Who's Watching Euphoria - I'm Seeing a Stock Market in Withdrawal

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
	https://urbanomics.blogspot.com/2019/11/hey-henry-high-earner-not-yet-rich.html
How to Open My First Brokerage Account	https://urbanomics.blogspot.com/2015/04/personal-finance-101-starting.html
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Also Coming Soon - a series on #HowtoInvest. People have been reaching especially after the spikes in Gamestop, AMC, and other stock to learn the basics. I self-taught myself how to invest beginning at the age of roughly 18 and have never stopped. To be a good investor and ensure you are not gambling (speculating), I'll cover (hardest parts of investing in RED):

Budgeting 101 - How to Fund Ur Investments?

Why Stocks as an Investment?

What is Ur Investment Profile + Personality?

How to Pick Stocks?

When to Buy Stocks?

How to Enter My Trade?

How Many Stocks Should I Own?

When to Sell Stocks?

Am I Speculating (Gambling)?

Stock "Euphoria" In Withdrawal

Did you see that episode of Euphoria? While I'm watching the show, I'm really watching the stock market euphoria evaporate. I want to be completely transparent that if your portfolio is NOT down and you are not feeling any pain then you are lying or you need to win stock investing award. One of my first rules is being transparent and my portfolio is down and guess what that is a normal part of the stock market. I'd like to take some credit that I've been calling for the market to top out for a while now. But the reality is even though I was right, no human being will ever get the exact day correct, so my portfolio is getting punished just like everyone else's. Like Rue Bennett on the show "Eurphoria" is in withdrawal, this market is shaking...we call it market volatility. 

You may wonder what I'm doing in response. The simple answer is I've moved out of stocks in my retirement portfolio. You can call cap (or my bluff) but I too was surprised that I made the decision to move one quarter of my retirement portfolio in October of 2021 to safety. I chose the PIMCO Inflation Protected Bond Fund. One quarter did not stop my portfolio from declining but what it did mean that I declined less than the what the market did and I calculated my retirement account was down from it's peak by roughly 10%. I like to periodically review my portfolio's quarterly and just logged in last month. The next thing I did was analyze the current situation. I think the economy is doing well despite what you see on the news. It's pretty hot and INFLATION is up big time. How do I know, because I want to buy a 3rd property and I no likey any of the prices I'm seeing. The only price I like is the inflated value I see on the properties I own. Funny how that works ehh. 

Why is this happening? Well, the Federal Reserve is committed to taming inflation and the only way to do this is to slow demand. Take your Starbucks coffee shop, if they keep selling out of everything the store will eventually conclude they may need to raise prices because the demand is so hot. A good business operation will raise prices until the demand slows down to something manageable. That is EXACTLY what the Federal Reserve is doing at the moment. They are raising interest rates and that is making mortgage rates and the cost of obtaining cash harder to come by. The goal is to SLOW down the economy as everyone is flush from stimulus and spending like crazy now that the think COVID is over. If you need a visual, think about Rue as she was going through withdrawal, it's NOT a pretty picture. So guess what, I'm taking my ball and going home. In my retirement account I put all of my cash into inflation protected investments for the mean time. I like to play games I can win. My personal stock investing account is still in stocks and it's not pretty. I still have a lot to learn about how to better hedge my investments as some of my high fliers came down to reality. ROKU, SPOTIFY, and UBER really don't want me to retire even earlier. Those #$#$#!!

I'll write more about what I'm doing in my personal stock account to try to reduce the amount of risk and volatility. My cybersecurity business is holding up well so I'm fully investing my time there but I'll keep you guys posted on how to continue investing in stocks for a brighter future.

Reader Question -- Groupon (GRPN) + Reverse Stock Split

So I am grateful for anyone that takes time to read my posts because to me I hope these posts light a fire under you. If Not Now Then When? When would you like to live in a world that breaks the chain of class systems and systemic racism. When do you plan to wake up and realize that you are responsible for looking out for your family and love one's best interests (a stimulus check isn't enough to get it done). If that means studying, working out, enlightening yourself, legitimate hustling, making a plan to exit the rat race --- are you ready to put in that type of work. The work I used to put in gym, on the field not knowing if it meant I was even going to make the team, have a starting position, or succeed at life. You have to plant that seed early and work at it every single day.

I always joke the best class I ever took in college was Probability/Statistics. When you learn about decision trees, life becomes so much easier. When you learn how to apply that to risk management, hard decisions are not so tough. I spend most of my time assessing risk to help make sound decisions. When I got this question from a reader, I welcomed their trust in my thought process but I also challenged them to do a risk assessment. Because these assessments are life assessments --- calculations we all make everyday which turn into investments. And we much invest our time wisely as we only get one chance to be great.

Reader Question: "Good stuff man - I would love to hear your thoughts on Groupon's reverse stock split 1-20"

https://www.businesswire.com/news/home/20200610005139/en/Groupon-Announces-1-for-20-Reverse-Stock-Split

Company Description:

Groupon (NASDAQ: GRPN) is an experiences marketplace that brings people more ways to get the most out of their city or wherever they may be. By enabling real-time mobile commerce across local businesses, live events and travel destinations, Groupon helps people find and discover experiences––big and small, new and familiar––that make for a full, fun and rewarding life. Groupon helps local businesses grow and strengthen customer relationships––resulting in strong, vibrant communities. 

Groupon (GRPN) Risk Assessment 

I don't do risk assessments much on paper anymore but when I do I really enjoy the process. It reminds me of when I would hear people describe the habits of great rappers --- and they would say "You Know Biggie didn't write down any of his raps". A quick nod to the greatest rapper of all time, the Notorious BIG. I guess risk assessments start with personal questions...do you work here, why risk assess it now, have you risk assessed it before, what's changed since then. So here goes my GRPN Risk Assessment:

Geopolitical (Country) Risk: GRPN is not being purchased by a foreign entity but I do think it's important to highlight this risk. While the USA is viewed as safe, I recall sparring with a colleague over whether US companies should consider geopolitical risk in their equation. The greatest country in the world has no risk I was told and I quickly reminded him about 2008 and the fact that if it was NOT for TARP and massive bailouts we would have seen the financial system implode. So quickly, I think that GRPN and every US company faces country risk as the divide in US wealth, health, and resource gap grows deeper. The erosion of the middle class IMO means the pie of strong local businesses GRPN is trying to grow and stregthen is shrinking. We haven't even talked about COVID-19 but shocks like this to the US system seem to be taking a huge toll on the economy (i.e., every time we have a crisis...it's NOW the greatest crisis since the Great Depression). 

Operational Risk: I looked back and realized I've written about GRPN roughly around 5 times. You can use the search bar to see my previous posts. What shocked me is how NOT much has changed in the 7-10 years since I last wrote about them. See here: https://urbanomics.blogspot.com/2013/07/same-companiesnew-tricks-mcdonalds-best.html

In the 2013 post provided above, I wrote about the fact that I didn't have an account and the company hadn't won me over in needing to do so. Some of their tactics felt like tricks, gimmicks --- which weren't working. I look at their company description and I struggle with what it means to find experiences. Do they use AI and know I like sports, so they will find me tickets to the Superbowl at the best possible prices? Are they a travel company -- because Expedia, Travelocity, and even Airbnb talk about experiences? Clearly the operational execution isn't clear because I don't understand what they do. I thought they still provided discounted offers for merchants who wanted to increase foot traffic. A great idea I would say if you GRPN were to sell themselves to Uber or Lyft or Match. I like discounted restaurants and experiences when I'm dating, in a car, in a hotel or Airbnb. As a standalone company, I'm not sure it makes sense...as an extension of a big data company OR a swipe right dating company or a ride hailing company --- damn that would seems like a good fit.

Financial Risk: The stock price says it all. Most companies only do a reverse stock split for one of 2 reasons: a) Unable to meet stock market listing requirements (i.e, the stock must be above $2 a share or you get the boot) or b) you want to "trick" investors by having a nice round number above $20 bucks so investors take you seriously. have I seen this yes -- take Citigroup during the 2008 financial crisis they did a reverse 10-1 stock split as the stock remained in the low single digits. Full disclosure, I've done no research but I would say the stock is saying something as it struggles to GROW organically through earnings.

Summary: At this point, I can not invest in GRPN unless it's purely a binary investment --- heads they put themselves up for sale, tails they go bust. Using poker language, you would be getting great odds IF you thought they were going to strategically look for a buyer. The economic toll of COVID-19 doesn't help because IF they were to have bought another company (Pinterest, Lyft, Yelp, Angie's List, Match) it might have gotten done with greedy bankers looking to finance everything just a year ago (when money was flowing). GRPN needs to fine tune the strategy because the value lies in knowing what I like and getting it to me quickly and possibly through another 2nd choice/off-brand competitor IF the discount is nice enough. Funny this was my rationale for GrubHub (GRUB) as well --- it's pure binary AND at least they delivery it too me. They were burning through CASH left and right and were NOT at risk in the future in a very competitive environment. They are not a delivery company, direct travel and experience board, DIY board, or dating site --- so at this point the RISK vs REWARD is just not there.

GRUBHUB (GRUB) + JUST EAT TAKEAWAY HOOKUP ALERT

If Not Now, Then When. This is the question I ask this great nation if we cannot come together and finally rid this world of systemic racism. No one's life should be snuffed out at the hands of another person -- especially the at the hands of the police who we are supposed to trust. Corporate boards, companies, universities, city-councils, police departments, when will you open your doors and diversify your ranks? I will continue to pound the table for justice and talk about the Pillars which are a guiding light for for balance and strength in this world. I am financially independent and educationally skilled Urban Economics professional --- that negotiates my on terms for work. I try to be spiritually balanced and physically and mentally fit so that I can take care of my growing family. But all this hard work is for nothing if at the end of the day, when I leave my house everything can be taken away from me in the blink of an eye OR worse 8 minutes and 46 seconds. #blacklivesmatter #justiceforGeorgeFloyd #nojusticenopeace

I have NOT been wanting to post anything but I owe it to you all and myself to stay the course. The system isn't designed for some of us to rise up even when you do everything right. My vision here at Urbanomics all those years ago was to be bridge for those of you that strive for independence or what I dub OPTIONALITY. Freedom to do what you want and still live an amazing life -- on your own terms. So my work continues:

I love speaking to people about OPTIONALITY and Grubhub is one of my young players on my investment roster exuding those qualities. OPTIONALITY lends itself to --- Heads I like the outcome, tails is just as nice of an outcome as well. The last time I wrote you UBER was making me an offer to take Grubhub off of my Junior Varsity team. I say JV because while Grubhub is young, risky, and shows lots of potential I don't trust them enough with a starting position on my investment roster. So they play a small but important role. Since the UBER everywhere skrt skrt offer, other teams have jumped into the fray. Yes, international teams are interested in this high flyer like LaMelo Ball hooping in Australia. 

I still like this Grubhub position and I still implore you to take risks even in an injust world. Together we can lift each other up. Here are the new details I just learned today about Grubhub from my dog, David Faber over at CNBC:

1) Grubhub and Uber are having issues. Like a young player not wanting to be traded over playing time in the future, Grubhub is nervous that US regulators won't like how big Uber will be in the food delivery business and nix the deal. So they are asking for big time dough if the deal falls apart. skrt skrt

2) Grubhub is evaluating a takeover offer from Just Eat Takeaway.com a food delivery company based out of the Netherlands.

Grubhub is looking like it's days on my roster are coming to an end. With multiple suitors, I was glad I took a small risk that paid off.

See my previous post about Uber's offer and a snapshot of my purchase price:

https://urbanomics.blogspot.com/2020/05/grubhub-grub-uber-uber-hookup-alert.html

It's Time for us all to eat...and Grub is just the beginning.

GrubHub (GRUB) + Uber (UBER) --- Hookup Alert

Uber everywhere, pre-rolls in my VIP (skrr skrr) / Yup I Uber everywhere, pre-rolls in my VIP
And I think that chick from Canada / I think she from the six / Yup I Uber everywhere, pre-rolls in the VIP, hey

~ Uber Everywhere (Artist: Made in TYO)

A bold move may be in play my Uber but I'm not mad at them. Many people have been saying the food delivery business is treacherous territory. I actually agree. The deals are so good for delivery right now because of the high competition between GrubHub, DoorDash, UberEats, and others.  Many don't know they are losing tremendous amounts of cash to be the top dog in this space. But I like GrubHub's position as being the dominant player in the industry. As a serial acquirer, they were taking the competition out one by one --- buying them up and essentially putting them out of business. Uber is a competitor in this space and it appears they have had enough. Logged in to my account to see my GrubHub position up fairly big. Why? --- because Uber wants to hook up in a major way.

The stock was halted pending news:

Here you'll see my position from the beginning of the year, an options contract. I listened to the CEO Matt Maloney back in January and it sounded like the company would be evaluating their options of buying or being acquired. 

I'm hoping these two hook-up, nothing is certain until they say I do but this would be a small win for my portfolio but I don't my letting go of that young flashy player on my roster that caused me some heartburn at the beginning of the year. Let's see if it works out.

Full Disclosure: I own option contract(s) in GrubHub from back in January 2020 (see above). Also another disclosure the artist above pronounces his name Make in Tokyo skrr skrr 🚗🚗

Summertime Rally - It Ain't Broke So Don't Fix It

Here it is the groove slightly transformed
Just a bit of a break from the norm
Just a little somethin' to break the monotony
Of all that hardcore dance that has gotten to be
A little bit out of control it's cool to dance
But what about the groove that soothes that moves romance
Give me a soft subtle mix
And if it ain't broke then don't try to fix it


~ Will Smith + DJ Jazzy Jeff ---Summertime

I often use my blog as my personal sticky notes. It becomes a treasure trove of how I traded the markets --- say during a previous recession. When I look back during those times, I laugh at the days I was recommending stocks (in a recession) --- but it serves as a healthy reminder that there will be plenty of good days as the economy heals and eventually rebounds. Are we already there? Well that's why I put on the track Summertime. While some may say its still technically Spring, the markets are roaring back and it feels like Summertime in the air. Good data is in the news for a change to break the monotony. It's cool to go outside and goof around in your backyard. It is so nice outside, many states are even trying to re-open BUT with the shelter-in place strategy working --- I often hear 'if it ain't broke then don't try to fix it'. I want to highlight the difference between MACRO AND MICRO.  While I may believe there is a long difficult road ahead (MACRO), I can't deny that weeks of 4/20 and 4/27 have been really good so far (MICRO).  Here are some of the headlines:

Fear of Missing Out -- FOMO RALLY 

The S&P 500, aka the S&P, is one of the more commonly followed stock indices. It is a good reflection of the U.S. stock market as it tracks the performance of the largest companies listed on stock exchanges in the United States. The all-time high of the S&P is roughly around 3380s in February 2020 --- well I'll be the first to say I'm very impressed, while also very shocked at the massive rally off the bottom. This is why I allocate funds in different buckets. My investment account has been fully funded in stocks and I have bought a few new stocks but mainly I've monitored the stocks that were down and glad to see many of them moving up off their lows.

COVID-19 Treatment / Vaccine News

Gilead Sciences (GILD)  This morning as I was watching the markets, a ray of hope sent the stocks shooting up. GILD released preliminary results of a coronavirus drug trial which appears to indicate that at least 50% of patients treated with a 5-day dosage of antiviral drug remdesivir got better and more than half were released from the hospital within a two week period. My understanding of the data appears to show similar results with a 10-day dosage (so positive news for a lower dosage period). Remember, this is NOT a vaccine only a treatment to save lives! But I think the market is looking for rays of hope and people will begin to see a path forward if they know there is an opportunity to survive this deadly virus.


Real Estate   

Developer DR Horton (DHI) said it has observed an upturn in weekly sales for the most recent two weeks.  March was been a rough month for real estate sales. I assume the industry needed some time to adjust and adopt technology to allow for more remote video based tours. A green chute in the housing sector can be seen as mortgage applications to purchase a home pivoted directions and moved higher a week ago --- up 12% week over week, says the MBA. This uptick was seen across the 10 biggest states and may kick-off a snapback spring of homebuying.

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URB Lesson:

Macro - I like to tell people to plan long-term 3-5 years and have opinion/view/perspective on how you expect things to play out. I watched the movie 'CREED' and based on your opponent you have to develop a game plan...even when you're the world champ.  Example: Towards the end of 2017, I had a view that the market was no longer cheap. So I changed my approach, I trained for 6 months and found ways to make income on quick trades. Normally I like to buy and hold for many years but it life we must adjust to the data (or your opponent).

Micro - This article is to keep it real. The last few weeks have been positive. That is great for me, my family, the city and state, country and world. Be flexible to take advantage of these micro moments. I am long in my stock portfolio but I can still be conservative in my retirement account.

What I am Trading - I have been actively trading UBER (UBER) over the last 3-4 weeks. I get in and get out. For example, I think its all time low is 18 --- I bought at $23 in my retirement account and just sold today. I was pleasantly surprised with how it performed. In my stock account, I was early on UBER and bought at $27ish. I traded around the position using options and took some nice income wins and then I sold off the position this week. But I need to research my opponent UBER further. A good friend of mine...billionaire Jim Chanos thinks UBER is a bad investment --- so I can be stubborn OR I can be balanced. He wisdom has prompted me to sell my position even though I was up over 33% in one account and had small gains in another. I must remain humble and see life and trades through the eyes of others. If not, you don't see the hidden risks around the corner.  Why do I respect Jim so much he makes money typically off of betting when stocks go down...very difficult thing to do. 

On advice from another famed short-seller Carson Block of Muddy Waters --- they bet that Luckin Coffee would tank. China's next Starbucks was a high flyer UNTIL this month: Luckin Coffee fell over 70% after the company disclosed its chief operating officer fabricated 2019 sales to the tune of over $310 Million dollars. How in the hell do you hide $310M when the whole world is watching you. That's my MACRO concern with this Summertime rally - we are still scared, jobs lost, many lives lost --- BUT the market looks as if that's all in the rearview. For now, I'll enjoy cutting the grass and chasing the kids but I do wonder what will be the damage from the coronavirus recession.