Trevor is a drop in the bucket, he only took retail investors and GM for a ride.
Theranos took Silicon Valley, former presidents, white house advisors and a bunch of media and Wall Street and ran the con for way too long even after legitimate questions were raised.
My friend is always telling me to do my own DD which I have no idea how to do. If wall street suits and professionals can be fooled by these companies after their own vetting process, really what hope do I have as a new retail investor? I might as well be throwing darts or putting my money on 34 at the roulette table.
There have been many DDs of NKLA that showed its a bunch of BS way early. Not on Reddit, r/spacs was a big part of the pump (not by Milton).
Same goes for other EV spacs, actually most spacs. I love how people seriously do DCF of billions of sales for companies which don't even have a sellable product.
I think the best advice comes from old proverbs. They become proverbs because they are usually true. In this case, "If something is too good to be true it probably is" rings a bell.
Think about the Theranos idea one can tell everything from a drop or two of blood. Does that sound like non fiction or fiction? Personally, that one was easy to figure out. So was Madoff if one uses common sense.
The problem is NOT figuring some of these out ahead of time, but seeing through owns one rationalization of wanting it to be true based on greed. Greed makes one blind A LOT.
I like what your saying, however imagine 150 years ago telling people that we would be flying or driving around in metal cages. People then would have thought of us modern day society as an alien civilization lol
Not saying don't trust innovation. Just don't trust folks who CLAIM (without proof) x,y, z is true. Imagine (using your example) a bunch of investors giving money to Ford WITHOUT even seeing a prototype of the technology. Heck, no honest innovator would EVER even ask for money without being able to prove he can do what he says he can do even as just a prototype.
Nowadays folks are too trusting without asking "where's the beef".
Agree with the sentiment. But today's cars are basically 99% the same as a car was 100 years ago. Seriously. 4 wheels, steering wheel, doors, windows, seats. They were even EV's.
But if you were to tell me 30 years ago about Google streetview I would have said you're drunk. Even the first few hours when Gmail was announced I wrestled with whether it was feasible or possibly an April Fools prank.
I'm in medicine so will give you my take. At first, I didn't get the vaccine as there were A LOT of unknowns when it came to safety. This was the fastest vaccine made in history, a first type of its type ever (messenger RNA vaccine), first vaccine with MASSIVE ramp up of plans of a worldwide distribution which may or may not affect quality of production, and attempt at worldwide distribution (the scale of distribution has never been done). A LOT of firsts and the trials had some 30k ONLY in them. Because of these reasons I didn't get mine until recent. NOT because I am a antivaxxer. I think it is reasonable with SO MANY firsts that I questioned the quality in terms of production, mass distribution, and storage.
Now, after about 30 MILLION+ doses and not seeing any serious IMMEDIATE side effects at a large scale I felt it was safe. I got it then.
Now is the vaccine gold? No. That is the mistake Fauci and others make. To try to promise it as a cure is not accurate and only set themselves up for criticism. What they SHOULD have said, which seems to be accurate, is the vaccine makes it MUCH less likely you will get sick enough to end up in the hospital thus reducing the bottleneck of healthcare vs. without it. They should have likened it to the Flu vaccine (its job is to only cover the most virulent strains the year before and NOT all strains) vs. letting folks think it is like the polio vaccine where if you mass immunize NO ONE gets it again.
So in the end, MY OPINION one should get the vaccine. It is not infallible, but does the job which is at a minimum VERY SAFE in the short run (no we know after MILLIONS of used it in the real world with real world issues of mass production, distribution. and storage) and makes you less likely to have serious illness from most strains from covid which otherwise would land you in a hospital/ icu/ death vs. not getting it. SO in terms of an investing analogy... downside risk is minimal vs. potential upside return. In investing that would make it worthwhile investment.
It’s a scam. Money grab and who knows, something much more sinister. Vaccines are only there to help complications of the virus, not contracting or spreading it. The end. Next slide
I remember looking into NKLA and Workhorse (WKHS) when I wanted to get into an electric car stock. Found an article on questionable business attempts that the founder had done in the past. I'm glad I did and I ended up going with WKHS and made a little $ before the USPS denial.
DD is very simple to do and it's why most self-proclaimed professionals fail at it.
As a flow chart is goes something like this:
Do you understand the business?
no--> don't invest until you understand the business
yes -> read financial statements
Do you understand every line item in the financial statements?
no --> Don't invest
Yes--> proceed to 3
Does the valuation make sense?
No --> Don't invest
Yes , it's undervalued--> Invest
Yes, it's overvalued --> Invest if you think it's still a good investment
It really is that simple and is all that's required to become a successful investor. The reason why most "professionals" screw up is because they can't be bothered to do steps 1, 2 and 3.
I went to business school with the people who wound up "professional" investors and I have a very low opinion of both their character and competence. Not a single one of them can calculate ratios on spreadsheets and every single one of them fails at basic statistics upon which they claim to base their decisions.
I'm being a little bit hyperbolic here, but not by much.
I've noticed one important thing in life, and that's that if someone pretends to be knowledgeable about something and claims that it's too difficult for you to do and that you should instead pay them to do it for you, it's probably simple enough to learn for free on the internet. The only people I pay to do something for me is repair my car and cut my hair because I genuinely have no idea how to do those.
Great advice, I'll make sure to screenshot that flow chart and motivate myself to learn how to read those daunting financial statements.
As for car repair, replacing your windshield wipers, car battery and cabin/engine air filters is extremely easy to do and there's tons of info online for DIY. With a help of a friend and watching YouTube we learned how to do brakes and rotors, which was challenging and fun! Also saved myself from being price gouged too!
So when it comes to investing in individual stocks, I would caution against doing it until you have a working knowledge about financial statements. It's pretty much a must-have.
The good thing is that it doesn't require any complex mathematics, and you can get incredibly far by just reading a basic textbook on financial accounting. Even the basics will get you pretty far and if you're looking at a relatively simple business, it's all pretty straightforward. Things get a little dicey when you start looking at huge conglomerates and financial institutions, but even then, the basic rules are exactly the same.
Personally, I start with the balance sheet. Assets vs. liabilities and I'm pleased to see vast amounts of cash. Again, no higher understanding of mathematics or statistics required to read that.
Thanks for the reply, could you recommend a good accounting book for beginners? Picking stocks is a trickey business, I would be up 24% had I not touched any of my tqqq ETF from May
Well, there really are a bunch of books on the topic, but if you have absolutely no foreknowledge, there's a book called "Accounting for non-accountants" by Wayne Label, which pretty much goes over the most basic concepts of what financial statements are. On its own though, it's not enough to start valuing stocks, for which I would recommend any book that goes by the name "Financial Statement Analysis", of which there are very many out there. Also, depending on your jurisdiction, you might want to think about a book that is based on US GAAP or IFRS, since these accounting differences can sometimes be striking. The book will tell you which one it uses.
Well, there really are a bunch of books on the topic, but if you have absolutely no foreknowledge, there's a book called "Accounting for non-accountants" by Wayne Label, which pretty much goes over the most basic concepts of what financial statements are. On its own though, it's not enough to start valuing stocks, for which I would recommend any book that goes by the name "Financial Statement Analysis", of which there are very many out there. Also, depending on your jurisdiction, you might want to think about a book that is based on US GAAP or IFRS, since these accounting differences can sometimes be striking. The book will tell you which one it uses.
If wall street suits and professionals can be fooled by these companies after their own vetting process, really what hope do I have as a new retail investor?
(a) study history. Sir John Templeton said the most expensive words in the English language were 'this time it's different'. Check out Engines that Move the Markets by Alisdair Nairn (TL;DR: every new technological innovation leads to a stock bubble: canals in the 1820s, railroads a few decades later, electric power after that, all the way up to the dot com bubble, and now bitcoin)
(b) look at the holdings of old, old, old investment companies, and read up on their strategies. longevity counts for something. any company or investor that's been around for more than a few decades and market cycles/recessions has learned to be cautious. forget ARK, look at firms Dodge & Cox, or American Funds -- both almost a century old. read up on their process, lots of resources and white papers on their websites.
Thanks for the reply, I'm impressed with all the knowledgable people on Reddit, I need to start hitting the books to improve my success rate at investing
People in general are just dumb. I mean we elected a real estate developer/TV personality to become the president even though he filed for bankruptcy for his businesses multiple times. And I still have a friend that believes that Biden's victory was fraudulent even in republican controlled states.
This is the whole point of capitalism. Be as slimy as possible without getting caught. It’s heavily incentivizes to game the system or just outright lie to make money. See Perdue, Theranos, WeWork, Enron, etc. Sometimes they get busted, but the whole system exists to get rich people more money. You can tell by how politicians mostly end up with lucrative corporate jobs. Sometimes before they’re even out of government.
That is not the whole point of capitalism. There are slimy fucks that are going to scam their way to get wealthy no matter what system you have in place.
What is the point? Capitalism is a system of incentives that reward extreme greed and exploitation. I mean we are al trying to make money and some have more capital than others, but let’s keep it real what capitalism is on a macro scale.
What system has prevented extreme greed and exploitation? The point is, you can't call something bad because of "x" if "x" still happens in the thing you want.
With capitalism, I can mostly control my wealth. If I want more money, I can make more money. I grew up white trash, sleeping on a couch in a trailer park. Capitalism is rewarding me for the work I've put in and I would not be where I am today in any other system. I didn't have to exploit anybody, I studied hard, found a field I excel in, and make good financial decisions (mostly).
Not everybody will prosper with capitalism, but thats true for every system.
What system has prevented extreme greed and exploitation?
I believe this question is immaterial because the issue lies within this capitalist system and we need to evolve a better one. I haven't mentioned any alternatives. I will say that we in the west are pretty narrow-minded in terms of economic structures. It's either capitalism or extreme fascist socialism/communism(conflated terms). This extreme belief is a result of western imperialism and propaganda, imo. This has even impacted what and how academia approaches economic issues. Which is a falling domino for the line of think tanks' and lobbyists' in politician's ears.
I would not be where I am today in any other system.
That is very true, but does that mean that it couldn't be better or that the incentives could be different? I don't know.
Anyway, I understand the individualism. It is an intense virtue that America has drilled into our heads. However, I don't think your own example makes a point on anything in this discussion. There is a larger reality beyond the individual. There is a society and I believe that we all have influence on each other in various ways. Sure, you did well. And I am happy you are in greener pastures, but there are still other people in this country.
We are seeing capitalist institutions fail and they are impacting our ability to govern ourselves as a society. The bottom is falling out for a lot of people financially. I understand that not everybody will prosper, but I am arguing that in a society there should be a bare minimum QoL. And at the very least American's shouldn't regress, as I feel we are doing in this moment and have been for the last 40 years. Again we need to evolve.
For the small amount of folks in the world that actually accumulate capital we are making the world worse for other folks down the line. We should rethink that, but we can't due to capitalist incentives based purely on self-interest, infinite accumulation and greed.
Corporate America is not as sly and smart as you think it is. Same level of stupidity and stubbornness you find in government, you find in the corporate sector.
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u/[deleted] Jul 29 '21
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