464 karma · joined November 6, 2020
You should never base your shorts on solely rational points (long-term rational points, even worse) when going short on bubbly assets.
Things like "Bitcoin is not a viable payment method, it's centralized, possibly manipulated, fueled by the greater fool" is not a valid shorting motive unless you have a triggering event caused by your aforementioned rational point.
Europe should fund them heavily and by doing so give them the advertising power to compete with for-profit ones.
Otherwise they will end up squandering a lot of money, Covid apps are not a good example.[1]
[1] https://www.reddit.com/r/programming/comments/henwet/the_uk_...
If that doesn't work, I would go out and study in a library or park.
I don't think he genuinely wants the people who follow him to be ruined, so I assume he really believes these prices are sustainable in the long term.
Imagine there are two identical twins in the womb, both equally bright and energetic. And the genie says to them, “One of you is going to be born in the United States, and one of you is going to be born in Bangladesh. And if you wind up in Bangladesh, you will pay no taxes. What percentage of your income would you bid to be the one that is born in the United States?” It says something about the fact that society has something to do with your fate and not just your innate qualities. The people who say, “I did it all myself,” and think of themselves as Horatio Alger – believe me, they’d bid more to be in the United States than in Bangladesh. That’s the Ovarian Lottery." ― Warren Buffett
People have completely lost the value of money, do you realize how much money is $4.5 billion?
In 2007 Apple had a market cap of 80 billion and a P/E ratio of 26, it had revolutionary products on the market that were clearly going to change an entire industry while at the same time bringing in steady revenue, can you imagine how much it would be worth today in this bubble?
if it had said "Humans ate vegetables and little else" it would be on r/all now.
https://www.statista.com/statistics/525353/sweden-number-of-...
So you're telling me that in places like Brazil more people are being traumatized by deaths in overloaded hospitals compared to Westerners (who are less traumatized) thanks to a year of isolation? uhmm
https://www.youtube.com/watch?v=CcAYObnlehE&t=2623s https://www.youtube.com/watch?v=LnKke19Ow8Q
150 Million pushed into Extreme Poverty by 2021 https://www.worldbank.org/en/news/press-release/2020/10/07/c...
168k child hunger deaths predicted in Africa https://apnews.com/article/africa-hunger-study-coronavirus-c...
E.g: Brazil https://www.youtube.com/watch?v=CcAYObnlehE
Ordinary people had little trusted data.
Experts had data from cruise ships showing a low infection fatality rate [1], data from the first quarantined cities in Italy showing 60% of asymptomaticity[2], data showing that the average Covid victim is 80 years old and has three comorbidities[3].
[1] https://www.nature.com/articles/d41586-020-00885-w [2] https://www.repubblica.it/salute/medicina-e-ricerca/2020/03/... [3] https://www.bloomberg.com/news/articles/2020-03-18/99-of-tho...
In everyday life, if an environment/person bothers you, you can simply CHOOSE to deal with it if it's worth it or avoid it if it's not. Schools and prisons are closed systems where the social hierarchy inevitably gets established and constantly contested.
As someone who has been on both sides of the game telling kids not to fight back is counterproductive. If the situation is handled correctly it can become an incredible opportunity for growth.
Nondiabetic Subjects: https://pubmed.ncbi.nlm.nih.gov/30381620/
https://www.ncbi.nlm.nih.gov/core/lw/2.0/html/tileshop_pmc/t...
Study: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3882489/
Quite a few others https://outline.com/JKgfuv
Am I wrong to expect that corporate valuations in Europe and the U.S. will not appreciate in the coming decades as they have in past decades?
Edit: Yes, the U.S. and Europe are indeed in different economic positions, the U.S. can still avoid the spiral if it continues to attract skilled immigration and remains a low bureaucracy, easy-to do business environment.
‘A new generation of Chinese Fraud 2.0 has emerged,’ the report said In January, days after the shares of Luckin Coffee Inc. hit a record high on the Nasdaq Stock Market, giving the company a $12 billion valuation, a cryptic email arrived in the inboxes of multiple short sellers.
“A new generation of Chinese Fraud 2.0 has emerged,” it said. “Companies that start off as fundamentally and structurally flawed business model [sic] that evolves into fraud.” The author offered to share customer receipts and videos from Luckin Coffee outlets, attached a long report about the company and said the short sellers could publish and take credit for it.
Several American money managers reviewed the report, which accused Luckin of inflating its sales. Carson Block of Muddy Waters LLC published it, posting the 89-page report on Twitter on Jan. 31.
Luckin’s auditor subsequently discovered that several employees had faked revenue and expenses and on April 2, the company disclosed that as much as $310 million of its 2019 sales was fabricated. Its shares collapsed, less than 11 months after the company went public, and will soon be delisted.
The stunning fall of Luckin, an upstart rival to Starbucks Corp. in China that touted itself as the country’s largest coffee chain by stores, has sparked a lot of investor soul-searching. Should they have followed the recommendation of Mr. Block, who has bet against multiple listed Chinese companies? Should they have doubted the company when it disputed the allegations in the anonymous report? Could they have done more due diligence to determine whether Luckin’s reported growth was too good to be true?
Well-known investors who lost money when Luckin’s shares plunged include Stephen Mandel Jr. ’s Lone Pine Capital and Steve Cohen’s Point72 Asset Management. Commodities-trading giant Louis Dreyfus—which entered into a coffee-roasting venture and juice business with Luckin—and two top Chinese private-equity firms also had sizable equity investments in the company.
Several money managers who earlier invested in Luckin said they had little reason to doubt the company because it also had the backing of other prominent investors like BlackRock Inc. and Singapore sovereign-wealth fund GIC Pte. Ltd.
Some American hedge funds, wary of getting burned after previous frauds involving listed Chinese companies such as Sino-Forest Corp. that also inflated sales, said they subjected Luckin to extra scrutiny before deciding to invest.
One fund’s work included spot checks on individual stores, taking note of crowded ones and the ubiquity of Luckin’s blue-and-white coffee cups. Independent data they reviewed showed a growth in downloads of Luckin’s mobile app—used by customers to order products and make payments— that tracked the company’s reported growth in sales.
Some investors who visited Luckin stores in person had reservations about the company’s business and strategy.
Baillie Gifford & Co., a large U.K. money manager, sent an analyst to China last year to visit several companies including Luckin, according to an article on its website. The analyst, who speaks Mandarin, met with Luckin management, went to one of its shops in Shenzhen and spoke with customers. Baillie ultimately passed on making an investment.
BCC Global, a Shanghai-based due-diligence and research firm, in September 2019 contacted some investment funds with an offer to monitor customer traffic and sales at a carefully selected sample of Luckin’s cafes. After receiving interest in its proposal and doing its research and analysis, BCC found discrepancies with Luckin’s reported figures, according to emails reviewed by The Wall Street Journal and people familiar with the company.
When the anonymous report that Muddy Waters eventually tweeted made the rounds early this year, some short sellers were skeptical about claims that Luckin inflated its sales.
Andrew Left, who runs Citron Research and back in 2015 drew attention to questionable sales practices at Valeant Pharmaceuticals International Inc., said he decided to buy Luckin shares after speaking to one of its top shareholders. The individual, whom Mr. Left didn’t identify, assured him that it had run channel checks and believed the company’s financial results were accurate.
Mr. Block of Muddy Waters said it was the first time he took a trading position based on someone else’s research while circulating it.
“It wasn’t anything glorious we did here. We just felt confident that the report was directionally correct, so we decided we’d be a good platform for it,” Mr. Block said in an interview. He declined to disclose the identity of the author, whom he said he has known for several years and believed is credible.
Short sellers look to profit from a declining stock. They borrow shares and sell them with the hope of profiting by buying the shares back at a lower price later and pocketing the difference.
Recipients of the anonymous report got it from an email address containing the phrase “coffeeforclosers.” Its author signed off as “GLEN,” according to a copy of the email obtained by the Journal.
They were apparent references to the line “coffee’s for closers” from the 1992 American film “Glengarry Glen Ross,” about four real-estate salesmen who use aggressive and high-pressure tactics to close deals.
The anonymous Luckin report was produced by Snow Lake Capital, a Chinese hedge fund with offices in Beijing and Hong Kong, according to people familiar with the matter. The firm was founded in 2009 by Sean Ma, its China-born and U.S.-educated chief investment officer who previously worked at a hedge fund for Ziff Brothers Investments, a New York-headquartered family office.
A spokesman for Snow Lake declined to comment. The firm has about $2.5 billion under management, according to its website. It made most of its money on Luckin in early April when the shares lost most of their value following the company’s disclosure of fabricated sales, according to a person familiar with Snow Lake’s returns. Its flagship China fund, however, was down 1.3% in the year through May, another person said.
It isn’t known why Mr. Ma and Snow Lake didn’t want to take credit for the Luckin research, though short sellers sometimes choose to hide their identities to maintain access to company executives and avoid regulatory scrutiny.
The Luckin report was the result of an elaborate undertaking during the fourth quarter of 2019 that involved more than 1,500 individuals, who fanned out to about 15% of Luckin’s more than 4,000 outlets across China, according to the report.
They counted customers in the stores, recorded more than 11,000 hours of videos and collected scores of customer receipts. After analyzing all the data, the report’s author concluded that Luckin had inflated its sales because the channel checks indicated that sales at its outlets were far lower than what the company had reported.
It didn’t have insights into what Luckin was actually doing behind the scenes to boost its reported sales.
Last month, The Wall Street Journal reported that a group of Luckin employees began engineering fake transactions ahead of the company’s May 2019 IPO. They first used individual accounts registered with cellphone numbers to buy vouchers that could be exchanged for cups of coffee, then used many little-known companies to make bulk purchases of vouchers, according to documents reviewed by the Journal and people familiar with the matter. Most Luckin employees were unaware of the scheme.
In some ways, Luckin was exceptional. Relatively few companies accused by short sellers of accounting chicanery ultimately disclose wrongdoing. In addition, shares of many companies accused by short sellers of accounting misdeeds have gained in value over time.
Between 2017 and 2019, short sellers accused 32 U.S.-listed companies of accounting misdeeds, according to Breakout Point, a data provider that analyzes short selling trends. In the six months following those allegations, 25 of the stocks gained and the rest declined.
Luckin’s shares fell in February after the anonymous report came out before rising again. Credit Suisse Group AG , the investment bank that led Luckin’s 2019 IPO and a follow-on sale of shares and convertible notes in January 2020, published a research report defending the company.
“We found no hard evidence in the short seller report to prove Luckin’s business as fraudulent, and some of the allegations are baseless or have major flaws, in our view,” a Credit Suisse report said on Feb. 4, maintaining an outperform rating on the stock. Morgan Stanley, which also underwrote Luckin’s share sales, didn’t address the allegations but kept the equivalent of a hold rating on Luckin in a report issued that month. After the company disclosed its accounting misdeeds, analysts at the two banks suspended coverage of the stock.
A Credit Suisse spokeswoman said the firm was one of five brokers with a buy or outperform rating on Luckin’s stock as of March 2020. Its research analysts based their views “on information prepared by management and financial data reviewed by the company’s auditors,” she added.
Accounting firm Ernst & Young Hua Ming LLP in April said it uncovered evidence that some Luckin employees had fabricated revenue and certain expenses. But just a few months earlier, the auditor reviewed the company’s interim financial statements that were included in a January 2020 prospectus for a share sale and issued a private “comfort letter” that indicated it didn’t have any issues with the numbers, according to a person familiar with the matter. A spokeswoman for EY declined to comment, citing client confidentiality.//
// What does this mean for GameStop? Because of traders’ bullish sentiment, a previously failing company is now in the position where it can leverage the overnight increase in value to make real, substantive changes to its business. GameStop can pay off debt through the issuance of new shares or make strategic acquisitions using its newly-valuable shares. [9] A struggling company could become solid simply not because of a change in the underlying business, but because investors decided it should be more valuable. //
The private letter to investors in his fund, which was seen by the Financial Times, amounts to a damning critique of recent market behaviour by one of the world’s foremost value investors.
Mr Klarman criticised the Federal Reserve for slashing rates and flooding the financial system with money since the onset of the coronavirus pandemic, arguing that the central bank’s moves have made it difficult to gauge the health of the US economy.
“With so much stimulus being deployed, trying to figure out if the economy is in recession is like trying to assess if you had a fever after you just took a large dose of aspirin,” he wrote. “But as with frogs in water that is slowly being heated to a boil, investors are being conditioned not to recognise the danger.”
The biggest problem with these unprecedented and sustained government and central bank interventions is that risks to capital become masked even as they mount
US stocks are up more than 75 per cent since their low in March, while spreads on corporate debt — a measure of how much extra interest corporate borrowers have to pay compared to the US government — returned to pre-Covid levels this month.
Mr Klarman — who founded Boston-based Baupost almost four decades ago and has grown it to $30bn in assets under management — underperformed the market in 2020.
He has been intensifying his criticisms of US central bank interventions for the past several months. In the latest quarterly letter, Mr Klarmen referred to the Fed as an “800-pound gorilla” that has priced out investors who typically provide liquidity in moments of distress.
“The biggest problem with these unprecedented and sustained government and central bank interventions is that risks to capital become masked even as they mount,” he said.
Mr Klarmen also said the Fed policies had exacerbated economic inequality, referring to a “K” shaped recovery that has seen “the fortunes of those already at the top bounding swiftly upward, while those at the bottom remain on a downslope without end”.
Using Tesla as an example, Mr Klarman said shares in the “barely profitable” electric carmaker had soared “seemingly beyond all reason”, briefly making the company’s founder Elon Musk the richest person in the world. Low interest rates have made projected cash flows more valuable, he said, a point many investors have unwisely used to justify valuations on companies that sit far above historic norms.
“The more distant the eventual pay-off, the more the present value rises,” he wrote. “When it comes to the value of cash flows, the vast and limitless future, yet to unfold, has gained considerable ground on the more firmly anchored present.”
The Fed’s policies and programmes “have directly contributed to exceptionally benign market conditions where nearly everything is bid up while downside volatility is truncated”, he added. “The market’s usual role in price discovery has effectively been suspended.”
Mr Klarman said investors were now in a constant hunt for yield that was driving them to riskier corners of the markets, including investment grade corporate debt, private credit or junk bonds.
The Fed’s drastic measures had helped to boost economic activity and rescue ailing businesses, Mr Klarmen said. “But they have also kindled two dangerous ideas: that fiscal deficits don’t matter, and that no matter how much debt is outstanding, we can effortlessly, safely, and reliably pile on more.” //