u/No_Presentation9490

If you don't know how the financial industry works the "active management is worse than S&P" argument appeals directly to the image of Wall Street as full of flawed human beings who act irrationally and make mistakes vs. the S&P which can do no wrong and will return you a 10% CAGR year over year without failure if you just trust the system, buy and hold, time in the market, 10 best days. This misunderstanding of why the majority of actively managed products underperform the S&P produces the wrong conclusions for retail investors.

Most of the actively managed mutual funds are just "fee traps" that methodically extract from retirement accounts. The worst offenders are "contrafunds" that don't perform (but a lot of employer 401ks will offer for some reason), thematic funds that are 90% S&P under the hood, or just total market + bonds packaged as a target date fund. This makes up the vast majority of products classified as actively managed that bring down the average performance of actively managed funds as a category. They are not meant to match the S&P's performance to begin with, they are meant to scrape fees from the financially uneducated.

Endowments, pension funds, institutional portfolios have investment mandates that require they buy international exposure and ESG compliant equities. They have no choice but to buy products that contain "developing world" or "sustainable energy" equities, and Wall Street is perfectly happy to package these underperforming equities up for those buyers who have no say in the matter. This again contributes to the sheer number of "actively managed" products that yes, underperform S&P, and again were not intended to perform well from the outset.

Another thing that's never talked about is the number of portfolio managers who use a high Sharpe ratio return stacking strategy that underperforms S&P by construction but protects capital much more effectively in a broad market drawdown. This is stuff like leveraged S&P plus uncorrelated assets, or hedging with options and swaps. The investors of billions of dollars into these strategies are not stupid, they are aware of what S&P is, they are investing for risk-adjusted returns and are willing to pay for their money to be in these strategies instead of the S&P.

Real returns-focused active management outperforms the S&P by such a wide margin that financial advisors avoid talking about it on purpose because it shows how passive exposure to pure market beta is comparatively terrible for wealth preservation and compounding. Hedge funds, for example, collectively made tens of billions of dollars per day in the first week of the Covid crash and tariff crash, and collectively hundreds of billions in their recoveries. Pershing Square, for example had 44% returns from Jan 1 to June 30 2020 while the S&P lost 3%.

If you're not willing to become financially educated and situationally aware, with basic principles of interest rate environments, risk premium of equities, and basic technical analysis, then allowing your wealth to be whipsawed around by the market is what you'll have to resign yourself to, because it's way safer than taking uninformed action. Just don't kid yourself that Wall Street does the same thing when they actively manage something. They monetize market movements, they're not hostages to them like S&P holders.

Been scalping and shorting Sandisk and Micron. When shorting I usually watch for repeated rejections of 20SMA on 1min inside of a downtrend and then open the short the next time price rejects off 20SMA. The last 2 weeks have been so choppy that it's conditioned to me to cover on the first strong uptick on high volume/RSI divergence and not open the short if the price didn't touch 20SMA even if the price is crashing so fast the 20SMA can't keep up. The profits are still good but I'm missing 70-80% of the move in some cases. Anyone using different metrics to determine when they cover that lets them stay in the trade longer?

Here's a list of companies that at one time were considered to have an undisputed and unassailable moat. It was assumed that these were absolute rock-solid safe investments that could do nothing except grow in perpetuity:

Xerox, Cisco, Worldcom, Kodak, Sears Roebuck, US Cotton, Bethlehem Steel, Nortel, Blockbuster, Nokia, Polaroid, Compaq, Borders Group, Lehman Brothers, Washington Mutual, Pan Am, Chicago Gas, Pullman, Ford, Bear Stearns, Lincoln Savings and Loan, BCCI, Motorola, Singer, General Motors, Lucent Technologies, KMart, Sun Microsystems, Control Data Corporation, Blackberry, America Online, A&P, EF Hutton, Radioshack, Palm Computing, Standard Oil, Arthur Andersen

The post could just end there, but the message to take away is that the fact that moats, bottlenecks, picks and shovels are all the things protecting the pricing power and profit margins of these companies, and therefore their stock valuation, is exactly the same thing that attracts the greatest amount of innovation and competition.

Whatever gives a company a moat or a bottleneck is actively being innovated on and competed for market share. The rest of the economy do not just passively take it when the moats/bottlenecks exercise their pricing power to demand more and more money. It can take months or years, but moats are there to be attacked.

Furthermore, the stock valuations of such companies are buoyed by the trade itself being extremely crowded, as everybody wants to own the narrative, the moat, the bottleneck, the picks and the shovels. This self-reinforcing momentum is incredible for trading, but is a point of vulnerability if you're a long-term investor.

When I see people rushing into an extremely crowded trade, late, with a significant position size or even 50-100% of their portfolio because "it's the bottleneck picks and shovels play of AI with a wide moat", I just hope for their sake that they have really good risk management in play.

It's true that those companies are critical and essential and profitable, it does not mean their stock will necessarily perform well in relation to the price you bought the stock at. Risk management is essential.

Comcast sucks as a company and is a long term dead end that will go bankrupt sometime around 2045, if not sooner. Their stock just crashed 7% today to 21.98 per share after their earnings report. This is a new 624-week low for the stock. If you ever invested in this company after Nov 1 2013, you got completely screwed and you should ask for a refund on your shares.

At $1.32 yearly dividend per share at 21.98 per share, this is a 6% dividend yield. Boomers are going to buy this and so will boomer adjacent "income strategy" funds. The bear case here is that with the way the federal reserve is going, this 6% dividend yield might not beat money market funds for long.

The stock is at the RSI oversold range on the monthly, the weekly, the daily, the 2h, the 1h, and the 1minute charts. This makes my entry at 21.96 per share definitely a falling knife catch, but at least it's a falling knife catch with decent short-term mean-reversion odds.

P/E is one of the dumbest measures of what a company is valued at but Comcast is currently 4.2 P/E. At least a few stupid youtubers and AI chatbots will talk about this incredibly low P/E and some gullible boomers might decide to buy some shares.

Their dividend payout ratio is 26% which isn't great, but its OK. I think this puts the odds that Comcast cuts or suspends their dividend before the next quarter at extremely low to impossible.

My position is 2000 shares at 21.965 per share. I'm targeting a 0.50 dollars move to the upside to make $1000. I think the odds of this occurring between now and the next earnings report are very likely.

This is the definition of picking up pennies in front of a steamroller (risk $44000 to make $1000) and nobody should do this. The copium case: the shares can depreciate by $0.43 from the current price and after 1 quarter I'll still have matched the performance of a money market fund with this position, even factoring in that dividends just subtract money from the stock price and pay it back to you.

NFA

https://preview.redd.it/m2xh4m5em1fh1.png?width=1330&format=png&auto=webp&s=cff26f4970d87b8e4a61f331126b3500e3a931fd

You should treat the saying "It's priced in" as always true, because it is always true.

The price of a stock on the stock market is set by what market forces have decided is the equilibrium. The confusion comes when people think stocks have any value or meaning beyond what the market prices it at. The stock is not the company, and it does not communicate information about that company on a constantly updating real-time basis. Think of it more like a mascot of a company which fluctuates in supply and demand. Stock prices are information that communicates the real-time supply and demand of that mascot.

The price of a stock at a certain time is the price. The price, before it has moved, is not a coiled spring full of potential energy nor is it perched on a cliff waiting to fall. Both of those situations are entirely possible, but entirely unknowable until the market decides to disagree on the price and price in a different price instead. The price at a certain time is exactly priced in for that point in time; that's what a price is.

Some point at cascading domino events like liquidity squeezes, short squeezes, leverage unwinds, etc. and say things like: "But this company's really strong/weak. The stock had no reason to do what it did." You might be entirely right in your assessment of the company. But the stock is not the company. The market is in fact pricing in the company's shares perfectly on a moment to moment basis, because that is all a market can do - price things in.

Remembering this will help you keep in mind that the only reason to buy a stock is to make money by selling it for a profit. You can be entirely right that Tesla the company or SpaceX the company is an overrated dumpster fire, for example. But that doesn't mean it's safe to short sell or buy puts on Tesla the stock or SpaceX the stock. You can be right that Microsoft the company or Servicenow the company is performing stronger than their stock prices suggest. But that says nothing about the trajectory of buying Microsoft the stock or Servicenow the stock. Preserve capital & make money over being right about your judgement on a company.

Algoslop during the day plus extreme market volatility so there's almost no setups to take plus can't safely hold/short anything overnight. Even scalping close to the open has almost totally dried up, I can basically only scalp the rebalance near the end of day or last minute moves. Anyone else feeling this frustration

What exactly was in it for anyone involved except the underwriters and SK? Who exactly wanted this ADR to happen?

SK gets 29 billion dollars of liquidity siphoned from our market so it can buy Korean government bonds and one day cash those out to build new factories.

And our market gets uhhhh..... liquidity drained out of existing stocks, our semiconductor/memory sector becoming even more entangled with a volatile overseas market with awful governance, a lot of shares of SK stock that you could buy if you feel like donating some money to Korean investors while you sleep.

With Korea proposing an unrealized capital gains tax, planning to raise their interest rates, having dysfunctional corporate and governmental culture, and a domestic stock market that is more influenced by retail investors than ours, I think the narratives about focusing investment more to SK and away from Micron are increasingly unlikely.

It's true that on paper SK looks extremely competitive with Micron in that they have a larger market share for their key product, are growing faster, and have lower forward P/E, but I think American financial institutions and market makers will not tolerate getting whiplashed by the Korean market forever and take the risks of South Korean governance seriously. I think they also take the risks of the SK ADR being added to the SOX index seriously too.

A lot of people expected the SK ADR to draw liquidity away from Micron, predicting that either the day of or the day after the ADR listing that Micron would test its support/50 EMA at 860.00, however, this still hasn't happened despite it being the 3rd time testing this support was a reasonable outcome.

The hype for SK was everywhere with people saying SK is 7x oversubscribed, having the CEO make an appearance on American TV, etc. However, the listing was a first day flop. We saw institutional accumulation patterns on the SK ADR today but all of those shares are now underwater already as Korea has sold off about 5% in the overnight.

Micron held unexpectedly strongly on the day of the ADR and today and is also showing some aftermarket/overnight strength. It still has room to retest the major support at 860.00 especially with the incoming minefields this week and hyperscaler earnings week, but I think it's clear that big players don't consider SK hynix as the "Micron killer" at all.

I think the bear case was still intact at a stock price of 1200-1300 (slowing acceleration of EPS growth, the market pricing in supply catching up to demand), but I can 100% see Micron trading in a range of between 800 and 1200 long-term if hyperscaler earnings reports confirm both capex and GAAP profitability. Big S&P names tend to start settling into a range like Nvidia did after getting added anyway.

I still think the price target consensus of 1500-2000 is too optimistic, but at 900 with a target of 1100-1200, I'm bullish

Getting the error code 013976 when trying to sell.

Anyone with the same issue or know what's going on? I tried every possible option for selling.

Growing is not enough, growing quickly is not enough to keep a company's stock price growing. Reported growth is a lagging indicator while stocks are forwards looking by 18-24 months. Peak stock price do not coincide with peak earnings, they coincide with peak second derivative of earnings.

When forwards guidance for a Q4 for example shows that the multiple of EPS growth between Q3 and Q4 is not as large as the multiple of EPS growth between Q2 and Q3, the second derivative (the growth of the growth of the growth) is now pointing negative, which is a sell trigger for that company's stock.

It doesn't matter what the actual number of that EPS growth is. The EPS itself doesn't matter either. And it doesn't matter how successful that company is or how important it is.

This is why an earnings beat as insane as Micron's is actually not that insane compared to its previous quarter earnings and why Wall Street has rerated it alongside other AI hardware downwards.

Q1 EPS = 4.78.

Q2 EPS = 12.20. (About 3x previous)

Q3 EPS = 25.00 (About 2x previous)

Guidance for Q4 EPS = 31.70 (About 1.2x previous)

You can clearly see that the second derivative of earnings growth is declining. Wall street sees it. Peak second derivative of earnings growth has clearly passed, it does not matter what the actual EPS number is or how profitable the company is. This is a reason for Wall Street to sell the stock and assign capital to higher velocity growth elsewhere. This is why a company can report insane, massive growth and then its stock gets punished like crazy and never recovers to previous ATH; this is not random at all.

Wall Street is also looking at potential capex growth slowdowns in 2028 (there simply won't be enough liquidity to maintain the GROWTH RATE of capex growth, although it will still be growing) plus new fabs coming online around that time. Perfect storm of reasons to sell.

I am not saying that happens to Micron but this is a documented pattern with hundreds of examples from past semiconductor/memory cycles.

This is also why Micron's share price fell after Q3 earnings. If you look at the numbers, it wasn't random or unwarranted at all. The growth rate of the growth rate declined from approximately 3x to approximately 2x.

The market is not perfectly efficient but it is not irrational.

I see a lot of confusion on Reddit about why AI hardware stocks can fall in price per share when their metrics look great.

Growing is not enough, growing quickly is not enough to keep a company's stock price growing. Reported growth is a lagging indicator while stocks are forwards looking by 18-24 months. Peak stock price do not coincide with peak earnings, they coincide with peak second derivative of earnings.

The really simple version is this, if forwards guidance for a Q3 for example shows that the multiple of EPS growth between Q2 and Q3 is not as large as the multiple of EPS growth between Q1 and Q2, the second derivative (the growth of the growth of the growth) is now pointing negative, which is a sell trigger for that company's stock.

It doesn't matter what the actual number of that EPS growth is. It doesn't matter how successful that company is or how important it is.

Take Micron Technology for example.

Q1 EPS = 4.78.

Q2 EPS = 12.20. (About 3x previous)

Q3 EPS = 25.00 (About 2x previous)

Guidance for Q4 EPS = 31.70 (About 1.2x previous)

You can clearly see that the second derivative of earnings growth (the growth rate OF the growth rate) is declining. Wall street certainly sees it. Peak second derivative of earnings growth has clearly passed, it does not matter what the actual EPS number is. This is a reason for Wall Street to sell the stock and assign capital to higher velocity growth elsewhere. This is why a company can report insane, massive growth and then its stock gets punished like crazy and never recovers to previous ATH; this is not random at all.

The market is not perfectly efficient but it is not irrational. Knowing this will help you not get blinded by raw numbers.

I can only see it being negative but what do you think