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ShadowInvestor.crypto

@shdwinvestor

Apr 7

Quick thread on Price-to-Rent Ratio?

The price-to-rent ratio can be helpful for gauging whether or not an area is “fairly” priced, or if it’s in bubble territory.

To determine the price-to-rent ratio in a given area, divide the median home price by the median annual rent.

Generally, a price-to-rent ratio higher than 21 means it’s cheaper to rent in that area.

As of 2019, the price-to-rent ratio in San Francisco is over 50, the highest in the US.
For every $1,000 you’d spend in rent, you’d have to pay $601,362 to buy something comparable.

e.g. a place that rents for $4,000/mo. would cost roughly $2.4M to buy.

At that rate, it’s cheaper to rent than to own, as the estimated monthly mortgage payment would be around $10,000.

Read 7 tweets

ShadowInvestor.crypto

@shdwinvestor

Mar 20

Thread on Short Selling.

Short selling is what investors do when they want to bet against a stock.

It’s the opposite of a long position (where they bet the value of the stock to go up over time).

So how do you make money on a failing company?

Take this fictitious example:

Shadow thinks the value of drug company ShadowPharma is overinflated, and that it will soon report that it's trials for its new drug were a failure.

Shadow approaches institutional investor Shadow Capital, which owns ShadowPharma stock to borrow 1 million of their shares.

Shadow Capital agrees, and charges Shadow a monthly fee of $5 million until he returns the shares.

Shadow takes ShadowPharma's shares and immediately sells them for the going rate of $100 each, depositing $100 million in his account.

Read 10 tweets

ShadowInvestor.crypto

@shdwinvestor

Mar 19

Quick thread on why TIME IN THE MARKET is better than TIMING THE MARKET?

Data from JP Morgan's Asset Management shows from January 2nd, 2001 to December 31st, 2020, for the S&P500, seven of the 10 best days occurred within two weeks of the 10 worst days.

Let me repeat that.

Seven of the 10 best days are current within two weeks of the 10 worst days.

So what do realise from this data?

Not only could you not time the market, but there's a good chance that if you try to time the market, you may miss those good days.

In times of panic or anxiety, sometimes investors may rush to sell.

ShadowInvestor™ encourages investors NOT to get out of the market, STAY INVESTED in the market.

Because if we go back to the stat & you go back to January 2nd, 2001 through year-end 2020,

Read 8 tweets

ShadowInvestor.crypto

@shdwinvestor

Mar 18

Mindset Moment 🧠

Sheesh, If you’ve been an active investor in the markets over the last 6 months, you don’t need ShadowInvestor™ to tell you what a hell of a ride it’s been.

Fears of rising rates and a slowing economy has completely flipped the switch on investor sentiment.

And that’s triggered a sell-off that’s seen the average tech stock fall by 37%.

We'll focus on tech for today but markets in general are looking heartbreaking & this could apply to you.

Pandemic favourites like Zoom & Peleton are down about ~80% and Australian tech about ~90%🤯

@CathieDWood

But despite the recent declines it’s easy to forget just how long this tech bull run has been going for.

Take e.g. ARKK, The famous tech ETF from @CathieDWood is down ~50% since this time last year.

But despite this, the ETF is still up ~40% from 2yrs ago (AKA pandemic).

Read 5 tweets

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