All posts by tremendousblog

Where Can We Hide in a Financial Crisis?

Markets are booming today, but just 18 months ago, things looked like this:

Ouch.

I lost about 22% of my portfolio in less than five weeks. It certainly made life interesting.

Today, markets sit near all time highs and jobs go begging. It’s a far cry from the darkest days of the COVID disaster.

But the next financial crisis is coming. It could be in a month, a year, or ten years. But as investors, we need to be prepared.

One of the best ways to protect ourselves is to own assets that are not correlated with stocks. That way, when the market is falling off a cliff, a part of our portfolio is preserved.

People often look to overseas stocks or real estate to diversify. I own those myself. But although they can deliver nice returns, they are highly correlated with US stocks.

Global stocks have a 0.97 correlation with the S&P 500, a near perfect match. Even Real Estate Investment Trusts (REITs) show a very strong correlation (0.70).

Investment grade bonds (-0.06) and cash (-0.17) show low correlations with stocks. But the yield to maturity on that Bloomberg investment grade bond index is just 1.42%, way below inflation. And cash in a bank account returns about enough to buy a candy bar at the end of the year.

So where do we go? Here are some options:

Litigation Finance

This arcane corner of the financial world gives plaintiffs and lawyers money to sue people. The lawsuits usually involve a small company suing a larger one.

Returns can be eye popping. But it’s difficult for those of us who aren’t lawyers to understand what we’re investing in. Are these good cases likely to win? Or suckers’ bets?

It probably only makes sense as a small portion of a portfolio, at most. And minimum investments can be high, making it less attractive to many.

Farmland

Ya gotta eat, right?

New platforms have sprung up to help people invest directly in farmland. Returns can exceed those of stocks, and correlation with US stocks is almost nonexistent (-0.05).

This could be an attractive area, but it’s quite unfamiliar to me, and probably to most other investors. I’d have to research it a lot more before jumping in.

Dividend Aristocrats

Dividend Aristocrats are blue chip stocks that have increased their dividends every year for at least 25 years. They’re household names like Coca-Cola, Exxon, and IBM.

They generally have higher returns than the S&P 500 with lower volatility. That’s a win-win.

But they’re highly correlated with the rest of the index (0.9). That said, they’re still better than overseas stocks in this respect, and not dissimilar to real estate.

Wrap Up

We have some interesting options for keeping our portfolios safer in the next bear market while preserving yields today. I encourage you to dig deeper into your favorite categories.

What asset classes do you favor in a crisis? Let me know in the comments at the very bottom.

More on markets:

Will Evergrande Spark a Global Financial Crisis?

Should Anyone Own Bonds?

How Solana Could Wipe Out Visa and MasterCard

Photo: “Tomb of Lehman Brothers” by futureatlas.com is licensed under CC BY 2.0

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Amazon Business American Express Card

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order.

China’s Crypto Ban and the Road to Total Control

You just went to a protest marking the anniversary of the Tiananmen Square massacre. You were scared, but you went. You wore a mask and took a winding route home. No one could have seen you.

You arrive home to your Hong Kong apartment and decide to check your bank account. Did the rent get deducted yet?

But when you log in, you see the balance has gone from 21,000 yuan to zero.

A notice appears to contact your local Party office.

This is the future China wants to bring about. Its tools:

1) The social credit score
2) The digital yuan
3) The banning of cryptocurrencies other than the digital yuan

Today, China banned bitcoin and all other cryptocurrencies. All, that is, except its own digital yuan, which debuted this spring.

It wasn’t hard to see this coming. China banned cryptocurrency mining earlier this year. This is part of a long term trend toward total control under Xi Jinping.

China’s government has cracked down hard on tech companies, Hong Kong dissidents, and even seemingly random targets like celebrities.

What’s next? About five years ago, China’s government created a social credit score. Any action that upsets the government, from farebeating to protesting, can have dire consequences. One may be unable to get a loan, a job, or access the internet.

After the crypto ban, the next logical step for China’s dictatorship is to ban cash and all non-digital yuan. Then, all money is electronic, traceable, and centrally controlled.

Step out of line, and your life savings could be gone.

It’s a dark, dystopian future. But I strongly suspect it’s coming.

We in the United States and the rest of the free world should guard against any such thing being done here. I will be wary of attempts to ban cryptocurrencies or cash as paving the way for similar control. Control that has no place in a democratic society.

More on China tech:

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

How China’s Tech Industry Dies

China Is Crushing One of Its Most Innovative Companies

Photo: “1984” by jason ilagan is licensed under CC BY-ND 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

AMC Shares 50% More Likely to be Traded in Dark Pools

The huge proportion of shares in AMC Entertainment Holdings, Inc. trading in dark pools has raised suspicions among retail investors. So today, I decided to find out if AMC is really more likely to be traded in dark pools.

What I found surprised me.

First, a little explanation. A dark pool is a privately operated stock exchange. It does not report prices publicly like the NYSE or Nasdaq.

In fact, there is little transparency of any sort. Most are operated by large investment banks like Goldman Sachs and Morgan Stanley.

60% of AMC shares in the last 30 days have been traded in these dark pools. In general, 40% of the market by value is traded there.

So AMC shares are 50% more likely to be traded in this opaque, secretive type of exchange.

What’s more, shares in tiny “microcap” stocks are the most likely to trade on dark pools. But AMC has a market cap of $21 billion, making it a large cap stock.

If you look at the two stocks most similar in size to AMC, VICI Properties, Inc. and Netapp, Inc., you see much lower figures. 30% and 26% of their shares trade in dark pools respectively, less than half that of AMC.

And if you look at one of the most commonly traded shares in the market, the S&P 500 ETF Trust, it too is traded in dark pools only half as often as AMC.

Let’s review: a massive proportion of shares are traded in dark pools. Add that to a long term pattern of huge fails to deliver suggestive of illegal naked short sales (see this, this, and this).

Trading in AMC shares looks increasingly fishy.

How much more evidence does the SEC need before they investigate?

More on markets:

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

New Data: AMC Fails to Deliver Down 85%

Photo: “Bruce Springsteen” by afevrier is licensed under CC BY-NC-SA 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

So far this year, shares of AMC Entertainment Holdings, Inc. have increased by a factor of 20:

This runup has badly burned short sellers, largely hedge funds. New data shows just how bad the bleeding is:

The latest data, courtesy of S3 Partners, LLC, reveals that by the end of last week, short-sellers who bet against AMC had lost $4.08 billion over the course of this year. The picture was bleaker for those who had targetted GameStop, with the data revealing that the short sellers’ year-to-date losses stood at $6.44 billion. Cumulatively, this shows that AMC and GameStop short-sellers have lost $10.52 billion as we exit the third quarter.

But hedge funds don’t seem to be learning from their mistakes:

Interestingly, however, while the AMC short interest shares have dropped since June, recent data reveals that they are rising again. For instance, in late August, they stood at roughly 82 million, highlighting that by the end of last week, more than four million short interest shares were added to the bets against the company.

These losses have already caused the implosion of some funds that bet against meme stocks. It’s incredible that fund managers can look at their colleagues losing everything and not change their strategy.

I suspect the problem is their mindset. Institutional investors are used to viewing retail traders as “dumb money.” If I’m so convinced that I’m smarter than my adversary, even clear evidence that my side is losing may not change my mind.

It’s just a shame that the teachers and firefighters whose pensions many hedge funds play the markets with don’t have a say.

More on markets:

New Data: AMC Fails to Deliver Down 85%

Will Evergrande Spark a Global Financial Crisis?

What a Hedge Fund King Fears Most

Photo: “Prescribed Burn Sign” by U.S. Fish and Wildlife Service – Midwest Region is marked with CC PDM 1.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Why I Just Invested in Capbase, The Startup in a Box

Knowing who owns your company should be easy, right? Just keep a spreadsheet with the names and percentages and you’re all set!

Unfortunately, company ownership is a lot more complicated than that. Different investors buy in at different prices and different terms over time. 

That’s where Capbase comes in. Capbase can handle your incorporation, capitalization table (list of company owners), stock options and a lot more. Capbase is so advanced that when you raise a fundraising round, it can automatically update your cap table as the wire transfers come in!

It’s basically a startup in a box. And it’s taking over the industry. 

Very few corporations use any software solution to manage their cap table. In the future, I think all of them will. And Capbase is hard to beat. 

Best of luck to this awesome team!

More on tech:

Inside a Startup Accelerator Demo Day

What if Everyone on Earth Had Super Fast Internet for $1?

Why I Just Invested in Gauge, the Best Way to Sell Your Car

Photo: “wrapped gifts with string and paper tape scissors on wood table” by PersonalCreations.com is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Will Evergrande Spark a Global Financial Crisis?

A massive Chinese property developer is teetering on the edge of bankruptcy, roiling markets worldwide today:

Worries about spreading contagion from troubles in China’s property market sent U.S. stocks toward their steepest declines in months on Monday.

The retreat came amid concerns over property developer China Evergrande Group. Market participants increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders. The company’s debt burden is the biggest for any publicly traded real estate management or development company in the world.


What Is Evergrande?

Evergrande is an odd company. It is one of China’s largest property developers but also has its hands in electric cars, soccer and bottled water. It has more debt than any other real estate company on the planet.

Sales have slowed in recent years, along with China’s economy. Rather than devising a new strategy or pulling back on growth, Evergrande has continued to build at a breakneck pace, earning lower and lower margins.

It’s the old “We lose money on every one, but we make it up in volume!” mistake. And as if to make things even worse, they’ve expanded to businesses they know nothing about. What unique insights does a property developer have on the bottled water market?

Risks in China

If Evergrande goes down, who’s going down with them? Probably mostly Chinese banks, as they’re the major holder of the embattled conglomerate’s debt. JP Morgan estimates that China Minsheng Bank has the largest exposure.

China Minsheng bank is an interesting company. In a banking sector dominated by state owned banks, China Minsheng was the first bank mostly owned by the private sector.

In a moment when Xi is trying to centralize the economy and promote state owned business, he could let it fail. The state owned banks could pick up the pieces, cementing their position.

But if a massive property developer like Evergrande fails, perhaps taking some major banks along with them, the Chinese financial system could be badly shaken.

Add this to crackdowns on numerous tech companies and even seemingly random targets like celebrities, and I could see a crisis in confidence in Chinese markets.

They’re already weak:

What About the US?

I think US markets are overreacting today. The institutions with heavy exposure to Evergrande appear to be mostly Chinese, not American. Moreover, trade with China is just 6% of US exports.

In all, I could see China’s economy and markets taking a significant hit, but I think the damage will be contained.

Investors in China, good luck.

More on China:

How China’s Tech Industry Dies

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

China’s Tech Crackdown Means Economic Decline

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

The Kings of Cuban Coffee

Last summer, as the lockdowns were lifting, my wife and I sat at a little table on bustling Bergenline Avenue. I lifted a tiny cup to my lips and tasted some of the boldest, most flavorful coffee of my life.

The place was Sweets and Cortaditos in North Bergen, NJ. It sits near the top of the lively shopping street near leafy Braddock Park.

This small shop serves the most outstanding cortaditos and cafes con leche I’ve ever had. The signature cortadito has a deep, rich flavor complemented by the smoothness of steamed milk.

It goes beautifully with a slice of creamy cheese cake or a delectable cupcake.

Originally from Belleville, Sweets and Cortaditos opened its North Bergen location in 2016. From what I can tell, it’s been an incredible success. A steady hum of customers pass in and out, dainty coffees and satisfying treats in hand.

Sitting at the outdoor tables, painted after the Cuban flag, and listening to a street festival play Cuban music made us feel like we were in Havana. At a difficult time for our neighbor Cuba, it’s wonderful to be able to enjoy a bit of their culture close to home.

Have a wonderful weekend everyone!

More on food and Cuba:

How to Get Internet to Cuba

The Best Mexican Food Is In…New Jersey?

New Jersey’s Jelly Donut Heaven

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Machine Learning Engine Predicts 20% Rally in AMC in Next Month

I came across a fascinating little tool today. It’s a machine learning program designed to forecast returns in stocks.

It’s called the Trefis AI Engine and it draws from 8 years of past stock returns.

Given the intense interest in stock of AMC Entertainment Holdings, Inc., I had to see what the oracle would say.

AMC is up 34% in the last month. Based on past scenarios, what does the next month have in store?

The machine learning engine predicts a 20% return over the next month in this scenario.

Machine learning is a series of algorithms that can be used to identify patterns and make predictions. It powers Google search, Netflix recommendations, and even self driving cars.

Will the genie be right? I honestly don’t know. But I find the tool an interesting thing to play with.

Type in some scenarios of your own and let me know what you find in the comments at the very bottom of the page!

Kudos to Forbes for the tip.

More on AMC:

New Data: AMC Fails to Deliver Down 85%

What a Hedge Fund King Fears Most

For Retail Traders, AMC Has Become the Only Meme Stock

Photo: “DSC_0274” by oblomberg is licensed under CC BY-NC 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

New Data: AMC Fails to Deliver Down 85%

New data from the SEC today shows fails to deliver in stock of AMC Entertainment Holdings, Inc. dropped 85% in the second half of August:

AMC fails to deliver from 8/13 (last day of prior reporting period) to 8/31 (last day of current reporting period), from SEC data

Investors have closely watched fails to deliver in this popular stock. Its large and persistent fails to deliver, or trades that don’t close, may be a sign of naked short selling.

Let’s review what short selling is and how naked short selling fits in. Short selling is borrowing a stock to sell, then giving it back to the owner later.

A short seller is betting the stock’s price will drop. That means he’ll make money because the shares he has to return aren’t as valuable as those he sold.

Naked short selling is selling short shares without borrowing them first. It’s generally illegal.

Naked short selling can powerfully push down the price of a stock. If you never have to find shares to borrow, you can sell as many as you want!

A long term pattern of huge fails to deliver, which we see in AMC stock, often happens because of naked short selling. Trades don’t close because the shares never existed in the first place.

Hedge funds have been short selling AMC shares all year, and have taken some brutal losses along the way.

I suspect they are using illegal naked short sales to drive down the price and save themselves.

I suspect hedge funds are using illegal naked short sales to drive down the price and save themselves. $AMC #AMC
https://tremendous.blog

Just because fails to deliver dropped at the end of August doesn’t mean the problem is gone. As you can see from the chart above, when they become extremely elevated the market makers tend to clear them up, only to see them rise again.

AMC still has a huge amount of fails to deliver compared to other stocks. With 140,978 shares failing to deliver on August 31st, AMC has 28 times the fails to deliver of Apple.

Apple is the biggest stock in the market, at over 100 times AMC’s size.

The SEC and market makers have a long way to go to make the market in AMC shares work properly.

What will it take to get their attention?

More on AMC:

AMC on the Threshold List: Strong Evidence of Naked Short Selling

AMC in Top 4% of Stocks for Fails to Deliver

For Retail Traders, AMC Has Become the Only Meme Stock

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Should Anyone Own Bonds?

I used to love bonds. Especially government bonds. Guaranteed income, easy liquidity, and stability in a crisis.

What’s not to like?

But my old flame hasn’t done much for me lately. And I’m not the only one.

The Problem

Bonds have hovered at or below the rate of inflation since 2009:

Just barely keeping up with inflation might be enough, given that I have much riskier positions in stocks, real estate, and tech startups.

But if an investment pays a yield below the rate of inflation, you’re essentially paying someone to hold onto your money. Instead of getting even a modest return, you lose a little of your cash every year, like clockwork.

Today, I own long term treasury bonds and medium term treasury and mortgage bonds. The long term bonds pay 1.73%, and come with a big risk of decline when interest rates increase. Which they’re just about bound to do, given that that they’re are sitting near 0.

The shorter duration bonds pay even less: 1.28%.

What Kind of Return Do We Need to Keep Up With Inflation?

Recent inflation numbers have been scary: over 5% a year. But, if we look at the longer run averages, the picture brightens a little.

Over the last 20 years, inflation has averaged 2.16%. Over the last 10 years, the figure is 1.89%.

I don’t know how long the sudden higher inflation of the last couple of months will last. But it appears that a floor for a return that will keep up for inflation is no less than 2%.

Where Can We Get Our 2%?

The attractive features of government bonds are liquidity, stability, and a modest income. Let’s review a few alternatives, with that in mind:

1) Corporate bonds. Returns aren’t much better than government bonds, at around 1.7%.

2) Fundrise. Love it, but not a good substitute for bonds. Real estate development just isn’t as stable. It’s not very liquid either. However, returns are good. I’ve notched around 7% since I started investing.

3) Single Premium Immediate Annuities. A rather exotic choice. Rates can be good at around 3.5% in some cases. And the income is guaranteed. But they’re not very liquid: there’s a 10% IRS penalty for withdrawal before age 59.5. But if you’re older, they could work well.

4) Dividend Aristocrats. These aren’t just any high dividend stocks. These have a history of paying higher dividends every year for at least 25 years. That’s a surer bet than many stocks with even higher dividends, because those huge payouts may not last.

The yield on some of these large, stable companies is impressive:

ExxonMobil: 6.5%

Chevron: 5.5%

IBM: 4.8%

Consolidated Edison: 4.2%

Of course, the stock prices could go down.

But if you’re buying for income, and the company is large and stable and has increased its dividend of decades on end, you don’t care. You just collect your check and head to the golf course.

What’s more, you can buy a basket of these stocks, rather than just one, insulating yourself from the chance that one of them cuts its dividend.

Wrap Up

Dividend Aristocrats seem like one of the best options to replace the income bonds no longer offer. They are also less likely to fall with higher interest rates.

What do you think the best option is? Leave a comment at the very bottom of the page and let me know! I just might use your idea. 🙂

More on investing:

What Does the Pandemic Mean for Real Estate Investments?

Why I Just Invested in EyeRate, the Best Online Review Tool

What I Learned From an Investor Who Turned $100,000 into $100,000,000

Photo: “Governor Jerome Powell speaks at Brookings panel, ‘Are there structural issues in U.S. bond markets?'” by BrookingsInst is licensed under CC BY-NC-ND 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order.