Tag Archive | "amc"

Robin Hoodie


Do not confuse values with value.  If you do, the guy with the hood can (and will) steal from you.

Don’t expect Robin Hood to steal from the rich and give to the poor.  He just steals.

Last week (Feb. 1) I wrote: “Small investors are cooperating through social networking communication and are winning over some of the biggest investment firms.  Expect more of this type trading this week, but DO NOT DO IT YOURSELF!

If you have been playing this game, take your profits and run.  If you have not…. don’t!”

I promised to say more in a future message, so here it is.

We have all heard of pump and dump.  That’s where a stock promoter will tout the benefits of buying a share while selling personally.  This is one of the oldest stock ripoff tricks in the world.

See below how ideal social networking is, as an instrument to pump and dump.

hoodie

Don’t let Robinhood (or any broker) become Robinhoodie and rob you.

The Wall Street Journal article “Robinhood’s Reckoning: Facing Life After GameStop” shows one reason why I put DO NOT DO IT in bold and with an exclamation.

Stock market investing and politics are contact sports! When anyone threatens the established financial order to such a degree as the Gamestop surge has, it will be shut down. 

In these periods of rapid technological change, experience is often a disadvantage, but in this case, my experience with silver investing is applicable.

I was young and speculated heavily in silver during the 1970s era when Bunker Hunt and his brothers William and Lamar Hunt began accumulating large amounts of silver in the 1970s.

By 1979, they had nearly cornered the global silver market and profited an estimated US$2-4 billion in silver speculation.

This drove silver’s price from $11 an ounce in September 1979 to $50 an ounce in January 1980.  I was so lucky.  Due to a trip that would keep me away from a phone (no cell phones back in the day) and my heavy leverage, I sold at the very top of the market (right at the top).

Almost to the day of my sale, the establishment struck back in several ways.

The trading companies raised the margins required to cover silver contracts.  Then the Hunt brothers were charged “with manipulating and attempting silver price by the United States Commodity Futures Trading Commission.

By 1988 the billionaire (a lot in the 1980s) Hunt brothers filed for bankruptcy as a result of their silver speculation. They paid tens of millions in fines in addition to a multimillion-dollar settlement to pay back taxes, fines and interest to the IRS

So The Wall Street Journal article “Robinhood’s reckoning can it survive the Gamestop bubble” (1) did not bring me any surprise.

The article says: The firm that set out to bring investing to the masses has run into the reality of Wall Street regulations

Matters came to a head early on Jan. 28 when the clearinghouse that handles Robinhood’s trades demanded it put up a total of $3 billion to cover the day’s trading, a cushion for the risks created by a stunning run-up in a few stocks, such as GameStop Corp. GME 19.20% , fed by cheerleading on Reddit’s WallStreetBets forum.

The demand, 10 times Robinhood’s daily requirements earlier that week, set in motion a chain of events that included stopping customers from buying the very stocks that made the app so popular.

The firm that set out to bring investing to the masses had run into the reality of Wall Street, with its tangle of often-expensive regulations, overseers and Byzantine infrastructure.

This is the same tactic the establishment used against the Hunts in 1980.  Robinhood managed to raise the money to cover the extra margin but this will not end Robinhood’s problems.

They may survive, but investors have to beware because social networking is a perfect venue for pumping and dumping.

A lot of stories get circulated about amateur  investors turning a few thousand into fortunes.  Another Wall Street Journal article tells how one 14 year old bought 33 shares of Game stop at $87 and saw it rise to $483.  He held on and it dropped to $53.50, but the investor said:  “The stock price hardly matters right now, I’m definitely riding with it.”

For years, we have been sharing the idea that investors will increasingly invest based on values as well as value.  We encourage this… investing in what you believe in.

But your values need to be supported by value!

If my grandfather, and his cohorts had protested what automobiles would do to humanity and invested in buggy whip manufacturing factories. they simply would have lost their money.  Cars would still be here.

Many of the social media traders who invested in Gamestops and AMC (interesting that silver became involved) did so with some idea that they were protesting and hurting “Big Wall Street”.   Losing money to Wall Street is not a good way to protest!

These traders think they are making history and this has made trading stocks look like fun.

Such ephemeral concepts that go viral without any real thought and are then magnified and intensified by waves of other non thinking traders are a perfect foil for pumpers and dumpers.

The Wall Street Journal article “Trader ‘Roaring Kitty’ and Former Employer May Face Federal Regulatory Scrutiny” (2) shows how vulnerable investors are to this tactic.

Mr. Gill has posted dozens of videos or livestreams over the past six months, most of them related to his view that GameStop shares were undervalued and would rise as others took notice. Some videos examined the company’s past performance and forecast aspects of its future outlook.

Mr. Gill has owned 50,000 shares of GameStop since early January, along with bullish options that pay off if the stock price passed $12, according to his recent posts on Reddit, which were written under the username “DeepF—ingValue.” Mr. Gill posted Wednesday on Reddit that he was “gonna back off the daily updates for now.”

GameStop shares reached an intraday high of $483 on Jan. 28, after trading around $17 at the beginning of the year, according to FactSet. The stock plummeted in the past few days but rebounded somewhat on Friday to reach $61.07.

Mr. Gill talked to the Journal last week about his new life as a famous trader.

The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.

The article does not confirm that Mr. Gill was pumping and dumping, but you can be sure, if he was not, others were and they will when social networking creates future waves of this sort.

My parents used to hammer me with the thought that “a gambler never owns anything”.  Some of that ideology must have stuck.  There is no such thing as a risk free investment.  Risk is the price we pay for expecting a return.  The more risk we take, the greater return we should expect.  But also the greater loss.

Most of us are not emotionally prepared to take too much risk.  Risk aversion is a human trait that simply means that avoiding loss is more important than making profit.  It is our nature to react more dramatically and make more mistakes when prices are crashing than when they rise.

hoodie

Most of us are not prepared for hoodie like this alone, at night nor are we prepared for  leveraged trading

Robinhood has  a mantra “provide insane customer service,”.  I think that means provide insanely good service, but according to the Wall Street Journal article, the company only had about 100 people assigned to respond to users’ issues and didn’t operate a hotline users could call to seek help. Agents responded only to emails and social-media messages.

This resulted in some disasters.

From WSJ: Limitations in customer service continued into the summer, when a 20-year-old student named Alex Kearns tried to reach a Robinhood customer-service representative in the middle of the night regarding a sophisticated options position. An amateur trader, Mr. Kearns was rattled when he thought his account statement showed he had lost three-quarters of a million dollars.

Mr. Kearns received an automated email reply from the company, according to people familiar with the matter. He killed himself on June 14, leaving a note that asked how someone of his inexperience was allowed to trade so easily. Mr. Kearns’s father declined to comment.

At the time, a relative told The Wall Street Journal that Mr. Kearns appeared to be looking at a figure on his account statement representing one leg of a trade that was losing money, but not the opposing leg that was gaining value.

Don’t kill yourself or let your finances be killed over investing.  Seek value in the values in which you invest.

Gary

The Only 3 Reasons to Invest

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The stock market has always been the best place of places to protect and increase wealth over the long haul.   Yet it’s also been the worst place to lose money, a lot of it, quickly.

There are only three reasons why we should invest.  We invest for income.  We invest to resell our investments for more than we had invested.  We invest to make our world a better place.

The goal of investing should be to stabilize our security, bring feelings of comfort and elimination of stress!

We should not invest for fun, excitement or to get rich quickly. We should not divest in a panic due to market corrections.

This is why my core stock portfolio consists of 19 shares and this position has hardly changed in three years.  During this time we have been steadily accumulating the same 19 shares and have traded only three times.

A model portfolio that dates back to 1969 has dramatically outperformed almost every stock market in the world.

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A hundred US dollars invested in that portfolio in 1969 is now worth $44833 compared to $100 invested in an equity weighted world index being worth $11,548.

This portfolio is built around a strategy that’s taught in my Purposeful Investing Course (Pi).  I call these shares my Pifolio.

This portfolio more or less matched the S&P 500 until May 2018.  Then a stronger US dollar made the portfolio look like it was falling behind.   This currency illusion creates a special opportunity we’ll view in a moment.

This portfolio above is based on stock price to value analysis built around 91 years of stock market data.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2020.   There have been no changes since.

70% is diversified into Keppler’s good value (BUY rated) developed markets: China, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, Colombia, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Germany (symbol EWG) is a Country Index ETF  that tracks the investment results of the MSCI Germany Index. The fund is at all times invested at least 80% of its assets in the securities of its underlying index that primarily consists of all the large-and mid-capitalization companies traded on the Frankfurt Stock Exchange.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market in our Pifolio.

This year I celebrated my 52nd anniversary of writing about global investing. Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades. This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You get this course when you enroll in our Purposeful Investing program (Pi) with a triple guarantee.

Triple Guarantee

Enroll in Pi.  Get the 130 page basic training, a 46 stock market value report, access to all the updates I have sent in the past three years, two more reports on investing (described below) and an online Value Investing Seminar right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy diversified investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the two reports and Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.This year I celebrated my 51st anniversary of writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Stock and currency markets are cyclical.  These cycles create extra profit for value investors who invest when everyone else has the markets wrong.  One special seminar session looks at how to spot value from cycles.  Stocks rise from the cycle of war, productivity and demographics.  Cycles create recurring profits.  Economies and stock markets cycle up and down around every 15 to 20 years as shown in this graph.

The effect of war cycles on the US Stock Market since 1906.

Bull and bear cycles are based on cycles of human interaction, war, technology and productivity.  Economic downturns can create war.

keppler

The chart above shows the war – stock market cycle.  Military struggles (like the Civil War, WWI, WWII and the Cold War: WW III) super charge inventiveness that creates new forms of productivity…the steam engine, the internal combustion engine,  production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and lastly during the Cold War, the internet.  The military technology shifts to domestic use.  A boom is created that leads to excess.  Excess leads to correction. Correction creates an economic downturn and again to war.

Save $102 If You Act Now

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.

Triple Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report, access to all the updates of the past two years,  right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy diversified investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the reports as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197 and receive all the above.

Your subscription will be charged $99 a year from now, but you can cancel at any time.

Gary

(1) www.wsj.com/articles/robinhoods-reckoning-can-it-survive-the-gamestop-bubble-11612547759?mod=itp_wsj&mod=djemITP_h

(2) www.wsj.com/articles/gamestop-trader-roaring-kitty-and-former-employer-may-face-federal-regulatory-scrutiny-11612553349?mod=itp_wsj&mod=djemITP_h