Author Archives: Edward Brownlee

Short Interest and Short Selling

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Short interest provides investors a sense of the degree to which investors are betting on the decline of company’s stock price.

It’s easy for investors to understand that you can make money after buying shares of a stock when the stock price increases (going long).

Traders can also profit from a declining market by using a strategy called shorting stock.

Short selling is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.

Shorting a stock first involves borrowing the stock you wish to sell at a market-determined interest rate and then selling the borrowed equities to take advantage of a future market decline.

You profit by selling the borrowed stock at a higher price and subsequently buying it back at a lower price if the stock price falls.

The profit consists of the difference between the price at which the trader sold the stock and the price they buy it back at less any borrowing and transaction costs.

To successfully short sell, you need to identify stocks that are likely to decrease in value. Look for companies with weak financials, negative news, or a downtrend in their stock price.

When short selling, market timing is crucial. You want to enter the trade when the stock price is likely to decrease, and exit before it rebounds. Pay attention to technical indicators and price action to make informed decisions.

Why Short Interest Matters

Short interest is the number of shares that have been sold short but have not yet been covered or closed out.

Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.

Source:

  1.  https://www.benzinga.com/insights/short-sellers/24/03/38010258/pypl-analyzing-paypal-holdingss-short-interest
  2. https://www.benzinga.com/money/how-to-short-a-stock

Persistent Inflation and Loss of Purchasing Power

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U.S. Consumer Price Index (CPI) data was hotter than expected.

March 2024 U.S.CPI annual inflation rose 3.5%, above expectations of 3.4%.

Core CPI inflation increased 3.8% year-over-year (Y/Y), compared to forecasts for a gain of 3.7%.

The March 2024 Consumer Price Index for All Urban Consumers (CPI-U) report marked a third consecutive 0.4% month-over-month (MoM) increase. On a year-over-year (YoY) basis, inflation rose by a stronger-than-expected 3.5% in March

  • The slightly stronger March Consumer Price Index (CPI) report was driven by rises in shelter and energy prices.
  • March’s stronger year-over-year (YoY) rise in the headline CPI suggests the path to the Fed’s 2% target could take longer than expected.

Persistent Inflation occurs when the U.S. money supply grows more rapidly (to pay for huge fiscal deficits) than the country’s economic output.

Money Supply and Inflation:

When the Federal Reserve (the Fed) increases the money supply, it leads to inflation.

Imagine an economy with $100 and 100 bananas. If the government increases the money supply by 10% to $110, but the banana output only grows by 5% to 105 bananas, we have more money chasing fewer goods. As a result, the average price per banana increases from $1 to roughly $1.05. Thus, the purchasing power of the currency is reduced.

The quantity theory of money (QTM) suggests that the value of money is determined by supply and demand. When the money supply grows faster than economic output, inflation occurs.

Monetarist View:

Monetarists believe that inflation results from too many dollars chasing too few goods. As the money supply grows, the value of money decreases due to supply and demand dynamics.

In summary, managing the money supply is imperative for the Fed. Too much growth can lead to persistent inflation, affecting the purchasing power of the dollar.

Taking Risks

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“Do the one thing you think you cannot do. Fail at it. Try again. Do better the second time. The only people who never tumble are those who never mount the high wire. This is your moment. Own it.” — Oprah Winfrey

The greatness you desire, the success you dream about, is on the other side of your doubts and fears, explains media mogul Oprah Winfrey. You must confront and manage your self-doubts and unrealistic fears if you ever expect to live a life of purpose and meaning. You must believe in yourself, be courageous in your actions, and be grateful for your current life.

You don’t find life’s purpose and meaning, you create them!

The kind of life you were created to live, a life of purpose and meaning, will require you to leave your comfort zone and take risks. Staying within your comfort zone and avoiding risks may seem safe, but they can also lead to missed opportunities for growth, learning, and progress.

Every decision involves an opportunity cost—the value of what you could have gained by choosing an alternative path. Taking risks involves making decisions or engaging in actions where the outcome is uncertain but there is a potential benefit or reward.

Not taking risks is a risk in itself. Many people are not living their dreams because they are living their fears.

Fear of failure often prevents people from taking risks. However, failure itself is a valuable teacher. You will never amount to anything if you let your doubts and fears hinder you from trying things.

Embracing failure as a stepping stone toward growth and learning is essential.

“I’ve failed over and over and over again in my life, and that is why I succeed.” — Michael Jordan

Your pursuit of security is what’s hindering you from reaching greatness. You can’t be safe and still be great because greatness will require you to take risks and try things you’ve never done before. But it’s in taking risks that you find security because proper security is having no fear of trying.

Nothing great is built in your comfort zone. Life is all about taking risks. It’s a daring adventure or nothing at all.

What’s stopping you? In the face of death, life’s fears hold no meaning. So live while you are still alive.

Go out, try things, do what scares you, let go of your doubts and fears, and embrace the uncertainties. What’s life if we aim for less because we fear more?

Take the risk; it’s a part of life, not part of it. Never take the risk of missing the chance to live.

People tend to regret missed opportunities more than failed attempts.

“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.” — Robert Kiyosaki

2024 SoFi NBA Play-In Tournament

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The 2024 SoFi NBA Play-In Tournament will include teams with the 7th through 10th-highest winning percentages in each conference and take place April 16-19.

The SoFi NBA Play-In Tournament will determine the teams that fill the seventh and eighth playoff seeds in each conference for the 2024 NBA playoffs.

The Play-In Tournament will take place Tuesday, April 16 – Friday, April 19, with the games played after the regular season concludes and before the first round of the NBA playoffs begins.

While the teams that finish Nos. 1-6 in the standings of each conference are guaranteed a playoff spot, the teams that finish Nos. 7-10 in the standings will enter the Play-In Tournament. These teams will battle for the seventh and eighth playoff seeds.

Each conference’s No. 7 team in the standings will host the No. 8 team. The winners secure the No. 7 seed in the playoffs. The losers will get another chance to earn a playoff spot.

Each conference’s No. 9 team in the standings will host the No. 10 team. The winners will advance to the final stage of the Play-In Tournament. The losers are eliminated.

The losers of the No. 7 vs. No. 8 matchups will host the winners of the No. 9 vs. No. 10 matchups. The winners secure the No. 8 seed in the NBA playoffs for its conference. The losing teams are eliminated.

If the regular season ended after games played on April 7, the matchups would be:

Western Conference:  (7) Pelicans vs. (8) Kings and (9) Lakers vs. (10) Warriors

Eastern Conference:  (7) 76ers vs. (8) Heat and (9) Bulls vs. (10) Hawks

Self-Worth

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Your self-worth is your ceiling! ~ Jamie Kern Lima, author of Worthy!
Eighty percent (80%) of people hear their inner voice telling them they’re not enough. Jamie Kern Lima’s book WORTHY helps you unlearn the lies that lead to self-doubt and enables you to ignite your self-worth!
‘Worthy’ is a confidence-building compass, empowering you to conquer self-doubt and embrace your authentic self.
Do you allow yourself to dream big, love deeply, and pursue your most audacious goals? Remember, you are inherently worthy of all the beauty life has to offer. Embrace your worth, reach for the stars, and let your belief in your limitless potential guide you writes Jamie Kern Lima.
To craft a life filled with self-love, purpose, and unstoppable empowerment, you must believe in yourself and believe you are worthy of your hopes and dreams and of living this one precious, beautiful life as who you indeed are, states Jamie Kern Lima!
You are deserving of all the greatness that awaits!

“In life, you don’t soar to the level of your hopes and dreams, you stay stuck at the level of your self-worth. In your business, leadership, relationships, friendships, and ambitions, you don’t rise to what you believe is possible; you fall to what you believe you’re worthy of. When you build your self-worth, you change your life.” – Jamie Kern Lima.

REWIRING YOUR SUCCESS

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BOOK TITLE : REWIRING YOUR SUCCESS:  |  AUTHOR : JOHN QURESHI
Success is not a matter of luck.
Successful people are not just lucky; they make their luck by taking action and persevering through setbacks.
Success is a journey, not a destination.
There is no one-size-fits-all formula for success. What works for one person may only work for one person. The important thing is to find your path to success and to be willing to make the necessary sacrifices along the way.
Success is not about money.
Money is important, but it is not the only measure of success. Successful people also find fulfillment in their work and make a positive impact on the world.
Success is a habit.
Successful people have developed habits that help them achieve their goals. These habits include setting goals, taking action, and never giving up.
Success is a choice.
You choose to be successful or not. It is not something that happens to you; it is something you create.
Success is a mindset.
Successful people have a positive mindset that allows them to see possibilities instead of obstacles.
Success is about personal growth.
Successful people are constantly learning and growing. They are unafraid to step outside their comfort zones and try new things.
Success is about giving back.
Successful people use their success to help others. They know they are not alone and feel responsible for giving back to the community.
Success is about leaving a legacy.
Successful people want to make a difference and be remembered for their positive contributions.
Success is possible for everyone.
You can achieve your dreams no matter where you come from or your circumstances. It takes hard work, dedication, and perseverance, but you can reach your full potential.

10 Lessons from The 80/20 Principle: The Secret to Success by Achieving More with Less
  1. Identify the critical 20% of activities or efforts that yield 80% of the desired outcomes and prioritize them over less important tasks.
  2. Work smarter, not harder. Focus on maximizing efficiency in the tasks that deliver the most significant results rather than trying to do everything.
  3. Streamline processes and eliminate unnecessary complexity to increase effectiveness and productivity.
  4. Develop a strategic mindset by focusing on high-leverage activities that align with long-term goals and objectives.
  5. Recognize that not all decisions are equally important. Focus your time and energy on decisions that have the most significant impact on your goals and outcomes.
  6. Identify and leverage resources, talents, and opportunities that contribute the most to your success.
  7. Embrace a continuous improvement mindset by regularly evaluating and refining your strategies and processes.
  8. Remain flexible and adaptable in the face of changing circumstances. Be willing to adjust your approach as needed to stay aligned with your objectives.
  9. Recognize and mitigate potential risks that could derail your progress toward your goals.
  10. Seek balance and harmony in your life by focusing on what truly matters and letting go of unnecessary distractions or obligations.

Warren Buffett’s Investment Strategy

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An initial investment of  $10,000 in Berkshire Hathaway when Warren Buffett took over in 1964 would now be worth more than $438 million!

Despite his reputation for picking winning stocks, Berkshire chairman and CEO Warren Buffett wrote to investors in his 2022 Berkshire Hathaway letter: “Charlie [Munger] and I are not stock-pickers; we are business-pickers.”

Over the decades, Buffett has refined a holistic approach to assessing a business—looking not just at earnings but also at its overall health, deficiencies, and strengths. He focuses more on a company’s characteristics and less on its stock price, waiting to buy only when the cost seems reasonable.

In short, Warren Buffett’s investing strategy is not complicated:

  • Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or, these days, a digital trade confirmation).
  • Look for companies with competitive advantages that can be maintained or economic moats. Firms fending off competitors have a better chance of increasing intrinsic value over time.
  • Focus on long-term intrinsic value, not short-term earnings. What matters is how much cash a company can generate for its owners in the future. Therefore, value companies use a discounted cash flow analysis.
  • Demand a margin of safety. Future cash flows are, by their nature, uncertain. Always buy companies for less than their intrinsic values to compensate for that uncertainty.
  • Be patient. Investing isn’t about instant gratification; it’s about long-term success.

Other investing virtues prized by Buffett include candid communication with shareholders, patience in letting an investment bear fruit and emphasizing practical vehicles over investing fads.

Patience Pays:  An initial Investment of  $10,000 in Berkshire Hathaway when Warren Buffett took over in 1964 would have purchased approximately 808 company shares at a stock price of just $12.37 per share.

As of the end of 2023, Berkshire Hathaway’s Class A shares (which have existed since 1964) traded for just over $542,625 per share. The stock has produced an overall gain of 4,386,621% from 1964 to 2023. Your initial $10,000 investment would now be worth more than $438 million!

While Berkshire Hathaway’s past 60 years have been an impressive growth story, Buffett cautions that the company’s size has become too large to sustain the same 20% growth rates over the long term. He believes future gains will not be as dramatic as those of the past 60 years.

Nevertheless, Buffett’s core investment strategy prioritizes thinking like a business owner and viewing investments as actual companies, not just as stocks.

He has long advocated for “boring” investing and the notion that real moneymaking happens when you sit back and trust in a long-term plan instead of strapping in for a wild ride seeking short-term profit. He continues to focus on lifelong learning, whether that means unpacking what a new product is all about or reading up on interdisciplinary subjects.

And he intends to give away 99% of his wealth to philanthropy.

Source: Susan Dziubinski, How to Invest Like Warren Buffett, Morningstar, March 13, 2024.

Reframing and Overcoming Rejection

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“Rejection is God’s protection.”  Jamie Kern Lima

Jamie Kern Lima explains that setbacks and rejections are not indications that your dreams will not happen; they’re just an inevitable part of a journey for anyone brave enough to pursue their dreams and goals.

Jamie Kern Lima is a New York Times best-selling author, host of The Jamie Kern Lima Show, and Founder of IT Cosmetics. She started the company in her living room and sold it to L’Oréal in a billion-dollar deal, becoming the first female CEO of a brand in its 100+ year history.

You were not rejected, God hid your value. This powerful statement reminds us that sometimes what appears to be rejection or disappointment is actually a redirection toward something greater.

In moments of adversity, it’s essential to recognize your inherent worth and value. Just like a precious gem hidden beneath layers of earth, your true essence remains intact, waiting to be discovered.

So, embrace your uniqueness, trust the journey, and remember that your value transcends any external circumstances. You are worthy, cherished, and destined for greatness!

“Hundreds and hundreds of setbacks and rejections are no indication your dreams will not happen. It means you’re one of the brave ones going for it.” ~ Jamie Kern Lima

In her book “Worthy: How to Believe You Are Enough and Transform Your Life”, Jamie Kern Lima shares a profound insight:

“In life, you don’t soar to the level of your hopes and dreams, you stay stuck at the level of your self-worth. When you build your self-worth, you change your entire life. You are worthy, and your value is immeasurable.”

“Self-confidence is the belief in your abilities as a person. Self-worth is the belief in your value as a person.” – Jamie Kern Lima. This quote reminds us that our worth extends beyond mere abilities—it encompasses our intrinsic value.

2024 Personal Consumption Expenditures for February

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The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred way to measure inflation, rose 0.3 percent in February, while the annual inflation rate rose to 2.4 percent in February, up 0.1 percentage points from January. The number excluding volatile food and energy prices rose 0.3% on a month-to-month basis, slightly faster than anticipated.

https://www.facebook.com/share/dPZDHUTEz93HSPdH/?mibextid=WC7FNe

Federal Reserve Chair Jerome Powell indicated the latest PCE report did not undermine the central bank’s baseline outlook, but said with the economy on a “strong” footing, “that means we don’t need to be in a hurry to cut.”

Some details of the PCE data for February, economists noted, showed improvement in aspects of inflation that the Fed considers important, even as the headline numbers have shown little progress in the first two months of the year.

The central bank last week held its benchmark overnight interest rate steady in the 5.25%-5.50% range and also reaffirmed – narrowly – a baseline projection that the rate will fall by three-quarters of a percentage point by the end of 2024.

Source: Howard Schneider and Ann Saphir, New US inflation data ‘along the lines’ of what Fed wants, Powell says, Reuters, March 29, 2024. https://stocks.apple.com/A8OnyemvKT4ue7DzP7DFCdg