u/No_Presentation9490

After seeing a lot of investors on Reddit get burned by space stocks and quantum stocks, and a lot of them asking for the next big sector that has 100x-1000x potential and being suggested that robotics or drones will be that, I think it's important to keep in mind that economic realities of running different types of businesses impose limits on the performance of the stocks of these companies. The market does not owe an industry's stock prices performance commensurate to the relevance and success of the companies in that industry.

What do all the "multibaggers" of the past two decades have in common? Extremely high TAM (Total Addressable Market), Extremely low input costs, and extremely high profit margins.

Digital tollbooths outperform real tollbooths by several orders of magnitude. Google and Meta are tollbooths for advertising, Amazon is a tollbooth for storefronts. Compare this to a real tollbooth for the sake of argument. It's exactly as effective as a bottleneck (it's a crime to pass without paying), but it's extremely narrowly distributed (1 section out of 1 highway out of tens of thousands), requires unionized labor to maintain and service, physically degrades constantly. Anything requiring physical location, physical distribution, high labor costs will inherently be far less profitable as a tollbooth. Mass distribution via the Internet is completely different, you have a much higher TAM, much easier time accessing that TAM, way lower overhead and input costs.

Space companies struggle with that asset-light business models do not: they have high opex (Operating expense), high capex (Capital expense), high insurance liability coverage (due to the nature of the business). They must source and import scarce materials and fuels from an international supply chain and pay all the "tollbooths" down the line of that supply chain. Some of these materials, as we just found out, have geopolitically sensitive costs. Think about the perspective of Wall Street: with so many moving parts and uncertain variables over time, how much capital are you allocating to space stocks? How do you justify making the kind of capital allocation that is the entire reason the stock would rise in the first place? This is despite the most optimistic possible estimates for the potential TAM of the space industry and despite the real massive growth in satellite deployment and government military interest in space. An industry can gain massively in relevance and revenue, but the stock prices may not necessarily perform to the extent you are hoping.

Anything facing the same types of problems, anything that "deals in the real world", as the late Jeffrey put it, will inherently face performance drag on those companies' stocks. You may think that Taiwan Semi is the premier "pick and shovel bottleneck" of the semiconductor world because nearly absolutely everything passes through them in manufacturing. They have immense pricing power, TAM, and will win no matter who wins downstream or upstream. But as a manufacturer, not a designer, of these chips, they have inherent supply chain risk that fabless chip designers only (such as Nvidia and Broadcom) do not. This risk discounts their stock price, it's a simple financial calculation that controls the stock price despite narratives that they "can't fail". Being unable to fail doesn't mean the company's stock price will outperform.

The "next big thing" is not necessarily the same as "the next big stock winner". Please keep this in mind.

A good thing to remember is that the purpose of participating in the stock market is to make money, not to be right about a trend or right about a company. It's extremely common on Reddit to see "We will need more of X in the future, therefore it's a good idea to buy this stock", usually to justify either buying an ATH, not cutting losses, or catching a knife. I think it's important to remember that the market does not owe you an appreciation on your asset or high relative performance for being right about the direction of economic developments. The following are some historical examples and their relative underperformance to various assets.

2022: "Will software-as-a-service and digital enterprise platforms become more deeply embedded in business in the future, or less?"

Software was the "sure bet" for years, as a sector it has appreciated 22% between 2022 and now. In the same time period, M2 money supply expanded by 5.6% and the S&P increased by 115%. Gold, a terrible investment in many regards, increased by 178%. This is despite SaaS & digital enterprise clearly becoming more deeply embedded, not less.

2008: "Will real estate be more expensive in the future, or less?"

Real estate was the "sure bet" for years, as a sector it's now up 68% since the pre-crash peak. In the same time period, M2 money supply expanded by 219.5% and the S&P increased 378%. Gold, a terrible investment in many regards, increased by 510%. This is despite the fact that real estate clearly did become more expensive in the future, not less.

2000: "Will the internet become more commercialized in the future, or less?"

We know how this one played out. Nasdaq took 16 years to recover nominally and 21 years to recover inflation-adjusted from its previous ATH. During that time period, M2 money supply expanded by 341% and the S&P increased 571%. Gold, a terrible investment in many regards, increased by 1,558%. This is despite the internet clearly becoming more commercialized in the future, not less.

1990: "Will commercial real estate and institutional debt structuring be more utilized in the future, or less?"

Savings and Loan crisis wipeout. 1k+ bankruptcies, real estate markets dropped 20-50% for years. $24 billion of 1990 dollars in bailouts. Junk bonds wiped out by bankruptcies, severe losses for investors and pension funds. CRE and debt structuring clearly became more utilized in the future, not less.

1970: "Will corporate conglomerates and multi-national business operations be more common in the future, or less?"

M&A powered by debt was seen as an infalliable strategy for earnings growth. S&P collapsed 36%, many companies' stocks lost 90%+ of their value and then went bankrupt, $39 billion of 1970 dollars in bailouts. Bear market and high inflation lasted an entire decade. But yes, corporate conglomerates and multinationals clearly became more common in the future, not less.

Some recent comments I've seen on Reddit:

"Buy Walmart stock right now, it just crashed. Will people be shopping at walmart more in the future, or less?" Ignore the fact that walmart's growth was literally the worst in 6 years for the sake of conversation.

"Buy ASTS and RKLB stocks right now, they just crashed. Will people be launching more rockets into space in the future, or less?"

"Buy memory stocks right now, they just crashed. Will people need more chips in the future, or less?"

Whether the trend is correct or not in an abstract sense has zero relevance to the expected value of buying a specific stock at a specific price at a specific time. This is something everyone should be aware of instead of relying on vague hunches with no defined endpoint to make investment decisions.

No AI was used or consulted to make this post, therefore it may be inaccurate or have missed key information. NFA

Whenever gold spikes, publicly traded pawnbrokers usually get a sympathy spike. You can see this in the historical relationship between FirstCash, EZPawn and Gold, shown here through ratios. The absolute level on the Y axis isn't important here, what matters is the directional movements.

FCFS divided by GLD 1 month chart

EZPW divided by GLD 1 month chart

What else usually spikes pawnbroker stocks? Interest rates.

FCFS divided by US10Y

EZPW divided by US10Y

Now, look at what these stocks did on Friday. Fridays are generally considered a "risk off" day where stocks considered moderate to high risk are sold. Conversely, stocks with high buying interest on Friday are more likely to be high-conviction trades. Stocks with high institutional buying interest on Friday (huge volume, tons of resting orders filled) are even more likely to be high-conviction institutional trades.

FCFS clean break above the 10, 20, and 50 day moving averages

EZPW clean break above the 10, 20 and 50 day moving averages

Big volume and broke through all 3 major moving averages. I think these companies have solid enough balance sheets for a short term trade (companies that don't are more likely to get dumped at the first sign of trouble):

FirstCash: P/E 25.6, EPS 8.77, debt to equity of around 1.0

EZPawn: P/E 16.2, EPS 1.99, debt to equity under 1.0

The most important factor is: Jackson Hole (Kevin Warsh) is next week which may be why capital is positioning here ahead of time.

My positions (bought on Friday after hours): 100 shares of EZPW and 20 shares of FCFS. ($7,700 of exposure). Targeting a 8% move before I sell half of both positions.

Read the wording of this news report very carefully:

Source: biz.chosun finance column

From the 19th, new investors will not be joining the degenerate leveraged ETF party for 5 full days. This isn't a 5 hours course on trading, it locks you out of trading for 5 full days. Furthermore, they will have to register and be approved to trade these products and inevitably, some won't make meet the standards.

SK hynix day chart

We can talk about the fact that SK rejected off the 20/50 SMAs (which isn't the case for MU/SNDK), bearish in and of itself, but the more important thing is that volume is already not coming back the way it is for Micron/Sandisk and the paper trading requirement hasn't even taken effect yet.

https://preview.redd.it/8c3g7azzt7kh1.png?width=1382&format=png&auto=webp&s=700cf68cf1dacae00968d045def7db4b38867b8c

https://preview.redd.it/mev0mc86u7kh1.png?width=1386&format=png&auto=webp&s=7aa9a56d2f965d12c3cd66a8dae5cffb8ebad81e

Add in the fact that Koreans are starting to buy US stocks instead of their own market:

Source: CNBC

So on one hand these ants thinking they're escaping the unfair Korean market are turning to US stocks without realizing that Korea/DRAM/SK hynix/memory/semiconductors are all correlated as 1 trade. On the other hand you have 5 upcoming days of no leveraged ETF inflows into SK hynix from new investors which likely causes KOSPI to decline which sets off the algorithmic associations between all the stocks in this sector.

My prediction is that for the next 5 days this sector suffers significant volatility, probably to the downside, and we likely get US institutions happy to distribute into Korean buying pressure, rugpulling them on US stocks just like they rugpulled them with Samsung/SK. We could also get Koreans who turned to US stocks changing their mind because all the algorithmic association brings that whole memory/semiconductor sector down, and that puts more selling pressure on those US stocks, which causes more algorithmic selloff of Korean stocks, etc in a feedback loop.

My position: 1,000 shares sold short of KORU at 19.58 per share ($19,580 exposure). Very risky because market hours don't overlap and it'll gap up over my stop if I'm wrong. NFA.

TLT is the ETF for US Longterm Treasury Bonds. Right now it's pushing all-time lows since the ETF was launched in July 2002:

https://preview.redd.it/9olu7l3sbzhh1.png?width=1415&format=png&auto=webp&s=1b6827aae7de2f7df452879210d00c2ec9027987

If you look at the dates where TLT takes big hits, you'll see they align with some annoying periods of the stock market:

July 2007 - Great Financial Crisis

December 2013 - QE tapering off market panic

October 2018 - Fed hawkish and 20% S&P correction

July 2020 - Covid

September 2023 - Mini recession

May 2025 - Tariffs

August 2026 - Kevin Warsh

These dates tend to align with high inflation and fiscal tightening which triggered market corrections/macroeconomic crisis.

The 82.00 level is somewhat of a hard floor... so far. Past performance does not guarantee future results. In the worst case scenario where interest rates are run up to ~8% in an emergency need for fiscal tightening (which would also destroy the world economy), TLT would likely go to $45-50, which would suck for this trade.

RSI is somewhat oversold, but RSI isn't that relevant for an equity like this. All else equal it's probably better to buy something when it's oversold than when it's not.

The put to call skew on TLT right now is like 7:1 and the short float is 20% so this is a very contrarian trade and will probably be punished by a 15-25% loss. My thesis is that the USA will not force an economic reset or a global financial crisis to happen. Avoiding this would cause some mean reversion to happen for TLT.

Also, at this price, TLT's interest rate is 5.14%, which provides some floor via income-strategy boomer buyers and provides some copium payouts if I get stuck in this trade. At least it's not nothing. NFA

My positions:

100 contracts January 1st 2027 leaps with strike price of $100 for an average cost of $9 each

100 contracts Sept 11 2026 calls with strike price of $96 for an average cost of $1 each

500 shares at a blended cost basis of $82.20 ($41,100)

I'm targeting a mean reversion move to $88, at which point I'll sell 400 shares for a profit of $2000. I'm targeting the leaps to be ITM or close by Jan 1 2027.

At this point I can't tell which market is influencing which anymore

EIDO has had a bad track record. If you invested on May 3 2010 when the ETF opened you would have lost 35% of that position during the same timeframe of S&P returning 696%.

https://preview.redd.it/nfndyp4njjhh1.png?width=1372&format=png&auto=webp&s=4a3ea09805f9f177d6396f17f1343abe834d2885

Indonesia has become more and more univestable over the years mostly because they hyperinflated their currency (as a lot of developing countries do). They have a lot of state owned enterprises plus bad governance which is extremely bad for doing business (we might be heading there with AI ourselves). More investors would buy crappy yield bonds or junk bonds than invest in Indonesia.

My thesis for trading this is purely short-term technicals. In this 1-day chart, you can see higher lows, inverted H&S and cup and handle, retesting the breakout level at 12.70. Extrapolating from these technicals and the RSI suggests a high probability of the shares reaching 13.00.

https://preview.redd.it/k8f7avwkkjhh1.png?width=1376&format=png&auto=webp&s=b6b0aafec5e5929bfa2b7a841c8a4ac47d39ba00

Indonesian inflation is bottoming and they're starting to relax their own export regulations with regard to rare earths. Their financial companies are also doing pretty well. I think the probability is high that they find a way to fuck it up long term which is why I'm only going for a short-term breakout trade. It's possible this could be a "long term deep value play" the same way it's possible I win 3 lotteries tomorrow.

This ETF itself has an average dividend yield of 3.2% at the current price which is not great but considering it's "international exposure/developing markets exposure" which for some reason some boomers and boomer funds want, I think it puts a hard floor on the ETF price at $8.13 which corresponds with a 5% dividend yield. My stop loss will have triggered long before then, but at that price I'd be taking a position regardless of fundamentals/technicals.

My position is 2550 shares at a cost basis of 12.58. ($32,000) I'm targeting a breakout to $13.00 to trim 3/4 of the position for a $530 profit, then putting a trailing stop on the rest. NFA

They can't be trusted with a stock market

Not only that, but they'll never trust their stock market again after the 50% sk hynix implosion

There is like zero buy volume for like a week in a row, it's clear too many people were burned. The few that are participating are probably just daytrading

As we saw from the recent AI infrastructure stock run-up and subsequent crash of 35-45%, the mindset of not wanting to pay capital gains taxes can cause people to get locked in completely to sunk-cost fallacy and bargaining with the market.

Many people who bought the AI bubble early and held (unless you were buying semiconductor and memory stocks, in size, so early that the thesis was not yet clear on why those companies will be critical to AI infrastructure, which is its own seperate kind of capital allocation mistake) have now lost a significant amount of their profits or broke even, and those who bought during the run up, the top, or one of the several "dips" over the past 4 weeks are at an unrealized loss.

If you look around Reddit there are also many examples of those who bought Apple, Nvidia, Amazon, etc. decades ago and are unwilling to realize their $1-5 million paper gains because it would trigger a capital gains tax of $250,000 to $1,125,000.

In their view, making $750,000 is unacceptable if it means paying $250,000 in taxes, so they choose instead to assume that past performance equals future results. They assume that the market is obligated to reward them for holding for 20 more years by allowing them to make $7,500,000 and pay $2,500,000 in taxes instead. If that person thinks $250,000 in taxes is unacceptable because it's a big number, would they be willing to pay $2,500,000 in taxes? Why not ride those shares of Amazon or Google up to $100,000,000, when you'll have to pay $25,000,000 in taxes on your capital gain instead?

If stocks actually worked this way, there would be no reason for Wall Street to ever sell you shares of stock. The trillion dollar firm making tens of millions of dollars a day on spread arbitrage is timing the market, and everyone knows time in the market beats timing the market, right? Every time you buy a share of stock, the party on the other side is valuing some rapidly hyperinflating, cash-dragging petrodollars more than the infinitely compounding prime asset they just sold to you. Why would they do that when they can just hold the stock themselves and get continuous, compounding, inflation-beating performance?

It's pretty sad to see people who had millions of dollars in paper gains buying the AI bubble that assumed past performance would continue and therefore they should wait until 1 year has passed from their full port into AI infrastructure and neoclouds to sell for the more advantageous long term capital gains tax savings. Many of them are now dependent on these companies gaining 250-300% in marketcap, hundreds of billions of dollars, in an incredibly volatile and interest rate-disadvantaged market just to get back to where they were, at which point they'll likely be blinded by the paper gain again and refuse to pay the capital gains tax again.

It's good to remember that the market does not owe you performance of a stock or that your stock be valued with the same metrics as similar companies are, or that the stock price of a company matches the importance of that company in the industry you think will outperform. The market does not owe you compounding growth, nor does it owe you a return to a previous all-time high. The highest expected value move on a position that's wildly profitable and starting to stall in momentum or reverse is often to liquidate it and accept that you will pay some taxes on it. If your 80% profit turns into a 30% profit and you liquidate it then, you'll still pay taxes on it, you'll just have made less money. Taxes should never be a justification for avoiding converting paper wealth into real wealth.

1. Invent a memory company and say it is worth $800 billion dollars because AI memory demand will grow exponentially and infinitely. Show the investors a picture of a graphing calculator with y = x^(2) and tell them that is what your revenue and profits will do because AI is awesome. Tell them Jevon's law will make demand scale infinitely with supply in a self-reinforcing feedback loop so there is literally no downside and no risk.

2. Roundhill will buy your shares at IPO for the full IPO price while selling off actual memory companies to make room for your company. Have put options on all of these memory companies that gain value when Roundhill sells them off and dips the price.

3. The money from Roundhill buying your shares plus the put options on other memory companies will easily recoup your losses.

Not financial advice

"You don't lose money unless you sell" is one of those sayings people take for granted because it's repeated so much, just like "Don't time the market, dollar cost average". Nobody ever thinks about these sayings critically because it brings up uncomfortable truths about what we are really doing here when we buy stocks hoping for their value to go up.

Firstly, "Don't time the market, dollar cost average" ignores the fact that every time you dollar cost average is in fact timing the market - you are choosing to buy at a specific price and specific time, with zero relation to technicals and fundamentals and you are NOT choosing to NOT buy at that price and time. You'll be engaging in market timing every single withdrawal with your 4% rule in retirement, too.

There are two main issues with "You don't lose money unless you sell". The first being that the inverse is true. You don't MAKE money unless you sell. When you buy stocks, you no longer own money, you own stocks, no matter what your brokerage balance is approximating how much money those stocks are worth. Money is the ultimate goal of investing in stocks, not accumulation of the stocks themselves. When the stocks you own appreciate in value, you did not make money. You have the exact same amount of stocks you had before.

The other issue is that everyone knows the advice of "You don't lose money unless you sell", but it's not up to them whether they sell or not.

When you're triple long:

Long real estate through your home/mortgage, mortgage being leverage itself.

Long equities through a stock portfolio with little to no cash position

Long employment through your job

You are extremely vulnerable to economic disruptions when two of those long positions have the rug pulled out from under them (Equities and employment), which tends to be the case in economic disruptions and recessions. If this happens to you, you do not have an option to not lose money unless you sell. You will be selling to protect your long position in real estate (your mortgage), and wall street will then sell the stocks you just sold them for pennies on the dollar back to you when you once again engage in your "Don't time the market, dollar cost average" programming in the economic recovery.

When people say "if you stick to a dollar cost average in the stock market and just held on to your stocks in the 1990 crash, in the 2000 crash, in the 2008 crash, in the 2011 crash, in the 2015 crash, in the 2020 crash, you'd be a multimillionaire right now". Well, look around. Where are the multimillionaires? Economic crashes cause people to liquidate against their choice. Their stock portfolios don't get to participate in the recoveries, and in the recoveries themselves they repeat the exact same strategy of buying high until the next crisis which will force them to sell low.

This isn't financial advice it's just a warning to question your assumptions about what you think is a "sure bet" in investing.

That was a sell signal and a half and everyone should have seen it coming. Dilute shares to raise cash to build new fabs and then miss earnings on the exact financial quarter that you offered the ADR on. Can't make that shit up