OT: Stock and Investment Thread
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Here is a good overview. Over the years/decades, a traditional IRA can grow quite a bit that can push you into a higher tax bracket, IRMA and NIIT surcharges—especially when one spouse dies and the other is taking RMDs. Maybe a good problem to have but if you fall into that cohort, you may be better off doing Roth 401k, Roth conversions, and maybe back door.
This is a very interesting story. Hadn't heard about this before now:
SEC Investigating SoftBank After NASDAQ Gamma Squeeze, FOIA Reveals
BY TYLER DURDEN
THURSDAY, MAR 25, 2021 - 11:50 AM
It looks like the SEC could finally be catching up to the artificial gamma squeeze that helped the NASDAQ nearly double off its March 2020 lows.
We were aghast when it was revealed in September 2020 that Softbank had bought about $4 billion worth of call options in names where it owned the underlying equity. The "strategy" seemed to clearly border on manipulation, despite apparently being legal.
SEC Investigating SoftBank After NASDAQ Gamma Squeeze, FOIA Reveals
BY TYLER DURDEN
THURSDAY, MAR 25, 2021 - 11:50 AM
It looks like the SEC could finally be catching up to the artificial gamma squeeze that helped the NASDAQ nearly double off its March 2020 lows.
We were aghast when it was revealed in September 2020 that Softbank had bought about $4 billion worth of call options in names where it owned the underlying equity. The "strategy" seemed to clearly border on manipulation, despite apparently being legal.
I do my backdoor Roth contributions with a few clicks on the Vanguard website. Mine is simple as I don't have IRAs. Do it every January. Causes a little complexity on TurboTax when filing but a quick Google search gets me my answers. Just need to have the after tax cash ready to be invested. And pray that the politicians don't change the rules after the fact on Roths.
Was the dip when Covid hit an overreaction? The economy was shutting down, no one knew just how bad things would get, fear prevailed. Many US companies had horrible results in 2020 as a result. Horrible. Look at Avis. People stopped flying, stopped renting cars. It bottomed at $10.58/share on 4/3/20. Current price? $65/share, above where it was before Covid? How is that justified? They lost a full year of earnings. Will they gain market share from Hertz's problems? I think so. Is there pent up travel demand? Yup. Are people less likely to take public transportation and prefer renting a car in the aftermath, time will tell. But $65/share?
And Greensill. That could end up being worse the WeWork. What a mess that place is.
Be careful with back door Roth IRA’s. Make sure you do the math both for the cost today with taxes and potential opportunity loss on the taxes if invested. If you are in the 39% tax bracket the gain is minimal at best.
Except you've already paid tax on the money you put in already. You put in after tax money into a Traditional IRA, and then convert it to a ROTH and don't pay any additional tax on any future gains. It beats putting the money into a traditional brokerage account because you're taxed on any future gains or dividends. You're essentially taking $6,000/year (12,000 if married) of already taxed money and putting it into a Roth bucket never to be taxed again.
So if you have maxed your 401k at $58,000 and then add in $6,000 to traditional IRA, you don’t have to pay 37% tax on the $6,000?
Here is a general description from MS on fair market value (actually called fair value estimate). They go out of there way to say that this is NOT a price target, rather a metric focused on the company's intrinsic value. Love to hear your thoughts on this:
The fair value estimate is a smart shortcut that can help you determine whether the price of a stock is high or low compared with its fundamental value--not hype, not fear. Calculating the fair value estimate involves looking at a company’s financial statements and annual reports, and assessing the management structure, competitive advantage, and corporate governance. It estimates the future cash flows of the company and adjusts them to today’s dollars. Based on that research, a value is calculated that estimates the value of the company and what one share of stock should sell for if no emotions or headlines or hype from talking heads were involved. Fundamental analysis is not perfect. It is an estimate, and there are uncertainties involved for sure, but it is a much more reasonable estimate of the long-term fair value of a stock than “Whatever people are willing to buy it for today.”
You may not have the time, knowledge, or interest to dig deeply into fundamental analysis and calculate the fair value estimate yourself. Morningstar’s analysts develop fair value estimates for thousands of companies based on independent, unbiased fundamental analysis. Our analysts are assigned to particular companies and they research those companies deeply, follow them for years, and do their best to keep an accurate and up-to-date fair value estimate for a share of that company. Morningstar was founded for the express purpose of making this kind of information available to the general public so that everyone could make informed investment decisions.
Summary FVE for AMZN (as an example):
Fair Value and Profit Drivers | by Dan Romanoff Updated Feb 02, 2021
Our fair value estimate for Amazon is $4,000 per share, which implies a 2021 adjusted price/earnings multiple of 87 times and a 1.3% free cash flow yield. We think multiples are a little less meaningful for Amazon given the ongoing heavy investment and rapid scaling that depresses financial performance. However, we expect the company to significantly grow its free cash flow as it matures.
Over the long term, we expect e-commerce to continue to take share from brick-and-mortar retailers. We further expect Amazon to gain share online. We believe that over the medium term, COVID-19 has pulled forward some demand by changing consumer behavior and better penetrating some retail categories, such as groceries and luxury goods, that previously had not gained as much traction online. We think Prime subscriptions and the accompanying benefits, combined with selection, price, and convenience continue to drive the retail story. We also see international as being a longer-term opportunity within retail. We model total retail-related revenue growing at a 15% compound annual growth rate (CAGR) over the next five years.
We believe the critical growth drivers over the medium term will be AWS and advertising. Since these segments earn materially higher margins than the rest of the business, we also expect them to drive margins higher over time. Over the next five years, we project AWS revenue growing at a 21% CAGR and other revenue (which includes advertising) growing at a 26% CAGR. In total, Amazon should grow at a 16% CAGR through 2025.
Our near-term forecast includes a gradual easing of some COVID-19-related expenses, which totaled more than $10 billion in 2020. We model GAAP operating margin expanding from 5% (actual) in 2020 to 9% in 2025.
Jeremiah Babe has a video up on You Tube showing where the stimulus money is going:Hundreds of cargo ships from Red China ready to be unloaded on the Left Coast.
No. I max out my 401K every year. The whole purpose of the backdoor Roth (which I'm shocked has not been eliminated) is to put additional after tax money into a facility where the gains are not taxed when drawn. Since I'm over 50, I put in $7,000 this January. If I did nothing, that $7,000 would sit in a taxable investment account. Not huge numbers but I'd rather do it than not.
People do conversions of previously untaxed contributions to IRAs, but they must pay tax on the amount that they are converting to the Roth. That is a different circumstance.
Great post. We max out 401k and get all of our company's match. Then we max our backdoor Roth IRA accounts. Then we contributed to our taxable brokerage E-Trade account.
I've been eyeing our retirement accounts (7 of them) and as of now, Q1 looks up a little bit. But definitely not up for Feb and Mar!
Roth is after tax money
if your 401K plan allows you to over contribute on after tax basis you can typically roll those over contributions into your Roth which helps to beef it up beyond the annual $6K limit.
I suspect my portfolio is doing better than expected. The big leg down are all in tech.I've been eyeing our retirement accounts (7 of them) and as of now, Q1 looks up a little bit. But definitely not up for Feb and Mar!
If I had the time, it would be fun to see how things would have fared had I not jumped in on a few WSB-esque type of plays. They are certainly skewing in my favor this time. Not stupid enough to think that will happen again.
Musk needs to get off Twitter:
I've been steadily intrigued by $uwmc the last two weeks. There's been a lot of chatter online about them last week on gamma squeezes and price runs that never occurred. Ignoring that chatter, I like the potential of this stock. #2 mortgage company in the US, solid dividend in their first quarter post-spac merger, trading at 6x earnings. Solid housing market.
Maybe im blind, but this seems like a solid hold for the foreseeable future. There's plenty of people here smarter than I am on this stuff, looking for feedback
Maybe im blind, but this seems like a solid hold for the foreseeable future. There's plenty of people here smarter than I am on this stuff, looking for feedback
I’ll leave the smarter replies to the smarter people but a word of caution, this has been a favorite of Twitter pump and dumpers. Might have to shake out some of that nonsense in the near term future.
Yeah, I've noticed twitter/wsb chatter as well, which is why I ignored it for the last 2 weeks. On the surface though it seems like it could be a solid play.
Note: I know nothing about this specific company. so here is the risk with mortgage lenders/bankers. They have generated a ton of loans during a period of falling rates due to refinances. In fact, a high % of originations have been refinances. With the 30-year mortgage rate up 65 bps over the last couple of months, it has really slowed down the refi market. If rates go up more, very little refi’s will occur, thus hurting the mortgage bankers. Although MB’s have variable costs that they can lower, they have fixed costs that could cause issues when rates go up and originations go down. Some of this risk is hedged, if they have a servicing portfolio, as less refi’s will extend cash flows (i.e. more fee income as servicing cash flows get extended due to less prepayments).
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UWMC is almost entirely wholesale new mortgages. Little to no refi's. Not their business focus
That would kill BLNK but less impact on ChargePoint. Will they charge fees for this? If so, no impact to ChargePoint.
I don’t believe you are correct. Yes, they are a wholesale mortgage lender, but that includes both purchase money mortgage and refinance loans sourced by the mortgage brokers that they partner with. This is what I just read. So, less refi’s will result in less mortgages that they can originate and sell through their wholesale operation.
Update: per your “little to no refi’s” comment....The following was in an article posted on their website: “Refinances represented 76% of UWM's 2020 mix at almost $140 billion, a 141% increase year-over-year. The remaining nearly $43 billion in volume came from purchases, which actually decreased almost 14% year-over-year, despite existing-home sales in 2020 reaching their highest level since 2006, according to the National Association of Realtors.”
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I was looking at ChargePoint but eventually passed on it. Mostly due to low margins and competition from manufacturers (Tesla and VW). I saw the same rumor yesterday. Good decision by me!
Fees? I'm sure. Tesla owners are charged, except for the early buyers of S and X, who got free lifetime charging. Maybe a subscription fee? Perhaps slightly higher rates than Tesla owners?
It actually cost more to charge at a charging station then filling up a tank of gas. It’s good for EV to mitigate range anxiety. But think most will charge at home.
CP charges for equipment and installation, not charging. Most of their clients are clients that look to provide this service as an amenity. BLNK does the opposite. Free setup and installation, but makes money like a gas station.
Business that uses CP is looking to offer it as an amenity. If the idea is to get you to their business, TSLA charging station has to be right next to your business to impact it.
Just to be clear, when you move the $6,000 or $7,000 (above age 50) from traditional IRA to Roth via backdoor, you don't have to pay tax (income)?
If you move pretax monies into a Roth IRA, you pay tax on the pre-tax monies.
If you move posttax monies into a Roth IRA, you pay no tax (as it has already been taxed).
All monies in the Roth IRA are post tax monies.
Good thing about Roth IRA is that all capital gains are tax free. And using a ROTH ladder (built up over at least 5yrs) you can tap the principle in the Roth IRA for a tax free income stream, if you desire.
This works great when coupled with mega backdoor roth conversions.