Investments Trade Log

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kawaivf1
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Re: Investments Trade Log

Post by kawaivf1 »

jacob wrote:
Sun Dec 04, 2022 9:01 am
BTC: -73%
I have stayed away from crypto like the plague.. which hurt on the way up. What do you think about the SVB issues? It feels like there are a lot of hidden issues out there that will cause some kind of capitulation event.. It doesn't feel like we have gotten that major moment yet that brings valuations back down to earth.. Which is saying a lot with how much tech has come down.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Lemur wrote:
Mon Feb 06, 2023 8:55 pm
Accumulating SOFI Jan 2024 $5.00 calls. I've 12 contracts thus far.
I increased this to 22 contracts and sold 40 $5 puts on SoFi a month out. Did this right after the 10% drop due to SVB. Good timing…I see after-market green and the CEO added more shares too. I don’t believe SVB has anything to do with SoFi and I’m betting this more of an isolated case rather then a systematic one.

plow_2
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Re: Investments Trade Log

Post by plow_2 »

What are the chances of Sofi being impacted by the government student loan forgiveness?

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Well when Student Loans were first paused, the stock began its downfall and each time the pause has been extended, SoFi stock has dropped. They had to adjust their business to innovate instead into a technology sector and grow their lending business. To do this…they had to dilute shareholders to fund acquisitions of Technisys and Galileo. They also acquired a Bank Charter.

So the student loan pauses forced SoFi to change and adapt considerably. The pauses still hurt the business thus the potential legal action:
SoFi projects that it will lose $25 million to $30 million if the payment pause remains in place through August.


If the Supreme Court strikes down the program, I’d imagine that would be a catalyst for SOFI’s stock price. Most of their brand is being a “student loan company” and that is how Wallstreet sees them but they’ve evolved quite a bit in two years.

The other catalyst I see is SoFi reaching GAAP profitability expected in 3rd quarter of 2023.

A lot of reasons to be bullish and hence my rather large investments. The macroeconomic conditions however continue to make this investment risky.

plow_2
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Re: Investments Trade Log

Post by plow_2 »

Thanks for that, That was how I was seeing it, but wanted to be sure I wasn't missing something.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

I believe the big banks and the Federal Reserve have already given us evidence that they will not let this bank fail by injecting $30 billion minimum into it:'
https://finance.yahoo.com/quote/FRC?p=FRC

The stock is down 84.20% YTD (trading at $19.50 at time of this post). If acquired by another bank or Buffett, you could potentially earn at a premium. You also could wind up bagholding and FRC ends up taken at a discount like Credit Suisse.

If you've the risk tolerance for a potential rebound... then FRC is something to look at. Hindsight - Picking up BAC in 2008-2009, for instance, would've been a great move. The bank is not insolvent, just has a liquidity issue...but I suppose you've to have reason to believe that their reputation will recover and confident that outflows of high net-worth depositors won't be impactful in the short-run.

I'd almost consider this myself but I'm already exposed heavily to another bank (SoFI). Just thought it might be worth sharing.

Edit: Now in the $12s…Woa.

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Bankai
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Re: Investments Trade Log

Post by Bankai »

Something something falling knives...

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@Bankai

There are opportunities in turmoil if you’ve the risk tolerance for it. We could also say “be greedy when others are fearful.” But you also need to know what to be greedy on…like what I always say jokingly what I post this is not financial advice…

Other thoughts - if we remove focus on building net-worth and instead focus on building a system for future cash outlays…why bother even touching any of this crap. I’ve had these thoughts in recent weeks.

For instance, I added a new column in my spreadsheet after market value (for each stock / index I own) for yield. And totaled that column. So I’ve thought focus on getting the total yield up instead of total net-worth. Example. If market value of my stock is $100k then that represents $4k annually at a 4% withdrawal rate, but if the dividend is 0% then it may have no use for my purposes of living off outlays in the future. If the yield is something like 2.13% then it represents $2,130.

The 3% capital for life yield on the Wheaton Chart seems to naturally occur in the average dividend of the broad market which is normally between 2-5% ish depending on asset values.

ETA: I’m not saying we should necessarily chase yield either, but to consider a measurement in your portfolio depending on your goals. It can be a useful indicator. Big cap corp with high ROE and 2-3% yield? Probably okay. Something in a riskier industry or a smaller cap yielding 6%? Might be a reason to be cautious…

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@Bankai

yeah that was one hell of a knife. FRC at $9.53 (Edit $8.29) Earnings showed an outflow of more than $100 billion in deposits.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

It looks like it may be a zero, Fox is saying it is expected to be seized by the government.

loutfard
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Re: Investments Trade Log

Post by loutfard »

Lemur wrote:
Mon Mar 20, 2023 3:32 pm
For instance, I added a new column in my spreadsheet after market value (for each stock / index I own) for yield. And totaled that column. So I’ve thought focus on getting the total yield up instead of total net-worth. Example. If market value of my stock is $100k then that represents $4k annually at a 4% withdrawal rate, but if the dividend is 0% then it may have no use for my purposes of living off outlays in the future. If the yield is something like 2.13% then it represents $2,130.
Doesn't work well over here. We pay a lot of dividend tax, but no capital gains tax except on very specific speculative things. I'd rather pay 0% on an accumulating S&P500 ETF's gains (including dividends!) than 40.5% dividend withholding tax on most foreign dividends.

Dave
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Re: Investments Trade Log

Post by Dave »

Lemur wrote:
Mon Mar 20, 2023 3:32 pm
...Other thoughts - if we remove focus on building net-worth and instead focus on building a system for future cash outlays…why bother even touching any of this crap. I’ve had these thoughts in recent weeks.

For instance, I added a new column in my spreadsheet after market value (for each stock / index I own) for yield. And totaled that column. So I’ve thought focus on getting the total yield up instead of total net-worth.

...

ETA: I’m not saying we should necessarily chase yield either, but to consider a measurement in your portfolio depending on your goals. It can be a useful indicator.
I know I'm not saying anything you don't already know (as shown by your past commentary and the edit), but it's worth saying that a lot of people who primarily focus on dividends do fall into the trap of sacrificing on other important qualities/metrics in an effort to get yield, even if they don't dive deeply into the land of junk assets.

This pattern of focusing on quantitative metrics that are easily measured at the expense of quality metrics that are more difficult to capture show up over and over in many areas of life. Think about strength training where for many people (definitely me at times!) the pursuit of increasing higher weight and reps leads to form breakdown and injury. Sure, progressive overload is critical. But not when you introduce other risk/damage to the system - then it's not real progressive overload. Same thing with excess focus on yield.

I get it. Investing is complicated and there is an elegant simplicity to the idea of focusing on "what matters" - cash flow - rather than trying to value assets. The problem is this approach basically uses dividend payout as a proxy for free cash flow, and there is often a real disconnect between historical and recent dividends and future free cash flow. It's easy to ignore this, but you do it at your peril.

There are many examples of companies, even of the type that you describe (large cap decent economics moderate yield) that don't work well. IBM comes to mind.

To your question of why bothering with other approaches, well, the reason is clear: to do better :lol:.

With that said, I think an intelligently designed and implemented investing strategy that prioritizes dividends but also gives consideration to other important factors can be a good way to go for many. The SWAN benefits seem to be especially important for some people who psychologically are drawn to smoother, more-even returns, and/or the comforting similarity of recurring quarterly dividend payouts to biweekly j*b paychecks.

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Bankai
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Re: Investments Trade Log

Post by Bankai »

Once one realizes dividends are not a return on capital but a return of capital, they lose all allure.

jacob
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Re: Investments Trade Log

Post by jacob »

Bankai wrote:
Wed Apr 26, 2023 12:06 pm
Once one realizes dividends are not a return on capital but a return of capital, they lose all allure.
These are technically not the same. In the US they are treated differently.

Return of capital is taken from equity. The tax consequence is a lowering of the cost basis, so it gets taxed as capital gains when you sell. Quirk, IIRC, the cost basis can never go below zero.

Return on capital is taken from earnings and taxed as capital income.

In terms of "sentiment", this is just the "total return"-debate. In theory, there's no difference. In practice, there is.
See https://www.amazon.com/What-Works-Wall- ... 0071625763

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Bankai
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Re: Investments Trade Log

Post by Bankai »

jacob wrote:
Wed Apr 26, 2023 1:08 pm
These are technically not the same. In the US they are treated differently.
In the UK most investments are tax-sheltered (ISAs and pensions) so there's no difference in treatment. However, my point was that many 'dividend investors' think that dividends are some additional value added to their investments, like interest on bonds or savings accounts, or rent on a property, not realizing what they're getting back is just a slice of what they already had, i.e. a piece of the company they own. A similar fallacy is an often repeated phrase that dividend reinvestment is the main driver of stock market growth.
jacob wrote:
Wed Apr 26, 2023 1:08 pm
In terms of "sentiment", this is just the "total return"-debate. In theory, there's no difference. In practice, there is.
Well, there's plenty of difference in theory too, on balance pointing to total return being superior. But I also understand the emotional comfort dividends give.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

Jacob made a few years ago one of the most compelling (in my view) arguments in favor of dividends: “you can’t fake cash”

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Bankai
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Re: Investments Trade Log

Post by Bankai »

Companies borrow to pay dividends all the time. Looks like faking to me.

loutfard
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Re: Investments Trade Log

Post by loutfard »

Bankai wrote:
Mon May 01, 2023 8:36 am
Companies borrow to pay dividends all the time. Looks like faking to me.
Borrowing to pay dividends sometimes is a tax avoidance strategy. Look at what Apple does for a prime example.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

Bankai wrote:
Mon May 01, 2023 8:36 am
Companies borrow to pay dividends all the time. Looks like faking to me.
No it’s not. The borrowing is visible and cannot be hidden.

jacob
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Re: Investments Trade Log

Post by jacob »

Bankai wrote:
Sun Apr 30, 2023 5:22 pm
However, my point was that many 'dividend investors' think that dividends are some additional value added to their investments, like interest on bonds or savings accounts, or rent on a property, not realizing what they're getting back is just a slice of what they already had, i.e. a piece of the company they own. A similar fallacy is an often repeated phrase that dividend reinvestment is the main driver of stock market growth.
Sure. I can't really be responsible for what people (mis)understand in the vernacular though, but this is why I keep recommending that people study the "startup curriculum".

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