E-Trade (ETFC) --- Hookup Alert

Investing In Yourself – Using Pillars to Build Your Core	https://urbanomics.blogspot.com/2015/04/urbanomics-pillars-path-set-for.html
Setting Budgets + Saving for Black Swans	https://urbanomics.blogspot.com/2013/02/personal-finance-budget-101-free-credit.html
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Don't wanna go on livin' without you

I got the hook up holla if you hear me (Ughhhhhh)

And if we say bye bye bye then take my heart with you

I got the hook up holla if you hear me (Ughhhhhh)

Can we go on livin' without you

I got the hook up holla if you hear me (Ughhhhhh)

Artist: Master P + Sons of Funk ~ Song: I Got The Hook Up

So for a short period of time, I've decided to open up my portfolio to help educate people. United we stand and by investing you can be independent, self-owned and bout it bout (thanks P). You can follow wild Reddit investing pages that chronicle how one person made $1M out of his $35K retirement account but those stories never tell you how many people flamed out taking crazy risks. This is about investing in yourself and your goals for the long-term. It's about diversifying your streams of income so that you make decisions on your own terms. It's not a overnight dream, but a long-term goal that you have to plan for. Being musically inclined, I remember a time when Master P said Ughhhh but more importantly I always heard him say "independent, black-owned and I'm bout it bout".  Yes sir, I remember this like it was yesterday but it was over 2 decades ago since Master P dominated the scene. Flashback: In high school, I used to go back and forth about which record label was the best. My man Darryl Baxter was definitely in the No Limit Records camp (the record label of Master P) and so was Ed Whitney. I've always gone against the grain, so to make this a competitive debate each day I took the other side and would always say Sean Puffy Combs and his Bad Boy record label was better. I know --- two successful black men meant we all were right at the end of the day but those debates were memorable. But what they didn't know was I was in the No Limit Camp way before I was a fan of Bad Boy because my dad (being a music lover) brought home a "tape" from the "record" store back then. Don't ask me how or why but he had a tape of Master P's "Ice Cream Man" which I played on repeat over and over and over. The moral of this story is similar to Master P, I write this post to plan a seed in one person's mind just like Master P did when he had a whole generation repeating that phrase. And for the record, NO, I was not inspired to be the "Ice Cream Man" but to be independent black-owned and yes bout it bout it. Next time I'll tell you about Suave House and my clique but let's stay focused.

If you haven't noticed, over the years I've had my fair share of stock hookups. On Wall Street, we call this activity: mergers, acquisitions, and takeovers. My search for value sometimes leads others in the same direction and I get lucky if a big investor or company buys out the company I own for a nice premium --- a hookup. No long story today but I wanted to highlight E-Trade Financial. I like to do research to find my next investment and often benefit from small clues hiding in plain site. If you don't believe me go back and read my posts on Sprint. It will go down as one of my most memorable investments because it was based off of the fact that the CEO (Marcelo Claure) and the Chairman of the Board (Masayoshi Son) both sold their houses before the deal was ever close to being finalized. haha who sells a $10M crib next to Sprint's headquarters unless you're on good authority you won't need it anymore.  

Link: Sprint-t-mobile-hookup-alert.html

My trade in E-Trade (no pun intended) started from the fact that apps like RobinHood, Dough and others were massively disrupting the retail stock trading space. With 20 years of investing under my belt, I can truly tell you the hardest problem to overcome is the fees which eat into your profits when making a trade. RobinHood and others have helped to reduce those fees to $0. TD Ameritrade and E-Trade were hurt badly kinda like how record sales were impacted once streaming became a thing. So along came Charles Schwab (SCHW) who decided to hookup with TD Ameritrade. There were rumors that consolidation was coming to the industry but I was slow and missed an opportunity to trade AMTD. So I kept an eye on ETFC and decided if I couldn't get the first option, I would trade the second option. Morgan Stanley (MS) came calling and slid into E-Trade's DM. The terms are Morgan Stanley will give ETFC shareholders 1.0432 for every share of MS. This is a good example where my current trade is not yet profitable (note: it was prior to COVID-19 market crash) but you need to have patience. However, if the deal closes in the 4th Quarter as expected, this trade will become profitable once closed or when my trade expiry date (Jan 2021) hits. 

Always remember, there is strength in numbers

Payment Protection Program -- P.P.P. (Yeah You Know Me)

PPP Remix:

Harm me with harmony
Dave drop a load on 'em
PPP, how can I explain it
I'll take you frame by frame it

To have why'all jumpin' shall we singin' it
P is for Payment, P is for Protection scratchin' temple
The last P...well...that's not that simple (uhh Program)

Who’s down with PPP, well it seems like everyone. Almost a month ago I wrote about the first stimulus package that was released.  In that package $350 BILLION was laid out for small businesses. So I turned up Naughty By Nature O.P.P. and started filling out the application. But to my surprise, my regional bank wrote back a few days later telling me all the funds in the program were gone and I’d have to wait and see if the program would ever be renewed. The question at the top of my mind is how in the hell did $350 Billion run out that quick. This is for small businesses, the backbone of our country, and it’s only covering two months of salary, rent, utilities, etc. Well I found out these snakes may be the reason (Company, Millions of Dollars Loaned):

Ø  Shake Shack $10M

Ø  Ruth Chris $20M

Ø  Fiesta Restaurant $10M

Ø  Quantum Corp. $10M

Ø  Potbelly $10M

Ø  J. Alexander’s Holdings $15.1M

Ø  Hallador Energy $10M

Ø  ZAGG $9.4M

 The interesting thing about the list here is I am only calling out the publicly traded companies on stock market exchanges. I’m not knocking these companies for taking advantage of a good situation BUT seriously if you’re stock trades publicly your kinda a big deal. And it means you have access to funds in ways I DO NOT. You can issue stock, access lines of credit, chat with private equity funds, etc. But wait there’s more -- there are over 75 public companies that decided to stiff it to small businesses. I seriously can’t support these companies in the future because in a time where everyone is hurting if you can't avoid gaming the system for once…then damn that more gangsta then my boys from the Sopranos or the Wire. Thanks to Morgan Stanley for searching thru public company filing records and compiling a list. And this means we don’t even know how many non-public companies of similar size are doing the same thing.   Here is a bigger list of inconsiderate #$*#*@:

Source: Morgan Stanley, public company records

Small businesses trying to stay afloat keep your head up. If you are an independent contractor, sole proprietor or true small business (LLC, S Corp, Corp, Partnership) head to the SBA website and sign up.

SBA Loan Program: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

Market Meltdown - AIG/Morgan Stanley

I wanted to lead off with AIG and I hope that you had the opportunity to follow along last night when we made the following comment:

" AIG is now in focus and I will take the course of action that I should have taken with Lehman. AIG should be shorted as you see in my STOCKTRACKER PORTFOLIO because they also need cash and the Fed is in no position to lend it out. AIG is considered to big to fail but if I am JP Morgan and Citigroup why should we post $75Billion dollars by ourselves to pay for their mistakes. Even more importantly, AIG's ratings were downgraded tonight and that raises more implications where AIG has to come up with cash really quickly to pay contractual obligations that arise from ratings decreases."

Folks to emphasize the speed at which things are changing, I wanted to point that I learned about these latest developments last night after 545pm central and traded AIG during the aftermarket hours once I got home from work... and sold short AIG for $4.87. Between then and the opening of the market this morning we gained over 50%-80% in less than roughly 14 hours on timely information because the stock dropped to levels between $1.60 - $3.00. Jim Cramer has reminded us that BEARS AND BULLS MAKE MONEY...and PIGS get SLAUGHTERED, so I (bought to cover) the shares for a profit. AIG like most stocks then began to trade on rumors that it could get the funds it needed and moved up quickly to levels between $3.60-$4.40s. Well knowing the information that we obtained last night, all private equity firms had stepped away from the table and AIG was standing by itself unless it received help from the Fed. So I decided for the second time in less than 24 hours to short AIG... AGAIN I think the stock will fall because of the following:

1. There is not enough time for a buyout or AIG to sell assets - which would cause the stock to rise
2. Private companies have walked away and we know they will not fund the $75 Billion - which would have caused the stock to rise
3. The Fed has promised not to provide any more funding - which could cause the stock to rise

It appears our thinking was correct b/c NY Governor Patterson came out on CNBC urging that AIG needing additional capital quickly (Pt. 1), private equity walked away which brought the Fed back to the table (Pt. 2), and because AIG needs so much money and is considered too big to fail...the Fed WILL provide $85 Billion but they are requiring almost complete control of the company to ensure that all $85 Billion and more is returned to the Fed (Pt. 3) Well all these reasons point to the share price plunging because all scenarios leave the stockholders screwed. This stock may be trading below $1 tomorrow.

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Morgan Stanley Breaking News

The street seems to have moved it sights to Morgan Stanley. Is there a RUN ON ALL BANKS!!! Late night reports say that MS is seriously considering whether the firm should remain solo or seek a merger with some large bank out there. There is alot of concern out there as the stock continues to swing back and forth. However, it appears that MS is watching all of this closely and does not want to make the same mistake that Lehman Brothers made.