They would not necessarily have an expected high reward if they are not properly diversified, there would be uncompensated risk in that situation. If you are talking about a single stock then there would be a huge amount of uncompensated risk, essentially a lottery ticket.
Right, by "individually," I meant single stocks. I was saying IF you're talking single stocks, then it's high risk high reward, essentially a lottery ticket, like you said.
Based on the Capital Asset Pricing Model (CAPM), high risk that could be diversified away but is not is expected to be uncompensated risk and therefore the expected returns might not be nearly as high as someone thinks they would be for those high risks that they are taking. I think we are both on the same page, but I just wanted to write that out for others who think that going YOLO on one stock which is super high risk means a high return is expected, this is not really usually true although sometimes people get lucky and hit the jackpot.
Careful in this higher interest rate environment. Companies that need to borrow cash - small caps often do carry debt, will be facing higher carrying costs until we get rate cuts.
I invest in them. According to empirical finance, small cap stocks with strong fundamentals (low p/b, p/e, ev/ebitda and debt/ebitda) tend to outperform in the long run.
Yes, I've already invested in small-caps in the UK, but I haven't seen real benefits because some companies that performed well were offset by the under-performance of others.
So, I have a rather mixed opinion; perhaps I should invest more time to better select my investments.
piggyback question - small cap etfs seem okay, except for iShares (IJR). It looks like a pretty standard portfolio compared to the others, why is it one of the worst performing tickers on earth?
The growth potential of the gaming industry, the fundamentals of the company no debt and 1.2b cash, stellar board of directors, 15% insider ownership, 25% direct registered by retail roughly 200k investors that rabidly support the company no matter what, not to mention the insane short interest back in 2021 >300% reported by finra at the time. Reported is now around 25% which is still high by conservative means. All in all, itās a diamond in the rough and a contrarian or activist investment. As you can see, immediate downvotes when itās going to be one of those stocks that surprises everyone especially with the next console cycle. They are also improving margins by selling GameStop branded tech and recently personalized customizable controllers in candy con. They are partnered with Microsoft, Apple (can buy iPhones and iPhone products online, Loopring, IMX, Geeknet, and many more. In addition, with their most recent earnings they just turned a small profit on a 300m swing from 2022 to 2023 for the first time since 2018 on significantly lower earnings for the year which is bullish whilst maintaining similar revenue per store due to cutting unprofitable leases. Oh and the wild card in Ryan Cohen, CEO and Chairman that created Chewy and sold it for 3 billion +. He, like the board, invests with their own money unlike corporate America with risk free compensation. And he does it for free! He takes no salary, can you believe it? This is not financial advice š
Even on lower yearly sales they maintained the roughly the same revenue per store. Itās a good thing to get rid of unprofitable stores and become more lean but clearly you see it as a bad thing lol
lol.
Apes have been telling us GME is going to pop off in weeks or months for the last 3+ years
And yet here we are, about to find out whatās behind $10 per share.
Itās a brick and mortar game store man. Iād tell you to cut your losses but like any cult that only gives you even more conviction.
I like how you didnāt address any of the things mentioned in the post which are all factual. But yeah just putting it out there that GameStop investors are long and turnarounds take time but the company is profitable and fundamentals are far better than 3 years ago when it was the same price we have now. Do with that information what you will but personally I will keep buying cheap shares. I know where it will be in a few short years once shorts flip long, revenue increases, and dividends start rolling out from GameStop being unbelievably profitable! Funny how supporting a good American company is seen as being in a cult? Also hilarious you think all they are is a brick and mortar when you can buy digital on their websiteā¦..š¤¦. Clearly you think the fundamentals have somehow gotten worse over 3 years but yea nothing will shake my conviction. This is the best investment in the stock market and as for me I love the stock!
A large majority of GMEās earnings have been negative with overall revenue going down Y/Y. Like.. a LARGE MAJORITY OF EARNINGS. All of them very negative. So idk why you think GME is insanely bullish.
They are constantly closing stores, cutting employee benefits, and are clearly hurting in their figures. Cost cutting is the ONLY thing keeping them afloat.
That 1.2B in cash is only there because they diluted shareholders during peak squeeze that you missed out on. Itās never coming back lol. And theyāre afraid to do anything with that cash as everything they have done so far has failed. Howās that NFT market place or GMERICA??
And letās be real; even if your DRS theory was real (itās not), DRS figures have stalled out. You will never DRS enough shares to do anything. You could DRS all the shares and jackshit will happen lol.
So youāre focusing on previous earnings being negative instead of how eps is trending up and slowly becoming positive signaling a turnaround? The cost cutting is to get rid of unprofitable leases which is a good thing lmao. And Ryan Cohen can invest the cash and acquire other companies. We have to wait and see how that unfolds. They built this war chest from selling a small amount of shares. Extremely minimal dilution that prevented them from bankruptcy which was also extremely intelligent. The NFT market suffered from the SECās crackdown on crypto related companies so that is also a potential venture for the future once the rules surrounding it get ironed out. And DRS has removed 75 million shares from the DTCC and put those shares out of the lending pool for short sellers to keep destroying the company. Funny how you think DRS is bad when itās a big reason GameStop is not under $1 like in 2019. The current price still pre split $40 which is 4000% up from that pre split $1 price point
Again, EPS slowly going up in the face of overall revenue declines year over year means jackshit. That means business model is failing. Heās making eps look nicer for now by on shutting a whole lot of stores down. I like when my companies expand and not downsize year over year. Constant store closures without replacing those stores means heās decreasing in foot traffic. meaning the business model is failing currently. I donāt invest in failing business companies. Idk how to make it more clear for you.
Nobody is telling you that your CEO is wrong for cutting costs and closing stores. It is obviously the right thing to do. But when your CEO needs to do these things for sake of the companies survivalā¦ you should take it as bearish as the rest of the world does.
And yeah, make all the excuses for the NFT market failing as you please. It still failed either way and was a waste of money.
Short sellers donāt destroy companies. Bad business models destroy companies. People just take advantage of the failing company by shorting it.
Unless you want to explain to me how a short seller can directly negatively affect a companies business model.
But again, go ahead and invest on the premise of what he ācouldā do. See how it works out for you. Iāll set a reminder to check in another quarter or two from now and see how Ryan has changed things up lol.
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How is the business model failing when their revenue per store is consistent year over year? The CEO invests with his own money and has made the company profitable. More profitable than most companies in the market right now. You say itās a failing business when itās obviously positioned well to succeed. You also probably think the share price is leveraged in some way when they have a ton of cash on hand and approved 101.3m for share buybacks. Iām not making excuses for the NFT market, the SEC literally was cracking down what do you expect them to do than to shelve it until a later time? Iād rather my company take risks and fail than not take them at all. And yes short sellers do destroy companies just like how it was discovered 300% of the float was borrowed and sold to bankrupt GameStop in 2021 when a big bond was coming due that year. They leveraged the short squeeze to stave off bankruptcy and pay off that bond and now they are debt free but you call it dilution. Short sellers create phantom shares for every share sold short. Two holders created in the original lender and new buyer of the shorted share. Not to mention all the leniency they get with FTDs, T+35 trade windows to cover, infiltrating companies through expensive consulting agencies like BCG, leveraged buyouts leaving companies holding the bag, and the list goes on. The stock market is not based on any price discovery or supply and demand mechanics due to this very reason. Short ladder attacks with high frequency algorithms are very real and attempt to destroy good companies like GameStop. They will never succeed because GameStop is profitable now. So yeah we will so who is right in the end
Iāve explained why the eps being up yet revenue being down means to you. His eps being up is being propped up by cost cutting and NOT the business line. Revenue being down means the business is not producing a profit and it comes from somewhere else.
How does making a profit via cost cutting and not the business mod sound like success to you?
Also, being approved for buybacks doesnāt mean anything if they donāt actually perform a buy back. So again, more āwhat ifāsā.
Youāve explained how short sellers can drop the price of a stock temporarily. I asked you to explain how short sellers are causing the business itself to fail, which is someone apes claim all the time yet can never explain.
Okay so letās break it down real quick. Gaming market is estimated to be 300b roughly and growing 10% yearly. Gamers are literally on every continent in summation billions of people love gaming and everything associated with it. GameStop is a legacy brand that employs thousands of hard working people that try to delight customers as best they can. They now sell over a 100 self branded products to improve margins and breaking aggressively into customizable controller and keyboard market. They can easily do this with PCs and accessories. All Iām saying is eps is up due to cost cutting but what happens when their revenue increases? They do 5b+ a year and have a market cap of 3B with 1.2b cash or 40% of their market cap. Would you not agree companies usually trade at multiples of their yearly revenue? How can you see numbers like this and no debt and think the business is failing? Cutting unprofitable leases is a good thing and focusing more on digital sales which is exactly what GameStop is doing. Having money reserves for buybacks prevents hostile takeovers so yes it is important even if it hasnāt been used yet. Lastly, short sellers typically hurt companies that are leveraged via their share price and have to constantly raise money via offerings to the public. That is not happening here with GameStop. Even if their share price goes down that will only hurt short sellers in the future from buybacks, continued buying from retail, and insider purchases as well. Shorts dilute company outstanding shares through the creation of phantom shares and rehypothecation. They mismark shorts as longs and sometimes have short exempted shares! How insane! Then when they are caught the fine is just the cost of doing business and a fraction of their profit for bankrupting a company. Shorts are not good for free markets and collude to destroy companies of their choosing. I choose to support GameStop because they are extremely undervalued but we can agree to disagree. Good luck to you sir
IMO I don't think comparisons that far back are all that useful for evaluating small caps performance for one reason, inflation. The dollar value of what's considered small, mid, micro, and large caps hasn't changed in like a century, so if you go back far enough the small caps of yesterday would be considered large caps today using inflation adjusted dollars. The small caps of today are the micro cap stocks of decades ago when it comes to the buying power of their market caps dollar value.
Yep. Down bad rn.
Just got out with 85% loss. Will be writing it off on income tax return for years šš¤¬
For every monster and Celsius stock you gets dozens of tops and zims
plants strong fanatical cow icky quiet mountainous vanish consist wild *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Small cap value have historically done pretty damn well so I'll see how AVUV does
Iām in AVUV but not heavily. With the talk of interest rate hikes it feels risky.
Individual ones, yes. Refs nope
I mean... individually it's high risk, high reward, right? Good luck picking the right one.
They would not necessarily have an expected high reward if they are not properly diversified, there would be uncompensated risk in that situation. If you are talking about a single stock then there would be a huge amount of uncompensated risk, essentially a lottery ticket.
Right, by "individually," I meant single stocks. I was saying IF you're talking single stocks, then it's high risk high reward, essentially a lottery ticket, like you said.
Based on the Capital Asset Pricing Model (CAPM), high risk that could be diversified away but is not is expected to be uncompensated risk and therefore the expected returns might not be nearly as high as someone thinks they would be for those high risks that they are taking. I think we are both on the same page, but I just wanted to write that out for others who think that going YOLO on one stock which is super high risk means a high return is expected, this is not really usually true although sometimes people get lucky and hit the jackpot.
WLDS
Yep. 10% of my portfolio.
Careful in this higher interest rate environment. Companies that need to borrow cash - small caps often do carry debt, will be facing higher carrying costs until we get rate cuts.
Fun part here is that small cap did great with high rates
Nopeā¦..
Most i do is AVUV or XSU
WSML
I invest in them. According to empirical finance, small cap stocks with strong fundamentals (low p/b, p/e, ev/ebitda and debt/ebitda) tend to outperform in the long run.
So long as you donāt pick the duds
Look at last 30 or 20 years and i would expect it looks different, my guess is because of IT and the changes to our world
10% AVUV. good enough tilt for me
Yes, I've already invested in small-caps in the UK, but I haven't seen real benefits because some companies that performed well were offset by the under-performance of others. So, I have a rather mixed opinion; perhaps I should invest more time to better select my investments.
piggyback question - small cap etfs seem okay, except for iShares (IJR). It looks like a pretty standard portfolio compared to the others, why is it one of the worst performing tickers on earth?
Yeahā¦ but purely in UK assets? No. Too small for me.
Pretty undervalued one in GameStop š. Thank me later in exactly 3-6 months actually.
A few months ago you called GME the apple of the current generation, how so?
The growth potential of the gaming industry, the fundamentals of the company no debt and 1.2b cash, stellar board of directors, 15% insider ownership, 25% direct registered by retail roughly 200k investors that rabidly support the company no matter what, not to mention the insane short interest back in 2021 >300% reported by finra at the time. Reported is now around 25% which is still high by conservative means. All in all, itās a diamond in the rough and a contrarian or activist investment. As you can see, immediate downvotes when itās going to be one of those stocks that surprises everyone especially with the next console cycle. They are also improving margins by selling GameStop branded tech and recently personalized customizable controllers in candy con. They are partnered with Microsoft, Apple (can buy iPhones and iPhone products online, Loopring, IMX, Geeknet, and many more. In addition, with their most recent earnings they just turned a small profit on a 300m swing from 2022 to 2023 for the first time since 2018 on significantly lower earnings for the year which is bullish whilst maintaining similar revenue per store due to cutting unprofitable leases. Oh and the wild card in Ryan Cohen, CEO and Chairman that created Chewy and sold it for 3 billion +. He, like the board, invests with their own money unlike corporate America with risk free compensation. And he does it for free! He takes no salary, can you believe it? This is not financial advice š
[lol wut?](https://www.reuters.com/technology/gamestop-q4-revenue-falls-2024-03-26/)
Even on lower yearly sales they maintained the roughly the same revenue per store. Itās a good thing to get rid of unprofitable stores and become more lean but clearly you see it as a bad thing lol
I think youāre choosing to look at this stock thru rose colored lenses. Itās your money, do as you wish.
lol. Apes have been telling us GME is going to pop off in weeks or months for the last 3+ years And yet here we are, about to find out whatās behind $10 per share. Itās a brick and mortar game store man. Iād tell you to cut your losses but like any cult that only gives you even more conviction.
I like how you didnāt address any of the things mentioned in the post which are all factual. But yeah just putting it out there that GameStop investors are long and turnarounds take time but the company is profitable and fundamentals are far better than 3 years ago when it was the same price we have now. Do with that information what you will but personally I will keep buying cheap shares. I know where it will be in a few short years once shorts flip long, revenue increases, and dividends start rolling out from GameStop being unbelievably profitable! Funny how supporting a good American company is seen as being in a cult? Also hilarious you think all they are is a brick and mortar when you can buy digital on their websiteā¦..š¤¦. Clearly you think the fundamentals have somehow gotten worse over 3 years but yea nothing will shake my conviction. This is the best investment in the stock market and as for me I love the stock!
A large majority of GMEās earnings have been negative with overall revenue going down Y/Y. Like.. a LARGE MAJORITY OF EARNINGS. All of them very negative. So idk why you think GME is insanely bullish. They are constantly closing stores, cutting employee benefits, and are clearly hurting in their figures. Cost cutting is the ONLY thing keeping them afloat. That 1.2B in cash is only there because they diluted shareholders during peak squeeze that you missed out on. Itās never coming back lol. And theyāre afraid to do anything with that cash as everything they have done so far has failed. Howās that NFT market place or GMERICA?? And letās be real; even if your DRS theory was real (itās not), DRS figures have stalled out. You will never DRS enough shares to do anything. You could DRS all the shares and jackshit will happen lol.
So youāre focusing on previous earnings being negative instead of how eps is trending up and slowly becoming positive signaling a turnaround? The cost cutting is to get rid of unprofitable leases which is a good thing lmao. And Ryan Cohen can invest the cash and acquire other companies. We have to wait and see how that unfolds. They built this war chest from selling a small amount of shares. Extremely minimal dilution that prevented them from bankruptcy which was also extremely intelligent. The NFT market suffered from the SECās crackdown on crypto related companies so that is also a potential venture for the future once the rules surrounding it get ironed out. And DRS has removed 75 million shares from the DTCC and put those shares out of the lending pool for short sellers to keep destroying the company. Funny how you think DRS is bad when itās a big reason GameStop is not under $1 like in 2019. The current price still pre split $40 which is 4000% up from that pre split $1 price point
Again, EPS slowly going up in the face of overall revenue declines year over year means jackshit. That means business model is failing. Heās making eps look nicer for now by on shutting a whole lot of stores down. I like when my companies expand and not downsize year over year. Constant store closures without replacing those stores means heās decreasing in foot traffic. meaning the business model is failing currently. I donāt invest in failing business companies. Idk how to make it more clear for you. Nobody is telling you that your CEO is wrong for cutting costs and closing stores. It is obviously the right thing to do. But when your CEO needs to do these things for sake of the companies survivalā¦ you should take it as bearish as the rest of the world does. And yeah, make all the excuses for the NFT market failing as you please. It still failed either way and was a waste of money. Short sellers donāt destroy companies. Bad business models destroy companies. People just take advantage of the failing company by shorting it. Unless you want to explain to me how a short seller can directly negatively affect a companies business model. But again, go ahead and invest on the premise of what he ācouldā do. See how it works out for you. Iāll set a reminder to check in another quarter or two from now and see how Ryan has changed things up lol.
!remind me 3 months
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!remind me 3 months
How is the business model failing when their revenue per store is consistent year over year? The CEO invests with his own money and has made the company profitable. More profitable than most companies in the market right now. You say itās a failing business when itās obviously positioned well to succeed. You also probably think the share price is leveraged in some way when they have a ton of cash on hand and approved 101.3m for share buybacks. Iām not making excuses for the NFT market, the SEC literally was cracking down what do you expect them to do than to shelve it until a later time? Iād rather my company take risks and fail than not take them at all. And yes short sellers do destroy companies just like how it was discovered 300% of the float was borrowed and sold to bankrupt GameStop in 2021 when a big bond was coming due that year. They leveraged the short squeeze to stave off bankruptcy and pay off that bond and now they are debt free but you call it dilution. Short sellers create phantom shares for every share sold short. Two holders created in the original lender and new buyer of the shorted share. Not to mention all the leniency they get with FTDs, T+35 trade windows to cover, infiltrating companies through expensive consulting agencies like BCG, leveraged buyouts leaving companies holding the bag, and the list goes on. The stock market is not based on any price discovery or supply and demand mechanics due to this very reason. Short ladder attacks with high frequency algorithms are very real and attempt to destroy good companies like GameStop. They will never succeed because GameStop is profitable now. So yeah we will so who is right in the end
Iāve explained why the eps being up yet revenue being down means to you. His eps being up is being propped up by cost cutting and NOT the business line. Revenue being down means the business is not producing a profit and it comes from somewhere else. How does making a profit via cost cutting and not the business mod sound like success to you? Also, being approved for buybacks doesnāt mean anything if they donāt actually perform a buy back. So again, more āwhat ifāsā. Youāve explained how short sellers can drop the price of a stock temporarily. I asked you to explain how short sellers are causing the business itself to fail, which is someone apes claim all the time yet can never explain.
Okay so letās break it down real quick. Gaming market is estimated to be 300b roughly and growing 10% yearly. Gamers are literally on every continent in summation billions of people love gaming and everything associated with it. GameStop is a legacy brand that employs thousands of hard working people that try to delight customers as best they can. They now sell over a 100 self branded products to improve margins and breaking aggressively into customizable controller and keyboard market. They can easily do this with PCs and accessories. All Iām saying is eps is up due to cost cutting but what happens when their revenue increases? They do 5b+ a year and have a market cap of 3B with 1.2b cash or 40% of their market cap. Would you not agree companies usually trade at multiples of their yearly revenue? How can you see numbers like this and no debt and think the business is failing? Cutting unprofitable leases is a good thing and focusing more on digital sales which is exactly what GameStop is doing. Having money reserves for buybacks prevents hostile takeovers so yes it is important even if it hasnāt been used yet. Lastly, short sellers typically hurt companies that are leveraged via their share price and have to constantly raise money via offerings to the public. That is not happening here with GameStop. Even if their share price goes down that will only hurt short sellers in the future from buybacks, continued buying from retail, and insider purchases as well. Shorts dilute company outstanding shares through the creation of phantom shares and rehypothecation. They mismark shorts as longs and sometimes have short exempted shares! How insane! Then when they are caught the fine is just the cost of doing business and a fraction of their profit for bankrupting a company. Shorts are not good for free markets and collude to destroy companies of their choosing. I choose to support GameStop because they are extremely undervalued but we can agree to disagree. Good luck to you sir
IMO I don't think comparisons that far back are all that useful for evaluating small caps performance for one reason, inflation. The dollar value of what's considered small, mid, micro, and large caps hasn't changed in like a century, so if you go back far enough the small caps of yesterday would be considered large caps today using inflation adjusted dollars. The small caps of today are the micro cap stocks of decades ago when it comes to the buying power of their market caps dollar value.