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Jedi2155

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I have a personal loathing for CDs because of the complete lack of liquidity.  Nearly every asset class including basic money markets is a better option for cash holdings. 

Kuhla and I both posted investment options with 4 week/1 month durations.  That Synchony CD yields 0.4% more than a US treasury and has a 12 month duration.  If you can afford to invest for 1 Year + there's no reason why you would want to use a CD. 

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  • 2 months later...
On 3/14/2018 at 8:58 AM, Malaphax said:

We have our first (and only) scapegoat in the Equifax saga of stupidity and incompetence. 

http://money.cnn.com/2018/03/14/news/companies/equifax-insider-trading/index.html

I'd love to see all of these idiots charged, but realistically the SEC will be satisfied with just charging one. 

.......and they did.

article - https://www.zdnet.com/article/former-equifax-executive-sent-behind-bars-for-insider-trading-after-data-breach/

Quote

A former Chief Information Officer (CIO) of Equifax has been issued a prison sentence for insider trading on the firm's disastrous data breach before the incident became public knowledge. 

Jun Ying served as the CIO of the credit rating agency's US Information Solutions arm at the time a 2017 data breach resulted in the exposure and theft of information belonging to roughly 145 million US citizens. 
Security

Consumer data including names, Social Security numbers, dates of birth, home addresses, and partial driving license details were exposed. 

An Apache Struts vulnerability present in Equifax systems -- despite a patch being made available two months prior -- was blamed for the breach. 
.....

The 44-year-old executive then sold all of his stock, resulting in payment of over $950,000. According to US prosecutors, the insider trading benefited Ying to the tune of over $480,000 and circumvented a loss of over $117,000. 

Several weeks later, Equifax publicly admitted to the data breach and the firm's share price plummeted. 

Ying pleaded guilty to insider trading and was sentenced to four months in prison with a year of supervised release. In addition, the former CIO was fined $55,000 and ordered to pay $117,117 in restitution. 
.....

Oh. So he still made a tidy bit of money off of this even after the fine. How nice. Cost of doing business.

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While you're technically correct I want to provide a bit of detail on how the stock options system functions. 

Most stock options are given at an exercise price below the current market value or at a market value at some point in time in the past. 
Ex: Your company gives you 100 shares worth of stock options for XYZ stock with an exercise price of $100 and a vesting period of 1 year.  After the vesting period you can choose to exercise the options at any time, you're given that choice because it's a taxable event. 
If the stock price is currently $200 your benefit is going to be $10,0000 (100 x [$200 - $100]).  If you decide to exercise and sell everything because you know the stock price is going to tank you can negate a loss.  If the price drops to somewhere above your exercise price but below the price you sold at then you can still have a positive benefit.  So in this example if the price dropped to $175 after the hack comes to light, you circumvented a loss of $2,500.  If the SEC decides to fine you and take your illegal gains then you might still have made some money on the option trade - because the stock didn't drop all the way to where your initial exercise price was. 

He had a $480,000 gain from the options position, but he was fined $50,000 + $117,117.  If he had sold at the very bottom of this event (like an idiot) he would have still had a gain of $480,000 - $117,117 = $362,883  Nothing about that gain is illegal.  He also received a 5 month prison sentence and will be on probation for at least 1 year. 

I'm not a prosecutor but I have no issues with the very short jail sentence, but I would like to see the fine be larger than $50,000. 

I'm not trying to defend this shitbag but I'm trying to present the information accurately. 

Here's a graph of EFX stock price to provide some additional context. 

image.png

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  • 4 weeks later...

The Equifax breach settlement is now live and you can file claims against it.  There are a few options, but in general there's a $125 claim if you opt out of credit monitoring (why trust the morons that suffered a breach) because you already use an existing service.  And there's an option to bill for your time at $25/hr for up to 20 hours.  People on reddit claim they don't require documentation for anything under 10 hours, so theoretically you can file for $125 + $250 from equifax. 
I'd say go ahead and take them for a ride, encourage friends, family and everyone you know to claim as much as you can get away with. 

https://www.equifaxbreachsettlement.com/

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On 7/24/2019 at 3:50 PM, Malaphax said:

The Equifax breach settlement is now live and you can file claims against it.  There are a few options, but in general there's a $125 claim if you opt out of credit monitoring (why trust the morons that suffered a breach) because you already use an existing service.  And there's an option to bill for your time at $25/hr for up to 20 hours.  People on reddit claim they don't require documentation for anything under 10 hours, so theoretically you can file for $125 + $250 from equifax. 
I'd say go ahead and take them for a ride, encourage friends, family and everyone you know to claim as much as you can get away with. 

https://www.equifaxbreachsettlement.com/

Yea none of that shit is happening.  FTC says too many people filed so everyone gets free credit monitoring... from the agency that got hacked and leaked your data on the internet.  What an absolute joke. 

https://www.ftc.gov/enforcement/cases-proceedings/refunds/equifax-data-breach-settlement

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5. I thought I could choose $125 instead of free credit monitoring. What happened?

The public response to the settlement has been overwhelming. Millions of people have visited this site in just the first week. Because the total amount available for these alternative payments is $31 million, each person who takes the money option is going to get a very small amount. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.

The free credit monitoring provides a much better value, and everyone whose information was exposed can take advantage of it. If your information was exposed in the data breach, and you file a valid claim before the deadline, you are guaranteed at least four years of free monitoring at all three credit bureaus (Equifax, Experian, and TransUnion) and $1,000,000 of identity theft insurance, among other benefits. The market value of this product is hundreds of dollars per year.

You can still choose the cash option on the claim form, but you will be disappointed with the amount you receive and you won’t get the free credit monitoring.

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This is something I have been mentioning offline and I'm posting here partially for my own future documentation.

I am very likely to move some or all of my investments to put them more in line with Socially Responsible Investing (SRI) or Environmental, Social and Governance (ESG) views.

Notes:

VSGX ETF ESG International Stock ETF
https://institutional.vanguard.com/web/cf/product-details/fund/4394

ESGV ETF ESG U.S. Stock ETF
https://institutional.vanguard.com/web/cf/product-details/fund/4393

VEIPX Investor Equity Income Fund Investor Shares
https://institutional.vanguard.com/web/cf/product-details/fund/0065

VFTSX Investor FTSE Social Index Fund Investor Shares
https://institutional.vanguard.com/web/cf/product-details/fund/0213

SOCIALLY CONSCIOUS ESG CORE-4 PORTFOLIO

https://core-4.com/esg-core-4-funds/
https://core-4.com/esg-core-4-portfolio/

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The Fed is currently working on an instant payment system, they hope to roll it out in 2023.  Currently big banks are working with the clearing house on their own version. 

https://www.marketplace.org/2019/08/06/the-fed-enters-the-instant-payment-fray/

To provide my own commentary - This is why I was initially excited by blockchain technology.  This is what we're moving toward.  Checks shouldn't take 5 business days to clear, and ACH payments shouldn't need an overnight to clear.  Stock/Bonds and Mutual Funds should be instant purchases rather than 1-2 days.  The instant payment and transaction systems will invariable squeeze and even destroy certain jobs, and while it sounds callous, I can't wait.  As someone who deals a fair bit with transactions, it blows my mind that everything sits in some weird "pending" status for so long while it's being verified, in actuality some middleman is taking a cut and big banks are holding onto cash for a few days, because there's been no pressure on them. 

I'd also love to see all major transactions like mortgages and real estate use a blockchain style system to shorten escrow and consolidate chains of title. 

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  • 4 months later...

A few articles I felt encapsulate both 2019 and the 2010 decade in the financial markets. 
tl;dr - everything went up, especially in 2019

Quote

Wall Street’s titans and armchair investors alike expend tremendous amounts of time and sweat trying to predict what will be up and what will be down, hoping to beat everyone else with a cleverly constructed portfolio.

This year, however, a simpler strategy would have worked: Buy almost anything.

https://www.nytimes.com/2019/12/31/business/2019-markets.html

Quote

Every $10,000 invested in the S&P 500 throughout the entirety of this decade turned into $30,000. This happened. It’s indisputable. Most people did not simply put 100% of their portfolio into the S&P 500 and just live through it during the entirety of the decade. Maybe no one did. Even so, you made money in REITs, in corporate bonds, in preferred stocks, in international stocks, in Treasury bonds, etc. You didn’t have to take maximum risk to earn good returns. You just had to tune out the endless recitations of the policy bears, the bubble-istas, the think tank economists and the most brazenly reckless newsletter attention-seekers.

https://thereformedbroker.com/2020/01/02/no-asterisks/

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  • 1 month later...
  • 2 weeks later...
On 2/28/2020 at 3:21 PM, kuhla said:

Just did this.

Hoping for the best.

It was only a tiny tiny bit harder than TurboTax. Had to do a bit more manual entry and more questions/steps but still very easy.

If everything is accepted and no problems I can see myself using them again.

Terrible name but seems to be plenty of happy customers on reddit who have used them for multiple years.

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  • 1 month later...

This is an opinion piece from the NYTimes attempting to explain why the stock market is nearly back to pre-covid19 levels, even as we continue to see horrible unemployment and GDP growth figures. 

https://www.nytimes.com/2020/04/30/opinion/economy-stock-market-coronavirus.html

Quote

What, after all, is the main alternative to investing in stocks? Buying bonds. Yet these days bonds offer incredibly low returns. The interest rate on 10-year U.S. government bonds is only 0.6 percent, down from more than 3 percent in late 2018. If you want bonds that are protected against future inflation, their yield is minus half a percent.

So buying stock in companies that are still profitable despite the Covid-19 recession looks pretty attractive.

And why are interest rates so low? Because the bond market expects the economy to be depressed for years to come, and believes that the Federal Reserve will continue pursuing easy-money policies for the foreseeable future. As I said, there’s a sense in which stocks are strong precisely because the real economy is weak.

He's suggesting that the limited investment pool available has forced people looking for any sort of growth to invest in stocks (and subsequently take on more risk).  I think there's some merit to that, the current bond market has been pretty garbage for some time now, with bond funds that provide decent yields often having large exposure to risky debt like emerging market debt or low quality corporate debt.  Comparing that to stocks, at least if you invest in some of the large/stable companies you'll more than likely see some returns compared to bonds which are losing out to inflation.  Funny enough this skews markets even further by changing everyone's risk level and it's also killing several well established theories about investing and risk. 

Here's a super ugly chart showing the weighting of the top 5 stocks in the S&P500 compared to the 350 bottom stocks.  Basically these top 5 stocks have seen substantial gains partially because they're so big that anyone buying an index that's tied to the S&P500 is indirectly buying some of these companies shares.  is it weird that this further suggests that the wealth inequality we see in the real economy is also present in the stock market?  Idk maybe I'm full of shit. 
Full article: https://theirrelevantinvestor.com/2020/04/21/the-only-thing-working-right-now/

pie.jpg

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  • 3 weeks later...

There are some stocks I consider outside of the normal rules of modern portfolio theory, Tesla is one of them.  For better or worse, that company is traded less on actual financial reporting and more on emotion or nebulous future predictions.  Every stock has a certain amount of forward looking projection built into their current prices, but TSLA seems like one of the extremes. 

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On 5/23/2020 at 11:47 AM, Malaphax said:

There are some stocks I consider outside of the normal rules of modern portfolio theory, Tesla is one of them.  For better or worse, that company is traded less on actual financial reporting and more on emotion or nebulous future predictions.  Every stock has a certain amount of forward looking projection built into their current prices, but TSLA seems like one of the extremes. 

They are more extreme because two primary reasons:

  1. Popularity - Retail customers have a large say in their matter due to their large ownership percentage . Elon has spent the past decade developing the brand and himself (inserting himself into mainstream media as earlier as Iron Man 2) to avoid advertising costs and increasing the popularity of EVs for the masses. This is reflected in the stock being purchased by people who do not look at the numbers but only the feeling.
  2. Large potential disruption - Tesla isn't only competing in automotive sector. They're also competing the energy generation sector with Tesla Solar. They're competing in the Utility sector/energy transportation with Tesla Energy. They're competing in the insurance market, the trucking sector (buying up transportation companies due to logistics issues with the Model 3 deliveries), machine learning, neural net processors (TPUs), charging infrastracture and I'm not even going to talk about the advances they're making in the IT sector as they're they've been redesigning their internal sales platform due to SalesForce being insufficient to handle their backend.

    Tesla has proven to be disruptive in the markets they enter usually becoming the 800 lb Gorilla. That's why I believe the stock will eventually be valued at $5-15,000 range but its a question of when. Given the volatility of stock based on Elon's comments (with agility comes issues), if Elon kept a lower profile than he does presently I would've bet the stock would've been closer to $2000 today on the basis of his comments. That being said, I think its also a core strength of his companies by communicating in such a fashion. Double edge sword there.
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Popularity is sorta true, but on paper they don't have a significantly larger retail investor presence than even other auto manufacturers. 
TSLA - Insider 20.51% + Institutional 51.5% = ~30% retail investors
F - Insider 0.1% + Institutional 52.6% = ~50% retail investors
GM - Insider 0.2% + Institutional 77.9% = ~23% retail investors (This is a more traditional S&P500 equity ownership)

Of course that leads to your second point, which is that Tesla isn't strictly an auto manufacturer, which I would agree with.  They still sell substantially lower numbers of vehicles than most auto manufacturers, but they also see a healthy demand - shown by some of their wait lists.  I agree Tesla is more similar to Amazon in the sense that they're willing to push into new/different business areas with some competence, but unlike Amazon they haven't really shown the ability to produce sustainable revenue.  They're also notorious for missing deadlines, missing revenue guidance and that's before we even touch Elon's general weirdness. 

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I'm not sure where you got ~50% retail for Ford checking these two charts which has a better breakdown:

Ford is ~1% accord to this data

https://money.cnn.com/quote/shareholders/shareholders.html?symb=f&subView=institutional

Tesla is 31%:

https://money.cnn.com/quote/shareholders/shareholders.html?symb=TSLA&subView=institutional

 

If you look at this source both Tesla and Ford has the same institutional percentage:

https://www.nasdaq.com/market-activity/stocks/tsla/institutional-holdings
https://www.nasdaq.com/market-activity/stocks/f/institutional-holdings

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7 hours ago, Jedi2155 said:

I'm not sure where you got ~50% retail for Ford checking these two charts which has a better breakdown:

Ford is ~1% accord to this data

https://money.cnn.com/quote/shareholders/shareholders.html?symb=f&subView=institutional

Tesla is 31%:

https://money.cnn.com/quote/shareholders/shareholders.html?symb=TSLA&subView=institutional

I'm not sure what you guys are exactly talking about but the institutional number is in the first paragraph on those pages you linked.

image.png

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I'm personally using these pages:

Ford: https://finviz.com/quote.ashx?t=f

Tesla: https://finviz.com/quote.ashx?t=tsla

I showed my calculations, Insider + Institutional - Total = ~Individual / Retail.  While I'm not entirely certain, I suspect that employee pensions make up the bulk of Ford's 50% "individual / retail" holding in my calculations and that the 1% number from cnn business is referencing insiders. 

In general, most stocks are majority held by institutional investors, sometimes as individual positions but more often as part of various investment products like ETFs and Mutual Funds.  Tesla most likely has an outsized "retail" ownership, I suspect that's partly because of the people who are excited about the company, and also due to the potential growth / volatility.  I just wanted to show that Ford, technically has a larger individual percentage ownership, I again suspect it's predominantly held by their pension fund or UAW.  Same with GM.  I'm also not sure what percentage of TSLA employees receive stock grants, options, etc. and if that also makes up a decent percentage of the 30% retail ownership. 

Honestly the largest difference between Tesla and Ford/GM is not the retail investor space, but the insider ownership percentage - Musk owns a shitload of Tesla, and in that sense the company's ownership structure is much closer to Amazon or Google, where owners/founders hold large positions (although that gets weird when you look at different classes of stock).  People sometimes refer to Tesla as behaving more like a tech stock than an auto manufacturer and while I think it's true they offer more than simple auto manufacturing, most of their products still remain physical goods and in that sense they're substantially different from many tech stocks. 

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  • 1 month later...

This blog post succinctly encapsulates why older financial models are having such a hard time coming to terms with the current market - and why we're seeing larger disconnects between the both debt and equity (and private equity) markets compared to the "real economy."

https://frank-k-martin.com/2020/07/10/down-the-rabbit-hole/

I generally dislike articles which are all doom and gloom because I've found that most people who scream about the sky is falling do so with reckless abandon, but I do think that current markets are behaving strangely.  I think often people get hyper focused on trying to spot what caused the last financial crisis instead of being on the lookout for the inevitably different issue that will cause the next crisis  I'm not sure if that's going to be CLO's or private equity funds like softbank going under or something more exciting like unlimited central bank spending.

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  • 3 months later...

Anyone remember a few years back when Foxconn lobbied the every living shit out of a small town in Wisconsin?  How about how multiple people in the town quickly realized that the billions in tax subsidies were being given out for a plant that was producing old technology?  Or that multiple people realized that this entire thing was a sham and wasn't going to actually be built?

Well here's a lovely article from the Verge talking about the details and how badly this all went. 
https://www.theverge.com/21507966/foxconn-empty-factories-wisconsin-jobs-loophole-trump

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I read a few sections and skimmed a few others (that is a long article) but it sounds like the entire project was political theater from the beginning. The work conditions sound maddening (work, hit target, then nothing to do, unknown if more work will come).

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It absolutely was political theater, the CEO of Foxconn has done this multiple times with multiple countries, including recently in India where they just finally announced that the proposed project isn't going to happen. 

The former repuplican governor pushed this through with a handful of protections that prevented tax breaks from being claimed without a minimum number of jobs being created (a saving grace of this fiasco).  But on a local level the town had closed door meetings and eventually condemned a sizable number of houses through eminent domain for a "factory" that is currently so underutilized they're literally calling it a general storage building and desperately looking for renters.  To add to this, the problem was partially brushed under the rug because the republican state legislature cut the legs out from under the incoming democratic governor elect and stopped her from doing basic oversight of this project that was supposed to generate 13,000 jobs.  So for many years now it's just been limping along, and at times abusing foreign students and h1b visas in an attempt to get "something" done so they could fraudulently claim a huge tax incentive. 

If at any point in time a rational individual performed the most basic of oversight, this would have been stopped.  But instead multiple levels of government were conned into this dumpster fire of a project all because they believed that the CEO of foxconn was going to create 13,000 jobs in nowhere wisconsin out of the goodness of his heart.  This exploitation from major companies shopping around for tax breaks (remember amazon hq2 and their bullshit bidding war?) is disgusting.  I hate that governments fall for this crap and I hate that companies continue to get away with this sort of dishonest crony capitalism. 

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