ThumbTack Fund Report 8 – What Are These Bots Doing?

1st up, can you guys go watch this video that I took a few days ago, watch it, and tell me (if u know), what exactly are the bots or people behind the bots hoping to accomplish by doing this?

(Sorry about the ticking sound, didn’t realize my study room clock is so noisy in the middle of the night. Also, wordpress doesn’t allow me to embed videos here, so gotta click on the link to go elsewhere)

https://player.vimeo.com/video/538081216

I’ve noticed something like this happening for various companies, on occasion. The asking price keeps ticking upwards every second (it literally follows the ticking sound of my clock!), hitting a certain level (USD 7 in this case), and gets reset to a base level (USD 5.50 in this case).

I can’t figure out any reasons for anyone doing this. What are they hoping to accomplish with this? Errr, trying to con market participants into thinking there’s “increasing demand” with the asking price ticking upwards? If so, at least set the algorithm to be a bit irregular right? lol. This is kinda foolish. I’m assuming it’s some algorithm and some bot doing that, it surely must be. But even the actions from algorithms and bots are determined by actual humans and there’s just seemingly no logic for this.

Or maybe I’m just not wise enough to figure out what they’re doing.

In any case, this doesn’t affect me 1 iota. I’m just curious why these things exist as they do.

Please enlighten me if you know the reasons why. Or drop me an email: thumbtackinvestor@gmail.com

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In my last post, I wrote about the electric vehicle industry. https://thumbtackinvestor.wordpress.com/2021/04/05/outlook-on-electric-vehicles-hype-or-hope/

Now, sometimes, some posts are written by “Team ThumbTack”. This means that I’m not really the sole author. There are readers turned associates who would work together with myself on certain content.

Anyway, the irony is that I currently don’t really have much exposure to the EV industry. I have a small long position in NIO, and some minor short calls in RIDE and NKLA, and that’s about it. Thing is, the clear leaders would not be cheap and have years and years of growth baked in their valuations. The clear losers (frauds, in some cases) can still enjoy a mega pop on the way down, on the back of some sudden news that’s perceived as a big positive by the markets. Both scenarios make it hard for me to make any EV ideas a core one.

So that’s it; I’d rather initiate smaller positions on both sides of the coin.

ThumbTack Fund Report 8

YEAR TO DATE (2021):

SPY: +11.97%

VT: +10.28%

STI: +12.59%

TTF: +7.25%

SINCE INCEPTION (FEB 2020):

SPY: +26.51%

VT: +24.94%

STI: +1.27%

TTF: +70.21%

Note: Returns are MWRs, all figures in USD

TTF’s NAV: USD 466,627.46

Deposits/Withdrawals: USD 319,223.93

Nett capital gains since inception: USD 147,403.53

Commentary:

A +7.25% quarterly gain would’ve normally been something that delights me, I mean, just imagine compounding at 7% every quarter, along with my capital injections over the next 3 decades… … … but it’s hard to be all that pleased when passive indices have zoomed up so rapidly this year. STI has been strong, and YTD, has even beaten both SPY and VT. That’s not all that surprisingly though, given that it’s coming from a low base + SG has been fairly successful at limiting the effects of Covid on the broader economy… thus far.

But what lies ahead? Interest rates are at record lows and have been there for a long while. Powell says it’s unlikely they’d raise rates this year… but me thinks higher inflation may just force his hand. US’s vaccination is going along rather rapidly, and with just 50% of the population vaccinated, I can forsee everything opening up with a vengeance.

Pent up demand is a real thing. Most of the folks that have had their travel, leisure, dining, wedding etc plans delayed, wouldn’t mind spending more when things open up. So that’s going to be a boost to these industries that have been so savagely ravaged the past year and counting.

Outside of that though, for the rest of the economy, it’s hard for me to see how things can be all that rosy. Latest reports of fully vaccinated individuals who end up still contracting and spreading Covid is worrisome. It just means that vaccinating large swathes of the population is not going to completely eliminate Covid, although it’s likely to mean we get to open up further and gain more normalcy. And ultimately, I think that’s where the world is slowly limping towards: more and more of the world’s population gets vaccinated, everyone starts to open up, activities return to a limited extent.. yet nothing really goes back to pre-covid days.

As an investor though, my thoughts really revolve around the Fed’s control of the money supply and the amount of liquidity in the system. As the economy opens up and inflation rises, the Fed will surely have to raise rates, and when that happens, it’d be a signal to forward looking markets that the only thing we can all expect in the near future would be rising rates. That’s a clear negative to the markets.

I’m not known for a macro view, and neither do I invest based on 1. If you’ve read the previous TTF reports, you’d know that I’ve injected capital into this new fund periodically over the past 13mths since inception. What is not visible though, is the rainy day back up kitty that I’ve built up and continue to build up. TTI’s proton cannon, so to speak. We all need 1. It’s like condoms. It’s too late to start searching for 1 when you really need it.

Some additional fund data:

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In my last fund report in Feb, (https://thumbtackinvestor.wordpress.com/2021/02/07/thumbtack-fund-report-7-%e5%a4%a7%e9%9a%be%e4%b8%8d%e6%ad%bb%e5%bf%85%e6%9c%89%e5%90%8e%e7%a6%8f/), the 5 generals are:

TTI’s 5 Generals

1. Broadcom (AVGO)
2. Ligand Pharmaceuticals (LGND)
3. Nio Inc (NIO)
4. Alibaba Group (BABA, 9988)
5. Facebook (FB) —–> (tough toss up between this and PSTH)

There have been some changes since then:

TTI’s 5 Generals

1. Broadcom (AVGO)
2. Alibaba Group (BABA, 9988)
3. Rocket Companies (RKT)
4. Pershing Square Tontine Holdings (PSTH)
5. Still interviewing applicants.

Having said that, my recent additions/activities have all revolved around the names that were sold down rapidly due to Bill Hwang’s Archegos Capital blowup. I’ve previously analyzed DISCA some time last year, just before it begun it’s crazy run up, and ultimately decided not to take any positions as I didn’t want to over pay. So when the news broke and DISCA tanked, I thought it’s a great opportunity to monitor and finally initiate positions.

Most of these Archegos-related names have not only NOT recovered, but are still trending downwards. Reportedly, some of the affected banks like Morgan Stanley and Credit Suisse were STILL hawking blocks of shares as recently as a few days ago, so this sell down isn’t exactly a short and sweet fire sale. The amount of leverage Archegos had must be really some crazy shit stuff…

Fortunately, I’ve structured it with options, and wouldn’t mind more volatility and/or redness in these names. IMO, there are a couple of real frauds within the Archegos list, and I wouldn’t touch those with a 10 foot pole, but for the rest, they’ve been sold down heavily and deserve an intense look from the brave value investor.

Alright, that’s it for this report. By the time the next TTF report rolls out, I’d expect NAV to exceed half a mil USD comfortably. The target of USD 1mil by the end of the 2nd year remains (Feb 2022), and yes, I know that’s a real stretch cos it’d mean a gain of >100% within less than 1 yr, but it’s not impossible with some generous capital injections. Let’s see. Just a soft target. I’m not going to get executed if I fail to meet it.

Happy Investing.

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Outlook on Electric Vehicles – Hype or Hope?

We witnessed a mini bloodbath in the global stock markets in the past one month – particularly so for counters listed on NASDAQ as a result of the tech sell-off; attributed to the recent announcement of treasury yields and Powell’s speech.

Take a look at the NASDAQ Composite (IXIC) below: The index dipped to its December 2020 high, erasing all gains in 2021 thus far. Some say it’s a healthy pull-back or a correction, while some say it resembles the March 2020 dip. But contrast this to the March 2020 sell-off when COVID-19 first surfaced, and this correction appears relatively healthy (and necessary) before it continues soaring up in the longer term.

NASDAQ Composite Index, IXIC chart, as of 28 March 2021, from Tiger Trade App

Even EVs were not spared amid the tech sell-off last month. As you can see from the chart below, Nio is currently down ~45% from its ATH ($66.99) when it closed at $36.13 per share on 26 March 2021. And that can pretty much be applied to most (though can’t say for all, e.g. banks) counters.

NIO chart, as of 28 March 2021, from Tiger Trade App

In comparison, TSLA is currently down ~30% from its ATH of $900 per share.

TSLA chart, as of 28 March 2021, from Tiger Trade App

With that said, let’s take a look at what’s occurred in the electric vehicles (EVs) scene prior.

In recent years, there has been a lot of hype surrounding EVs, more so in the year 2020. This is evidenced by Nio shares skyrocketing 1,266.6% over the past 12 months while Tesla’s stock has soared 445.5% during the same period. In contrast, the S&P 500 climbed by 43.9%.

As with any nascent industry, there’d be that small select few trail blazing companies leading the charge into the new sector. Tesla has now undoubtedly become a household name, and they’re now the “team to beat” in the EV sector. With success, comes attention from competitors and that has in turn, spawned an entire plethora of EV companies, some entirely new upstarts, with the rest being the traditional Internal Combustion Engine (ICE) car companies.

In China, arguably the largest EV market in the world for some time to come, the competition is really heating up. We are still in the early throes of the game, but already, some of the most popular, pure EV brands have already started getting entrenched in the market, together with Tesla. Think of NIO, XPeng and BYD. Traditional ICE companies have also stepped up their game, with BMW, Volkswagen and Mercedes investing heavily in this sector.

It remains to be seen who would eventually come out tops in this hyper competitive market, and in all likelihood, we’d see these few top names dominating the market. 1^st mover advantage in the largest EV market makes it very hard for newer companies to break into the market in future, without a clear competitive advantage.

The regulatory environment has also very quickly shifted in favor of EVs. Governments are keen to modernize their transportation network, and in the process, control their carbon footprint, as well as limit the geographical extent of the release of smog. For example, Singapore government recently announced their target to have 60,000 EV charging points across Singapore by 2030.

(Source:https://www.lta.gov.sg/content/ltagov/en/newsroom/2021/3/news-release/Accelerating_nationwide_deployment_of_electric_vehicle_charging_points.html)

It is worth noting that EVs still require energy, but by some studies, the emissions are cut by 60% compared to traditional ICE vehicles. Also, since the energy is derived from electricity, whose generation is localized within power plants, there is no widespread release of smog while the vehicles are being utilized.

Along with all this hype, comes a large amount of capital flooding into the industry, as investors look to profit from being early in the game. The problem though, is that all that money attracts duds and con men as well.

The revelation that Nikola (NKLA)’s supposedly functional trucks were filmed rolling down a gently sloping hill was quite comical to say the least. We now know that NKLA has no real proprietary hardware, and instead, their vehicles are mostly a mishmash of parts from 3rd party vendors. I honestly don’t even know how anyone can invest in something like this.

The latest dud that was revealed is Lordstown Motors Corp (RIDE), with their supposed “orders” being nothing more than “indications of interest”. What is more damning is that “customers” were actually paid by the company to display their interest in future orders.

In both cases though, it is worth noting that their respective founders made a ton of money despite listing con job companies. Nikola’s Trevor Milton for example, is worth something like $2billion as of end 2020, mostly due to NKLA. After NKLA’s share lock up expiry, he took the chance to cash out a substantial portion of his holdings.

Logical investors should pay real attention and either stay far far away, and/or seek to profit from others who may be foolish enough to trust such duds.

On that note, let me move on to a little promotion following my last Tiger Brokers’ promotion post here.

Tiger Brokers’ Latest Account Opening Promotion

Previously, I wrote about the free 30-day US market L2 data awarded to new Tiger Brokers account users, which you can read here: https://thumbtackinvestor.wordpress.com/2021/01/21/ttis-2021-market-outlook-and-review-of-tiger-brokers/

This time, Tiger Brokers is coming up with another new Account Opening promotion – a 10% off Tesla voucher. Attaching some screen grabs below from the Tiger Brokers’ promotion sites:

What is this 10% off Tesla Share voucher?

It allows new users to purchase one Tesla share at 10% discount during US market trading hours.

This is how it works:
The voucher will be issued automatically into the user’s Rewards Center (Tiger Trade App > Me > Promotions & Rewards) within 2 working days after the account is successfully opened.

No deposit required is required to be eligible for this reward.

Existing User
If an existing Tiger Brokers’ user and refers a friend to open an account, BOTH him and his friend will each get a 10% off Tesla Share voucher once the friend’s account is successfully opened.

To use the voucher, you must access it via Rewards Center (Tiger Trade App > Me > Promotions & Rewards) during US market trading hours (9.30pm-4.00am SGT, during DST). Select the voucher and it will bring you to the screen as shown below.

Screenshot of 10% off Tesla share voucher before payment

Simply ensure that you have the sufficient amount in your account before clicking ‘Pay Now’. After the payment is completed, one Tesla share will be credited into your account within 10 working days.

A few things to note:

• Do expect some time lag due to the Tesla’s stock price fluctuations and volatility. In other words, you will only know about your true cost price (less commissions) after you receive the SMS notification informing you of your successful deduction.
• If unused, the voucher will expire within 20 days after  issuance.

• Currently, this promotion will last till 17 July 2021

In addition, there’s also a new Refer-a-Friend reward – Scratches Rewards.

If you’re lucky, you can even win up to ONE free Tesla share under Scratches Rewards page.

These are the potential rewards from the scratch card:

Well, if you are still reading this and you need a little nudge, may I present to you Ark’s Cathie Wood, who has an extremely bullish price target for TSLA by 2025.

That would easily place TSLA’s worth at almost US$3 trillion, based on the number of shares outstanding.

It remains to be seen how this will unfold 4 years down the road (or sooner).

For more information, you can read the detailed T&Cs from this link: https://www.tigerbrokers.com.sg/activity/forapp/invitflow-intl/?template=invite202011&region=SGP#/

Disclaimer: This post is written in collaboration with Tiger Brokers. All opinions expressed are my own, based on the information shared with me by Tiger Brokers and my own research.