Because the Bitcoin just crossed the $100,000 mark recently, and with the upcoming US president who is friendly to the bitcoin and Cryptos, I saw a lot of excitement and craziness going on in that space.
Came across a question at FB private group:
My young adults (16/19) keep trying to invest in crypto, xrp, etc. Where is a good place to learn about it so they don’t get scammed. Already a few times one has lost $ from graduation gift we gave him to try his hand. What are legit companies to try bitcoin investing that I can learn from? They are definitely targeted on their social media platforms. Thanks!
My initial answer: Replace “invest” with speculate (or gamble). I don’t think cryptos are investment: they have no real value – other than hope the next guy will pay a higher price.
Someone’s answer to my initial answer: tell that to all the people who have made hundreds of thousands of dollars by investing in it.
My follow up answer: some people are just lucky 🍀- just like those people who won giant jackpot🎰 at the lottery. That doesn’t mean everyone else can have the exact same luck.
PS: I already expressed my opinion on “investing” on bitcoin and other cryptos (I don’t even want to call them cryptocurrencies). But at the same time, recently I realized companies such as Block Inc. with stock ticker symbol $SQ, Coinbase with ticker symbol $COIN, and Robinhood (App) $HOOD etc. actually are still viable business. Imagine them like the casino houses such as Caesar Entertainment, Las Vegas Sand, Wynn or other other casino in Las Vegas, in Macau and in Singapore: they are mostly profitable as long as their casinos are open and they have customers coming to gamble. Or just think them like the operator of Mega Millions or Powerball in the USA. Remember the old saying: the house always wins.
You may also read a Chinese version (translated by Google Translate) here.
Recently due to the booming of AI, the daring of AI and the wall street Nvidia $NVDA had crazy good earning reports in last year or two (20 months to be exact, if we look at the stock chart from Jan 1st, 2023).
And I recall recently their every quarter’s earning report is a confirmation of both the excitement of Nvidia and Gen-AI’ fans as well as the company unstoppable momentum in the space. Personally I feel Nvidia is the only drug dealer in the AI chip space. And a few days ago, I heard the word “Nvidia watch party”.
Of course this excitement is on display at Chinese stock forums, Chinese YouTubers, and so on.
Mike 是麦克 – 8月25日 美股实盘分享 下周赌一把 ｜英伟达股票｜美股操作分享 || I was vigilant of this kind of pump due to my experience. But I don’t know if there are others buy into those of BS (bull shit).
一亩三分地 – there are many discussions on NVDA and some are quite misleading.
Keep in mind for those guys, and many other creators, media people (think Jim Cramer of Mad Money) included, they don’t make money from actually betting on earnings. They make money from eyeballs.
Verdict
I had 12 shares a day or 2 before the $NVDA earnings this time. I never traded much NVDA in the past. And this time I decided just have a bit fun – I didn’t go to the “watch party” per say, or the Twitter (X) space dedicated to NVDA earnings. But I did listen to the earning call, as well as Jensen’s interview with Bloomberg right after the earnings call. In the recent past Jensen has went on to Jim Cramer’s CNBC Mad Money a few times, both after earning calls, or during other occasions. Don’t know why this time he went to CNBC’s rival Bloomberg.
PS: betting on earnings is essentially just like flip a coin. Because we as outsiders don’t really have any edge trying to figure out how a company is doing in a particular quarter.
Also you can read more about “earning report” that I wrote in the past.
I normally don’t bet on earnings (earning report), but when I do, I usually lose. –yours truly
And $PDD was no exception. Yesterday 08/26/2024 Monday morning, before market open, I noticed the stock was free falling. Note I bought 6 shares before the earning report. And basically this confirms another thing I talked from time to time: 买中概变乞丐 (and this is my short X thread); and my X thread on $PDD.
Reading Time: 2minutesSource: TrungTPhan on X (I think there are some valuable lessons that’s applicable to trading / investing here)
I used Robinhood App since year 2015, when they just got started. To be honest, I was drawn to them initially by the zero commission feature.
My experience with Robinhood over the years
I think Robinhood has some features I like, in addition to the zero comission feature that it pioneered in the industry. It also helped me to gain more confidence on trading stocks, especially between 2015 and 2019. Note in the early days Robinhood is probably the only brokerage firm to offer zero commission. Over the time, other brokerage forms followed suit too.
Other features I like:
They try to make the app fun to use, so in a way lighten things a bit such as doing some sort of confetti when a trade is submitted or executed, because trading stock actually has some pressure comes with it, believe it or not;
Once a stock is sold, the money is available to trade on the same day, as long as one does not sold it again on the same day. Day trading is somewhat complex and confusing in the US stock market. They do have a 3 strike rule: basically one cannot do more than 3 day trades over a week (5 days period). I got myself into this small trouble a few times, and I wait patiently until all 3 blocks expire.
Their app’s stability improved significantly over the years. For example, in today’s morning session, many bigger traditional brokerages had encountered issues on either website or apps, but Robinhood App did fine.
Referral
Sign up for Robinhood with my link and we’ll both pick our own gift stock 🎁
Update (01-20-2025) Amid recent Robinhood’s push into the Crypto etc., and also their gimmicks to sign up people or stir the interest (the new year promotion for example), I plan to gradually getting away from them. As some of my readers may know, I am not a believer of Crypto.
I understand business is for profit, but at the same time I do believe higher standards especially on ethics side. I believe in 君子爱财，取之有道.
Some random thoughts I had on consumer products companies stocks: I think it’s probably better to bet on $V and $MA instead of $LULU, $NKE, $DECK, $CROX, $SBUX and last but not least: $ONON which I have a small long position, thinking selling it around summer Olympics. I just sold few $LULU shares and I did a little comparison between Lulu and Alo/Vuori.
I recall in year 2006 when both CROX and MA were new IPO stocks, both were at between $20 and $40. Both did well in last 18 years. Also note CROX is probably the best performing shoes stock from year 2006.
Both Crocs and Mastercard IPO’ed on 2006, this is their stock performance since then.
Apparel and Shoes business are very hard
Many apparel and footwear companies stocks came and gone: and yours truly happened to traded this one called Heelys. Fun facts: Heelys IPO’ed the same day as $ALGT All Giant Travel the discount airline (quite unique business model). I actually bought ALGT that day, and I quickly sold it unfortunately. ALGT did much better than HLYS (which is the Heelys ticker symbol, it was a fad and I saw the Jurney’s footwear stores still sell them?). Other apparel makers that are in decline in recent years and yours truly managed to trade it for a loss: VF Corp $VFC.
That also on the other hand, shows Nike did a tremendous job to stay relevant. It got fierce competition in the running shoes and sneaker side from upstart such as HOKA (Deckers Outdoor $DECK), and ON Clouds ($ONON). We all saw Under Armour came and gone in terms of its threat to Nike. I already touched slightly on the potential threat from Alo and Vuori to Lululemon.
Apple Stock $AAPL
I rung the register on $AAPL today: one share at a time. I hope it can test $200 on Monday w/ WWDC, but hope is not a strategy. || I fully understand the “one more dance or one more drink” mentality because I have been there many times – and got caught without chair 🪑 when the music suddenly stops.
Q: Why Apple stock went up and down in the last 12 months?
A: You ask me, I ask who.
Seriously good question.
I guess things $AAPL bears 🐻 don’t like: its near zero revenue (sales) growth in last few years, people holding on their iPhones longer, increasing competition in the CHN market, mostly using financial engineering (stock buy back) to boost its stock price, failed car project and lagging behind in Gen AI…
PS, 06-07-2024, I just saw Mark Gurman of Bloomberg published some scoop on the upcoming WWDC
Recall probably in year 2015, at about 2 pm on Saturday afternoons, as I hop into the car, my iPhone would usually pop up and show the time it takes from the our condo to the Creve Coeur ice rink (under 10 minutes). At that time S was taking a private skating lesson. Apple probably got this Saturday afternoon routine of mine (or my daughter’s skating lesson) either from calendar, or past Apple map navigations. Then it just serves as a friendly reminder just like an assistant tells the boss. Again this is “non invasive, I am happy with it”.
I expect on Monday Apple will build on what they have now, and adding some Gen AI capability from a partner (Google or Open AI?).
Most recently, I speculated a few more, one with the intension of arbitrage (Reddit$HCP– HashiCorp is weighing up a potential sale – Bloomberg Business); another one I just stepped on it purely by accident ($BSY). I know in many days, I stepped on the wrong thing (or stock), but this time with #BentleySystems, things are looking good 🙂
My year 2020 post on Terraform, note TF is probably Hashicorp cash cow, and also important for cloud infrastructure life cycle management
Note in the years since 2015, essentially since year 2019, I thought about learning the #golang myself and apply for a job (likely dev) at Hashicorp. That didn’t materialize like many initiatives I had over the years. Also note in year 2020/21 while at Ascension health I did use the Terraform quite a bit for the GCP infrastructure automation. My main motivations to join them are two folds: 1) I was interested in Dev Ops and cloud infrastructure; 2) I recall if I join a startup when they have 200 people (or engineers), potentially I would make enough money from stocks so that I can retire early.
For $BSY, I heard about them for a while, but until recently I didn’t have chance to look at their financials (until they came to the public market a dew years ago)
Last but not least, as the old Chinese saying goes, 胜不骄败不馁，what I need to do: is continue this battle on the stocks, and hopefully I will come away with more winners compared to losers (recently losers include $DT, $LEG Leggett & Platt which I talked about here, and $RIVN).
PS (04-27-2024) I sold all my $HCP long position at $33 on Thursday 4/25, and now I think if it drops to $31.50 ($10% discount of IBM $35 offer price), I can make some money there – assume the deal doesn’t collapse, and I think almost risk free arbitrage from $31.50 to about $34. Along those thinking, I placed a limited “good until cancel” buy order of $31.50 🙂
This is a continuation of my personal reflection on investing in stocks. I recall most recently I talked about patienceover frequent short term trading here. Patience is import during power (electricity) outage too: which btw, in St. Louis due to the unpredictable weather, it happens once a while (such as this one in year 2006. And in summer 2021. Both the Jan 2007 and the July 2021 outages lasted multiple days. Also keep thing in perspective, I recall in July 2006 an electrician died when working to restore the electricity.
Today (this morning to be exact) I just noticed 2 stocks in my portfolio. And one is much bigger than the other in terms of portfolio size: 20 to 1. The big one barely went up 1%, the small one went up 10%. If you are curious, the large holding is $KO Cocacola, and the smaller one is $VERX Vertex software inc (tax software).
This reminded me of something Charlie Munger said quite a few times.
Charlie Munger: “And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple.” (reddit self.investing)
Stocks that I hold on for too long: RIVN, “hold on the loser, sell the winner” is the opposite of what I wanted to do.
Some of the things I am going to try
Delete the mobile apps (so far, deleted TD Ameritrade and Vanguard app)
Consider using less Robinhood and ThinkOrSwim (kept the latter as TD Ameritrade accounts are transferring to Schwab post the acquisition)
Do more reading and have a more focused as well as longer term portfolio – companies such as BRK, or companies that have some dividends that can potentially drop less or have less volatility during a bear market
The shareholder letter and 2023 annual report PDF file here. Quote the letter, page 5
Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. It’s harder than you would think to predict which will be the winners and losers. And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.
====== At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies – and simply sitting tight – can deliver wealth almost beyond measure. Even heirs to such a holding can – ugh! – sometimes live a lifetime of leisure.
====== We also hope these favored businesses are run by able and trustworthy managers, though that is a more difficult judgment to make, however, and Berkshire has had its share of disappointments.
Warren did not use the word enduring here. I think he meant companies that have enduring competitive edge 竞争优势 when he said “……rare enterprise……”, or the “moat” 护城河 which was frequently talked about/used in the past shareholder meetings. By the same token, in investing we are looking for an enduring company.
Warren’s grades for the subsidiaries and companies that BRK has Equity Stakes
If I could summarize what Warren said about the subsidiaries and the companies that Berkshire Hathaway equity stakes. He is what he said basically insurance is doing good, BNSF is doing okay and will probably be okay in the future. He was not that sure about the Berkshire Hathaway Energy BHE, mainly due to the unknown regulatory risks such as the capped rate. As a capitalist, he expected to recoup the investments and then some. But for the BHE (electricity utility co.), because the regulators limit the rate they can charge, he was not sure BHE can get the money back from all the investments in green energy (wind, solar) and power transmission.
For companies BRK has equity stakes, he basically “praised by names”: they are American Express and Coca-Cola. Both are companies born in 1800s. They have enduring competitive edge. I guess this is true even after the recent Capital One /Discover merge. Amex is in a such a unique position in the market, and they are not afraid of Visa and Mastercard either.
American Express Rose Gold card
Warrren praised the OXY, its CEO Vicki and the US oil industry as well.
Companies that has long history or decent history
I noticed in the US there are companies that has long history or decent history. Many of them are family controlled or started by a family (or two, in the case of Leggett and Platt, Wikipedia entry here). In a way Anheuser-Busch the beer giant was like that too. But now AB is a part of AB InBev. Over the time as companies go public (traded in the stock exchanges), the families will gradually sell off the stakes, and eventually they don’t have the control or majority ownership. I think the few companies that families still have control included Ford. Also Berkshire Hathaway will selectively provide a home for those families owned business too, include the one in recent news – Pilot Travel Centers.
Below some of them have STL connection (HQ).
ADM: they had an accounting scandal recently. That’s bad.
I traded the stock around that day. I sold it on the 2nd day though.
Bunge: first saw their North America HQ at west port, probably in year 2008. On its Wikipedia entry, – I noticed this company have long history. They are in similar business as ADM (food processing, some call them agri business). Note Monsabto is in that business too. STL has quite some agri business.
Founded 1818; 206 years ago; Amsterdam, Netherlands
Founder Johann P. G. Bunge
Somewhat related to John Deere, I noticed #Bunge moved its HQ to St. Louis in the last few years – https://t.co/H1s6Fq7xgG (they are also in the agriculture business, more on the processing side). I noticed their old North America (or USA) HQ near westport, about 16 years ago /6
Noticed the company HQ and company history of John Deere, Bunge and BRK
Berkshire Hathaway: nothing to add (this is a common phrase Charlie Munger used to say in the annual shareholder meeting).
Emerson Electric: this is St. Louis based company, and they recently sold the climate control business (White Rodgers and Sensi brands) to private equity, and the PE firm rebranded it as Copeland. Meanwhile Emerson continues to focus on industrial automation (compete against Rockwell Automation, Siemens etc) , and other business.
GE: 100+ years, in the progress of breaking up. The healthcare unit GE Healthcare is already being spun off, and its stock has done well so far.
IBM: 100+ years, sold or spun off some low margin business, still going strong recently.
Jack Henry and Associates: blog post (same blog post below for Leggett and Platt). The only tech public company HQ’ed in Missouri. Found in 1976, same year Microsoft was found.
Leggett and Platt: It seems they will have some tough time this year due to the consumer slowdown of beeding products (their main products). The company has a long history and is based in Missouri. I sold the stock recently, btw. My Blog post – Dividend Based Investing.
Twitter thread below. I have quite a few threads on this actually. But I am posting the last one here only. It seems the US consumers are tapped from year 2023 (and until now Feb 2024). I do expect some sort of recession for those consumers. This will impact consumer products companies such as Polaris too $PII (no position at this time).
Found one #dividendYield chart for $LEG: https://t.co/mNXqNcnKKU || For the dip at each quarter, it seems was caused by #exDividend. From visual the average dividend for $LEG is about 4%, and right now 6.95% yield seems juicy: obviously, the potential risk is the stock price drop
Btw, I sold the Rivian stock $RIVN on the same day I sold all the remaining shares of $LEG too. EV seems like the traditional car business, and similar to the airline business. They are both very hard to survive, and almost impossible to thrive in those businesses.
A related note is in the large commercial air planes space, there are only two players AirBus and Boeing $BA. And yours truly has a few shares of $BA at this time. And we cannot say that for EV. Tesla is obviously big in the USA, but in China BYD has just beat Tesla. And then there are also the legacy car makers, including the all mighty Toyota Motors, whose hybrid is taking the wind from the EVs now.
Macys: May Department store (Famous Barr). I heard they rejected PE’s take private offer. Long term I don’t see they survive. I recall we played with our soon to be 14 year old at Macy’s (hide and seek, when she was probably 2 years old). She could no longer remember. She shops at Aerie (American Eagle Outfitter), Hollister (a brand under ANF), and H&M instead.
Monsanto: bought by Bayer, operate as a part of Bayer Agri Science, and involved in lots of lawsuits on roundup (the lawsuit existed before the acquisition).
Sara Lee: Wikipedia. Came across it today as I saw people talked about its former subsidiary Hanesbrand. It looks like Sara Lee itself is broken up now: it split into the US business and European business, and the companies names also changed. They still kept the Sara Lee brand for bread. I used to have a roommate worked for Sara Lee in year 2007.
A side story: my 9 year old didn’t remember the brand name because of their font.
PS: in this year’s annual shareholder letter, Warren used his own little sister Bertie quite extensively, which is a good thing because he wanted non financial/accounting professionals to understand the business. He always paid tribute to Charlie Munger, who has the best 30 seconds brain in investing. Charlie does have other good attribute and skills too, e.g., he is a real architect (designing his own house, for example). And he did steer Warren towards the value investing in companies such as See’s candies and Coca Cola.
Coca-Cola can and drink (exaggerated)
Last but not least, I wrote a X thread yesterday on similar topic.
#BerkshireHathaway 2023 annual report (and #WarrenBuffett 's letter to shareholder) is out – https://t.co/VobyFbo5ML || I am reading it now, before reading others' comments. It seems I won't go to #BRK2024 at Omaha this year. Hope next year I can go. /1
Reading Time: 5minutesA tweet I saw yesterday 02-20-2024 regarding the $COF $DFS merger
Writing from my experience on credit card both from consumer (outside) and business (inside) perspective: meaning encourage more usage of the card via loyalty and rewards, make sure the card is on the top of the deck etc. I also understand Americans are addicted to the credit card to a large extent. Full disclosure: between 2015 and 2019 yours truly worked for the Mastercard loyalty and rewards department on Biz Ops (production support, Site Reliability Engineering, and product support), and Application Development (software engineering).
Note I call them merger instead of outright acquisition, because it’s essentially a 60/40 all stock transaction. Meaning the Capital One shareholders will get 60% of the combined company, the Discover shareholder will get 40%. While it’s not 50% to 50%, I think it’s close enough for merger.
CNBC (Hugh Son) – Here’s why Capital One is buying Discover in the biggest proposed merger of 2024
The deal, if approved, enables Capital One to leapfrog JPMorgan as the biggest credit card company by loans, and solidifies its position as the third largest by purchase volume. — Personally I am not ready to give up my CSP card for the Capital One Venture card.
‘Holy Grail’ But it’s Discover’s payments network — the “rails” that shuffle digital dollars between consumers and merchants, collecting tolls along the way — that Fairbank repeatedly praised Tuesday when analysts queried him on the strategic merits of the deal. There are only four major card networks: giants Visa and Mastercard , then American Express and finally the smallest of the group, Discover. (I agree 100%. Credit card network is just like a financial highway. Not toll free. Most everyone has to pay. 信用卡网络就像一个收费的金融高速公路。)
NBCNews – Capital One-Discover merger could put a bigger squeeze on credit card users, experts warn – Many of the largest credit card issuers already charge steeper rates than smaller ones.
The average credit card interest rate in the U.S. is 24.61%, according to LendingTree, the highest since the credit marketplace began tracking monthly rates in 2019. I felt for those cardholders who pay 24.61% or more 🙁 I don’t think even Warren Buffett can easily earn this kind of return in his investments (even with a smaller sum).
USAToday – Discover’s merger with Capital One may mean luxe lounges, better service, plus more perks
The acquisition would give Capital One access to Discover’s high-credit-quality customers and its network of payment processing services, an area dominated by Visa and Mastercard. (Both are not very accurate in my opinion. I will explain them below.)
The deal will create the largest U.S. card issuer with around $250 billion in card balances and a market share of 22%, according to TD Cowen. (This may be true)
FAQs on credit card
What is credit card network?How does it work?
I just saw Stripe has a good text explanation. A picture is worth a thousand words sometimes. For that in ByteByteGo (my friend Alex Xu) I trust. See below. Discover is similar to Visa, Mastercard and American Express when we talk about credit card network (card swiping in the old days, now it’s tapping or digital wallet pay).
How credit card works, from Alex Xu/ByteByteGo
How does credit card companies make money?
In simple words, they collect network usage fees from the user of the credit card, initially from the merchant (via the merchant bank). For example, a consumer paid $100 at grocery store using a Chase Visa credit card. Typically the grocery store will eventually get about $97 from the merchant bank. Visa (the credit card network) will receive about 20 to 30 cents. The Chase bank will receive about $2.00 and the rest may go to the people (companies) who setup the payment terminal, merchant bank and so on. One may wonder why Chase bank (the credit card) issuer gets $2.00 which seems like a lot: note that money is not risk free. For example, if the consumer (the Chase credit card customer) didn’t pay her/his credit card bill, in theory Chase will take the loss. But banks usually are not that nice: they will pursue collection, hike interest rate etc. If someone is living on credit cards, basically he/she will be the “slaves” of the bank. 这里是一个具体的例子，下面是引用。
Visa accounted for just over half of the purchase volume on general purpose credit cards in 2022: Visa credit: 52%, $2.84 trillion. Mastercard credit: 24%, $1.32 trillion. American Express credit: 20%, $1.08 trillion. Discover credit: 4%, $211 billion.
Credit card issuers are the banks, or credit unions. Note American Express and Discover Financial are also credit card issuers, in addition to providing their respective credit card network.
Trivia Questionor bonus question: do you know the history of Discover Financial?
They actually started as a credit card division of the now defunct Sears corp., at one time the powerful department store that is based in Chicago (have you ever heard the Sears tower).
Will regulators approve the deal?
This is mostly a US only deal. Both companies mainly operate in the US. Not a lot of International exposure. I think the regulators will likely approve it, because together they are still not the most dominant credit card issuer or network. Here is a Bloomberg report on the deal (YouTube).
A word on digital wallet
I noticed digital wallet such as Paypal can automatically update the expiration date of the card on the file. This is a neat feature.
中文简译
Translate those two companies into Chinese. They don’t have heavy presence in China, Discover was there, in my vague memory.
Capital One Financial Corp. – 美国第一资本投资国际集团: 美国第一资本投资国际集团（Capital One Financial Corp.，下“Capital One公司”）是一家以投融资及基金管理为基础,集国际贸易、项目开发、投资银行业务为一体的多元化国际企业集团，总部位于美国特拉华州。
Discover Financial Service – 发现金融服务公司: 发现卡（Discover Card）是一种在美国广泛使用的信用卡。1985年到2007年，由美国金融寡头摩根士丹利等金融机构控股，零售商公司Sears推广发行。(Wikipedia)
Amtrak is enticing me with a new credit card offer
