io.

Look at the spreads of Hoo after implementing Wootrade.

They're super thin!

Watching the @FSCDems hearing on GameStop.

1/

Ranking member McHenry says there is “wisdom to the crowd” and said that general public is more savvy and intelligent and people in Washington think they are. Funny. The Securities laws were created to protect investors. With a “seller beware” motto from FDR

2/

He is complaining about the accredited investor definition designed to protect people who cannot afford to lose money from being fleeced by securities offerings where there is not adequate disclosure.

3/

Now @RepMaxineWaters is introducing the witnesses and reading bios

4/

I agree with @BradSherman, the GameStop saga would make a great exam question. Especially questions about payment for order flow. Even if perfectly legal, is this a problem for the stability of our financial markets?

5/

Stocks from Reddit today. 💸💸

So last few days was a push for Weed Stock but now it is semi conductor stocks. Keep an eye out for the cheaper semi-conductor manufacturers. ⚡⚡

Here are the stocks we are tracking rn 👇🏼👇🏼

#PoolsApp #stocks #investing #trading #investors

$TNXP is a real BIO med value play in a sea of PnD’s.
Phase 3 trials, Institutional Backing

$SNGX breakout through major

$ASRT: Lawsuit win, sold shares, new

$CBBT declaring