Author: ThumbTackInvestor

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. 1st 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.

ThumbTack Fund Report 7 – 大难不死,必有后福

"大难不死,必有后福" = "If you survive a major calamity, you'd certainly have great fortune subsequently"

ThumbTack Fund (TTF) was incepted at the beginning of Feb 2020, right before the pandemic became a real thing. On the very 1st month in Feb 2020, the fund got a -29.59% hit, and this was followed by another bright red -26.25% in Mar 2020, which cumulatively led to a nightmarish -50%-in-2-months start for TTF.

This is the investing equivalent of Freddy Krueger from nightmare on elm’s street appearing in your dreams.

That was the calamity part.

Exactly 1 year on, this is the great fortune part.

YEAR TO DATE (2021): (which is really just January 2021!)

SPY: +3.70%

VT: +4.40%

STI: +2.23%

TTF: +14.55%

SINCE INCEPTION (FEB 2020):

SPY: +22.60%

VT: +23.44%

STI: -7.76%

TTF: +117.69%

TTF’s NAV: USD 408,474.88

Deposits/Withdrawals: USD 239,227.83

Nett capital gains since inception: USD 169,247.05

At this current rate, I think TTF’s NAV would cross the million dollar mark within another 1 year, with the help of some capital injections too. Yep, that should be the logical target by 2022.

Well, if Biden’s going to pump another close to 2 trillion dollars into the markets and waste American dollars, I might as well use my wits and grab as much of this helicopter money while I can.

Note that this list cannot be taken at face value, as some are short positions. Also, there are some long positions that are structured solely via options and hence, may not appear individually within the top holdings list, but are collectively, a major component of the portfolio.

OK… don’t ask me what’s “Real Estate”.

I have no idea what in my portfolio constitutes “Real Estate”. Maybe it’s GameStop positions, since their intrinsic value is only how much residual value their physical stores retain? hehehe.

Ok, I’m going to side track a bit:

Notice how the 2 green lines are almost moving 100% in tandem with each other? The 2 green lines are the SPY (SPDR S&P 500 ETF Trust) and VT (Vanguard Total World Stock Index Fund ETF).

I started getting curious why they’d match each other to a T, cos afterall, SPY is US S&P 500 index ETF, whereas VT is supposed to be benchmarked against the WORLD’s indices.

So I went to check up what are the components of VT:

Month-end 10 largest holdings

(13.70% of total net assets) as of 12/31/2020 

1Apple Inc.
2Microsoft Corp.
3Amazon.com Inc.
4Alphabet Inc.
5Facebook Inc.
6Tesla Inc.
7Taiwan Semiconductor Manufacturing Co. Ltd.
8Berkshire Hathaway Inc.
9Johnson & Johnson
10Tencent Holdings Ltd.
https://investor.vanguard.com/etf/profile/VT

Ahhh. Geez, I dunno why is VT a world index. It looks damn American to me.

I guess mystery solved. Is it any wonder that the 2 green lines are like 1 uber fat green line on the chart?!

RISK:

I don’t typically consider stuff like risk adjusted returns when thinking of investing theses, but since IB gives this data, I’d include it.

Apparantly, a sharpe ratio of 1 is considered acceptable to good.

Sharpe ratio of 2 is considered very good

Sharpe ratio of 3 or more is considered excellent

Sharpe ratio of <1 is considered “sub-optimal”

So in the past 30 days… not sure why so tbh, but whatever I’ve been doing in Jan 2021 is considered god-like in the Sharpe ratio world. Hahaha. Whatever that means.


TTI’s 5 Generals

New list, new names except for the Chief Of Army. That dude stays on top since inception.

  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)

I’d add some disclaimers/rules.

1stly, and this should be obvious, this list obviously doesn’t state my entry prices, it doesn’t state my time frame, it doesn’t state my rationale, and it also doesn’t state how a long position is structured (it may be a long via derivatives instead of the equity)

2ndly, the names on this list may change at any 1 time. I take no responsibility to update the status… at all. Much less in real time.


That’s all for this report. I’m excited for the next few upcoming weeks as I’m scaling into an opportunity that I think will give TTF massive returns and pull further away from the benchmarks. It’s always exciting when you find something like this, which is not that often.

You won’t be able to explain it, it’s like love. You will know it when you find it.

For concentrated portfolios like TTF, you don’t need to get everything right all the time. Most things I do just have to be ok-ish, and not massive mistakes… then that 1 or 2 things every year that you show hand in are the ones that you absolutely have to be spot on correct. If it’s a mistake, the year’s gone. You can’t get back from that.

That’s the life of concentration, and the subsequent price to pay. (with a correspondingly devastatingly sweet reward if you get it right)

Anyhow, CNY is right around the corner, here’s wishing all readers a prosperous (what else? lol) Year of the Ox!

Huat ar!