Bitcoin mining is how new coins come in circulation. It's also how our transaction on the BTC network are verified.
As the Bitcoin blockchain uses the Proof-of-Work consensus algorithm, Mining is done by solving a complex computational math problem.
Apr 21, 2022 • 5 tweets • 3 min read
Did you know there's a measurement that can predict whether a business will go bankrupt or not in the next 2 years?
It's called Altman’s Z-score Model.
The lower the Z-score, the higher the odds that a company is heading for bankruptcy.
A Z-score that is lower than 1.8 means
that the company is in financial distress and has a high probability of bankrupcy.
A score of 3 and over means the company is in a safe zone and is unlikely to file.
A score between 1.8 & 3 means the company is in a grey area and with a moderate chance of filing for bankruptcy.
Apr 12, 2022 • 10 tweets • 4 min read
A quick thread on Diversification.
Diversification is a strategy allowing investors to manage risk by spreading their money across different investments.
Investors should have some money allocated to safety assets like cash and bonds in addition to riskier assets like stocks.
Any investor looking for a quick and easy way to help manage risk and potentially boost returns on their portfolio, should take a moment to consider how diversification could work in their portfolio.
Apr 11, 2022 • 9 tweets • 5 min read
A quick thread on Asset Allocation
Asset Allocation is an essential component of anyone's investment journey!
Fancy translation; asset allocation is the breakdown of different investments in the categories known as asset classes. Stocks, bonds, cash are different asset classes.
Within each asset class, there are more breakdowns that categorize each investment like market capitalization, sectors, geographical locations etc. etc.
But in practicality, asset allocation is to diversify depending on an investor's risk tolerance.
Apr 7, 2022 • 7 tweets • 4 min read
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.
Apr 5, 2022 • 4 tweets • 2 min read
What is value investing?
Value investing is a long-term investment strategy used by investors to seek out stocks that are trading for less than their intrinsic or book value.
Just like online shoppers keep tabs on their favourite items and buy them when they go on sale, value investors track down stocks they think are being undervalued by the stock market.
Investors analyse and use various metrics to find the right valuation of the stock.
Mar 20, 2022 • 10 tweets • 4 min read
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.
Mar 19, 2022 • 8 tweets • 3 min read
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.
Mar 18, 2022 • 5 tweets • 5 min read
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%🤯
