Investing

with a focus on value investing, hedge funds, large asset managers, and value investing. We have provided beneficial information for the purpose of value investing for value investors

The Big Housing Migration and How It Affects the Homebuilding Industry
Investing, Online Trading

The Big Housing Migration and How It Affects the Homebuilding Industry

Housing starts for December 2020, reported in late January, hit a level not seen since 2006.A confluence of several factors is driving this trend which we’ll explain in this article.Translation: the housing market is booming once again. Is the boom here to stay, and how does this fare for the homebuilding industry?Quick Rundown on HomebuildersIt’s in the name: home builders build and sell homes.They buy plots of land in neighborhoods poised for growth and use construction crews to build houses on the land. Once the house is built, they typically use their own team of realtors to sell the house.Some homebuilders build speculatively–meaning they build before they have a buyer, and list the home on the Multiple Listing Service hoping to get a good price.On the other hand, many r...
The best defense is a good offense…lately
Investing

The best defense is a good offense…lately

Hypothetical scenario – you want to play all offense with your stock portfolio, i.e. own the hottest stocks with the most potential upside, but use the rest of your portfolio to play the strongest defense possible. Another way to phrase this would be a barbell portfolio on steroids.It would have worked over the last five years. It may not work in every market environment. But just for fun, I asked the boys to run the numbers…As asset allocation of 50% Cathy Wood (ARKK ETF) and 50% 5 year Treasurys (IEI – 3-7 Treasury bond ETF). Holding period is 2016 through the end of 2020, so five full years, rebalancing once annually.What really stood out to me was the max drawdown number. The ARKK + 5 year Treasury combo actually had a lower drawdown than the SPY, mostly because of all those bond...
Beware the Bubble? The US Stock Market Cap-to-GDP Ratio
Investing

Beware the Bubble? The US Stock Market Cap-to-GDP Ratio

The stock market capitalization-to-GDP ratio — the so-called Buffett Indicator — measures the size of the equity markets relative to the economy. Since corporate sector growth depends on economic growth, the indicator’s two inputs are expected to move in sync over the long term.So What’s the Trend in the United States?The Buffett Indicator’s trajectory over the last 50 years displays two primary characteristics:1. A Rising TrendThe curve has been on a fairly continuous upswing, with a pronounced acceleration in recent years. What explains this behavior? The private sector’s growth as a proportion of the economy is probably one culprit. This has occurred as the government’s contribution to GDP has gradually decreased over the last half century.US Stock Market Capitalization-to-G...
How to Find Stocks in an Exploding Theme
Investing, Online Trading

How to Find Stocks in an Exploding Theme

Are you bullish on a idea or industry?Maybe you see the tastes of a specific demographic changing before Wall Street can see it.Or perhaps real estate in your area is booming, but the boom isn’t showing up in your regional homebuilder’s stock price.All of us have unique vantage points that allow us to see societal trends early, and we can monetize some of these.Just seeing it doesn’t matter if you can’t take meaningful action, though.You need to have an accurate, early view and know how to express it in the financial markets. Even better if you can do so in a way that gets you the most leverage on the trend as possible.Today’s article aims to bridge one of those gaps–finding the right stocks that will help you express your view on a specific theme.This way, you can create you...
Managing Your Investments Late in the Cycle
Investing, Trading Tips

Managing Your Investments Late in the Cycle

Live long enough to see several complete market cycles, and patterns emerge. Denial and disbelief turn into reluctance and acceptance as stocks go from being far too cheap to far beyond fair value. Those who lashed themselves to the mast to avoid the siren call of the bulls miss a money-making opportunity as a speculative frenzy intensifies. When the crash belatedly arrives and blood flows in the streets, most are too terrified to buy. Instead, they double down on their bearish bets, missing a generational buying opportunity.This rinse, lather, repeat cycle of market history is filled with epic stock narratives. A couple of the more recognizable ones in recent history include the dot-com boom of the late 1990s, real estate in the 2000s and the blockchain frenzy of 2010s. But what really ...
GameStop Investing Craze ‘Proof of Concept’ for Bitcoin Success, Says Scaramucci
Crypto News, Investing

GameStop Investing Craze ‘Proof of Concept’ for Bitcoin Success, Says Scaramucci

SkyBridge Capital’s Anthony Scaramucci said Wednesday that retail investor-led stock surges for video gaming firm GameStop suggest bitcoin will ultimately be a success.On Tuesday, a volatile trading session largely driven by a campaign by members of the Reddit forum r/WallStreetBets saw GameStop (NYSE: GME) jump 92.7%. Trading of the stock has been halted multiple times in the last week as price spikes triggered market protections.After Elon Musk joined the fray, tweeting “GameStonks,” shares rose 50%. The video gaming stock is now worth $10 billion and classified as a large-cap stock, according to Bloomberg.Scaramucci said in an interview with Bloomberg that this strong individual trader market action is “proof of concept that Bitcoin is going to work,” and should be tak...
Here is something you can’t understand
Investing

Here is something you can’t understand

There was a moment in the fourth quarter of 2018 where shares of Apple fell 38 percent in a matter of just a few weeks. Nothing much had fundamentally changed, but the stock market had been hit by a wave of fear that the Fed would go “too far, too fast” in normalizing interest rates and that China would retaliate against Apple in the Trade War™.And during that brutal bear market, in which the S&P 500 fell half as much as Apple – roughly 20 percent – the Greatest Company on Earth‘s stock actually got momentarily cheap. Its price/earnings ratio (on trailing twelve months’ earnings) fell by more than its share price, a drop of 43 percent from the high in September. So investors had implicitly (and very temporarily) decided that Apple’s valuation should only be about half of what it was ...
Beginners Guide to SPAC Stocks [2021]
Investing, Online Trading

Beginners Guide to SPAC Stocks [2021]

What is a SPAC?SPAC stocks is a Special Purpose Acquisition Company.They’re essentially shell companies that raise money, go public, then use the funds to buy a company and bring it public.You can think of them as publicly-traded venture capital firms that only ever make one investment with a specific deadline to make said investment. Most of the time, the deadline is two years. SPACs are referred to as “blank check companies” because investors give the SPAC sponsors a bunch of money without knowing what they’re going to buy with it.The sponsors can now go out and try to pursue a takeover of a private business to bring it public. Here’s the rough timeline for a SPAC:Form a shell company and prepare for an IPO. This includes raising funds from investors, dra...
Large Cap vs Small Cap: What’s the Difference?
Investing, Online Trading

Large Cap vs Small Cap: What’s the Difference?

So what’s the difference with large cap vs small cap stocks?Quite a bit actually!In this article, we will help shed light on market capitalization, differences between large and small cap stocks, and things to consider when trading both types.What is Market Cap?Market cap is a measure of a company’s value that investors are placing on the company at a given point in time. This measure refers to the total dollar value of a company’s outstanding shares of stock.Outstanding shares include all shares — those available to general investing public and restricted shares held by and available to specific groups.To calculate market cap, simply multiply the share price of a stock by the total number of shares outstanding.FormulaMarket Capitalization = Number of Shares Outstanding x P...
Beat the Compound! A Simulated Stock Trading Game Coming in January!
Investing

Beat the Compound! A Simulated Stock Trading Game Coming in January!

Just for fun, Michael Batnick, Ben Carlson and I will be playing a new simulated stock trading game with our fans this January. Sign up now to grab your spot in the game.Starburst Labs, the team behind popular advisor tool Wealthbox CRM, have been building what looks to be the best simulated stock trading engine ever. It’s called Wealthbase and it’s beautifully done, you’ll be impressed by its capabilities and its user interface. Simulators are a great way to learn about investing and trading, and they’re also a great tool to learn about yourself – what do you trade like when you’re up, how do you react to being down, what does the risk of being in a large drawdown do to your mentality? We hope you’ll jump into this contest for a fun, engaging learning experience.We’re inviting our f...