Board 8 > Stock Topic 26

(+) Yeah! (+)

I can't believe we keep having to have this conversation.

Bitcoin has value in the same was the US dollar or any currency has value. It's all "artificial" in that it entirely depends on what those in an exchange are willing to assign to it. There's no reason to keep comparing it to a stock.

Put it this way - if Zuckerberg announced tomorrow that his intention is that Facebook will not issue a dividend as long as he lives no matter what, the stock price would probably fall significantly as people reevaluate whether they really want to be invested in a company that is not going to generate a cent of income for them for 60+ years. Sure, it's not in his interest to make that announcement, but he could do it, and there would be nothing anyone could do about it.

My point is that it's completely normal for the value of an investment to depend on the actions and beliefs of others. There's nothing irrational about that. And in normal circumstances, market participants are willing to tolerate quite a lot of this.

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red sox 777 posted...

Sure, it's not in his interest to make that announcement, but he could do it, and there would be nothing anyone could do about it.

False. Look up Fiduciary Duty. The other shareholders would have a right to sue him at this point

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ChainLTTP posted...

Gamestop?

Gamestop is a great example. It had bad management who were running the company into the ground. Some activist investors looked at it and thought that it would have a lot more value with better management, so they bought the stock. Now they are on the board, and the stock has gone way up, anticipating the turnaround the new management will bring. The free market at work.

Note that this kind of thing would not be possible at Facebook or Google.

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Colegreen_c12 posted...

False. Look up Fiduciary Duty. The other shareholders would have a right to sue him at this point

Look at the business judgment rule. It's virtually impossible to beat. As long as he says that in his business judgment, this course of action is best for the shareholders, a court is not going to second guess him. And it's very easy for him to justify it - legally he doesn't have to justify it beyond saying that is his honest opinion, but if he wanted to, he could say that in his opinion, Facebook can invest the money better by funding growth inside the company than he thinks can be done outside the company on the market. Warren Buffett has said exactly that for nearly 60 years with Berkshire Hathaway. People haven't complained because he's been right, but if he had turned out to be wrong, they still wouldn't be able to win a lawsuit against him on that.

Henry Ford made the mistake, 100ish years ago, of admitting that his actions were in the interest of employees, not shareholders. So he lost his case. No one is going to admit that now.


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ChainLTTP posted...

Bitcoin has value in the same was the US dollar or any currency has value. It's all "artificial" in that it entirely depends on what those in an exchange are willing to assign to it. There's no reason to keep comparing it to a stock.

Strong disagree. Currency is actually closer to a stock but instead of a company you're investing in a country.

USD has the faith of the US government and US businesses honoring it that grounds its value. Hundreds of years of established backing that give you ballpark what 1 USD is worth.

Or if you wanna wear the tinfoil hat then you can even just put its birth as when we got off the gold standard. Still dwarfs bitcoin in terms of age and use.

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Red Sox I think you are making a fundamental misunderstanding. As a shareholder im ok as long as I make as much money as possible.

As long as the company/controlling interest is doing what it believes is best to achieve that i'm fine with it.

If that means no dividends because they have better use of it elsewhere i'm fine with that since it means the value will go up.
If they think that no dividends is better for them but I disagree but the market agrees or is neutral I might sell the stock and move elsewhere but that's just because I don't believe in the company anymore, nothing to do with best interest.
If they think that no dividend is better and the market vehemently disagrees and the price tanks then you get into lawsuit territory that likely ends with them reversing the decision.

Whether the company is controlled by one person or many my stance in all of those scenarios is the exact same. At the end of the day its about the company, its underlying's and expectations of the future. I will not agree with every decision but I bought a stock, not a whole company.

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Colegreen_c12 posted...

Red Sox I think you are making a fundamental misunderstanding. As a shareholder im ok as long as I make as much money as possible.

As long as the company/controlling interest is doing what it believes is best to achieve that i'm fine with it.

If that means no dividends because they have better use of it elsewhere i'm fine with that since it means the value will go up.
If they think that no dividends is better for them but I disagree but the market agrees or is neutral I might sell the stock and move elsewhere but that's just because I don't believe in the company anymore, nothing to do with best interest.
If they think that no dividend is better and the market vehemently disagrees and the price tanks then you get into lawsuit territory that likely ends with them reversing the decision.

Whether the company is controlled by one person or many my stance in all of those scenarios is the exact same. At the end of the day its about the company, its underlying's and expectations of the future. I will not agree with every decision but I bought a stock, not a whole company.

I'm also okay with it. Just, if I owned FB or GOOG (and I have at various points in the past), and suddenly the founders decide they don't care what the market thinks in the short run, they are embarking on a 60 year plan to reinvest all their earnings into colonizing Mars - well, if the stock tanks, I'm not going to complain or be filing a shareholder lawsuit. That is the risk of owning that stock.

Just like there's a risk that people collectively stop believing in bitcoin. That takes more than one person changing his mind, so one could even imagine it being less risky (I don't think it is with crypto specifically).

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red sox 777 posted...

I'm also okay with it. Just, if I owned FB or GOOG (and I have at various points in the past), and suddenly the founders decide they don't care what the market thinks in the short run, they are embarking on a 60 year plan to reinvest all their earnings into colonizing Mars - well, if the stock tanks, I'm not going to complain or be filing a shareholder lawsuit. That is the risk of owning that stock.

I agree, if they actually have a game plan and it is reasonable.

I also consider controlling interests as part of a stocks underlying value anyways though. If a stock is controlled by one person it's instantly less valuable to me, doubly so if it's someone I don't like/agree with.

red sox 777 posted...

Just like there's a risk that people collectively stop believing in bitcoin. That takes more than one person changing his mind, so one could even imagine it being less risky (I don't think it is with crypto specifically).

I would argue there's a lot more risk here. With bitcoin you have the risk of satoshi coming back and selling all his coins flooding the market, or any major player exiting really. You have the risk of a government full or partial ban. I consider all of these pieces in the value of owning it. The difference is I don't know about all these controlling interests, in stocks case I know every person with more than a 10% share

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red sox 777 posted...

FB or GOOG (and I have at various points in the past), and suddenly the founders decide they don't care what the market thinks in the short run, they are embarking on a 60 year plan to reinvest all their earnings into colonizing Mars - well, if the stock tanks, I'm not going to complain or be filing a shareholder lawsuit. That is the risk of owning that stock.

I guess the difference to me is the potential risks of bitcoin tanking (government regulation, different crypto winning out, discovered flaw in algorithm, loss of public faith in crypto, etc) are far far more realistic than an established multi billion or trillion dollar company randomly deciding to colonize Mars.

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Lopen posted...

I guess the difference to me is the potential risks of bitcoin tanking (government regulation, different crypto winning out, discovered flaw in algorithm, loss of public faith in crypto, etc) are far far more realistic than an established multi billion or trillion dollar company randomly deciding to colonize Mars.

Tesla?

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Not sure I'd call Tesla established yet

Regardless if you wanna say investing in Tesla is more risky than BTC right now I might agree with you but that's because their P/E ratio is like 1000 moreso than Musk being crazy

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Having a "superstar" CEO is probably the primary reason their stock has spiked enough to create that P/E ratio though. If Musk gets cancelled and is replaced by some boring executive who manages to do a better job managing the company, I'm certain the stock would tank, and it probably wouldn't recover even if the new CEO produces financial results stronger than Musk's.

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Lopen posted...

I guess the difference to me is the potential risks of bitcoin tanking (government regulation, different crypto winning out, discovered flaw in algorithm, loss of public faith in crypto, etc) are far far more realistic than an established multi billion or trillion dollar company randomly deciding to colonize Mars.

I actually chose that one because I'm pretty sure that's the exact reason Elon hasn't taken SpaceX public. He doesn't think the public shareholders would align with his long term vision of interplanetary expansion.

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Im just saying some of these billionaires are getting frisky. Bezos wants the moon. Musk wants Mars. I am not trying to actually contribute

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On a slightly related note, the three companies I most want to invest in are all private:

SpaceX
Fidelity
In-N-Out

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Anyway the point is a company entirely refocusing their gameplan while POSSIBLE isn't really something that you should consider a realistic risk of owning a stock and by and large the established company gives you some sense of ground floor value of the stock. It's not entirely "the whims of the public" deciding what non dividend paying stocks are worth. There is a well defined backbone there, and even just speculating on "what if the company starts paying out a dividend what would that dividend plausibly be" has some inherent worth because you can somewhat guess at that what the dividend is based on profit margins and stock price.

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I got the best possible pulls out of my Hidden Fates Elite Trainer Box and my Battle Styles booster box the past two days.

They aren't stocks but DNN is boring right now so here we are.

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Sunroof posted...

If I sell a put with an expiration date of next Friday, and it hits the strike price before Friday, what are the odds it executes? I am considering selling a Disney put at $185 which it is currently hovering around. I dont want it to hit.

Need an answer on this. Just want to know the odds of a contract exercising before the expiration date. What factors are involved, etc.

You don't usually get assigned early but I've had it happen (literally once, but I haven't sold a ton of puts either)

That's the best I can give ya

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Sunroof posted...

IEAWW killing it, glad youre in on that STM. I feel like its too late to get in now, I guess Ill wait for a possible dip.

;(

DNN is so cyclical. Should I just start putting limits on $1.20/$1.25 and then buying back at the $1 mark? It has fluctuated between those prices three times since I started following it last month.

Do covered calls for 1.50 and really get some money.

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OMG DISCB JUST MADE ME RICH!!!!!! Holyyyyyyyyyyyyy

I am retiring from this daytrading, stress-filled bullshit. Selling EVERYTHING and using $300k to go into selling Disney (and similar stocks to diversify) puts at insanely low prices. Gonna earn $1,000 a week in premium and god forbid they ever gets exercised Ill have plenty of good stocks at a discounted prices which Ill then sell covered calls on. FINALLY!!!!

What on earth is going on with DISCB and why is nothing happening to DISCA?

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It skyrocketed yesterday so I put my $97k into it during a dip and it paid off 120% as of today when I sold it.

You put 97k into DISCB? Oh wow, what a trade. That is some insane luck.

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And the gravy is that PTON is going up not that I give af about that horrible pick anymore. Ill still hold it until Monday just to greedily collect the call on it.

Whoa nice!

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red sox 777 posted...

You put 97k into DISCB? Oh wow, what a trade. That is some insane luck.

I was hovering around $45k net gain YTD (almost exclusively thanks to AMC) and it was slowly deteriorating ever since I tried going long on stocks (Tesla, PENN, PTON, etc.) at the worst time. It also didnt help that I bought DNN and FPVD or whatever and lost over $10k from those two total.

But now my YTD is that $155k number I screenshot and posted. Im not gambling anymore.

That is amazing.

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Yeah you need to retire off that

Like that move could have easily cost you 40k instead. Enjoy your gain and get out before you get burned imo

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Im definitely out. Like I said, Ill just sell puts now at incredibly safe prices just to collect a small premium. And if that becomes too much hassle, Ill stop that too.

Congrats dawg

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Sunroof posted...

OMG DISCB JUST MADE ME RICH!!!!!! Holyyyyyyyyyyyyy

woah congrats man

what precipitated that spike?

Also does this put you in a higher tax bracket now, assuming that your gains stay the same for the year?

Im honestly not 100% sure. Something to do with Archegos hedge fund and shorting Viacom or something. Also their CEO Bill Hwang has a dramatic history. I went in on it because I saw it was down nearly 50% from a week ago. Then when it spiked yesterday I figured that it could ride another wave, as weve seen random stocks do back to back. Because even with its spike, it was still only where it was at a week prior. So I was confident that it wouldnt fall below that, and I managed to get it even lower! I was going to sell today regardless.

ChainLTTP posted...

Also does this put you in a higher tax bracket now, assuming that your gains stay the same for the year?

I would think so. Id have to check the brackets but this puts me over $250k annual.

Wow. When it rains it pours. I just found out that I won an office raffle and you wont believe what it was for. Its a $10 gift card to my choice of one of the following places: Sonic, Starbucks, Regal Cinemas, AMC Cinemas, Texas Roadhouse, or Kristen Kreme.

Guess which one I went with!

Yeah. As long as you get out now then that's great

I just think if you think doing that was actually a good play you're going to lose a ton of money long term. That type of move is going to lose more often than win and as much as you think "it's not easier to make money when you have more money in play" if you didn't have 90k to muscle around you're not making nearly as much there.

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Kristen Kreme is bae

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Sunroof posted...

I would think so. Id have to check the brackets but this puts me over $250k annual.

If you're not married, these are the brackets you'd probably need to be cognizant of:

24%: $85,526 to $163,300

32%: $163,301 to $207,350

35%: $207,351 to $518,400

Welcome to the 35%, man!

Lmao 35%, what a mess. Reminds me of this beautiful exchange:

https://youtu.be/0e50fQLyebI

Moonroof that is epic. My kinda trade

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I actually don't think that trade was any riskier than putting 97k on EVRI or PTON. Less risky, if anything. It just paid off immediately.

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Imo it was way more risky. You're "buying the dip" on a stock that had gone +100% in the past year to get to that dip (it was +250% before then) and it's a super low volume stock at that. PTON is a growth stock that at least peaked a lot higher than what it's at. EVRI isn't much higher than it was pre-pandemic so you can argue it's at something resembling a fair value now

Like DISC.B dropping down to $30 was probably more likely than what did happen. And because of the way the stock volume is it could have absolutely gapped down a lot of that.

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It's super low volume because it's the Series B (10 votes per share) stock. The company has a 19B market cap, but most of the volume is in DISCA. Without having actually confirmed this for Discovery specifically, usually you can convert the supervoting Series B stock to Series A stock if you want to (not that you would) so in the worst case it shouldn't go below DISCA, which has much higher volume.

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I mean the fact that DISCA is basically flat and DISCB is flying shows it was a fluke more than anything

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Of course it was a strange event. Some kind of short squeeze or maybe some people fighting for control of Discovery probably. But that kind of strange event is more likely to happen to the upside than the downside. I mean, at least compared to EVRI and PTON, both of which I think have major potential to fall a long long way (although it looks like you don't share my view on that).

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