Discover and read the best of Twitter Threads about #investing

Most recents (24)

A thread on why investors love to use P/E ratio to determine value of a stock despite it being wrong, from a #biological and #evolutionary perspective.

1. In humans brain weighs about 1400 grams but uses 20 % of our energy which is a big proportion of our energy daily.
2. Early humans used to hunt for food and their only thinking is either to hunt an animal or to be safer and not get killed - Survival instinct. So all humans were consciously thinking were either to kill or survive from threats. So we didn’t expend our brains so much then.
3. As evolution happened we slowly started using our pre frontal cortex to think rather than the more primitive brain “LIMBIC SYSTEM” As we started to evolve our habits of thoughts were ingrained in our brains 🧠 so deeply we even now have those effects in our thought process.
Read 12 tweets
1/ In a recent series of papers, I argue that many important behaviors are shaped by neglect of selection bias in social observation.

HT to @Ben_Golub for a fascinating thread about effects of neglect of selection bias.
2/ In a “call to arms” paper, I argue that neglect of selection bias in social observation is one of the key sources of bias in the transmission of ideas and behaviors.
3/ And that in turn, bias in the social transmission of ideas and behaviors is a key intellectual building block for social economics.
papers.ssrn.com/sol3/papers.cf…
Read 16 tweets
1/
 
What should the “intrinsic P/E ratio” be for an “average US company” in today’s market?

Is it possible to find this out?
 
Yes, it is roughly 16.92.

Let’s do some math.

#stocks #investing #ValueInvesting
2/
 
First, let’s define what is an “average US company”?

We assume this is a US company that is mature.
 
Its cash flows grow at a steady rate.
 
It has market average risk: beta = 1.
 
And it earns no excess returns: Return on Equity (ROE) = Cost of Equity.
3/
 
For such a company, we can use the Gordon Growth Model to compute its intrinsic value:

P = FCFE1 / (r – g)

where FCFE1 is next year’s cash flow available to equity owners (or potential dividend), r is the cost of equity, and g is the steady growth rate.
Read 9 tweets
How to achieve Financial Independence at an Early Age --

A Thread --

A Hypothetical Person X, will Share His Story and Give you His 4 Rules.

👇👇

Inspiration -- @FI_InvestIndia
I also had a similar age when I started earning. Let me share my experience of how I started my financial journey.

From the very beginning, I knew that I don’t want to work for the rest of my life.

I need to achieve financial freedom at a young age. So I followed 4 key rules:
Rule #1 Increase Income

• At the end of the way, income is the key here.

I knew that if I need to live a financially comfortable life, I need to increase my income.
Read 23 tweets
Important Thread🧵on common #Financial Mistakes which people normally commit.

Credits: CA Govind M Chandak.

#WAFwd #InvestmentPlanning #Investing

Avoid these mistakes for better financial future.

@dmuthuk @Vivek_Investor @VidyaG88 @caniravkaria

🙏 RT to maximize reach🙏
❌ Buying Insurance Policies for investment purpose.

Always go for #TermInsuance
❌ Not able to wisely use Credit Card ...

As always pointed out by @dmuthuk sir & @FI_InvestIndia avoid #CreditCard for purchasing unnecessary stuff on credit.
Read 28 tweets
Warren Buffett’s Investment Tips For Beginners.

A Thread ---

👇

Inspiration -- @FI_InvestIndia .
“When a individual with cash meets an experienced individual, that individual with experience ends up with cash and that individual with cash leaves with experience.“.
• Buffett says that experience is the ultimate key to be a successful investor.
Read 14 tweets
Why people lose money in stock market?

Top 7 mistakes and 5 root cause.

A Thread ---
👇

Inspiration - @FI_InvestIndia and @warikoo
1. Investment in Penny stocks:

• Many people have an obsession with penny stocks.

• They think that when they invest in penny stock, the downward risk is very low.
2. No idea of valuation:

• Valuation? What is valuation? If I ask 100 people, majority of them have no clue about valuation.

• They just invest because they think that the share is good or someone suggested the share.
Read 25 tweets
𝐓𝐚𝐱𝐚𝐭𝐢𝐨𝐧 𝐟𝐨𝐫 𝐒𝐭𝐨𝐜𝐤 𝐌𝐚𝐫𝐤𝐞𝐭 & 𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬

1. 𝘓𝘛𝘊𝘎 (𝘗𝘦𝘳𝘪𝘰𝘥 𝘰𝘧 𝘏𝘰𝘭𝘥𝘪𝘯𝘨 > 1 𝘺𝘦𝘢𝘳) : Equity, Equity MF – 0% for first Rs 1 lac, 10% on exceeding Rs 1 lac, Debt MF: 20% after indexation benefit
2. 𝘚𝘛𝘊𝘎 (𝘗𝘦𝘳𝘪𝘰𝘥 𝘰𝘧 𝘏𝘰𝘭𝘥𝘪𝘯𝘨 < 1 𝘺𝘦𝘢𝘳) subject to Total Income exceeding 2.5 lacs : Equity: 15%, Equity MF: 15%, Debt MF: as per individual tax slab
3. If you have bought and sold the same shares multiple times then use 𝐅𝐈𝐅𝐎 methodology to calculate the holding period and Capital gains

4. Long term capital loss can be setoff only against long term capital gain.
Read 6 tweets
A Thread🧵on various #IncomeTax #Deductions.

Must read for everyone.

A simple & legitimate way to to save taxes every year!

(RT to maximize reach.)

Money Saved is Money Earned !

#IncomeTax #Tax #ELSS #TaxSaving #Investing #TaxPlanning

Images Courtesy : Internet.
When the month of March starts or is about to end suddenly everyone remembers one thing #TaxSaving ...

This is where #TaxDeductions come into picture.

Deductions allowed under #IncomeTax act help you reduce your taxable income.
People normally know a bit about Section 80C Deduction which allows a person to claim a deduction of Rs 1.5 lakh on total income.

But there are various other common deductions which anyone can claim.

This thread is about such common deductions.
Read 23 tweets
Cathie Woods, Kevin O'Leary, & Jan Van Eck Exchange Perspectives Summary

Paradigm shift in financial markets happening:
-start of global fin. crisis, central banks supporting fin. markets with stimulus
-with Fiscal Spending GDP growth expected to go up 6-9% 2021
ctd(..)

#stocks
🌎GDP growth like this not seen since 1950s
-direct impact is 10-year high interest rates
-many people afraid H2 will be higher interest rates from most recent stimulus
-fixed income will be challenged

#arkinvest #arkk
@kevinolearytv is changing his portfolio for the next 2 years
🧐 from 50% fixed income and 50% equity to 30%/70%🧐 assets to own during inflation are quality co.s, profitable, & sustainable ROI
🧐 some industries permanently damaged due to tech ex: airplanes v. $zm

#investing
Read 16 tweets
A Thread 🧵80 C Deduction of Income Tax.

Must read for everyone.

A Simple way to to save tax upto Rs. 46,800 each year!

(RT to maximize reach.)

@caniravkaria @CAPratik_INDIAN views welcome 🙏

#IncomeTax #Tax #ELSS #TaxSaving #Investing #TaxPlanning
When the month of March starts or is about to end suddenly everyone remembers one thing #TaxSaving ...

This is where #TaxDeductions come into picture.

Deductions allowed under the #IncomeTax act help you reduce your taxable income.
Deduction under Section 80 C is a popular tax deduction section which allows you to claim a deduction of Rs 1.5 lakh on your total income.

By completely utilizing this deduction limit, a person can save tax upto Rs. 46,800 each year! (For person
falling in tax bracket of 30%).
Read 20 tweets
1/N. What’s going on in the stock market and why so many people are paying a close attention to the treasury bond yields?
When treasury bond yields go up, mortgages get more expensive, loans get more expensive, margin rates get more expensive, all debts start to get more costly.
2/N. It’s bad for the companies because when interest rates go up, it makes the corporate debts cost more to pay. That lowers profit margins and ultimately lowers the stocks prices. The increase in interest rates play a big factor in the valuation of the growth stocks.
3/N. It is because they are valued on their future growth potential. The higher the interest rates, the lower valuation of the growth stocks. When interest rates are really low, investors can afford to pay a higher price for the stocks.
Read 10 tweets
Last week, a fantastic episode on the Meb Faber Show with @verdadcap and @MebFaber highlighted several market observations and contrarian insights. 👏👏👏

#markets #smallcap #investing

Here is my summarized list of 20 highlights from the episode: 🧵💡👇

1) Verdad’s core investment strategy remains focused on “private equity replication”, which primarily invests in public equities that are “small in size, cheap in valuations, and financially leveraged”.

Verdad grew its AUM from ~$50M in 2018 to ~$600M in AUM today.
2) Between the beginning of Q4 2018 and the end of Q1 2020, micro-cap value and small-cap value indices suffered one of the worst market environments in history.
Read 22 tweets
Excellent speech from #RaamdeoAgarwal about significance of long term #Investing where he explains his 30 years journey in Indian stock market #videoshorts
The 1992 crash, what happened to his portfolio
Even am not the smart guy
Read 10 tweets
Kalpfin Wealth Byte (30 seconds read)

Too much, too soon, too fast!

Everyone knows the investing duo of Warren Buffett and Charlie Munger. But 40 years ago, there was a third member, Rick Guerin. The three made investments together.
Then Rick kind of disappeared while Warren and Charlie became the most famous investors of all time

A few years ago, hedge fund manager Mohnish Pabrai asked Buffett what happened. Rick, Buffett explained, was highly leveraged & got hit with margin calls in the 1970s bear market.
Some things scale well. Double their size & you get double the output (or more).Other things don’t, & it is important to know which is which.

A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you try to be paid sooner
Read 6 tweets
#Stoploss 101:

A stop-loss (SL) is an order to buy or sell a specific asset once the asset reaches a certain price. An SL is designed to limit a trader's loss on an open position. Basically, it's a insurance against unexpected loss.

#1
When you take a trade, you take a risk. Acknowledging this means accepting the risk and quantifying it before you enter a trade. Not using an SL, means that you‘re not accepting the risk and thereby increasing it! If you don’t use an SL your whole account will become the SL.

#2
SL Placement:

90% of the retail traders put their SL just below the wick. Well, let me tell you it's actually the worst possible place to set yours. Every bigger player knows that liquidity can be found just below these wicks.

#3
Read 11 tweets
Earlier today, @JonahLupton hosted an informational webinar titled “Everything about SPACs”. Great summary with lots of educational knowledge about SPACs. 👏 👏 👏

#spacs #Markets #investing

Here are the highlights below:

1) The webinar discussed SPACs, PIPEs, SPAC sponsors, warrants, and examples of SPACs. The webinar also discussed the SPAC process, de-SPAC process, and the redemption feature.

(Past performance is not indicative of future returns, and risks are present in SPAC investing.)
2) Most PIPE investments get completed at $10 per share.

Many SPAC warrants have a 5-year expiration timeline with a $11.50 strike price. SPAC warrants provide leveraged exposure to the target private company that is being taken public via a SPAC.
Read 8 tweets
Often a very underappreciated and less-talked about trait in investing / trading is the behavioural psychology.

You see, having an informational edge today is no longer something that's restricted to the 'elite' or the 'inner circle'.

Read on 👇
At the click of a button, you get access to tons of data, analyst reports, investor presentations and what not.
While data helps you build conviction, it is paramount how you're able to sit on a position to make it compound to 10x / 100x while also being cognizant of the fact that there could be big drawdowns in your journey to see the wealth compound.
Read 7 tweets
Major bear market decline of 20% plus rarely happen without seismic market events, aka indicators. Similar to earthquakes or volcanoes eruptions, financial tremors can be felt long before the actual events happened. Let review some bear market indicators to better manage risks.
Volatility in commodity rates of changes correlated to bear market in stocks. In period of high inflation, sharp spikes in commodity can trigger commodity shocks. While a period of weakening economic cycle depress commodity prices, making commodity a predictive indicator.
The issuance of JUNKs bonds increase the economy leverage. Most market crashes are preceded by spikes in JUNKs issuance. JUNKs bonds are illiquid, risky, and more likely to default during recession. JUNKs issuance is a useful indicator measuring market euphoria in risk pricing.
Read 9 tweets
The RATE-ARDs at $MCO Moody's and S&P $SPGI have too much influence over companies - case in point is $INVH which owns 80k single family homes with a loan-to-value (LTV) of just 32%. Somehow this company is NOT 'investment grade' and they are de-levering...
2/ to appease these idiot rating agencies. Consider that people typically put down only 5-10% of the purchase price of a home (the rest is financed with a mortgage at an LTV of 80%+). Of course there is one recent example of a situation where the US housing market blew up -caused
3/by rating agencies who in pursuit of fees did whatever $BAC $GS $MS $C $JPM etc told them too - rating hundred$ of billion$ in garbage debt as investment grade creating a housing bubble followed by a global financial crisis truthout.org/articles/the-i…
Read 5 tweets
In investing many of us know what to do, but only few know when to do it.

#behavior #investing
Next time you see market crashing, just remember what you did or didn't do in March 2020.

You will figure out what is the right thing to do.
Investing success is less guided by formulas and more by our reaction to other people's behaviour and views.

#investing
Read 4 tweets
#MGL #MahanagarGas
CMP ₹1219

Target: 1300/1400/1500/higher
SL: No SL for #Investment. For ST keep 900

Buy on dips
Best Buy range: 1000-1100

Only for #patient #longterm #investor

Please do your due diligence

#StockMarket #NSE #BSE #gas #Investing #Invest
#MGL

🔗Expanding CGD network and new business areas for PNG CNG
🔗Consistent promoter holding 32.5%. GoM holds 10%
🔗Distributor in prominent city of Mumbai and surrounding areas
🔗Improving business prospects post COVID
#MGL

🔗Reasonable valuation and consistent dividend payer 3% yield
🔗Experienced Management
🔗Debt free
🔗Increasing cash flows
🔗Positive guidance of revenue and margin expansion by Management
🔗Low crude oil price is positive
Read 6 tweets
Inflation $TLT worries=opportunity to invest in single family rental leader Invitation Homes $INVH. At $28/sh implies 4.8% 2021 cap rate. Trades at ~5-10% discount to NAV.
$AVB $EQR $CPT $MAA $ESS $VNQ $AMH $XLRE #reits #dividends
SHOULD trade at premium to NAV->Platform value:
2/While anyone can buy a home and become a landlord, this is a scale/density business. To effectively manage single family homes bigger is MUCH better. Scale allows for in-house provision of services (hire a plumber full time for $200/day rather than pay $150 for each visit).
3/Route density is also critical. On average, INVH owns at 5,000 homes per market. Can cluster maintenance jobs. This has lead to NOI margins of ~67%. Put simply, with scale INVH retains more of each rental $ as profit than competitors.
Read 11 tweets
Highlights from the "Businesses of the Future" webinar with Mr. Ajay Modi, VP @PiperSerica

Read here 👇🏻
Long-term disciplined #investing is the most popular way of efficient wealth creation. As pointed out by Ben Graham, money is made through time in the market and not through timing the market.
The key drivers of the businesses of the future are going to be rising #incomes, availability of global goods and services, digitalization of consumption, rising number of millennials, etc.
Read 7 tweets

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