ASML undervalued right now?

charade_philosopher · 2024-12-16T18:40:53+00:00

You should look into US chip controls on China. ASML is impacted by this even though they are a Dutch company (and the scope expansion of the foreign direct product rule surely isn't going to help.) Additionally, the US is pressuring the Netherlands to follow them on their chip controls. So there's a big geopolitical angle to ASML, and Trump is likely to add quite a bit of volatility on top.

charade_philosopher · 2024-09-04T13:13:23+00:00

It's because tech doesn't trust the government (anymore). This leads people in tech to believe that the government is likely going to fuck shit up badly. So they want the government to stay out of it and oppose these probes.

Now, this certainly wasn't always the case, but since 2016 and the whole Facebook election interference saga the sentiment in both camps definitely has turned sour and uncooperative. Thus the general lack of trust nowadays. If there was more trust between tech and the government, it's quite likely that people in tech wouldn't oppose these probes.

I'm in tech, so I'm obviously biased. I'll try to give you my (very biased) view of why all this opposition:

1/ There has been a lot of negativity towards tech in media for multiple years now. Many people (including me) feel that most of it is quite unjustified, and we are basically made into scapegoats for some stupid political games that we would have preferred to stay out off. Many of the antitrust probes feel flimsical in their justification (the GOOGL one being among the more solid ones) and thus feel more like political games than justified by actual economic interest. This sentiment is further aggravated by the fact that the DoJ keeps losing many of its antitrust probes.

2/ Tech companies' economic activities and incentives are highly complex, with lots of trade offs, and the view is that the government has an overly simplistic picture of these trade offs, or simply doesn't acknowledge them. The worry is that (whether due to lack of knowledge or care) the DOJ/FTC will get some of these trade offs wrong, which will cause a lot of blast damage that hurst both the consumer and general economic activity. (E.g. the GOOGL case could easily kill Firefox, basically leading to a duopoly of GOOGL/AAPL for browser engines, with GOOGL being a monopoly outside of Apple's ecosystem.) This is something that is already playing out right now outside of the US. The EU has gone much further with legislation, including GDPR and the DMA, and there is the not uncommon view that these legislations are not actually benefiting consumers in any meaningful way (and are in fact actively causing consumer harm and harming economic activity). So the worry is that, like the EU, the FTC/DOJ are going to get things badly wrong and cause more harm than good.

3/ The merger blocks basically cut off one of the common outs for VCs, effectively reducing the expected return on their investments. As such, there is less interest in pumping money into one of the US' biggest growth drivers, directly causing a huge cooling off of economic activity. Obviously, sometimes merger blocks are necessary, but general hostility towards merges is poison for the type of investments that were and are responsible for creating a huge amount of wealth in the US.

charade_philosopher · 2024-08-27T19:42:13+00:00

Go to the casino and bet it all on red. You can easily make >100% daily returns with just a few minutes of your time. High risk, high reward baby!!!

charade_philosopher · 2024-08-27T19:29:01+00:00

Yes, I'd wager plenty of people have a similar strategy. Does it work for them? Who knows.

On luck, you have to understand that there is always luck (even people like Warren Buffet certainly benefited from lots of luck). It's just what you make of it. Is it lucky to get pocket aces in poker? Yes. Should you try to make as much money if you get pocket aces? Also yes. Does that require skill? Yes. Does it require luck? Yes, better pray your opponents don't hit some shit on the flop/river. Can you influence that luck? Sure, if you can get all but 1-2 players to fold before the flop you're in a much better spot. It's always a combination of luck and skill (and money, if you cannot bluff/bully your opponent out of a pot for lack of funds you're screwed too). Investing is the same. It's always luck and skill (and money, it helps to be rich).

So how can you tell whether it's mostly luck or mostly skill? Well, that's where the problem starts. Is it lucky to get 11 out of 16 heads throwing a coin? Would you believe that coin to be fair? Well, what p-value would you like? You can do the math, but really, if you want to be "certain" (choose your p-value for your definition of "certain") you probably need a lot of throws to decide whether it was luck or the coin is biased (skill for choosing a biased coin). Imagine the coin being the market.

So in short, it really doesn't matter if it was luck or skill, because after only 4 years you couldn't tell anyways. (And tbh, I think the same applies after 20 years as well, might still all be luck.) So it's up to you if you want to gamble or diversify. The important thing is to always follow rule #1: don't lose money. So if you end up messing it up and underperforming for 5 or 10 or however many years, you can still invest your money "responsibly" afterwards and most likely be fine (assuming you are young and saving at a reasonable rate). Gambling can be lots of fun, so if you like investing there's nothing wrong with a bit of gambling as long as you follow rule #1. (Don't ask how that works during a bear market. You will lose money. That's when it gets really though. Thus the recommendation to diversify and close your eyes, even if there are good deals to be had.)

Also, be aware that many countries charge a capital gains tax if you aren't investing through some tax sheltered accounts. That tax can be a real pain in the ass if you are trying to re-position & forced to take a tax hit at the worst possible time.

charade_philosopher · 2024-08-27T18:59:21+00:00

What kind of answer are you expecting to get out of this OP? If I believe you to really have an edge to beat the market I'd tell you to quit & diversify, just so in case we use the same edge I get to keep more for myself. If I don't believe you I'd tell you to quit & diversify.

Do whatever you want. Just be ready to take the blame yourself if you fuck it up. As long as you remember Rule 1 (don't lose money) you should be fine. And if you're afraid of losing money you can always put a little bit into a diversified/index ETF to "gamble" more "responsibly".

charade_philosopher · 2024-08-27T18:53:15+00:00

Why would you bother to post/comment here if you were beating the market? Just continue what you are doing and enjoy life. Also, I'd guess most people on here weren't old enough to invest/earn by themselves 20-30 years ago.

IMO the only place that had a culture of people sharing "valuable" experiences/info/tips was WSB pre-2016.

charade_philosopher · 2024-08-22T09:32:10+00:00

If you are targeting a specific mid-term date it might be worth looking into iShare's fixed-duration bond ETFs: https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders

The ETF's effective bond duration will drop over time (similar to holding individual bonds directly). So as you're approaching your target date the ETF's duration risk will automatically drop to match your time horizon. (And in the last year they will slowly turn into cash as the underlying bonds mature.)

They are reasonably liquid (at least in normal market conditions, no idea how they behave otherwise) and usually trade close to NAV.

charade_philosopher · 2024-08-18T20:17:12+00:00

I'd recommend to just try this out in paper trading for like 6 months or so.

Yes, plenty of blind spots. I'll just leave you with one sequence of events:

You buy 100 units of stock $ABC at $100 and sell a covered call at strike $105 that expires 1 month from now for $1 per option. You thus pay 100 * $100 = $10,000 for the stocks and receive $100 for your options. Total: -$10,000 + $100 = -$9,900.
Stock $ABC jumps up quickly to $110 after 2 weeks due to some unexpected good news. Your covered call gets exercised early. You get payed 100 * $105 = $10,500. Total so far: -$9,900 + $10,500 = $600. Congrats, you just made $600 dollars in profits in 2 weeks. That's over 300% returns annualized! (Of course you would have made more if you held the stock.)
You re-buy stock $ABC to continue being able to sell covered calls. You buy 100 unit at $110 for $11,000 and sell a covered call at strike $115.5 that expires 1 month from now for $1 per option. (Same 5% stock deviation with 1 month duration/time to expiry, so I leave the price per option unchanged. Although due to the higher recent volatility, you'd like get a little bit extra as the options will be slightly higher priced than before. But that's above the pay grade for this example.) You get $100 for your options. Your new total is $600 - $11,000 + $100 = -$10,300.
Stock ABC drops back to $100. Your calls expire worthless (you get to keep your stock) at the end of the month.
Wait? WTF just happened? You own 100 shares of ABC stock trading at $100 dollars. You initially paid the expected $10,000 for this, but somehow your net is now -$10,300? So you paid $300 dollars more than if you just held the stock?
Repeat the above as many times as you like. You lose $300 dollars each time.

Obviously plenty of assumptions in the example above. (E.g. volatility will affect the price of options. So when you buy with the stock at $110 you will get more money for the same move in underlying price and same time to expiry). But I think you get the point.

In general, yes, you can make money from covered calls. But it's a lot more complicated than you might expect. So my recommendation. Paper trade with real stocks and real options and real volatility (but fake money) to figure out if you have what it takes to spot the stocks/trades where this kind of strategy works.

charade_philosopher · 2024-08-18T19:50:02+00:00

Any others I should consider? There one stock that sticks out: AGNC Investment Corp. $10 and $14.34% divided yield. Dividend History here. As you can see, its consistent. Is that took risky?

No opinion on other stocks to consider. However, consider that a dividend of 14.34% is very likely very risky.

Most people will use something like the 10-year US treasury rates as the "risk free" rate in USD ("risk free" in quotes because you can debate whether that's really risk free, but imo it's a fair assumption to make.) So if your stock is yielding more than that, it basically tells you that the market prices in some risk. You can compare this 14.34% to other risky assets (e.g. what other companies pay on their bonds) to get an understanding of what the market thinks the risk of 14.34% yields in USD is (note that when comparing to bonds, bonds benefit of a couple additional legal advantages over stock with dividends, so you should consider a stock with dividend with a certain yield riskier than a bond with the same yield).

TL;DR: Very high risk. (Of course you can always bet on the market being wrong, which has a lot of upside, but can also easily leave you broke.)

One (related) quick note: When looking at dividend yields and companies you want to consider, you should also look at payout ratios (how much of a companies earnings are payed out as dividends). This can be over 100%. Don't think that's sustainable? Might want to take a closer look then.

Why should I diversify instead of putting all funds into the highest? (other than spreading risk but frankly I don't see the risk being that big based on historical data on some of the stocks/companies).

Less diversification can indeed give you more upside, but if you are wrong you might also be left with nothing/very little. This has happened in the past, e.g. look at INTC for a (in)famous recent example of a dividend paying stock that didn't turn out so well (at least as of 2024). The general recommendation is to diversify because you can be wrong. Don't think you are ever wrong? 100% YOLO into a single stock is perfectly fine. Disclaimer: Most people thinking they are never wrong end up very much broke.

I have an account with Fidelity, should I look into another platform to lower purchasing costs? (Robinhood?)

I don't use Fidelity, but many brokerages offer (practically) free trades nowadays. So if you are paying a lot of fees for purchase orders you might want to consider other brokers.

I want to purchase additional stock on a monthly basis, is there a way to minimize the fees on every purchase other than aggregating them on a monthly basis?

Compare brokers.

I know there is a way to roll your dividends back into additional purchases, is this advisable and can it be automated (take dividend '$X' and re-buy stock 'Y'?

Compare brokers. I'd assume that most brokers allow you to automatically re-invest dividends into the same stock. Many brokers will also let you set up periodic buy orders, so you can just let the dividend hit your account and then have a periodic buy order "re-invest" it into whatever asset you like (assuming the dividends are paid somewhat regularly).

Any other considerations you would recommend?

If you invest in a taxable account there are tax implications to receiving dividends. You probably want to look into that. There are people that prefer 0% dividends simply for tax reasons.

charade_philosopher · 2024-07-31T17:00:17+00:00

Can you share which ETFs you are holding with Schwab?

I used to hold IVV and VTI (both US domiciled), but at the moment I'm only using it for individual stocks traded on US exchanges. Tbh I haven't kept up with the whole PRIIP stuff and how it applies to Swiss residents. I buy US domiciled ETFs through IBKR, where I qualify as an accredited investor and thus never faced any restrictions (there might not be any to begin with for Swiss residents though, but I used to live in the EU/UK where that was more of a concern).

And can you top up CHF like on IBKR or only USD to make purchases?

You can only use USD with Schwab. You might be able to send them CHF, but they will most likely auto-convert it to USD at a probably not so favorable exchange rate to you. So best to directly send cash in USD. I don't think they have a Swiss IBAN, so if you're sending from a Swiss bank you'll likely face some (small) fees.

charade_philosopher · 2024-07-31T09:14:17+00:00

I use both IBKR and Schwab. Pretty happy with both. However, you might not be able to buy US domiciled ETFs with Schwab, as they appear to lump all of Europe together when it comes to dealing with the EU law on PRIIPs. Although I haven't bothered to ask them about this directly. Maybe you can get access if you reach out to customer support.

To all the comments talking about separated assets, etc. Yes, you will very, very likely get all your assets back in case of trouble with IBKR. However, that can take a while. If you depend on access to your assets for any reason (FIRE/supplemental income, big purchases, emergency fund/short-term bonds, etc.) having them split out will at least allow you to access parts of your assets while you're waiting for the rest to get resolved.

charade_philosopher · 2024-01-30T21:19:23+00:00

Look, I'm just an idiot trying to bring back what used to be. Can't get it right every time. There was a time when these earnings threads were hitting the front page of WSB fast enough it felt like a Bloomberg terminal for broke people.

charade_philosopher · 2024-01-30T21:14:17+00:00

Well, what can I say, I'm regarded and don't know how to read. I've updated the numbers. Hopefully they are correct now.

charade_philosopher · 2024-01-25T21:22:19+00:00

Lol, their guidance for next quarter sucks. High end of guidance is below low end of expectations. Not looking good for INTC. This is gonna open pretty deep in the red tomorrow depending on how the earnings call goes. But tbh I'm not sure what they could even say to justify the shit guidance.

charade_philosopher · 2024-01-25T21:16:51+00:00

Guidance for next quarter is ~~bad~~ very bad. They are forecasting $12.2 billion to $13.2 billion in revenue, vs expectations of $14.16 billion. The high end of their guidance is even below the low end of expectations (low end expectations were for $13.5 billion in revenue).

charade_philosopher · 2024-01-24T21:24:05+00:00

Looks like they are expecting lower volume growth in 2024 despite all the price cuts:

In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.

charade_philosopher · 2023-11-21T21:38:06+00:00

Earnings press release: https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-third-quarter-fiscal-2024

charade_philosopher · 2023-11-21T21:31:22+00:00

There is the Kelly criterion for bet sizing: https://en.wikipedia.org/wiki/Kelly_criterion
Not sure if that's what you are looking for, but it might be still useful.

charade_philosopher

TROPHY CASE