How to increase online casino's profit margin? - Smart Money

Parimutual vs. the House

The parimutual wager is the truest wager in sports gambling. Inside of every payoff, every dead heat and every torn ticket lie the hopes and dreams of the gambler, not some casino's profitability margin. This is why Horse Racing or any other wagering system that relies on parimutual is the only true representation that is both accurate and fair.
When you wager against a predetermined outcome, you're effectively wagering against a known percentage that the House has determined is to their best profitability. Wagering in Horse Racing / Poker / Pari is different. The only issue you have with the house is how much they're able to take from the rake (a preagreed amount that the house collects as a commission). The house has a vested interest in not only designing you slot or table game in being unfair, they also get an environmental edge by plying you with enough drinks, food, free stupidness to get you to stay.
Only wager against others. The only thing I want to do is beat you within the rules supplied. The others want to not only beat you, but also want to make the rules around your loss. Keep playing horses. It's the last true gamble.
submitted by deez_treez to horseracing [link] [comments]

How to avoid getting limited (hopefully insightful & worth the read)

You're new to sports betting. You see a 2% arb on an NBA game. You hit it for $500. You made $10 risk-free 5 hours later. You buy an extra six pack of beers with that $10. That's great but....here's the issues with it.
Limits will come. I've been limited on various sportsbooks. I've been betting for many years, and when online sports gambling was legalized, it was like a field day. Arbs galore. Errors galore. Here's what I've learned. Because, trust me, there is not a casino or online sportsbook that is above giving you a max bet of $2.
1) Betting "massive errors" is the #1 way to get limited. A sportsbook accidentally posts Ravens +175 instead of Titans +175 and you max it out. That's actually very similar to how I got limited on Fanduel. I hit an error for thousands, and was immediately limited after the wager settled. Casinos aren't like other businesses - they can decide to just NOT take your money for a bet. I used to get thousands on Fanduel, now I can barely get $50. Consequently, when there is an error, you need to think about how valuable that error actually is. If they post Bucs vs. Washington as Bucs +400, then, sure, maybe it's worth blowing up an account over? Maybe? But think about all the great, +EV, profitable bets you could be making over the next few years. Is it worth risking that? Maybe it is, I don't know - obviously depends on the profit margin of the error and how much you care about your account. Is it worth not being able to bet Bills +76 points (or whatever that Fanduel promo was) and all those other absurd promos?
2) Arbing is often identical to betting errors. That's because, when you're arbing books, there is usually one "smart" book and one "dumb" book. Let's say Harden gets injured, every site updates the game, one site doesn't. You arb it. For the most part, all you are doing is taking a plus EV bet (a profitable bet) and a negative EV bet (an unprofitable bet). There are obviously books who have consistently "dumber" lines and more errors (Fanduel is of course one). That mean's you'll be winning more on the dumber books, and you'll get limited quicker on the dumber books, because usually when there's arbitrage, one book hasn't updated its lines yet to news (e.g. a player injury). But that's not what you want! As a sports bettor, you are hoping to create a little "hedge fund" for yourself - making a ton of profitable odds boost bets, taking advantage of promotions, betting on line moves, etc. to make tens of thousands per year. Getting limited by a dumb book will set you back massively - they are the ones you want to be able to bet on. Think about the future of your account before arbing a game for 2% or betting $200 on an error.
3) Am I saying you shouldn't bet on incorrect lines? No. Just the bigger the error, the higher the risk of getting limited, especially if you bet it really big. So also watch your sizing. It's tempting, I know, to max bet a major arb or massive error. But betting 5k on an error is, for obvious reasons, a lot more worrying for your account than betting $50. Also, if it's a "clear and obvious error," the sportsbook has the right to void the bet (happens very frequently in fact). So, ideally, keep your bet sizing in the triple digits, and avoid betting clear mistakes unless they're offering Chiefs +2000 to win the Superbowl or something that makes it worth it. You want to avoid bets that scream pick off. If the Chiefs line moves from -3 to -6, and you can still bet -3 on one sportsbook, then bet $950 on it. That's not a massive error, and you made a profitable bet. Will you eventually get limited for making money off the sportsbook? Probably, but it may take a few years. A lot of recreational bettors are betting -3 at the same time, so it's hard to determine who "thought" about the bet and who just bet it, because obviously the sportsbook wants bettors who just bet things without really considering the price they're getting.
4) Odds boosts/promotions have no effect on getting limited. You want to act like a normal, recreational bettor who, in the sportsbook's eyes, is just a little smart and running hot. From what I've heard talking to reps at major sportsbooks, they don't analyze user profit & loss statements when deciding who to limit. That makes sense. The guy who has a 1000% ROI because he just bet Chiefs Superbowl last year just ran hot - they still want his business. They look for people "picking them off" and have systems to determine who is. Betting all the promos / boosts that are good is perfectly fine.
Reach out with any questions. I've been around the block in sports betting, have been limited, have been banned.
submitted by stats_and_sports to sportsbook [link] [comments]

My 2021 Portfolio

Albeit a week late, I want to share my 2021 portfolio for documentation purposes and for whoever is interested. I aimed to balance risk in this portfolio with some growth names and legacy plays. Down to brass tacks, I am putting my money in the highest quality companies (in my view) across a diverse set of industries I find attractive. Some of these names are overvalued in the short term. However, I have realized I am not in the business of beating Wall Street’s pricing, but would rather hold high-quality companies that I believe will grow faster that the market in the long term. In other words, I am totally fine paying a short-term premium for growth and quality. Below is a summary of the portfolio and big picture reasoning behind each investment. I'm definitely open to any feedback.
Company Ticker Entry Price Exposure
ARK Genomic Revolution ETF ARKG $93.26 6.60%
CrowdStrike CRWD $211.82 11.78%
Disney DIS $181.18 10.53%
Enphase Energy ENPH $175.47 7.98%
Evolution Gaming Group EVVTY $101.02 12.77%
Facebook FB $273.16 11.05%
Redfin RDFN $68.63 10.41%
Teladoc TDOC $199.96 9.60%
Sea Ltd SE $199.05 14.09%
Waste Connections WCN $102.57 5.19%
ARK Genomic Revolution ETF (BATS: ARKG) - Invests in companies advancing genomics. The companies held in ARKG may develop, produce or enable: CRISPR, Targeted Therapeutics, Bioinformatics, Molecular Diagnostics, Stem Cells, Agricultural Biology.
CrowdStrike (NASDAQ: CRWD) - Cybersecurity technology company that provides endpoint security, threat intelligence, and cyber attack response services.
Disney (NYSE: DIS) - Worldwide entertainment company that you all are probably familiar with.
Enphase Energy (NASDAQ: ENPH) - Designs and manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.
Evolution Gaming Group (OTC: EVVTY) - Swedish company that develops, produces, markets and licenses integrated B2B live casino solutions for gaming operators.
Facebook (NASDAQ: FB) - Enables people to connect through devices. It’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus.
Redfin Corporation (NASDAQ: RDFN) - Provides residential real estate brokerage services.
Teladoc Health (NYSE: TDOC) - Provides virtual healthcare services on a B2B basis to its clients and provides services to consumers directly and through channel partners.
Sea Ltd (NYSE: SE) - Digital entertainment, electronic commerce, and digital financial services. The Company operates three business segments: Garena, Shopee, and SeaMonkey. The Company’s digital entertainment business, Garena, is a global game developer and publisher with a presence in Southeast Asia, Taiwan, and Latin America. Garena provides access to mobile and personal computer online games. Shopee provides users with a shopping environment that is supported by integrated payment, logistics, fulfillment, and other value-added services. SeaMonkey business is a digital financial services provider. SeaMonkey offers e-wallet services, payment processing, credit related digital financial offerings, and other financial products.
Waste Connections Inc. (NYSE: WCN) - Waste services company that provides non-hazardous waste collection, transfer, disposal and recycling services.

P.S. I have two other accounts - one with about 40 growth stocks and another with about 10 big names / ETFs. However, this portfolio has the largest allocation for 2021. My first time trying a more concentrated approach.
submitted by bull_doze to investing [link] [comments]

You are naïve to think EA doesn't try and influence game outcomes and consumer spending habitats

Seriously, bear with me for a sec.
EA are a giant software company with no competition, running an online casino targeted primarily at children. Why should we believe that they aren't doing everything they can with analytics to maximize there profits (on a game that already has an obscene profit margin year-in and year-out because it is commercially designed that way)?

They use your data nefariously (just like Facebook, Apple, etc.) to influence how you spend your time and money.
Seriously, think about it.:
  1. They log all of our playtime, menu habits, and market spending data.
  2. We know they already use this data (and they have years worth of it) for determining when they time SBCs and pack promos
They give fuck all about ethics, they just want your money. FUT is an online casino which doesn't have to follow the laws of "traditional" online casinos.
Would anyone really be surprised if we found out they have a program which automatically adjusts in-game sliders in order to influence a desired outcome that increases the chances of more playtime and money overall?
I'm of not saying that the game is totally scripted and that these elements can't be overcome, of course not, that's why we have people who can go undefeated in WL. But I think they do adjust game elements to influence game outcomes in order to try and manipulate player behavior.
submitted by Ham_Biscuit to FIFA [link] [comments]

+3000% in 2020... My Journey to the Golden 7 Figure Mark

+3000% in 2020... My Journey to the Golden 7 Figure Mark
Hey Folks,
My first ever Reddit post and I guess I chose to make an essay of it. This post is about how 2020 has been a stellar year for me in the stock market. For context, I'm 32 and have a been trading for about 7 years. I started in 2013 with stocks and then in 2016, I switched to options trading which had disastrous consequences at first, but is also the reason I eventually managed to hit the million dollar mark. Disclosure: I have a pretty stable career completely unrelated to the finance world so a lot of this is mostly self taught, which I am sure is also the case with most readers :)
I will preface this post by saying that I am aware that there have been a bunch of success stories in the market in 2020 and by no means do I intend for my excitement and elation in sharing my story to come of as chutzpah. 2020 has been a crazy year considering the adjustments we have had to make to our lives because of Covid. The "benefit" of this has been the ability to wfh and this lifestyle change has spawned a whole new population of day traders. As an inhabitant of an area that follows Pacific Time, the 2.5 or so hours before work officially begins has been an absolute blessing for me. This additional time coupled with super favorable market conditions, gumption/balls of steel and a good technical understanding or experience of the stock market are the factors that probably led to my success. I will also say you need A LOT OF LUCK in this process. Sometimes things just work out for you in life and you ABSOLUTELY need that to even come close to achieving something like this.
Point to note: This post is going to ignore the injection and removal of some of my own funds along the way. You can assume the highest "baseline" amount I ever had in the account was around 140k. I mention starting at 11k but please note in no way is this post saying I went from 11k to >1 million.
Here's this year's action and the next few images summarize/document my crazy journey to get to this point.
BOOM portfolio as of 10/1/2020. 3000%. You can do it too!
I started trading 7 years ago. Mostly stocks. It was all good but humans have a propensity for risky behavior and I am human after all. This tendency meant that I couldn't just let my money sit in an account and grow gradually. I will admit I have a gamblerisk taker mentality and you must realize how critical this characteristic is to achieving success like this. Anyway, started dabbling in options in 2016 and I probably went about it the wrong way. My first foray into the options space was via long calls (which I realized later is actually only recommended for Options "Veterans" and not for those starting out as novice traders). Got burned A LOT along the way . I start with 11k in 2015ish and built that to about 39k by May 2017 and then literally lost more than 50% by 2019. Yuck! I know. Trust me there were days I would hate myself for being so incompetent or just displaying terrible money management. For this post, let's assume you only start seeing the action from Jan 8 2016 (image below)

The starting value here is reflected as ~100k
It's not so obvious anymore because the scale has been affected massively by the spike this year. But for clarity, my lowest point was Sep 2019 (See image below). I was heavily leveraged and this was where I was basically ready to give up. Thank god I didn't. So what changed? Read on!

https://preview.redd.it/l5ugxjuhuiq51.png?width=566&format=png&auto=webp&s=032d472e0e912f43b35547214eacdae371870311
So in retrospect, I think we were in a very bearish environment between 2018 and 2019. People don't reference it as a bear market because lots of stocks did climb in that period (and it technically wasn't a bear market) but the tariffs on the Far East really messed with a lot of trading strategies and just market movement in general. My favorite stock in the early part of wealth building was AMD! I used that to build my portfolio and get out of the rut, post 2019. I basically took all my 80-90k (46k + 100% margin) and bought long AMD calls with strikes very close to the market price it was trading at in June-Sep 2018 and expirations 4-6 months out and just waited. POTUS did us all a great favor by ending the damn tariffs and that's when this party started.
By March 2020, right before Covid, I hit 292k or so and was loving life and every minute of what I had pulled off. I will admit somewhere along the way between Oct 2019 and March 2020, I had traded NVDA and a few other large cap growth stocks given I now had all this additional purchasing power. BUT Guess what? My dumbass didn't take any profit! Or if I did, I reinvested it into the market. Remember what Mathew Mcconaughey's character says in WoWS? " They're all f**ing addicted. As brokers, we take their money out from 1 stock and dump it in another and just keep making money. Who cares about the investor!" .... So anyway, Covid strikes and BAM! my portfolio fell back to around 105k. I was pissed (I am sure many of you suffered the same fate). Thankfully, we have had a V shaped recovery (or K depending on what your political affiliation is) and I basically used the next 6 months from March till today to supercharge my portfolio to what you saw in the first image.
So here's what I learned along the way:
Disclaimer: None of what I mention in this post should be taken as financial advice. I accept no responsibility for how you do/do not use this information in your own trading strategies
  1. The power of compounding is a beautiful thing. People understand this but don't full appreciate what this can do for you. If you start at 10k, you should aim to get to 20k first before trying to fly to 100k. When you get to a 100k, make sure you don't lose a single cent and have to start again from scratch. 100k with 100k margin = 200k. That can get you an ROI a helluva lot larger than if you were to start with 10k again. Grow your money in steps but know that in the casino, to win more, you have to bet more, which in this case would be your new principal amount after you have made profit.
  2. Don't waste time trading rubbish. I see lots of new investors chasing the dollar stocks hoping they reach $10. Yes I did it with AMD but when I started trading AMD it had already gone from $3 to $16 in a year so the story was starting to build up! Penny stocks/pink sheet stocks are trash. Please don't waste your time on that. Large cap growth is the best way to make money. It's all about %. One option of TSLA or NFLX or AMZN purchased at the right time will make you a lot more than 1000 shares of a trash penny stock.
  3. Technical Indicators are your friends. Learn how to use them, particularly in a bull market. I personally love Bollinger bands and RSI. These coupled with understanding the trend in a market will give you a significantly higher chance at making money than just speculating. Also, use these to either take profits off the table or to let your winners ride. 95% of all price action takes place within the +/-2 sigma bollinger bands(hence the definition). Don't believe me? Plot the chart yourself. Use the daily indicator for short term trading. Use the 3min or 5min chart for intra day trading.
  4. If you are interesting in options trading, please go read or watch YouTube videos to understand how to get started. There is SO MUCH LITERATURE available for free. DONT PAY ANYONE to learn how to trade unless you want to contribute to the downpayment for their next Aston Martin :). Also, the Greeks didn't just give us great Mediterranean food, they are also the most important parameters in options trading. Delta and Theta should be with you at all times but dont' ignore gamma and vega. Alos understand how IV impacts your trading. The most successful/profitable strategy for me was (once I learned to do it correctly of course), buy call/put options with expiration>=2 months from the day you purchase them at a strike very close to the money. Don't worry about straddles and iron condors till you have mastered what the basics mean. Also, once you understand options and start buying them, know that writing Calls and Puts is a great way to collect premium as you grow your account. If you own shares, there's no reason you shouldn't be collecting extra income from writing calls against them. If a stock flies up too high, sell puts at 10% below the current price. In a bull market, you'll be hard pressed to find a growth stock that doesn't recover after tanking 10% in a 2 month time period.
  5. Margin is your friend. Think of margin as the mistress/boy toy. He/She can give you unreal levels of pleasure but if he/she rats you out/bails on you, RIP. Use it wisely. Finally, trust nothing but your own instinct - No one but you is responsible for how you grow your account. Don't blindly follow people unless you understand what they are proposing. Most of us learn this the hard way (including me).
  6. Take profit off the table but also let your winners run! Set yourself targets when you are in the very early stages of building your wealth. Remember the point I made about compounding? If you start at x, and make 20% on that, you are now at 1.2x. If you make 20% on that, you are now at 1.44x. I know you want to make 8x eventually but is it better to be realistic and try and grow 1.44x to 8x or go back down to 0.5x and then have to make your initial capital back and more? If your winners are up 20%, TAKE YOUR PROFIT. If you want to let it run, fine go ahead. But if you are now suddenly 50%, wtf are you waiting for? Are you going to stare at the screen hoping you suddenly see $1,000,000? That's not going to happen. Now, that said - in the current market climate which is a SEARINGLY HOT bull market, it is not unreasonable to see stocks climb 5-10% in a day. So? Take advantage of that of course but never ever let FOMO be the reason you lose out on profit.
  7. Much like point 6, realize that you need to cut your losses when things don't work out. Go check out the CANSLIM method for some guidance on what targets to set yourself. E.g. in your early stages set tell yourself that no matter what, you will take profit at 20% upside and cut losses at -10% downside. On paper, with this math you can never lose. Of course, executing this requires curbing 10 different stages of human emotion which is why most never make consistent profit in the stock market.
  8. Be greedy when others are fearful. I am at a stage now where I LOVE RED DAYS. Why? Because I know that in 24-48 hours the large cap growth stocks are going to recover and I will basically make close to 100% gains on my initial investment. Don't chase when others are chasing. Most of retail doesn't know wtf they are doing. Keep cash handy for days like this. Never be 100% invested with your entire portfolio and never be invested in a single stock unless you are very very sure based on technicals that you will see a rebound. And don't be scared to hit the buy button on a red day. Trust me, once you see it work you will instantly feel vindicated.
  9. Finally, and most IMPORTANTLY. The risk taking mentality/gambler mentality is CRITICAL to making money. You won't hear this much and it might even be a controversial statement to make but your end goal should be to place a bet on a trade which you know, based on experience, will have a favorable/profitable outcome in the near future. To execute this you need to have the guts and the belief in what you are doing but also very low aversion to risk. I will add again that YOU NEED A LOT OF LUCK and a brazen assurance in your own abilities. These will come with time and you will likely make lots of mistakes along the way. But, if you are patient enough, you will reach that level where you stop second guessing your decisions and that's the day you are on your way to your dream portfolio.

Okay, I could probably write much more and I might edit this again in future but I will stop here for now. I hope you were able to take something from this. I respect your opinions so feel free to disagree with anything, everything I have said. I am just sharing my story and always happy to hear yours too!
Good luck folks. I hope you all make boatloads of money and have very happy, enjoyable lives regardless of whether you are motivated by money or not!
-Phantas

EDIT:
Thanks for the comments everyone. I appreciate both the love and the hate. Many of you make excellent points and valid arguments both for and against what I have done.
I saw a few posts about how this might be fake. I understand that this is my first post and so it does create some doubt. Video proof below for those who had concerns on the legitimacy of the screenshots. I apologize in advance for the disparity in the numbers. Due to this morning's gains, the portfolio value in the video is significantly higher than when I made this post.

https://reddit.com/link/j3fx2video/dteq0s1njpq51/player


submitted by Different_Kick_3561 to wallstreetbets [link] [comments]

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

TL:DR
Hello, welcome to my first deep dive write up.
My name’s Mark and I’m an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today.
I’m a long-term investor. I am focused on finding great companies and holding them for a long time. I’m willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book “100 Baggers” by Chris Mayer.
Introduction
I think it’s fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I’ve always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US.
I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there’s obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings’ (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes.
The Thesis Statement
For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I’m buying and holding that stock for the long term. I’ll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you’re holding this position.
The thesis statement I have come up with for DK is as follows:
“DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend.”
Notice how I said “allowing fans to engage financially” as the first sentence and not necessarily “allowing fans to gamble”. There’s a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States.
I’ll try to clarify the difference between DFS contests and sports betting real quick:
DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards “The Pot”. “Draft” 9 players to be on your “Team” for 1 week. Enter your “Roster” into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever “Roster” amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well.
Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat.
These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling.
DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states.
How DK makes money
At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers’ excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn’t to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at.
For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK’s latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software.
Online Gaming (82% of Total Revenue for 9 months ended 9/30/20):
Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as “iGaming” or “online casino”.
For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons.
Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines.
Gaming Software (18% of Total Revenue for 9 months ended 9/30/20):
While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined “the old DK company” with SBTech so that they now are “the new DK company” listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today’s revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech’s online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that’s enough about the software migration for now, back to the Gaming Software revenue.
The Gaming Software revenue stream for DK is essentially a continuation of SBTechs’ B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:
  1. Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
  2. Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.
As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it’s international reach.
A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK’s B2B technology (powered by SBTech) helped enable the launch of “PalaceBet”, a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK’s new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK’s Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it’s business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue.
This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – “Can we 10x from here?”
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
submitted by Historical-Comment36 to SecurityAnalysis [link] [comments]

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

TL:DR
Hello, welcome to my first deep dive write up.
My name’s Mark and I’m an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today.
I’m a long-term investor. I am focused on finding great companies and holding them for a long time. I’m willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book “100 Baggers” by Chris Mayer.
Introduction
I think it’s fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I’ve always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US.
I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there’s obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings’ (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes.
The Thesis Statement
For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I’m buying and holding that stock for the long term. I’ll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you’re holding this position.
The thesis statement I have come up with for DK is as follows:
“DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend.”
Notice how I said “allowing fans to engage financially” as the first sentence and not necessarily “allowing fans to gamble”. There’s a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States.
I’ll try to clarify the difference between DFS contests and sports betting real quick:
DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards “The Pot”. “Draft” 9 players to be on your “Team” for 1 week. Enter your “Roster” into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever “Roster” amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well.
Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat.
These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling.
DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states.
How DK makes money
At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers’ excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn’t to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at.
For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK’s latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software.
Online Gaming (82% of Total Revenue for 9 months ended 9/30/20):
Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as “iGaming” or “online casino”.
For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons.
Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines.
Gaming Software (18% of Total Revenue for 9 months ended 9/30/20):
While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined “the old DK company” with SBTech so that they now are “the new DK company” listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today’s revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech’s online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that’s enough about the software migration for now, back to the Gaming Software revenue.
The Gaming Software revenue stream for DK is essentially a continuation of SBTechs’ B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:

  1. Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
  2. Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.
As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it’s international reach.
A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK’s B2B technology (powered by SBTech) helped enable the launch of “PalaceBet”, a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK’s new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK’s Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it’s business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue.
This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – “Can we 10x from here?”
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
submitted by Historical-Comment36 to investing [link] [comments]

DKNG place your bets please

TLDR: buy DKNG, 30% short term upside, 300% mid-long term upside, small market cap, meme stock potential (small cap, insane upside potential, wouldn't be surprised if FOMO kicks in), it's a fucking betting company - and you know how you gamblers are
why tf none of you gamblers are talking about this? anyway, DKNG is disgustingly undervalued (currently ~48$), and I can easily see 300% gains in next 2 years, and have 70$ target in mind in next 1-3 months
short term bullish
  1. united states are starting to legalize online sports betting, and are doing it fast one by one (last they did so in MI, they are launching in early 2021)
  2. 2020 was void of sports due to beer plague, and all big competitions (euro soccer, olympics etc) are moved to 2021, and 2022 is following immediately with world cup
  3. company still had great profits (i'm sure some - probably one or two of you - can read financial statements better than me, but what i have seen is pretty good)
long term bullish
  1. legalization in the US
  2. US is really young market compared to europe and asia, it's actually funny - there is so much space to grow it's insane
  3. management - guy that started this, could've cashed out a long time ago - but here he is, company has no debt, and is valued 20 bil during global pandemic when most of the sport was canceled, postponed etc, computer science and marketing major - golden ticket in this industry (lots of dinosaurs that still think retail betting - betshops, ssbt-s are a way to go
  4. clean balance sheet - 2.5 bil assets, 0.5 bil liabilities and no debt
been working in the online sports betting and online casino industry for the past 3 years, so i've got some insights on the topic
industry insight:
- average hold (how much the house keeps of each bet) is 7% for prematch (matches that you bet on before they begin)- average hold for live bets is around 11% (margins are insane here)- average return to player on casino games is around 95% (so 5% hold on each spin on online casino)- player retention is off the charts, average session duration of around 20 minutes- players that register and make deposit are not going anywhere, where they usually start betting, continue betting there for a long time (there are a few reasons for this, not sure how interested you are in this though)- acquisition cost per customer drops steadily more players you have- US has really just began embracing online sports betting market (huge upside potential)- increase in operations cost for each new player is negligible
wouldn't be surprised if this went to moon in the near future

edit: positions: shares, all 12 of em
submitted by Inevitable_Band_5290 to wallstreetbets [link] [comments]

Do you really like your beer, or are you just a victim of Capitalist Propaganda? How you can learn how the free market works while you guzzle some suds, and how beer can help you to understand the vast conspiracy that is slowly degrading America.

TL;DR - I use the craft beer industry as a way to understand Capitalist Propaganda, how Capitalism and Socialism are inextricably linked to each other, and how through the use of propaganda, companies use the "illusion of choice" to coerce you into believing that you prefer the products that are most favorable to them. In order to change this into the consumer's favor, you need to be an informed consumer in the free market, and raise class consciousness to overthrow the tyranny of Capitalist Propaganda, that is called "Marketing".
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You can't understand Capitalist Propaganda unless you have a solid understanding of what Capitalism is beyond the literal definition of the word, which is just an abstract ideal. Propaganda plays off of the discrepancies between the ideals of Capitalism, like the free market, which is another abstract ideal, and the reality of Capitalism in practice in America, which can be characterized as Trickle Down Economics. Capitalism sought to be a pragmatic alternative to its economic predecessors, a fact which drives Capitalist Propaganda. However, through layers of abstraction throughout the years, it has become more of a religion, as critics refer to the increasingly ideological concept as "Supply Side Jesus", meaning you give all the money to the rich, it'll trickle down to the poor, and they can "vote" on the actions of the capitalists through monetary interactions in the free market.
Capitalist Propaganda is engrained in America, because at the time of our founding, Adam Smith wrote "Wealth of Nations", which is considered the Bible of the Free Market. This groundbreaking work utilized Newton's Laws of Physics, which were en vogue at the time, to describe how interactions in the marketplace would balance each other out, just as the laws of Newtonian Physics do.
The very noble purpose of Wealth of Nations was not create the oligarchy we have today, but to do the opposite. He wanted to describe a system that would protect individual freedoms and be truly democratic. Just as Lenin and Stalin bastardized the works of Marx, so too have capitalists in America bastardized the intentions of Adam Smith.
Capitalism and Socialism are best learned side by side, in my opinion, to avoid falling into the trappings of either ideology that our brains like to do. Which one is better? It depends on the market, but the answer is almost always somewhere in between.
Through learning how Socialist concepts can be applied to problems in Capitalism, you can cut through the propaganda and will see for yourself that these problems can be solved if we just drop the labels and do what's best for society and the individual. The problem is always finding the proper balance.
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WHAT? CAPITALISM AND SOCIALISM ARE JOINED AT THE HIP?
Yep. You can never live in a pure economic system. Purity is always an illusion. If you want something to be pure, you have to put a lot of energy into making it that way. Nature likes to mix stuff up. This is why ideologies around racial purity and fascism always fail. There are people who want a "pure" economic system, but they are usually the people at the top and would only get richer from more purity while the rest of society loses freedom and slowly starves.
In a nutshell, Capitalism promotes laws that benefit those with money, while Socialism promotes a safety net that benefits everyone. Every single human is born into Socialism. As a baby, you need food, someone else works for it and gives it to you, but then at some point, you are expected to exchange labor for capital, and buy your own food. See? The two are forever bound as the yin and yang. You can also grow your own food, but for that you need land, which is capital.
These interactions are very tricky. I only want to tell you enough so that you can start to see Capitalist Propaganda, because right now, you're like a fish in water that can't see water. I often use this line to describe a person who can't see their own homegrown propaganda. The best way I found to study Capitalism is by relating it Socialism, the "air" above the "water" of Capitalism, if that makes sense.
I always find it best to look at a microcosm to understand these concepts. And today, that microcosm is beer.
Mmmm....Beeeeeeeeeerrrrrrr.....
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CONFLICT OF INTEREST AND THE ILLUSION OF CHOICE
Before I poison your mind with my own propaganda, picture you're on vacation and you walk into a bar and want to order a beer. If you really want to understand the power of propaganda in your own life, really think of this before we break this all down. Really think, what makes you decide which beer to order? Do you like to look at the labels on the tap or bottle? That's obvious propaganda. It has absolutely nothing to do with the taste or quality of the beer itself, but sways your opinion toward logos you've seen before, which is why you see so many beer advertisements, which means that money that could've gone into quality is instead going into propaganda, and you're already biased towards an inferior product. Interesting. You really can't help being swayed by marketing, but at least you can be conscious of that fact, and that's important in order to be an informed consumer.
Do you ask the bartender for a recommendation? Why would you do that? You don't know the bartender any better than the beers in front of you. How do you know they aren't paid more to offer you a beer that sucks and is 12 years old and the owner wants to get rid of it? Do you ask for a certain style of beer? Do you ask for a local beer? And once you finally narrow it down to a few choices, do you ask for samples so you can make up your own mind? You should always do this. Then we get into "flavor propaganda", which we'll discuss later. Jeez. Did you every realize there was so much complexity behind being an informed consumer and just ordering a simple beer? Maybe you'll give in and just tell the bartender to pour whatever. Choice is difficult sometimes.
If you really visualize this and take a minute to let this sink in, you'll start to understand how external forces hijack the processor in your mind to manufacture desire through the illusion of choice. However, your health and enjoyment of the beer is not the goal for these external forces, they only want you to purchase. The perfect example is fast food. They know their product sucks, but they know you'll keep buying it, but that doesn't keep them from lying about how delicious it is in their ads. There is far more at play behind the curtain. There is a science behind addicting you to things, this is reinforced by a corporate tax and subsidy system that contorts the free market pushing centralization of production through homogenization and use of chemicals to hide the homogenization, and simply because there is more than one option, they make you feel like you have choice. This, in a nutshell, is how the illusion of choice works in the free market. It's not about what YOU want. The producer manipulates you to think you want what they have. Through this, they deceive Americans into buying products with a list of ingredients that a person would never freely choose to consume. So if you want to order a beer with no shit in it, then you're shit out of luck in America. You could in Germany, but we'll discuss that later.
While you're standing at that bar, you aren't conscious of the fact that your interests are in direct opposition to those of the bar owner's. Capitalists hide this fact with their perfect smiles, but Marx described this in detail. You want the best beer for the cheapest price, and the bar owner wants to sell you the cheapest beer at the highest price you'll pay. It doesn't stop there. The bar owner flips roles in the same situation with the beer distributor, who does the same with maybe another level of distribution, and continues to the brewer, then goes to the brewer versus supplier, supplier to farmer, and even though you'd think it stops there, the farmer has to deal with suppliers of equipment and seeds, and on and on.
Add to this list their auxiliary staff of HR, drivers, managers, brewers, bottle/keg makers, and of course owners, none of them care whether you actually like the beer you're drinking as long as you keep buying more. That's the big driver here.
Did you ever realize that every time you buy a beer, your own capital is partially responsible for creating and sustaining all of these jobs involved? You, my dear beer drinker, are the true job creator. Budweiser can brew all they want, it means nothing without buyers, who are the true engines of capitalism. Instead, you're treated as a rube by suits in a boardroom somewhere.
Capitalist Propaganda tells us the billionaires are job creators, but this is a lie. Jeff Bezos can't drink enough beer to sustain all these jobs. So why do we let him hoard all the money? Wouldn't the economy do better if we spread out Jeff's money so more people could buy more beers and more jobs would be created? According to Socialist Economics, yes. That's actually, quite simply, a Socialist Free Market. Did you even know that existed? The power hungry greedy people who are too lazy for manual labor go to such great lengths to make sure you don't learn it. They want you to think that only Capitalism allows you choice in the market. I'm sure you can guess why they say that.
Capitalism maintains itself by exulting the wealthy who use their economic power to punch down. The only way this system won't fall into fascism and fail is if the consumers start to punch back. Where Marx envisioned the Dictatorship of the Proletariat as they usurped power from the Bourgeoisie, a modern alternative is just teaching people to understand the system we live in, so that we can just start making changes in the way we live and to whom we give our money.
See that? Capitalism and Socialism can get along nicely, so long as the consumers are informed.
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CLASS CONSCIOUSNESS AND THE ALIENATION OF LABOR CAUSING LONELINESS IN SOCIETY
What I described within the previous section is what Marx called "Alienation of Labor". Each step in the process of making your beer is isolated from the others, so no one feels ownership over the end product or a true connection to the consumer, or job creator. Even the bartender selling it is alienated from the profit of their labor in serving the beer, so they only focus on the service aspect of giving you the beer, because that is where they earn their tip. They can't really fix anything about a shitty beer other than to offer you a different brand. The capitalist owner is usually not there. Their only interaction is setting the rules for everyone in the bar to follow, and pay themselves more than everyone who has to follow those rules. This is part of the conflict between the classes. I'm not saying it's right or wrong, I'm just pointing it out. The bar owner themself has to spend money on propaganda to attract customers that could be spent in other places, so has to find ways to cut costs. Unfortunately, they buy cheaper beer...and this is why you end up with IPAs. No one is connected to the products, so they only look at prices and find the cheapest, passable product. This is the race to the bottom of Capitalism.
Compare this to when brewpubs were a new thing. The brewer would come out and talk to you about the beer, you would give feedback that could effect future batches and it connected everyone to each other through commerce. It makes business "social" and I think nearly everyone enjoys that, but it is losing out in competition with chain breweries that enforce isolation and make cookie cutter propaganda and cookie cutter business models so they can turn owners into managers and suck all the profit back their corporate headquarters and offshore accounts. They kill the experience and make everything transactional. And all the kitsch they hang around their cookie cutter chain bar is just to hide the fact that no one in that place cares about anything other than not getting fired. Everyone is effectually alienated from everyone else. It's worth a read to check out this page on Marx's Theory of Alienation.
This alienation is the root of a lot of misery in society. Humans are communal animals forced to live in a society of individuality and alienation. As they mope around, they seek an escape. And that is why advertising is so nefarious. It seeks to manipulate you in that state. Imagine driving home from your alienating job to you empty home, but looking up and see a billboard with bunch of actors laughing and drinking beer. They take pictures that make these actors look like friends. It's just for show. They aren't selling beer to those laughing people in the picture. They're tempting lonely people to drown their sorrows. Capitalist Propaganda is used so your brain doesn't understand what it wants. It wants friends, then sees the words Bud Light. So when the bartenders asks...Make it a Bud Light. Look at how much money they spend to manipulate and capitalize on people's suffering.
Propaganda in Communist countries is controlled by the government, so it's clear who the enemy of your freedom is. Capitalist Propaganda hides behind the layers of complexity of the same economy you rely on to survive, so you never know what's propaganda or where it's coming from. Marketers find every way imaginable to get their disinformation in front of your eyes, even enlisting your friends on Facebook in annoying MLM schemes. Propaganda invaded everything that can be legally monetized. It's in the media, and not just commercials anymore. There's product placement, stories injected into the news, and even movies and social media created an entire industry of "lifestyle propaganda", telling you how to live your life and indulge in overconsumption. It's REALLY hard to get away from Capitalist Propaganda. There is so much money and research behind it and so much depth, even this long post is only barely scratching the surface. I just want to open your eyes to it.
I can't make you see all this. No one can. I can only describe it as best as I can. What you will experience when you understand this is what I call "Economic Enlightenment", similar to what Marx called "Class Consciousness". Once it happened to me, the world looked amazing, and the shitty propagandists selling us false hope all look like clowns in a very odd circus of vanity, despair and mediocrity.
Once I understood this, I saw clearly how we are increasingly trapped in a form of Corporate Slavery, led by seriously ridiculous oligarchs like Mark Zuckerberg, who thinks he's the reincarnation of Augustus Caesar or something. That's why he has that haircut! This is a guy who stole a company and hired "screen psychologists" from Las Vegas to get you hooked on Facebook the same as casinos do with slot machines. He wants to be the funnel for propaganda throughout the world. He wants to be the kingmaker, decide what people buy, who they like, what views they hold. He can only do this because so many companies spend so much money to put their propaganda on that platform. They can only have this much money because the free market is not actually free. It's bought and paid for on platforms like Facebook and Amazon. The money that was supposed to "trickle down" is instead being spent on Capitalist Propaganda on these platforms, to get the proletariate to trickle their money up through endless, nonsensical online purchasing and local businesses who send the town's money to people who can't do anything with it but buy up properties that increase your rent and cost of living.
When people get drunk on the power of propaganda, they forget the lessons of the past. Propagandists always fall prey to their own delusions over time. In reality, your life is better without Facebook. There isn't anything on there that is healthy. Even if you just want to talk to a few friends, you are going to fall for the propaganda there. You can't help it. And if your bar advertises on Facebook, just think, that money could've gone into purchasing higher quality beer then sold at the same price, instead of going to Mark Zuckerberg so he can drop $30 million to buy the houses around him so no one can spy on him while he spies on you. You really gotta watch out for a guy who combines spying and propaganda all into a single app and thinks he's going to bring 200 years of peace to America. History is littered with knuckleheads like that. It's best to get off Facebook and encourage everyone else to do the same. Zuck only wants to lead himself to the Promised Land, and he's using your ignorance to fuel his own delusions by deluding you into thinking you want what he has to offer.
Let's get back to beer.
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IPAs AND THE FREE MARKET VS THE RACE TO THE BOTTOM
I like beer. When I worked in Germany, it was easy to walk into a bar and, like Farva, just order a liter o' beer. Often, there would only be two choices, light color or dark. As a matter of fact, even at the most famous beer festival in the world, Oktoberfest, people mostly drink the same standard type of beer, and no one complains about the lack of choice. It's quite easy. You can order with one finger. No need to see a menu or ask what's in it. It's simply beer. This worked for centuries. Consumers are fine with it. Prost! Have you ever shared a story like this and people say, "Oh, that would never work in America. Americans want choice." Yeah. Because we are flooded with Capitalist Propaganda.
So if consumer choice isn't pushing for a selection, why would a free market call for it? Imagine there are two bars and one of those bars says "30 beers on tap" and the other doesn't. You're more likely to choose it, and the other bar will have to compete in some way, often by copying. This forms trends, and people mistake this for something customers wanted. Trends are always marketing. Don't believe me? What happened to fidget spinners? So now you have a bunch of beers that no one asked for, yet will now demand. Competition creates more Capitalist Propaganda to create demand for something you never even wanted, but makes you think you do. And that's the best propaganda. You think you are thinking for yourself. This is the fallacy of consumer choice.
If you want to understand just how important that last paragraph is, consider this, "consumer choice" is the same propaganda they used to get you to carry around a device that spies on you 24/7 and sends that data to people you don't know, and you can't stop it, can you? You chose that. You wanted it. Not only that, but you paid $1,000 for the device to opt into their spying program, for the privilege of being mind controlled by the propaganda their AI selects for you. Did you read the Terms of Service? As bad as you may have thought Communist Propaganda was, Capitalist Propaganda is far better, and far stealthier. You believe you have freedom of choice. But your only choice is usually take it, or leave it. Oh, you need it for work? Maybe find a different job. Or just succumb to mass surveillance, and next year, you can drop another grand on a device with a marginally better camera.
There is a way to free yourself. You just have to understand the nature of propaganda. It took me a while, but I eventually broke free. Under Socialism, there would be laws against the exploitation of consumers. Capitalist Propaganda tells you that this takes away your freedom. This is a lie. Regulations give you the freedom to not have to worry whether the beer you're drinking has poison in it.
Germany has a lot of regulations on beer. It has the Reinheitsgebot (purity order), a law passed in 1516 that states that beer can only consist of water, hops and barley. Note, this is a different use of the word "purity" from earlier, as beer is itself a mixture of things. Historically there have also been regulations where beer could only be sold regionally, so no matter what part of Germany you were in, you only got a certain brand of beer at the bar, but it didn't matter because they all had the same ingredients. They could make wheat beers or unfiltered, but they were generally variations of pilsners and lagers. One meaning of the word "Lager" in German is "storage", meaning the beer was brewed in a way that it could be stored, allowing them to brew in bigger batches and store it.
Lagers use a more complex brewing process, so only larger breweries would make them, but this worked because of protected territories. America has a similar system, because each state has its own regulations on alcohol, but this is changing as corporate lawyers fight to homogenize the rules favorable to them, but the consumer loses control. Big brands tend to be lagers as they have general appeal to a wide audience. Did you notice this is the second time I pointed out that corporations create homogeneity? Without regulations, corporations create Fascism. That is why I tell people that we already live in the NWO but corporations rule the world instead of governments. Why do you think so few conspiracy theorists make this connection? Propagandists are paid a lot of money to keep even our small community confused about the reality of what's happening. Now, check out conspiracy and you'll see what I mean. They are spreading propaganda for the NWO over there and don't even know it. I tried to point that out and they finally banned me. Oh well. They'll figure it out in their own time.
In America, in 1978 it became legal to brew beer at home. This is what led to the explosion of new beers in the US decades later. Americans don't have purity laws, so could test new recipes. But people didn't generally like IPAs before, so how did they become so popular that they control 30% of the market? Marketing, of course. Create the market and tell people what they want.
IPA stands for India Pale Ale. It was invented by the British as an easy way to make a beer that they could drink in India. People only drank it out of necessity, as the other beers couldn't make the trip. IPAs are very easy to make and very forgiving, because if you mess it up, it already tasted bad anyway. As people started trying to get into microbrews, they often didn't have the capital to make lagers at small scale, and also wanted a simpler process so they didn't have to hire or train expert brewers, IPAs are cheap and easy to make at smaller scale.
In order to make it drinkable, brewers experimented with many different flavorings. This created a cult following of craft IPAs, where people would drive hours to stand in line for hours to try the newest concoction. The trendy nature of the craft beer world kept people training their palate to adapt to the taste of an IPA, making people start to actually like them. The flavorings made people think they were different, so even if they didn't like it, marketing tactics kept people coming back to try the latest blend. Your palate can adapt A LOT. Swedish people love Surströmming, but watch this video of Americans trying it for the first time. They tried to get me to eat it several times, but I would rather sit in a sauna until Tuesday to avoid smelling it while watching them eat it. It really smells that bad.
IPAs enticed people with popular, aromatic ingredients like bananas and pineapple. This is what I call "flavor propaganda". It's not bad in and of itself, but it can be easily misused to cover issues with quality or hide the taste of preservatives. Since we don'e have laws like Germany, you're left to rely on the knowledge and honesty of the bartender to find out. They don't make this info readily available, which is another form of Disinformation.
So if you think you actually like IPAs, just remember, you are just like a Swede eating rotten fish. A lot of propaganda went in to making IPAs popular, but it's the cheapest, easiest product to make that can be sold at the highest price, so they become popular. This is what business students call a business plan. To overcome the bad taste, IPAs were marketed as "classy" to shame you if you choose the more expensive to produce and more appealing pilsners and lagers, which were given a bad name due to being associated with major brands like Bud Light. This makes it harder to market microbrew lagers, which can only fetch a certain price due to association. And this is what is referred to as the "race to the bottom" in Capitalism.
Instead of trying to innovate ways to produce the beers you want, they just figure out how to get you to pay more for an inferior product, just like they do with BBQ. They make you think you want it. From this you can understand why "food" is full of junk that you wouldn't feed your dog. Whatever legal poison helps cheapen the product is considered "smart business", another propaganda term designed to hide the reality of doing immoral and harmful things to other humans for profit. If you make money on it, it's good. As if there aren't better choices we could come up with if there truly were a free market with an informed consumer.
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STRENGTHEN THE FREE MARKET BY BEING AN INFORMED CONSUMER
We don't need a Communist Revolution to make positive changes, so take off your ski masks and put your Antifa flags down. I like microbrew culture and still enjoy IPAs, but understanding the marketplace is how I do my part as an informed consumer and job creator to help create the world that I want to live in. I encourage you to do the same. Vote with your dollars. Don't let the Zuck-type sociopathic, corporate people in a distant land decide what you consume by looking at ads on his platform. Visit local breweries and talk to the brewmaster. Don't reinforce alienation from labor. Connect with the people who make the things you buy. Support independent entrepreneurship. These are the paths to a brighter future where we share in the abundance of wealth.
Discover Economic Enlightenment for yourself and realize that We The People are ultimately in control. Wealth inequality is greater than it was in France before the French Revolution. Don't let this train take us into the depths where another Lenin will arise and spend the night shooting people.
How you choose to spend your money today is what decides what will become the society of tomorrow. And remember, you always have the choice to buy nothing at all. I never saw a billboard that said that.
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LET THEM DRINK BEER!
I hope this gave you a glimpse behind the curtain of Capitalist Propaganda. Propaganda isn't just political, it has invaded everything and it's at full blast right now. I hope you can piece together how Capitalist Propaganda is actually designed to make you subservient by controlling what you want so they can maximize their own profit and teach you to accept whatever they offer, the homogenization of choice. However, your life is your own and you should remain in control of all aspects of it, including your desires.
Richard Wolff is an economist who studied at three elite universities in America and discusses how he was not able to even learn about Socialist Economics in the ivory tower, even though Capitalist Propaganda calls universities leftist. He found no department in America that is even willing to teach it or study it. Capitalist Propaganda censors these ideas, especially at the university. People in power don't want the serfs to learn about themselves. Check him out on YouTube. You'll realize that unchecked Capitalism leads to Fascism and Slavery, which is why they want to get rid of the minimum wage, so that we can return to sharecropping which is already increasingly happening in America under different names, like "student debt", "mortgages" and "insurance". Don't you think it's odd that a person has to go into debt so they can generate profits for corporations who really ought to be paying for this education themselves? If you have to go into debt before they'll hire you, it's much easier to negotiate against you.
If you want to see other examples of propaganda, check out this random tweet from one of America's Top Capitalist Propagandists. These are very odd pictures, and the only thing I can see in them is that they must be promoting those outfits, likely the blue dress, maybe those men's outfits as well. One thing you know is that she didn't become a billionaire by letting any single opportunity to enrich herself at the expense of others pass her by. I didn't look it up, but I am certain they sell that blue dress, or whoever does paid her to post this.
That's the main reason celebrities use social media. It's marketing. Their whole schtick is to sell garments made in a sweatshop in a foreign country by people who can't even afford a beer to Americans who are facing bankruptcy and homelessness themselves.
Read the replies of the tweet. These people have influence that vastly outsizes their understanding of their impact on the world. There are guillotines in the comments. There usually are. I'm seeing them a lot lately.
This type of propaganda is everywhere. And it's destroying America. Just like propaganda led to the demise of Nazi Germany, we could be looking at the same thing, but worse. It could start off as famine.
If you're having trouble deciding between the beers you are being offered, it's probably because you don't want anything at all, in which case the proper choice is: nothing. Or, try tap water. Maybe you're just thirsty. Now ask yourself, when you envisioned yourself at a bar, did you ever think to order water instead? Did you entertain the idea that you didn't even want a beer. That's the power of suggestion.
What if the rest of the world just cut America off from the means of production outsourced to areas with cheap labor? We would have our own famine and likely war. And if we have a revolution here, with the masses in the country being so disinformed about everything and not having any sort of class consciousness at the moment and instead stuck in alienation, the leader that rises here will likely lead to something horrifying. And we censor ourselves from pointing out the simple fact, that the only way America will survive is to tax the deluded royalty like Kim and Mark back to reality, so they can't indulge their reckless, childish delusions by selling off the very fabric of our nation to the highest bidder.
That doesn't make me a Socialist, that just makes me honest.
Enjoy your beer!
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Thanks for reading and I hope I helped you understand how you can empower yourself. I'm excited about the one I wrote for Election Day tomorrow to keep our NOPOL spirits up while all the politics clouds the airwaves. Cheers!
submitted by SchwarzerKaffee to conspiracyNOPOL [link] [comments]

NamSys Inc. (TSX.V: CTZ)

Summary of Findings
I am recommending that you take a close look at NamSys Inc. NamSys Inc is a simple predictable free cash flow generative business with a durable competitive advantage and a long runway ahead of it. It has a strong market position in the cash management industry and a growing SaaS business model. As of January 5th, 2020, NamSys Inc, which trades under the ticker symbol “CTZ”, closed at a share price of $0.90 or a market cap of $24.5m. It has about $5.5m in net cash on the balance sheet and the stock currently trades at a 9.3x pre-tax cash flow multiple, which translates to a 10.8% pre-tax free cash flow yield. At this price, I think it is worth a close look.
Business Overview
NamSys Inc is a small company based in Toronto, Ontario that specializes in providing SaaS software solutions to the cash management industry for financial institutions, retailers, casino operators, transit services, and to many different government entities. It sells 4 cloud based software solutions: Smart Safe Monitoring, Cash-In-Transit (CIT) logistics, Currency Controller (cash vault management), and Deposit Tracking (Banking). NamSys’s cloud based solutions are labelled under the brand name, “Cirreon ''.
Cirreon Smart Safe - The Cirreon Smart Safe product segment represents over 70% of NamSys’s total revenues and it has been growing at approximately 20% compounded annually over the past 10 years. The software solution is being sold in 24 countries but most of it is in North America. There are 16,000 NamSys smart safes out of a total of 80,000 smart safes in North America, which translates to 20% market share in the smart safe segment.
Cirreon CIT Logistic Software - The CIT logistic software assists cash-in-transit operators, who are responsible for safely transporting a business’s physical cash to the bank, to manage day-to-day operations. The Cirreon CIT software solution is an app that allows CIT providers to manage their fleet, track pickups and deliveries, strategically map routes, provide GPS navigation services, and also allows the CIT driver to communicate with the other drivers or customers. The CIT logistic software represents 4-5% of total revenues. CIT sales have been growing by 300% over the past two or three years, according to management, so it is a stream of revenue that will grow at huge rates over time. NamSys Inc has a long-term partnership with CIT providers across North America. The biggest CIT customer is Brinks, similar to the smart safe product. Brinks control 25% of the CIT service market in the cash management industry, which obviously exposes NamSys to 1/4 of the total market.
Currency Controller - The Currency Controller is a cash vault system used to process cash, count cash, and fill cash orders. The Currency Controller can be found within ATM and bank machines and assists banks and CIT services with accounting, billing, management and fulfillment that they need to perform for customers. The Currency Controller segment represents about 20-30% of sales and it has grown at 50% compounded over the past 3 years. It is available with a license and a subscription-based pricing model although the subscription model is becoming more popular.
Cirreon Banking - The Cirreon Banking app is a new product segment that has been introduced a few years ago and represents about 8% of total revenues. The Cirreon Banking app helps customers create and track deposits, place change orders, and request support, all from the customer’s phone. The Cirreon Banking app is sold as a subscription just like the rest of the Cirreon software solutions.
Durable Competitive Advantage
High Switching Costs - Once a retailer is hooked up onto the Cirreon platform, the idea of switching to another software platform is very unlikely and rather costly. Since Cirreon holds all of the retailer’s financial data related to invoices, cash inflows and outflows, and other important information, transferring this data on to a whole different platform will not only take up a lot of time and money, but sometimes might not be technologically possible. The Cirreon platform uses Java based programming, which makes it almost impossible to transfer data. In addition the learning curve for business owners and retailers when joining a new platform is very steep, which makes it uneconomical for NamSys customers to switch and spend hours, if not days, getting used to a whole new set up. The high switching cost nature of the software solution is evident with the high customer retention rates of the Cirreon platform, which management has reported to be very high. In the CIT logistics segment, NamSys provides navigation services and GPS software which interacts with the Cirreon platform to help retailers track where their cash is heading while also allowing CIT providers to communicate with local financial institutions. NamSys also has the benefit of high switching costs because CIT providers almost always stick with their logistic software providers and rarely switch. This is mainly because NamSys’s logistic software is already embedded in the CIT network system and the cost of reprogramming all the computers inside the CIT trucks and stopping business is so high, that it remains uneconomical for a NamSys customer in the CIT logistics space to switch over to another software provider.
Product Differentiation - Cirreon integrates many different parts of the cash management cycle onto one platform. There are very few services like this in the cash management industry that offer an all-in-one, easy to use service. In fact, the closest product offering could be from Safeology, which is a new tech startup, prominent in Europe. However, even Safeology fails to offer the quantity and quality of services NamSys provides to customers, as they do not have an established smart safe software service or an online banking app. In the most recent annual shareholder meeting, management has asserted their ability to increase prices to improve profitability. However, from a strategic perspective, they prefer to continue to add value to customers by keeping prices stable and remaining much more competitive in the marketplace. If you can add enormous value by providing a better quality service at great prices, then it is almost inevitable that the business will succeed over the long term. Holding this philosophy over the past 5 years contributed to the stellar growth in the business and I expect this to continue.
Brinks Long Term Partnership - NamSys and Brinks have strong business relationships with each other that should last over the long term. They both have a 3 year contract with an option to renew the contract at the end of each term. Since NamSys has already penetrated Brink’s ecosystem, it is expected that their customer relationship continues over the long term. With Brinks focusing on the hardware side and NamSys providing the software, both Brinks and NamSys have worked together to launch extremely successful cash management products and have been rapidly expanding to over 24 countries. NamSys is able to piggyback on Brink’s acquisition driven approach for expansion and its 23% share of the global cash management market, which provides countless opportunities for NamSys to grow and gain more market share in the software industry. For example when Brinks acquired Dunbar or G4S (both are cash management companies), they converted Dunbar and G4S’s old cash management software and integrated NamSys’s software in all the smart safes, CIT logistic networks, and currency controllers. As a result, NamSys inherits a strong market position and bigger network when Brinks acquires its competitors. Most of NamSys’s competitors lack valuable customer relationships with big players like Brinks and it is part of the reason why NamSys has been able to keep high returns on invested capital and operating margins for a decade.
Revenue Breakdown and Capital Efficiency
The SaaS revenue stream consists of hosted service fees and technical/maintenance support. It is clear that from 2015 to 2019, the recurring revenue stream has grown to 83% of total sales revenue. The licenses segment as a % of revenue has been decreasing as it represents an old fashioned method of selling software (customer provides a payment at the time the software is provided). This is more or less caused by customers abandoning licenses and getting onto the SaaS platform, which is a much cheaper option. The professional services segments represent the small customized projects NamSys does for specific customers but we will exclude this out of our analysis as it is negligible and very volatile.
The business requires very little incremental capital to maintain and grow its line of business. ROIC has gone from 135.6% in 2015 to 463.8% in 2019, which illustrates the capital light nature of NamSys’s business. With very little tangible capital employed, NamSys was able to grow revenues at a 20% CAGR over the past five years and increase cash flow generation significantly.
Revenue growth exceeded 20% in 4 out of the 5 past years, besides 2018. Revenue growth in 2018 fell down to 12% primarily due to NamSys’s decision to fully convert its currency controller segment, which makes up about 20% of revenues, into a SaaS model. Before, customers had to pay a big upfront cash payment (software licenses), but this all changed during 2018 when customers had to pay a fraction of the big upfront cash payment, due to the shift in payment terms. Thus, the lack of revenue growth in 2018 can be seen as an anomaly. Furthermore, gross margins have averaged about 71% over the past five years, declining 2-4% in 2018 and 2019 due to an increase in staffing costs. Operating and EBITDA margins are very healthy, averaging about 43% over the past 5 years, which illustrates stellar operating performance. FCF margin has averaged about 38% over the past 5 years, moving up and down due to aberrations in changes of working capital. Finally, the company has averaged about 29% FCF growth over the past 5 years, however the volatility in the changes in working capital create stark differences in the yearly figures. Moreover, based on analyzing NamSys’s historical growth and margins, one can conclude that NamSys is a predictable business that will grow over the long term.
Opportunities to Grow
The smart safe software revenue segment, which consists of 60% of total revenues, has grown at 28%+ per year over the past 5 years. With Brink’s, a $3B private security and protection company, being the largest customer, NamSys can piggyback on Brink’s international growth plans. NamSys has a strong customer relationship with Brink’s, as Brink’s builds the hardware for the smart safe and NamSys installs its proprietary software into the smart safe. At the moment, over 16,000 smart safes with NamSys software are being used in North America. However, in places like South America, the smart safe market is growing at 100% per year while in places like the Middle East or Africa, there is no smart safe market. NamSys has significant international opportunities to grow and expand its software service, which should be a prime driver of growth moving forward. If you do the math, Brinks projects that there will be 1.2 million potential new locations for smart safes to be installed worldwide. If the partnership between Brinks and NamSys gets hold of 10% to 20% of this market, this could mean about 60,000 to 120,000 smart safes installed within the next decade. Right now, NamSys Inc has around 16,000 to 18,000 smart safes installed. Over the next decade, I conservatively project that NamSys Inc can 3x to 7x their sales today, as long as they keep good customer relationships with Brink’s. Obviously, this is not accounting for the fact that Brink's is gaining a ton of market share through acquiring a lot of its competitors, which should yield more market share for NamSys in the software development space.
In addition, NamSys is currently experiencing huge tailwinds in their CIT logistics and currency controller software lines of business as well. I think there is a great runway with Next Gen ATM and the whole trend behind CIT companies acquiring ATM networks. With Next Gen ATM, NamSys can be positioned to sell not only their CIT logistics application but also their cash vault (currency controller) product as well. Furthermore, NamSys is also participating in a pilot project with the US Federal Reserve, with testing new software products and solving issues relating to the transportation of cash. The revenues from this pilot project should materialize within the next 3-4 years, as it is a long term project.
Management
The CEO of NamSys Inc is Barry Sparks, who has been the CEO for over 15 years. Mr. Sparks is the President of Torvan Capital and owns 40% of NamSys common stock through this investment vehicle. The President and COO Jason Siemens has been with the company for about 23 years and owns about 0.8% of the common stock. Mr. Siemens is a very competent manager, who thoroughly understands the cash management business. Through analyzing all the past earnings transcripts and shareholder meetings, it is evident that Mr. Siemens has a clear strategy on building NamSys’s moat and growing the business. One of the best and worst capital allocation decisions management has ever made was entering the hardware market (a lower ROIC business) in 2006 and leaving it in 2011, which led to NamSys’s stellar financial performance from 2012 and onwards. In addition, there has been no shareholder dilution (through stock based compensation) over the past 10 years, which is beneficial for long term shareholders of this business. Along with the Board and Mr. Sparks and Mr. Siemens, I think NamSys is a well managed and shareholder friendly business and I do not foresee any managerial issues arising from the individuals who run this company.
COVID-19 Impact
NamSys Inc has not really been negatively impacted by COVID-19 when compared to most other companies. A lot of their customers are grocery chains and gas stations that were running even when most businesses were closed. Revenues for Q2 2020, period ending April 30th, increased by 14.5% when compared to Q2 2019. Revenue for the first six months of fiscal 2020 increased by 19.2% when compared to revenue in the same period in fiscal 2019. NamSys generated a significant amount of free cash flow and the cash balance grew to $5.5m, up from $4.3m from Q1 2020. COVID-19 had an immaterial impact on NamSys Inc from a financial standpoint, which further emphasizes the durable business model of NamSys Inc, which can grow even during a pandemic and recession. So, while most businesses are struggling amid today’s unstable business environment, NamSys is growing its market share and throwing off more cash.
Valuation
I think NamSys’s intrinsic value will grow and compound over time, given its sticky business model and long growth runway. Please see for the supporting financial model of the base case valuation. For the base case valuation, I think a reasonable case would be projecting out a revenue CAGR growth of 13.7% over the next 5 years until 2024 (compared to 24.6% between 2015 and 2019). Given the company has a history of growing revenues at 20%+ CAGR over the past five years and the future growth potential in its smart safe and Cirreon banking application segment, I expect operating margins and its cost structure to remain stable over time. Keeping the 15x FCF multiple constant, the value of the business will grow to about $2.00+ per share by 2024, which represents an IRR of 23% per year. I think this is a compelling investment opportunity with significant upside. First DD, so thanks for reading :)
I have 2,500 shares at 0.88
submitted by 00nizarsoccer to pennystocks [link] [comments]

[Exploit] Award unlocks do not transfer between characters, but bank account does

If you want you can make a new character to reunlock your locked awards such as doing all 3 the casino heist approaches for 300k, and then transfer the money back to your other character.
Not really a glitch just a misuse of an intended mechanic. An exploit if you will
I’m uncomfortable doing things like bogdan but I’m definitely gonna grind the easy unlockables
Cant confirm if the scavenger hunts work with this such as the navy revolver, but I can confirm that things like the Solomon props do get unlocked again
I CAN confirm that the stone hatchet scavenger hunt does not allow you to replay it
EDIT
I highly recommend that you replay the collectibles and grind those. You have NO daily fees on a new character, if you have the starter pack, which many people do, just buy your free MC club, spawn the default motorcycle, and drive by all the collectible locations
EDIT
I know it’s not the most profitable glitch, the best money in the game is casino heist, paintings, gruppe sechs from my knowledge. So if you can do B2B that’s your best bet.
It’s just if you don’t like doing glitches like this, you can redo your first time bonuses on the casino heist. It’ll be the difference between making a million and 1.3 million.
You can also redo the prop hunts, someone told me they DO NOT give you money the second time around but I thought they were a fun little time waster so I’m gonna go ahead
Lastly, you can redo the Solomon missions, and all the collectibles
I personally love cruising around the map getting collectibles. So to be able to restart is fun for me. I’ve received about 10 messages “waste of time, this isn’t profitable” and all this stuff. I get it. It’s only a marginal pay increase. I never claimed you’d make 1,000,000 every 5 minutes
submitted by TheCoochieSnatcher69 to gtaglitches [link] [comments]

Why are lottery winnings taxed if the government owns it?

I looked this question up and have found multiple answers saying “because it’s income, so it’s taxed.”
But like no shit. I doubt anyone asking this question is asking if getting money is considered income.
But if the government owns it and already makes a huge profit margin off of ticket sales alone, why do they take more from whoever wins.
It’s like if a casino charges you to play, then takes half of your winnings.
Also - If the jackpot was $100, but the person that hosts the lottery takes $50, why even say “$100 jackpot”. Why not say $50 jackpot. The government decides the law so its not like they’re just trying to play by the rules-They make the rules
submitted by Cartmanhartman to TooAfraidToAsk [link] [comments]

Former investment bank FX trader: some thoughts

Former investment bank FX trader: some thoughts
Hi guys,
I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert.
I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning.
When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions.
The first topic is Risk Management and we'll cover it in three parts
Part I
  • Why it matters
  • Position sizing
  • Kelly
  • Using stops sensibly
  • Picking a clear level

Why it matters

The first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”
You have to keep it before you grow it.
Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around.
The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices.
Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.

Capital and position sizing

The first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.
Position sizing is what ensures that a losing streak does not take you out of the market.
A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples.
So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000.
We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be?
We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator".

https://preview.redd.it/y38zb666e5h51.jpg?width=1200&format=pjpg&auto=webp&s=26e4fe569dc5c1f43ce4c746230c49b138691d14
So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital.
You should be using this calculator (or something similar) on every single trade so that you know your risk.
Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later.
The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work.
As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you.
Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints.
For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly:

https://preview.redd.it/q2ea6rgae5h51.png?width=1200&format=png&auto=webp&s=4332cb8d0bbbc3d8db972c1f28e8189105393e5b
To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you.
Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown.
It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance.
Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k.
Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money.
Do not let this happen to you. Use position sizing discipline to protect yourself.

Kelly Criterion

If you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?
The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round.
This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet.
Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin.
Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips.
Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds.
Applying the formula to forex trading looks like this:
Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio
If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically.
If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss.
So that’s 0.3 - (1 - 0.3) / 3 = 6.6%.
Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit!
With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not.
Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account.
Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see.
This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders.
Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
  • How many live trades have you done? Often they’ll have done only a handful of real trades and the rest are simulated backtests, which are overfitted. The model will soon die.
  • What is your risk-reward ratio on each trade? If you have a take profit $3 away and a stop loss $100 away, of course most trades will be winners. You will not be making money, however! In general most traders should trade smaller position sizes and less frequently than they do. If you are going to bias one way or the other, far better to start off too small.

How to use stop losses sensibly

Stop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.
A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter.
The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’.
This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK.
Why are stop losses so important? Well, there is no other way to manage risk with certainty.
You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter.
Learning to take a loss and move on rationally is a key lesson for new traders.
A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not.
Bruce Kovner, founder of the hedge fund Caxton Associates
There is an old saying amongst bank traders which is “losers average losers”.
It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong.
Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.

Picking a clear level

Where you leave your stop loss is key.
Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible.

If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop
You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200.
The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up.
Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD.

https://preview.redd.it/moyngdy4f5h51.png?width=1200&format=png&auto=webp&s=91af88da00dd3a09e202880d8029b0ddf04fb802
If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend.
So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level.
There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section.
There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high.

https://preview.redd.it/ygy0tko7f5h51.png?width=1200&format=png&auto=webp&s=34af49da61c911befdc0db26af66f6c313556c81
Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument.
Here are some guidelines that can help:
  1. Use technical analysis to pick important levels (support, resistance, previous high/lows, moving averages etc.) as these provide clear exit and entry points on a trade.
  2. Ensure that the stop gives your trade enough room to breathe and reflects your timeframe and typical volatility of each pair. See next section.
  3. Always pick your stop level first. Then use a calculator to determine the appropriate lot size for the position, based on the % of your account balance you wish to risk on the trade.
So far we have talked about price-based stops. There is another sort which is more of a fundamental stop, used alongside - not instead of - price stops. If either breaks you’re out.
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.

Coming up in part II

EDIT: part II here
Letting stops breathe
When to change a stop
Entering and exiting winning positions
Risk:reward ratios
Risk-adjusted returns

Coming up in part III

Squeezes and other risks
Market positioning
Bet correlation
Crap trades, timeouts and monthly limits

***
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

The classic WSB story - lost it all.

Going to keep this simple. EDIT: this isn’t simple and I should write a short story on this.
I am generally risk averse. I hate losing $100 at the casino, I hate paying extra for guac at chipotles, I will return something or price match an item for a few dollars of savings. I am generally frugal.
But, I somehow had no issues losing 10k in options...
How I started
I remember my first trades like they were yesterday. I was trading the first hydrogen run-up in 2014 (FCEL, BLDP, PLUG) and made a few hundred dollars over a couple weeks.
I quickly progressed to penny stocks / biotech binary events and general stock market gambling mid-2014. I was making a few % here and there but the trend was down in total account value. I was the king of buying the peak in run-ups. I managed to make it out of 2014 close to break-even to slightly down.
WSB Era
March 2015 was my first option trade. It was an AXP - American Express - monthly option trade. I saw one of the regular option traders/services post a block of 10,000 calls that had been bought for 1.3 and I followed the trade with 10 call options for a total of $1300.
I woke up the next day to an analyst upgrade on AXP and was up 50% on my position. I was addicted! I day-dreamed for days about my AXP over night success. I think around that time there was some sort of Buffet buyout of Heinz and an option trade that was up a ridiculous amount of %%%. I wanted to hit it BIG.
I came up with the idea that all I needed to reach my goal was a few 100% over night gains/ 1k>2k>4k>8k> etc. I convinced myself that I would have no problems being patient for the exact criteria that I had set and worked on some other trades.
Remember, the first win is always free.
I was trading options pretty regularly from March 2015 until August 2016. During my best week I was up 20k and could feel the milli within reach. I can remember the exact option trade (HTZ) and I was trading weeklies on it.
For those who have been in the market long enough, you will remember the huge drawdown of August 2015.
I lost half my account value on QCOM calls (100 of them) that I followed at the beginning of July and never materialized. I watched them eventually go to 0. It was another 10,000 block that was probably a hedge or sold.
In August 2015 there were some issues with China and all of us woke up to stocks gapping down huge. Unfortunately my idea of buying far dated calls during the following days/weeks after the crash went sideways. I quickly learned that an increase in volatility causes a rise in option prices and I was paying a premium for calls that were going to lose value very quickly (the infamous IV crush).
I kept trading options into the end of 2015 and managed to maintain my account value positive but the trading fees for the year amounted to $30,000+. My broker was loving it.
I tried all the services, all the strategies. I created rules for my option plays: 1. No earnings 2. Only follow the big buys at a discount (10,000 blocks or more). 3. No weekly options 4. Take profit right away 5. Take losses quickly 6. etc.
I had a whole note book of option plays that I was writing down and following. I was paying for option services that all of you know about - remember, they make money on the services and not trading.
I even figured out a loop-hole with my broker: if I didn’t have enough money in my account, I could change my ask price to .01 and then change it to market buy and I would only need to accept a warning ⚠️ for the order to go through. I was able to day trade the option and make money, who cares if I didnt have enough? After a few months of this, I got a call from my broker that told me to stop and that I would be suspended if I continued with this.
By the way, I was always able to satisfy the debit on the account - so it wasn’t an issue of lack of funds.
Lost it all. Started taking money from lines of credits, every penny that I earned and losing it quicker and quicker.
I was a full on gambler but I was convinced that 8 trades would offset all the losses. I kept getting drawn in to the idea that I could hit a homerun and make it out a hero.
I eventually hit rock bottom on some weekly expiring FSLR options that I bought hours before expiration and said to myself - what the f are you doing? I resolved to invest for the long term and stop throwing tendies away.
The feeling was reinforced during the birth of my first born and I thought - what a loser this kid will think of me if he knew how much I was gambling and wasting my life. It was a really powerful moment looking at my kid and reflecting on this idea.
I decided at that point I was going to save every penny I had and invest it on new issues with potential.
Fall 2016
TTD, COUP and NTNX IPO ‘ed I decided I was going to throw every dollar at these and did so for the next few months. I eventually started using margin (up to 215%) and buying these for the next 6 months. They paid out and managed to make it over 100k within the year.
The first 100k was hard but once I crossed it, I never fell below this magic number.
2017 - I did some day trading but it was mostly obsessing over the above issues. I did gamble on a few options here and there but never more than 1k.
2018 - SFIX was my big winner, I bought a gap up in June 2018 and my combined account value had crossed 400k by August 2018. I was really struggling at crossing the 500k account value and experienced 3 x 30-40% drawdowns over the next 2 years before I finally crossed the 500k barrier and have never looked back.
I still made some mistakes over the next few months - AKAO & GSUM come to mind. Both of these resulted in 20k+ losses. Fortunately my winners were much bigger than my losers.
I thought about giving up and moving to index funds - but i was doing well - just experiencing large drawdowns because of leverage.
2019 big winners were CRON SWAV STNE.
2017 / 2018 / 2019 all had six digit capital gains on my tax returns.
At the beginning of 2020 I was still day trading on margin (180-220%) and got a call from my broker that they were tightening up my margin as my account was analyzed by the risk department and deemed too risky. Believe it or not this was right before the covid crash. I brought my margin down to 100-110% of account value and even though the drawdown from covid hit hard, I wasn’t wiped out.
I stayed the course and bought FSLY / RH during the big march drawdown and this resulted in some nice gains over the next few months.
I am constantly changing and testing my investment strategy but let me tell you that obsessing over 1 or 2 ideas and throwing every penny at it and holding for a few years is the best strategy. It may not work at some point but right now it does.
I still day trade but I trade with 10k or less on each individual position. It allows me minimize my losses and my winners are 1-7%. I am able to consistently make between 3-700$/ a day on day trades using the above strategy. I still take losses and still dream about hitting it big with an option trade but dont feel the need to put it all on the line every month / week.
I finally crossed into the two , club. I know people are going to ask for proof or ban but I am not earning anything for posting and the details about some of the trades should be proof enough that I kept a detailed journal of it all. I have way more to write but these are the highlights.
Eventually I will share how I build a position in a story I love. I still sell buy and sell to early but I am working on improving.
TL:DR - I gambled, lost it all and gambled some more lost more. I made it out alive. I have only sold calls/puts lately.
The one common denominator in all successful people is how much they obsess over 1 or 2 ideas. Do the same. All the winners on this sub have gone all in on one idea (FSLY / TSLA ). Stick with new stories or ones that are changing and go all in...wait a second, I didnt learn anything.
submitted by jojo2021 to wallstreetbets [link] [comments]

Countering the Pro Credit Card Propaganda

Warning: Rant below. I felt the need to vent after seeing another pro-credit card hot take.
If you have been around this subreddit for any amount of time you will often come across people explaining how they are very financially savvy and recommend getting a credit card for a number of seemingly great reasons. I would argue that this is a really irresponsible, because it is just not true.
Credit cards are nowhere near as great as they are touted to be, in any category. And this misrepresentation of them causes real world damage to financially vulnerable people and families everyday.

"Credit cards help build your credit score!"
This is not a valid reason to get a credit card. In New Zealand the only credit score that matters is a bad one. There is no need to have had previous loans to secure lending, especially when getting a home loan. If you show good financial habits with your account logs, and you have the necessary income and deposit you will get approved. In fact, just having a credit card can greatly reduce the amount they will lend you, even if you have a zero balance, because you have an open line of credit.

I am protected from fraud, and insured when I go overseas!
Any debit card has the exact same fraud protection, and when you do go overseas, travel insurance is easy to purchase and often a one click purchase when buying a plane ticket. It is not expensive at all.

The points! I get so many points! If I didn't have my card I would never have been bought XYZ
No matter how hard the banks try to convince you, your reward points are nowhere near equal to cash. Reward points can expire. Reward points are not legal currency. Reward points can only be spent at certain merchants, which are high margin and more expensive than other merchants which are not entered into a reward affiliation. Reward points cannot be used to pay many bills such as your rent or mortgage.

But if I spend X amount I will break even and get free points!
Reward points are most certainly NOT FREE.
In order to maintain a points yielding credit card you must pay fees. The more points you earn per dollar you spend, the higher the fee. This means that all things being equal, you will ALWAYS be down in cash equal to at least the credit card fee if nothing else. Even if you 'break even' and spent 100 bucks on the fee, and made 100 dollars in points, you are zero REAL dollars better off, you have exchanged $100 for 100 points of limited utility.
You cannot invest points in stocks, or put it in your Kiwisaver. You can't use them to help with your house deposit. You can't even spend it wherever you want.
You should really think of points like, someone getting you a gift card for Christmas. Everybody knows that cash is superior than an equivalent value gift card, but the damn gift card companies have made grandma think that cash is not as loving as a gift card.

The other thing to remember is you are not only paying for the card annually, you pay per transaction.
But not everywhere charges a surcharge! I only use my card when there is no extra surcharge!
You might not always be aware of it, but you actually still pay to use the card. Have a look at Noel Leeming vs PB tech. Noel Leeming charges no extra to use a credit card, so I guess it doesn't cost you any money to get your points? Wrong. Noel Leeming pays the credit card service charge, but they pass it to you in the price of the product because they have beefier margins than the cheaper places to buy identical products. If you are not familiar with pricespy.co.nz, get familiar real quick before you buy another item at Noels, JB or Harvey Norman.
PB Tech charges a service charge for credit cards payments directly, and you will notice if you take two items at their listed price PB will be lower than Noel Leeming, 9 times out of 10. Right now Google Nest mini for example, $85.43 at PB and 89.99 at Noel Leeming. That is a 5% difference in price, and that's how your credit card surcharge is hidden.
I know there are die hard credit card users out there. You truly believe you have cracked it. That the banker goes home every night and complains to her husband about how badly you owned them today. "If they could just miss one payment!" she pleads "then we might make some damn money out of them!".
The system is not setup that way, the bank will always profit in the end, they do their best to hide that from you so you think you are winning. They are smarter than you, they are like casinos in that regard. You can't beat statistics.
Conclusion
In any case, all I would ask is please stop being an unpaid credit card advocate. It is no skin off your nose. You don't get a commission, or a kick back. It doesn't get you a better price or into heaven the more people you convert. And you most certainly aren't helping others with pro credit card advice.
To "win" with a credit card takes a lot of things going right, and realistically a good amount of cognitive work.
For every person that "does well" with a credit card, there are many people that are completely ruined financially due to their monthly credit card bill. Some of those people would have gotten their first credit card because they have heard anecdotes from people about the free points, the great rewards. They remembered hearing about the awesome credit building power that a credit card unlocks. Even if you think that is true for yourself, I think we can all agree that people who aren't very financially aware will more than likely get no benefit from a card, and in some cases be much worse off because of it.
TLDR: Please don't contribute to someone else's decision to get a credit card. Please enjoy your 'very valuable' points in private and don't recommended highly dangerous financial products to people when you don't know anything about their financial circumstance or ability.
submitted by GraphiteOxide to PersonalFinanceNZ [link] [comments]

[NYTimes] Sources describe horror stories of young and inexperienced investors on Robinhood, many engaging in riskier trades at far higher volumes than at other firms

https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html
Richard Dobatse, a Navy medic in San Diego, dabbled infrequently in stock trading. But his behavior changed in 2017 when he signed up for Robinhood, a trading app that made buying and selling stocks simple and seemingly free.
Mr. Dobatse, now 32, said he had been charmed by Robinhood’s one-click trading, easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made it feel like a game. After funding his account with $15,000 in credit card advances, he began spending more time on the app.
As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. His account value shot above $1 million this year — but almost all of that recently disappeared. This week, his balance was $6,956.
“When he is doing his trading, he won’t want to eat,” said his wife, Tashika Dobatse, with whom he has three children. “He would have nightmares.”
Millions of young Americans have begun investing in recent years through Robinhood, which was founded in 2013 with a sales pitch of no trading fees or account minimums. The ease of trading has turned it into a cultural phenomenon and a Silicon Valley darling, with the start-up climbing to an $8.3 billion valuation. It has been one of the tech industry’s biggest growth stories in the recent market turmoil.
But at least part of Robinhood’s success appears to have been built on a Silicon Valley playbook of behavioral nudges and push notifications, which has drawn inexperienced investors into the riskiest trading, according to an analysis of industry data and legal filings, as well as interviews with nine current and former Robinhood employees and more than a dozen customers. And the more that customers engaged in such behavior, the better it was for the company, the data shows.
Thanks for reading The Times. Subscribe to The Times More than at any other retail brokerage firm, Robinhood’s users trade the riskiest products and at the fastest pace, according to an analysis of new filings from nine brokerage firms by the research firm Alphacution for The New York Times.
In the first three months of 2020, Robinhood users traded nine times as many shares as E-Trade customers, and 40 times as many shares as Charles Schwab customers, per dollar in the average customer account in the most recent quarter. They also bought and sold 88 times as many risky options contracts as Schwab customers, relative to the average account size, according to the analysis.
The more often small investors trade stocks, the worse their returns are likely to be, studies have shown. The returns are even worse when they get involved with options, research has found.
This kind of trading, where a few minutes can mean the difference between winning and losing, was particularly hazardous on Robinhood because the firm has experienced an unusual number of technology issues, public records show. Some Robinhood employees, who declined to be identified for fear of retaliation, said the company failed to provide adequate guardrails and technology to support its customers.
Those dangers came into focus last month when Alex Kearns, 20, a college student in Nebraska, killed himself after he logged into the app and saw that his balance had dropped to negative $730,000. The figure was high partly because of some incomplete trades.
“There was no intention to be assigned this much and take this much risk,” Mr. Kearns wrote in his suicide note, which a family member posted on Twitter.
Like Mr. Kearns, Robinhood’s average customer is young and lacks investing know-how. The average age is 31, the company said, and half of its customers had never invested before.
Some have visited Robinhood’s headquarters in Menlo Park, Calif., in recent years to confront the staff about their losses, said four employees who witnessed the incidents. This year, they said, the start-up installed bulletproof glass at the front entrance.
“They encourage people to go from training wheels to driving motorcycles,” Scott Smith, who tracks brokerage firms at the financial consulting firm Cerulli, said of Robinhood. “Over the long term, it’s like trying to beat the casino.”
At the core of Robinhood’s business is an incentive to encourage more trading. It does not charge fees for trading, but it is still paid more if its customers trade more.
That’s because it makes money through a complex practice known as “payment for order flow.” Each time a Robinhood customer trades, Wall Street firms actually buy or sell the shares and determine what price the customer gets. These firms pay Robinhood for the right to do this, because they then engage in a form of arbitrage by trying to buy or sell the stock for a profit over what they give the Robinhood customer.
This practice is not new, and retail brokers such as E-Trade and Schwab also do it. But Robinhood makes significantly more than they do for each stock share and options contract sent to the professional trading firms, the filings show.
For each share of stock traded, Robinhood made four to 15 times more than Schwab in the most recent quarter, according to the filings. In total, Robinhood got $18,955 from the trading firms for every dollar in the average customer account, while Schwab made $195, the Alphacution analysis shows. Industry experts said this was most likely because the trading firms believed they could score the easiest profits from Robinhood customers.
Vlad Tenev, a founder and co-chief executive of Robinhood, said in an interview that even with some of its customers losing money, young Americans risked greater losses by not investing in stocks at all. Not participating in the markets “ultimately contributed to the sort of the massive inequalities that we’re seeing in society,” he said.
Mr. Tenev said only 12 percent of the traders active on Robinhood each month used options, which allow people to bet on where the price of a specific stock will be on a specific day and multiply that by 100. He said the company had added educational content on how to invest safely.
He declined to comment on why Robinhood makes more than its competitors from the Wall Street firms. The company also declined to comment on Mr. Dobatse or provide data on its customers’ performance.
Robinhood does not force people to trade, of course. But its success at getting them do so has been highlighted internally. In June, the actor Ashton Kutcher, who has invested in Robinhood, attended one of the company’s weekly staff meetings on Zoom and celebrated its success by comparing it to gambling websites, said three people who were on the call.
Mr. Kutcher said in a statement that his comment “was not intended to be a comparison of business models nor the experience Robinhood provides its customers” and that it referred “to the current growth metrics.” He added that he was “absolutely not insinuating that Robinhood was a gambling platform.”
ImageRobinhood’s co-founders and co-chief executives, Baiju Bhatt, left, and Vlad Tenev, created the company to make investing accessible to everyone. Robinhood’s co-founders and co-chief executives, Baiju Bhatt, left, and Vlad Tenev, created the company to make investing accessible to everyone.Credit...via Reuters Robinhood was founded by Mr. Tenev and Baiju Bhatt, two children of immigrants who met at Stanford University in 2005. After teaming up on several ventures, including a high-speed trading firm, they were inspired by the Occupy Wall Street movement to create a company that would make finance more accessible, they said. They named the start-up Robinhood after the English outlaw who stole from the rich and gave to the poor.
Robinhood eliminated trading fees while most brokerage firms charged $10 or more for a trade. It also added features to make investing more like a game. New members were given a free share of stock, but only after they scratched off images that looked like a lottery ticket.
The app is simple to use. The home screen has a list of trendy stocks. If a customer touches one of them, a green button pops up with the word “trade,” skipping many of the steps that other firms require.
Robinhood initially offered only stock trading. Over time, it added options trading and margin loans, which make it possible to turbocharge investment gains — and to supersize losses.
The app advertises options with the tagline “quick, straightforward & free.” Customers who want to trade options answer just a few multiple-choice questions. Beginners are legally barred from trading options, but those who click that they have no investing experience are coached by the app on how to change the answer to “not much” experience. Then people can immediately begin trading.
Before Robinhood added options trading in 2017, Mr. Bhatt scoffed at the idea that the company was letting investors take uninformed risks.
“The best thing we can say to those people is ‘Just do it,’” he told Business Insider at the time.
In May, Robinhood said it had 13 million accounts, up from 10 million at the end of 2019. Schwab said it had 12.7 million brokerage accounts in its latest filings; E-Trade reported 5.5 million.
That growth has kept the money flowing in from venture capitalists. Sequoia Capital and New Enterprise Associates are among those that have poured $1.3 billion into Robinhood. In May, the company received a fresh $280 million.
“Robinhood has made the financial markets accessible to the masses and, in turn, revolutionized the decades-old brokerage industry,” Andrew Reed, a partner at Sequoia, said after last month’s fund-raising.
Image Robinhood shows users that its options trading is free of commissions. Robinhood shows users that its options trading is free of commissions. Mr. Tenev has said Robinhood has invested in the best technology in the industry. But the risks of trading through the app have been compounded by its tech glitches.
In 2018, Robinhood released software that accidentally reversed the direction of options trades, giving customers the opposite outcome from what they expected. Last year, it mistakenly allowed people to borrow infinite money to multiply their bets, leading to some enormous gains and losses.
Robinhood’s website has also gone down more often than those of its rivals — 47 times since March for Robinhood and 10 times for Schwab — according to a Times analysis of data from Downdetector.com, which tracks website reliability. In March, the site was down for almost two days, just as stock prices were gyrating because of the coronavirus pandemic. Robinhood’s customers were unable to make trades to blunt the damage to their accounts.
Four Robinhood employees, who declined to be identified, said the outage was rooted in issues with the company’s phone app and servers. They said the start-up had underinvested in technology and moved too quickly rather than carefully.
Mr. Tenev said he could not talk about the outage beyond a company blog post that said it was “not acceptable.” Robinhood had recently made new technology investments, he said.
Plaintiffs who have sued over the outage said Robinhood had done little to respond to their losses. Unlike other brokers, the company has no phone number for customers to call.
Mr. Dobatse suffered his biggest losses in the March outage — $860,000, his records show. Robinhood did not respond to his emails, he said, adding that he planned to take his case to financial regulators for arbitration.
“They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.”
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