Edit 1: More ARKQ buying today (~50k shares). Thank you everyone for the positive feedback and discussion!
Bottom Line Up Front (BLUF) or TL;DR for the non-military types:
LMT is a good target if you want to literally go to the moon, and my PT is $690.26 in two years (more than 2x from current levels). Justification and some possible trade ideas are listed below, just CTRL-F “Trade Ideas”. I hope you guys enjoy this work and would appreciate any discussion or feedback. I hope to catch you in the comments.
Team,
We interrupt today’s regularly scheduled short squeeze coverage to discuss a traditionally boring stock, LMT (Lockheed Martin), with significant upside potential. To be clear, this is NOT a short squeeze target like many reddit posts are keying on. I hope that this piece sparks discussion, but if you are just looking for short squeeze content, all I have to say is BUY, HOLD, and GODSPEED.
The source of inspiration for me writing this piece is threefold; first, retail investors are winning, and I believe that we will continue to win if we continue to identify opportunities in the market. In my view, the stock market has always been a place for the public to shine a light on areas of innovation that real Americans are excited about and proud to be a part of. Online communities have stolen the loudspeaker from hedge fund managers and returned it to decentralized online democracies that quickly and proudly shift their weight behind ideas they believe in. In GME’s case, it was a blatant smear campaign to destroy a struggling business. I think that we should continue this campaign by identifying opportunities in the market and running with them. It may sound overly idealistic, but if reddit can take on the hedge funds, I non-ironically believe that we can quite literally take good companies researching space technology to the moon. I think LMT may be one of several stocks to help get us there.
Second, a video where the Secretary of State of Massachusetts argues that internet boards are full of a bunch of unsophisticated, thoughtless traders really ticked me off. This piece is designed to show that ‘the little guy’ is ready to get into the weeds, understand business plans, and outpace analysts that think companies like Tesla are overvalued by comparing them to Toyota. That is a big reason that I settled on an old, large, slow growth company to do a deep-dive on, and try my best to show some of the abysmal predictive analysis major ‘research firms’ do on even some of the most heavily covered stocks. LMT is making moves, and the suits on wall street are 10 steps behind. At the time of writing this piece, Analyst Estimates range from 330-460 (what an insane range).
Third, and most importantly, I am in the US military, and I think that it is fun to go deep into the financials of the defense sector. I think that it helps me understand the long-term growth plans of the DoD, and I think that I attack these deep-dives with a perspective that a lot of these finance-from-day-one cats do not understand. Even if no one ever looks at this work, I think that taking the time to write pieces like this makes me a better Soldier, and I will continue to do it in my spare time when I am feeling inspired. I wrote a piece on Raytheon Technologies (Ticker: RTX) 6 months ago, and I think it was well-received. I was most convicted about RTX in the defense sector, but I have since shifted to believing LMT is the leader in the defense space. I am long both, though. If this inspires anyone else to do similar research on other companies, or sparks discussion in the community, that is just a bonus. Special shout-out to the folks that read more than just the TL;DR, but if you do just read the TL;DR, I love you too!
Now let us get into it:
Leadership
I generally like to invest in companies that are led by people that seem to have integrity. Jim Taiclet took the reins at LMT in June of last year. While on active duty, he served as a C-141B Starlifter pilot (a retired LMT Aircraft). After getting out he went to work for the American Tower Corporation (Ticker: AMT). His first day at American Tower was September 10, 2001. The following day, AMT lost 13 employees in the World Trade Center attack. He stayed with the company, despite it being decimated by market uncertainty in the wake of 9/11. He was appointed CEO of the very same company in 2004. Over a 16 year tenure as CEO of AMT the company market cap 20x’d. He left his position as CEO of AMT in March of last year, and the stock stagnated since his departure, currently trading at roughly the same market cap as to when he left.
Jim Taiclet was also appointed to be the chairman of the board this week, replacing the previous CEO. Why is it relevant that the CEO came from a massive telecommunications company?
Rightfully, Taiclet’s focus for LMT is bringing military technology into the modern era. He wants LMT to be a first mover in the military 5G space, military application of AI space, the… space space, and the hypersonic glide vehicle (HGV) space. These areas are revolutionary for the boomer defense sector. We will discuss this in more detail later when we cover the company’s P/E multiple and why it is absolute nonsense.
It is not a surprise to me that they brought Taiclet on during the pandemic. He led AMT through adversity before, and LMT’s positioning during the pandemic is tremendous relative to the rest of the sector, thanks in large part to some strong strategic moves and good investments by current and past leadership. I think that Taiclet is the right CEO for the job.
In addition to the new CEO, the new Secretary of Defense, Secretary Lloyd Austin, has strong ties to the defense sector. He was formerly a board member for RTX. He is absolutely above reproach, and a true leader of character, but I bring this up not to suggest that he will inappropriately serve in the best interest of defense contractors, but to suggest that he speaks the language of these companies effectively. I do not anticipate that the current administration poses as significant of a risk to the defense sector as many analysts seem to believe. This will be expanded in the headwinds section below.
SPACE
Cathie Wood and the ARK Invest team brought a lot of attention to the space sector when the ARKX, The ARK Space Exploration ETF, Form N-1A was officially filed through the SEC. More recently, ARK Invest published their Big Ideas 2021 Annual Report and dedicated an entire 7-page chapter to Orbital Aerospace, a new disruptive innovation platform that the ARK Team is investigating. This may have helped energize wall street to re-look their portfolios and their investments in space technology, but it was certainly not the first catalyst that pushed the defense industry in the direction of winning the new space race.
In June 2018, then President Trump announced at the annual National Space Council that “it is not enough to merely have an American presence in space, we must have American dominance in space. So important. Therefore, I am hereby directing the Department of Defense (DoD) and Pentagon to immediately begin the process necessary to establish a Space Force as the sixth branch of the Armed Forces". Historically, Department of Defense space assets were under the control of the Air Force. By creating a separate branch of service for the United States Space Force (USSF), the DoD would allocate a Chairman of Space Operations on the Joint Chiefs of Staff and clearly define the budget for space operations dedicated directly to the USSF. At present, this budget is funneled from the USAF’s budget. The process was formalized in December of 2019, and the DoD has appropriated ~$15B to the USSF in their first full year of existence according to the FY21 budget.
Among the 77 spacecraft that are controlled by the USSF, 29 of them are Lockheed Martin GPS satellites, 6 of them are Lockheed Martin Space-Based Infrared Systems (SBIRS), and LMT had a hand in creating and/or manufacturing for several of the other USSF efforts. The Next Generation Overhead Persistent Infrared Missile Warning Satellites (also known as Next-Gen OPIR) were contracted out to both Northrup Grumman (Ticker: NOC) and LMT. LMT’s contract is currently set at $4.9B, NOC’s contract is set at $2.37B.
Tangentially related to the discussion of space is the discussion of hypersonic glide vehicles (HGVs). HGVs have exoatmospheric and atmospheric implications, but I think that their technology is extremely important to driving margins down for both space exploration and terrestrial point-to-point travel. LMT is leading the charge for military HGV research. They hold contracts with the Navy, Air Force, and Army to develop HGVs and hypersonic precision fires. The priority for HGV technology accelerated significantly when Russia launched their Avangard HGV in December of 2019. Improving the technology for HGVs is a critical next-step in maintaining US hegemony, but also maintaining leadership in both terrestrial and exoatmospheric travel.
LARGE SCALE COMBAT OPERATIONS (LSCO)
The DoD transitioning to Large-Scale Combat Operations (LSCO) as the military’s strategic focus. This is a move away from an emphasis on Counter-Insurgency operations. LSCO requires effective multi-domain operations (MDO), which means effective and integrated strategies regarding land, sea, air, space, and cyberspace. To have effective MDO, the DoD is seeking systems that both expand capabilities against peer threats and increase the ability to track enemy units and communicate internally. This requires a modernizing military strategy that relies heavily on air, missile, and sensor modernization. Put simply, the DoD has decided to start preparing for peer or near-peer adversaries (China, Russia, Iran, North Korea) rather than insurgencies. For this reason, I believe that increased Chinese and Russian tensions are, unfortunate as it may be, a boon to the defense industry. This is particularly true in the missiles/fires and space industry, as peer-to-peer conflicts are won by leveraging technological advantages.
There are too many projects to cover in detail, but some important military technologies that LMT is focusing on to support LSCO include directed energy weapons (lasers) to address enemy drone technology, machine learning / artificial intelligence (most applications fall under LMT’s classified budget, but it is easy to imagine the applications of AI in a military context), and 5G to increase battlefield connectivity. These projects are all nested within the DoD’s LSCO strategy, and position LMT as the leader in emergent military tech. NOC is the other major contractor making a heavy push in the modernization direction, but winners win, and I think a better CEO, balance sheet, and larger market cap make LMT the clear winner for aiding the DoD in a transition toward LSCO.
SECTOR COMPARISON (BACKLOG)
The discussion of LSCO transitions well into the discussion of defense contractor backlogs. Massive defense contracts are not filled overnight, so examining order backlogs is a relatively reliable way to gauge the interest of the DoD in a defense contractor’s existing or emerging products. For my sector comparison, I am using the top 6 holdings of the iShares U.S. Aerospace & Defense ETF (Ticker: ITA). I hate this ETF, and ETFs like it (DFEN) because of their massively outsized exposure to aerospace, and undersized allocation to companies like LMT. LMT is only 18% smaller than Boeing (Ticker: BA) but is only 30.4% of the exposure of BA (18.46% of the fund is BA, only 5.62% of the fund is LMT). Funds of this category are just BA / RTX hacks. I suggest building your own pie on a site like M1 Finance (although they are implicated in the trade restriction BS… please be advised of that… hoping other brokerages that are above board will offer similar UIs like the pie design… just wanted to be clear there) if you are interested in the defense sector.
The top 6 holdings of ITA are:
Boeing Company (Ticker: BA, MKT CAP $110B) at 18.46%
Raytheon Technologies (Ticker: RTX, MKT CAP $101B) at 17.84%
Lockheed Martin (Ticker: LMT, MKT CAP $90B) at 5.62%
General Dynamics Corporation (Ticker: GD, MKT CAP $42B) 4.78%
Teledyne Technologies Incorporated (Ticker: TDY, MKT CAP $13B) at 4.74%
Northrop Grumman Corporation (Ticker: NOC, MKT CAP $48B) at 4.64%
As a brief aside, please look at the breakdowns of ETFs before buying them. The fact that ITA has more exposure to TDY than NOC and L3Harris is wild. Make sector ETFs balanced how you want them to be balanced and it will be more engaging, and you will likely outperform. I digress.
Backlogs for defense companies can easily be pulled from their quarterly reports. Here are the current backlogs in the same order as before, followed by a percentage of their backlog to their current market cap. All numbers are pulled from January earning reports unless otherwise noted with an * because they are still pending.
Boeing Company backlog (Commercial: $282B, Defense: $61B, Foreign Military Sales (FMS, categorized by BA as ‘Global’): 21B, Total Backlog 364B): BA’s backlog to market cap is a ratio of 3.32, which is strong, but most of that backlog comes from the commercial, not the defense side. Airlines have been getting decimated, I am personally not interested in having much of my backlog exposed to commercial pressures when trying to invest in a defense play. Without commercial exposure, their defense only backlog ratio is .748. This is extremely low. I understand that this does not do BA justice, but I am keying in on defense exposure, and I am left thoroughly unsatisfied by that ratio. Also, we have seen several canceled contracts already on the commercial side.
Raytheon Technologies backlog (Defense backlog for all 4 subdivisions: 67.3B): Raytheon only published a defense backlog in this quarter’s report. That is further evidence to me that the commercial aerospace side of the house is getting hammered. They have a relatively week backlog to market cap as well, putting them at a ratio of .664, worse off than the BA defense backlog.
Lockheed Martin backlog (Total Backlog: $147B): This backlog blows our first two defense backlogs out of the water with a current market cap to backlog ratio of 1.63.
General Dynamics Corporation backlog (Total Backlog: $89.5B, $11.6B is primarily business jets, but it is difficult to determine how much of their aerospace business is commercial): Solid 2.13 ratio, still great 1.85 if you do not consider their aerospace business. The curveball here for me is that GD published a consolidated operating profit of $4.1B including commercial aerospace, whereas LMT published a consolidated operating profit of $9.1B. This makes the LMT ratio of profit/market cap slightly in favor of LMT without accounting for the GD commercial aerospace exposure. This research surprised me; I may like GD more than I originally assumed I would. Still prefer LMT.
Teledyne Technologies Incorporated backlog (Found in the earnings transcript, $1.7B): This stock is not quite in the same league as the other major contractors. This is an odd curveball that a lot of the defense ETFs seem to have too much exposure to. They have a weak backlog, but they are a smaller growing company. I am not interested in this at all. It has a backlog ratio of .129.
Northrop Grumman Corporation backlog ($81B): Strong numbers here. I see NOC and LMT as the two front-runners in the defense sector. I like LMT more because I like their exposure to AI, 5G, and HGVs more than NOC, but I think this is a great alternative to LMT if you like the defense sector. Has a ratio of 1.69, slightly edging out LMT on this metric. LMT edges out NOC on margins by ~.9%, though, which has significant implications when considering the depth of the LMT backlog.
The winners here are LMT, GD, and NOC. BA is attractive if you think anyone will have enough money to buy new planes. BA and RTX are both getting hammered by commercial aerospace exposure right now and are much more positioned as recovery plays. That said, LMT and NOC both make money now, and will regardless of the impact of the pandemic. LMT is growing at a slightly faster rate than NOC. Both are profit machines, but I like LMT’s product portfolio and leadership a lot more.
FREE CASH FLOW
Despite the pandemic, LMT had the free cash flow to be able to pay a $2.60 per share dividend. This maintains their ~3% yearly dividend rate. They had a free cash flow of $6.4B. They spent $3.9 of that in share repurchases and dividend payouts. That leaves 40% of that cash to continue to strengthen one of the most stalwart balance sheets outside of big tech on the street. Having this free cash flow allowed them to purchase Aerojet Rocketdyne for $4.4B in December. They seem flexible and willing to expand and take advantage of their relative position during the pandemic. This is a stock that has little downside risk and significant upside potential. It is always reassuring to me to know that at the end of the day, a company is using its profit to continue to grow.
HEADWINDS
New Administration – This is more of an unknown than a headwind. The Obama Administration was not light on military spending, and the newly appointed SecDef is unlikely to shy away from modernizing the force. Military defense budgets may get lost in the political shuffle, but nothing right now suggests that defense budgets are on the chopping block.
Macroeconomic pressure – The markets are tumultuous in the wake of GME. Hedgies are shaking in their boots, and scared money weighed on markets the past week. If scared money continues to exert pressure on the broader equity markets, all boomer stocks are likely weighed down by slumping markets.
Non-meme Status – The stocks that are impervious to macroeconomic pressures in the above paragraph are the stonks that we, the people, have decided to support. From GME to IPOE, there is a slew of stonks that are watching and laughing from the green zone as the broader markets slip deeper into the red zone. Unless sentiment about LMT changes, I see no evidence that LMT will remain unaffected by a broader economic downturn (despite showing growth YoY during a pandemic).
TAILWINDS
Aerojet Rocketdyne to the Moon – Cathie Wood opened up a $39mil position in LMT a few weeks ago, and this was near the announcement of ARKX. The big ideas 2021 article focuses heavily on satellite technology, deep learning, and HGVs. I think that the AR acquisition suggests that vertical integration is a priority for LMT. They even fielded a question in their earnings call about whether they were concerned about being perceived as a monopoly. Their answer was spot on—the USFG and DoD have a vested interest in the success of defense companies. Why would they discourage a defense contractor from vertical integration to optimize margins?
International Tensions – SolarWinds has escalated US-Russia tensions. President Biden wants to look tough on China. LSCO is a DoD-wide priority.
5G.Mil – We still do not have a lot of fidelity on what this looks like, but the military would benefit in a lot of ways if we had world-wide access to the rapid transfer of encrypted data. Many units still rely on Vietnam-era technology signal technology with abysmal data rates. There are a lot of implications if the code can be cracked to win a DoD 5G contract.
TRADE IDEAS
Price Target: LMT is currently at a P/E of ~14. Verizon has roughly the same. LMT’s 5-year P/E ratio average is ~17. NOC is currently at a P/E of ~20. TSLA has a P/E Ratio of 1339 (disappointingly not 1337). P/E is a useless metric because no one seems to care about it. My point is that LMT makes a lot of money, and other companies that are valued at much higher multiples do not make any money at all. LMT’s P/E ratio is that of a boomer stock that has no growth potential. LMT’s P/E is exactly in line with the Aerospace and Defense Industry P/E ratio standard. LMT’s new CEO is pushing the industry in a new direction. I will arbitrarily choose a P/E ratio of 30, because it is half of the software industry average, and it is a nice round number. Plus, stock values are speculative and nonsense anyway.
Share price today: $321.82
Share price based on LMT average 5-year P/E: $384.08 (I see this as a short term PT, reversion to the mean)
Share price with a P/E of 30: $690.26
Buy and Hold: Simple. Doesn’t take much thought. Come back in a year or two and be happy with your tendies (and a few dividends to boot).
LEAPS Call Debit Spread (Based on last trade prices): Buy $375 C 20 JAN 23 for $26.5, Sell $450 C 20 JAN 23 for $12. Total Cost $14.5 for a spread width of $75. Max gain 517% per spread. Higher risk strategy.
LEAPS: Buy $500 C 20 JAN 23 for $7.20. Very high-risk strat. If the price target is hit within two years, these would be in the money $183 per contract for a gain of 2500%. This is the casino strat.
SOURCES
https://www.lockheedmartin.com/en-us/news/features/2020/james-taiclet-from-military-pilot-to-successful-ceo.html
https://www.warren.senate.gov/newsroom/press-releases/in-response-to-senator-warrens-questions-secretary-of-defense-nominee-general-lloyd-austin-commits-to-recusing-himself-from-raytheon-decisions-for-four-years
https://news.lockheedmartin.com/2019-08-30-Lockheed-Martins-Expertise-in-Hypersonic-Flight-Wins-New-Army-Work
https://www.lockheedmartin.com/en-us/capabilities/hypersonics.html
https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK%E2%80%93Invest_BigIdeas_2021.pdf?hsCtaTracking=4e1a031b-7ed7-4fb2-929c-072267eda5fc%7Cee55057a-bc7b-441e-8b96-452ec1efe34c
https://www.deseret.com/2018/6/19/20647309/twitter-reacts-to-trump-s-call-for-a-space-force
https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2021/fy2021_Budget_Request_Overview_Book.pdf
https://www.airforcemag.com/lockheed-receives-up-to-4-9-billion-for-next-gen-opir-satellites/
https://spacenews.com/northrop-grumman-gets-2-3-billion-space-force-contract-to-develop-missile-warning-satellites/
https://www.lockheedmartin.com/en-us/capabilities/directed-energy/laser-weapon-systems.html
https://emerj.com/ai-sector-overviews/lockheed-martins-ai-applications-for-the-military/
https://www.defenseone.com/business/2020/07/new-ceo-wants-lockheed-become-5g-playe167072/
https://www.wsj.com/articles/defense-firms-expect-higher-spending-11548783988
https://www.etf.com/ITA#efficiency
https://s2.q4cdn.com/661678649/files/doc_financials/2020/q4/4Q20-Presentation.pdf
https://investors.rtx.com/static-files/dfd94ff7-4cca-4540-bc4b-4e3ba92fc646
https://investors.lockheedmartin.com/static-files/64e5aa03-9023-423a-8908-2aae8c7015ac
https://s22.q4cdn.com/891946778/files/doc_financials/2020/q4/GD_4Q20_Earnings_Highlights-Outlook-Final.pdf
https://www.fool.com/earnings/call-transcripts/2021/01/27/teledyne-technologies-inc-tdy-q4-2020-earnings-cal/
https://investor.northropgrumman.com/static-files/6e6e117f-f656-4c68-ba7f-3dc53c2dd13a

This writing was copied from my blog https://nope-its-lily.medium.com/. I write about the NOPE and other options and market things there and on my twitter https://twitter.com/nope_its_lily. Cheers!
Check out Part 1 first about my thoughts on the short squeeze thesis. To clarify — I do think shorts are being squeezed in Gamestop, although this is auxiliary to the main driver of the stock’s momentum (and not, in my opinion, the primary driver of Friday’s exponential rise).
So okay, let’s go to the obvious question — if hedge fund tears didn’t cause Gamestop to rocket, what did cause it?
Wew laddy, +71.25% at the peak.
Gamestop in many ways is an extraordinary story, and has all the properties of a successful meme stock (salience):

1. Personal name recognition/Nostalgia-For better or worse, we all know/remember Gamestop (primarily from childhood), which is similarly why Hertez performed so well in the afterlife while Mallinckrodt hasn’t.
2. A hero and a villain — Much like Tesla, Ryan Cohen represents the hero in the Gamestop narrative, where investors can paint whatever picture of the future they want and justify whatever price tag they pay. Similarly, Melvin and Citron (I mean, even the name Melvin) and the hedge fund industry are (perhaps well-deserved) villains in the arc, helping obfuscate feelings of greed or risk by presenting it as a righteous cause.
3. A cataly-ish — For obvious reasons Gamestop is benefiting from the console cycle, but perhaps to a lesser degree than before (its massive real world presence during a pandemic doesn’t help much).
4. Humor-What could be more funny than investing in a relic of the early 2000s? Except maybe investing billions into 3d renderings of hydrogen powered cars.

So it isn’t a surprise Gamestop captivated the attention of the internet; despite common belief, the legend of Gamestop extended far outside wallstreetbets (although the saga of DeepFuckingValue/RoaringKitty there helped bring substantial energy to the cause).
And how does the internet show some love?
Well, it buys calls.
For better or worse, most new investors have absolutely no concept outside of simple long call/put positions (probably for the best, from experience). In general, most new market positions view long options (and, let’s face it, mostly calls) as a highly leveraged bet on the underlying akin to a lotto ticket, which works beautifully for the following reasons:

1. Long options have asymmetric risk-reward, assuming risk-loving participants.

While in prior posts I’ve touched on the expected profit of options being zero, this is only true (it’s never actually true, due to seller’s, variance risk premium, and a host of other factors) under risk-neutral measure. In the real world, investors (especially on indices) tend to be risk-averse (weighting losses more heavily than chance of gain)… at least historically. The new class of retail investors, on the other hand, partly engendered by Robinhood’s extremely gamified UI tends to be risk-loving (“yolos”), favoring chance of gain over (higher) chance of loss.
For that type of an investor, options are akin to a casino due to convexity, or in layman’s terms, “the potential to go up a lot really fast” in value. This is of course true for stocks too (albeit less so, due to the implied leverage of options), but when an individual purchases a stock they have a rather large downside (the entire stock can become worthless). This isn’t the case for a call option, which only represents a portion of the total cost of the stock, but represents the entire upside.
2. Options have to be hedged… often in the underlying.
Before I get 1000 responses telling me this isn’t always true (especially on indices, where you have futures and all sorts of nice things) — it’s more or less true on a meme stock, which basically has no beta or correlation to any other stock (except perhaps other meme stocks). In general, one can anticipate that an option written by a market maker and sold to a retail investor (who owns a long position from that transaction) is hedged in the underlying stock, which obeys the same rules of buying and selling pressure. This is even more apparent in stocks with low float, which tend to move in price substantially with relatively low volume traded. You can imagine how few option contracts it similarly takes (given the implied leverage up to 100 shares worth of delta) to actually move the price (I’ve seen call options move the spot in real time, for instance, on Del Taco stock before earnings).
3. Option buying begets option buying.
What happens when a few individuals buy options on a stock? It moves up slightly (usually in proportion to how many options were bought, what time period they were bought in, and how large the underlying’s float is). This triggers the happy centers in peoples’ brains (yay, we’re making money) and triggers more buying of calls.
More interestingly, option convexity is largely due to the Greek gamma, which simply refers to the rate delta changes in response to changes in the underlying’s spot price. Delta more formally measures how much we expect the option price to change as the spot price changes, but more usefully for this example can represent how many shares equivalent the option contract controls at the given price. This is why delta represents the hedge ratio — if you, for instance, write a 100 delta (ITM) call option and sell it, you need to equivalently own 100 shares of that stock to neutralize your risk.
Delta is interesting (my favorite Greek) because it is heavily non-linear, and changes in response to:

1. Spot price (gamma)
2. Time to expiration of the option (charm)
3. Volatility of the underlying (vanna)

These are all second order derivatives, so you probably are lost by now if you didn’t take calculus at some point.
So why is gamma important here?
Source: quantik.org
Unlike controlling the equivalent delta’s worth of shares, the value of an option contract increases at a faster rate as it gets closer to in-the-money. This is (one of the reasons) why options have convexity — the value of an OTM call option contract goes up faster as it gets closer to ITM, with a potential for (5,10,100,200+)**-**baggers (multiples of how much you paid for the initial) if you play it right.
What’s even more interesting though than gamma alone, however, is pairing it with theta, the decay of an option’s value as the time-to-expiration draws closer. This tends to have a strong relationship to the implied volatility — theta represents the time value of the option (extrinsic), and implied volatility is largely the market consensus of the potential for the underlying to move in the time remaining on the option. However, as the days tick down, the time for that move to actually happen diminishes, and therefore the value of the option similarly goes down with it.
As IV increases, theta usually does (especially on short term options), and vice versa. (Helpful video by the tastytrade crew — https://www.tastytrade.com/shows/market-measures/episodes/theta-and-iv-05-17-2019)
So, given my tendency to ramble, the question is — why is this important? Let’s look at gamma and theta in the context of 0-day-to-expiration (0dte) options, and try to piece together what happened to Gamestop on January 22, 2021.

0 Days to Live

0dte options have long been a mainstay of the dopamine addicted day-trader community (including me, sometimes) given they represent the purest form of lottery ticket:

1. They expire at the end of the day — You don’t need to go to bed and worry about your position, because it’s either closed or worthless.
2. They’re cheap, generally-Theta in particular becomes exponential for 0dte options, and you can quickly buy positions on sale just to gamble as the end of the day grows closer.
3. They still represent implied leverage and have that tasty convexity-Like their more respectable brethren, 0dte options still represent the underlying and have all the neat Greeks (gamma, delta, vanna, pajamas, etc.) which make their payouts non-linear and fun.

In general, the optimal strategy to capitalize on 0dte long options is to buy as late as possible in the day, to allow theta to provide as much leverage to you as cheaply as possible.

Let’s Imagine a Scenario Here

Let’s imagine you have a high implied volatility stock that has been stable/slightly declining in price for multiple days. During that time period, theta is aggressively destroying the value of long options, while IV is similarly dropping (both due to theta and due to relative lack of movement). As we get to the final day (this is a weekly, for example), much of the option’s value has now disappeared.
This impacts both put and calls open, though. And let’s say a mean orange decided to start a war on your stock in the days before, causing a flood of short-term puts to hit the market during that week, which had minimal effect (largely due to continual call buying of longer-dated options coupled with actual shares buying pressure due to belief of a short squeeze/Ryan Cohen being the second coming of Christ).
What happens when those puts start to expire? As the days and then hours tick down, the hedges of those put positions (shorted shares) start to unwind, and buying pressure picks up.
Similarly, this buying pressure is noticed by market participants, who start to capitalize on the momentum by buying 0dte call options. These at first have minimal impact, largely because the inflow and outflow of call delta are roughly equivalent (somewhat of a bias towards inflow, pushing price up alongside share buying).
But towards the middle of the day, two interesting things happen:

1. Theta and charm become more and more prominent in both making new option positions cheaper and unwinding existing put and call positions.
2. Gamma starts to become more dominant due to the high implied leverage versus cost of 0dtes, leading to the virtuous cycle (option buying begets option buying).

These two effects tend to be complementary — as the hedges unwind (given the weekly puts from Citron/the short seller attack) for existing option positions, new 0dte positions can be bought and bought, each time pushing up the underlying as well as increasing the value and delta of other 0dte positions.
This can be neatly observed in the option volume versus open interest for the 1/22 series on GME:
This is fine.
Although more puts traded, the delta (for obvious reasons) of calls is much higher.
As the price of the stock goes higher and higher, this continues to attract more and more speculation, hoping to capitalize on the continued momentum. This continues in a loop:

1. The price of the underlying continues to increase as put hedges unwind, volatility spikes, and call options are bought (the initial delta hedge).
2. The increase in price leads to gamma of existing contracts increasing the delta of those contracts.
3. This leads to more shares being bought to hedge those increasingly higher delta positions.
4. This leads to more speculation and momentum.

An interesting property of $GME from Friday you can neatly observe is the highest strike in the series is $60, meaning that at Friday’s close, every single call option expiring 1/22 expired ITM. More interestingly is the relationship with gamma, again observable below:
Source: quantik.org
As a contract moves further and further ITM (at one point, GME hit $76 intraday), the gamma of the contract decreases as delta hits 100 on the position. This implies a cap on the momentum from the virtuous cycle described above — while continued call buying can of course drive up the price further, not only does the cost become prohibitive (given that a deep-ITM position is basically equivalent to buying 100 shares in payout), it becomes linear (and therefore boring). Once 100 delta is reached, there is no more cycle of increasing spot price causing increasing share buying, only normal share buying.
And that’s when it drops.
It’s hard to say whether the halt caused the drop (given the mental association halts have to pump and dumps for most investors). In this case the drop assuredly coincided with the halt, but more importantly, we can observe where the drop ended:
​
57.99 is such a pretty number.
In this case, we can observe the drop in price stabilized at $58, before rapidly jumping above $60. This is largely due to gamma and continued 0dte call buying buttressing the fall — as the positions fell farther OTM, shares used to hedge those positions are sold off, further driving the price down (in this scenario, the dealers are almost assuredly short gamma). However, similarly those positions-now closeOTM and close to expiry-become cheaper at a fairly exponential rate (due to theta and charm).
Speculators again gain conviction, pushing the price up above the highest strike (to the point where gamma provides no real extra push versus the clock ticking down).
This is what we call a gamma squeeze, and isn’t a terribly uncommon phenomenon. It largely follows similar patterns:

1. In general, gamma squeezes tend to happen closer to OPEX, due to both hedge unwinding (in the case of a previous put skew, for instance) and due to the 0dte effects mentioned.
2. In general, there is both a rapid rise (due to gamma looping and speculators joining) with a similarly steep cliff (especially if the available strikes is exhausted, like what happened to $GME).

Can it be continued forever, though?

In general, the answer unfortunately is yes.
Gamma squeezes in generally power meme stocks, and require a few elements to be true:

1. Continued supply of strikes and promise of convexity — Put gamma squeezes rarely happen because well, the maximum value of a put option occurs when the underlying hits 0. Calls, however, have an infinite potential payoff and strikes similarly can be added indefinitely. This allows continued creation of OTM options, which due to cheap premium and asymmetric risk-reward on longs power the gamma squeeze.
2. Continued momentum-In general, meme stocks follow the greater fool theory, despite promise of rocket emojis. When they drop, they drop hard.

​
Oopsies.
This is because, as previously mentioned, meme stocks are powered by long calls sold by market makers, who are chronically short gamma. Any selling begets more selling. Even periods of quiescence are dangerous, because without continued inflow of call delta, hedges unwind, and the selling pressure begins.

1. Continued attention-This is where salience shines. The major reason Tesla (the OG gamma squeeze) continued to rocket throughout 2020 was largely due to Elon Musk’s charisma and Tesla’s promise of a better world. It becomes a lot easier to stomach risk for an investor when following a strong personality with a killer story. This role was largely played in Gamestop’s saga by Ryan Cohen, and fed into (potentially unwittingly) by the battle with Citron and the mystique of DeepFuckingValue. It remains, however, to be seen if this will continue.

The moral of the story here is retail, for better or for worse, finally learned how to weaponize options. We’ll see what happens next.

TL;DR it takes too much work and mental stress to become consistently profitable. Get a day job.
Below are some of the guidelines I make for my own personal investments and I am sharing my investing perspective so it may help others improve their trading views through the perspective of an idiot.
What I think every investor should know/learn about:
•It usually takes years before traders become profitable, but it can be a great source of income if you can game the market.
•It is important to remember that there is always a winner and a loser in a trade. The banks are usually the winners.
•When you go to the casino always find a way to bet on the casino winning.
•Only sell puts when they are covered and you intend to buy stocks from it to use as a potential swing trade or long hold. You don’t want to get caught trying to work the verticals after hours.
•Indicators are great outliers for trading, but should really only be used as a basis to judge your trades at the end of the day. you want to avoid getting VWAP, MACD and IC fucked because when you’re trading at the bottom of the channels sometimes it just keeps going...
•Sitting back and going cash heavy is never a bad move. Sure you miss out on some opportunities but you certainly don’t want to feel the bite of overbuying during an institutional sell off.
•Consolidation can take weeks before it rockets or blows up. Place consolidation calls 1 month out and swings 2 weeks out. Theta usually burns during the last week more than any other time, so doing 2 week trades is usually best unless you expect the market to turn the next day(don’t buy calls for next Friday exp if tomorrow is the only up day you expect) because other people are probably thinking the same thing and selling their options at the same time as you.
•Generally speaking, most people lose money by buying a call or put and holding it until expiration. If you’re lucky enough to ride a daily wave or gap consider selling out or pulling profits to gamble with house money. How many degenerates have been up 100+ only to be down 90% the next day?
•Know the rules(really though, read the rules on exercising options as they vary from platform to platform).
•make your own guidelines, and look for keys or tell tale signs of a head fake.
•If you’re new to trading stocks you should probably stick to trading stocks until you learn what a bid/ask spread is, learn how markets move, and learn how all the small things can make industries move on a macro level.
•Learn how to time the market and compare charts for consistent moves made during specific time periods. Break it down per 1,5,15,30,60 minute charts and daily charts mon-Friday for years. Try to find tendencies and consistencies in charts and graphs. If you think you can read charts and patterns choose a random day of that stock that you have not studied and day trade it using Webull on normal time playback(not on fast forward so you suffer the misery of watching it move slowly for minutes on end only to miss the timing of the jump or bottom).
•There is nothing wrong with holding onto cash and just watching/studying the markets. Look for how different things like hurricanes, war, tsunamis, inflation, deflation, bond yields and exchange rates effect the market in the mean time as that is what has been driving this market on a macro level.
•my personal holdings strategy is 80% cash, 10% stock, 9% options and 1% leverage. It can change to 90% cash and 10% options with a 5-5 or 8-2 split when I am not holding onto stock and run bearish. I do not want a normal market as that would kill my strategy(a market that lacks volatility).
•If leverage is too expensive to buy on your positions, find a stock that has been outperforming based on that sector and short it(assuming you’re call heavy). They usually have the lowest IV but the largest amount of movement. Puts on triple leveraged is also a pretty decent money mAker when looking for leverage(costs more but has a tendency of having larger payout percentages).
•Learn about psychological manipulation and the way institutional investors move the bid/ask spread to create artificial support and resistance lines before canceling their buy/sell orders and letting the stock run. Sometimes they will kill the price after a few minutes just to create a different bid/ask spread with backup orders(my theory is that this is what creates VWAP and MACD flops on a macro level).
•create your own rules that will help you refine your investments. Having too many rules doesn’t limit your trades, rather it increases your ability to invest by increasing success and through this creating confidence required to make the right trade.
•Look at daily bond yields and volumes of bonds bought/sold and at what prices.
•Watch currency exchanges as currency rates will clearly make a difference in profits that rely on imports/exports(almost every company).
•When trading wedges, sell out when one set of options covers the cost of the entire wedge(calls and puts) +10%, and hold the other side until the stock goes the other way. I view it as buying the consolidation, profiting off of movement, and banking off of a head fake.
•sell options within the first 15-30 minutes of market open if the stock spiked to take advantage of volatility.
•buy options around 2-3et as that will usually be the cheapest time , but the last half hour can also be a great time depending on which part of charts you like to work.
•Close options as a day trade if I profit 100% or more in a day.
Personal rules:
80% cash, 10% stock, 10% options with 90% cash-10% options if I am bearish.
Don’t overpay for an option just because you think you can scalp a quick 50%. It’s not worth getting macd or vwap fucked.
If you have to pay more than the price of 1 stock for a weekly option that is 50 cents or .2% otm it is not worth buying in my opinion(don’t hold options for more than 1-3 days at the most because you don’t want to ride the waves if you know a down day is coming).
Be happy with 5-10% returns. Sure some people might be making more, but you just need to hit the right rotation to outperform them.
Do your research. Don’t jump on hype/meme stock.
Inverse Cramer except when he is giving advice to service members.
Always buy leverage because breaking even on bad days is worth sacrificing 10-30% worth of gains to make sure you break even if the market turns.
Know the who(who is the ceo and what have they done), the what(what does the company sell and who are they marketed towards), when(when do you plan on buying and selling), where(where are they based out of), why(why do you think this company will outperform the other companies in the same sector), and how(how did you hear about the stock? Sources matter as they will give you an idea of how accurate they have been in the past).
Buy on bad news and sell on good news. Most of the time billionaires already got the news and sold out by the time you hear about it and panic(causing more panic and a great buying opportunity).
This is not investment/financial advice and is for entertainment purposes only.
Edit: food for thought: ever wanted to exercise an option afterhours and sell it in early premarket 4:30 et to buy and dump the position? How are you going to exercise those options without cash to exercise them?

This guide aims to outline all of the best gambling cashback offers available over a range of sites, following this guide you should be able to make over £500 in cashback
Note - Cashback often takes a while to payout, bear this in mind when completing offers as you may have to wait to cashout your earnings
When completing these offers don't chase any loses as the cashback will give you a profit with nerly every offer
A short review of each site and some referral links
Topcashback - Cashback will show as tracked within a few days, can take a few weeks to become payable, in some cases even longer, asides from gambling they have great offers for car insurance and mobile phone contracts, worth taking a look to save some extra money!
Ref - Extra £5 when you make £10 cashback
Non-Ref - No reward
Quidco - Much the same as Topcashback
Ref
Non-Ref
Minimum payment - £10
Ohmydosh - Faster Payouts but less offers
Ref - Extra £1
Non-Ref - No reward
Minimum payout - Any
Cashback Earners - A lesser known site in need of a fresh look, this site also has some bad reviews, referal income is paid to the site on a monthly basis with the dates for each site being different, offers don't seem to show as tracked until the website receive their payment, cashback should appear in your account within 1 month of completing an offer. Cashout amounts are specific, its best to build up a balance and then withdraw. Payment takes around 3 weeks.
Ref - Sign up bonus £6.5
Non-Ref - Sign up bonus £6.5
Minimum payout is £20
Payment Proof - Payments for all sites can be seen here, quidco isn't shown as i have signed up for all the casinos on offer through topcashback

How to Maximize Profit - IMPORTANT - READ THIS

For the majority of these offers you want to play blackjack following the chart found here
Any blackjack game will do, look for a normal version of the game at the site you are playing on and make sure it is a non live game as the hand sizes will be lower.
When playing blackjack there will often be more than one spot that you can bet on, allowing the player to bet more than one hand at a time, Its important to only bet on one spot at a time as it reduces the variance of the game and will ensure you get the maximum return possible from the game, stick to £1 hand sizes when playing and dont be tempted to bet larger amounts as you will be getting a nice amount of cashback from every offer
Through playing blackjack this way the player will get a return of around 98%, meaning for every £100 staked you will lose around £2. If you make a loss on a casino site after completing the required wagering amount, withdraw your remaining balance, don't chase loses as the cashback will make up for loses and give you a profit in most cases.
All offers are updated fairly regularly, make sure to check the terms for each offer as information in this post may become outdated. Also check for other offers every now and then as new casinos are added!

TopCashBack Offers - £400+ Profit

Topcashback Referral - Get an extra £5 - See the Ref Link at the top of the page!
If you dont already have an account at top cashback, you can sign up through my referral to get an extra £5 added to you account once you make £10 cashback
Lottoland - Cashback £15
Add £11 and play 11 separate £1 hands, following the strategy outlined at the top of the post, withdraw any remaining balance.
Betfair Casino - Cashback £70
Note this is not the poker offer
Add £50 to your account and play 50 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Quidco are offering £100 for this offer
Party Casino - Cashback £26.5
Deposit and play 30 single £1 hand son blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Tombola - Cashback £24.5
Deposit £10 and open the tombola roulette game, choose a £1 chip size and choose 5 spots, repeat this twice, withdraw any remaining balance, you will likely lose money here but the cashback will give you a profit
Coral - Cashback £46
Add £10 and play 10 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Bingoport - Cashback £3
Sign up to bingoport to get an easy £3
Ladbrokes - Cashback £42
Add £10 to your account and play 10 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Pokerstars - Cashback £32
Add £25 and play 25 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
STS - Cashback £21
Add £30 to your account and play 30 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
William Hill - Cashback £54
add £25 and play 25 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Megacasino - £15.75
Add £25 - Play 25 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
LottoGo - Cashback £3.18
Buy a euromillions ticket
Slingo - Cashback £24.75
Add £10 play 10 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
PaddyPower Games - Cashback £20
Add £10 play 10 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
The Football Pools - Cashback £24.75
Sign up for the £10 a month subscription, cancel this after 30 days
Lottomart - Cashback £18
Add £10 - Play 10 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Genting Slots - Cashback £25
Add £30 play 30 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
OhMyDosh - Cashback £40+
Referral gives an extra £1, sign up through the ref link at the top of the post to get the bonus!
Gala Bingo - Cashback £17.50
Deposit at least £5, you'll get a £10 slots bonus and 100 free spins, these carry hefty wagering requirements, Open any slot and play the minimum spin size, play until you lose all of the money in your account or complete the wagering requirements on the bonus funds. Withdraw any remaining balance.
BGO - £10 Cashback
Deposit at least £15. Play 15 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance. DONT ACCEPT the welcome bonus from BGO.
Lottosocial - Cashback £4
Sign up to Lotto Social - Use your correct phone number when joining as it is the only way to login to your account. Purchase 10 lines for £1, after making a purchase go to your account page and find the list of syndicates your are in, leave the syndicates to avoid making any more payments.
Cheeky Bingo - £10 Cashback
Deposit £10 and get a £40 welcome bonus, just play bingo with all of your funds and hope to get some wins, bonus has 4x wagering requirements.

Quidco - Cashback £100+

Quidco don't offer a sign up bonus, find my ref link at the top of the post if you want to help me out!
All of the offers on quidco are much the same as topcashback, the only offer worth noting is the betfair casino offer which pays £100
Betfair - £100 cashback
Add £100 and play 100 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.

Cashbackearners - Cashback £180+

Sign up Bonus
Get a £6.5 sign up bonus, think this works with or without the ref link, links are at the top of the post!
To find these offers just search for casino on the site.
All of these offers state that you only need to make a deposit, its best to play through the deposit 1x to ensure that the cashback is paid.
LuckyMeSlots - Cashback £15
Add £15 and play 15 single £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Spin Genie - Cashback £12.5
Add £12.5 and play 12.5 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Cashmo - Cashback £10
Add £10 and play through £10 on any slot staking the minimum amount per spin. Don't spin the wheel that pops up after signing up or accept any other bonuses.
Ice36 -Cashback £15
Add £15 and play 15 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Spinhill Casino - Cashback £15
Add £15 and play 15 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Galacasino - Cashback £30
add £30 and play 30 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Casino765 - Cashback £12.5
Add £12.5 and play 12.5 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
Casinosuperwins - Not recommended, bad site, awful support
Casino2020 - Cashback £15
Add £15 and play through £15 on any slot staking the minimum amount per spin. Keep track of spins and quit the slot after wagering the required amount. Don't spin the wheel that pops up after signing up or accept any other bonuses.
Pocketwin - Cashback £10
Add £10 and play through £10 on any slot staking the minimum amount per spin. Keep track of spins and quit the slot after wagering the required amount. Don't spin the wheel that pops up after signing up or accept any other bonuses.
The Sun Vegas - Cashback £15
Add £15 and play 15 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
DrSlot - Cashback £10
Add £10 and play through £10 on any slot staking the minimum amount per spin. Keep track of spins and quit the slot after wagering the required amount. Don't spin the wheel that pops up after signing up or accept any other bonuses.
MrSpin - Cashback £10
Add £10 and play through £10 on any slot staking the minimum amount per spin. Keep track of spins and quit the slot after wagering the required amount. Don't spin the wheel that pops up after signing up or accept any other bonuses.
PrimeCasino - Cashback £15
Add £15 and play 15 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
ConquestAdor - Cashback £10
Add £10 play 10 £1 hands on blackjack following the strategy outlined at the top of the post, withdraw any remaining balance.
MFortune - Cashback £10
Add £10 and play through £10 on any slot staking the minimum amount per spin. Keep track of spins and quit the slot after wagering the required amount. Don't spin the wheel that pops up after signing up or accept any other bonuses.
Thanks for reading, hope this of use to some people, happy earning!

Some days ago I made a post on the best possible payouts you could get, but forgot some variables. As such I have decided to, now that I am certain that I understand it, explain it to others since I still see many misunderstandings of how the heist really works.
Difficulty
When starting the heist it will either be hard or normal. You get the hard mode by paying the 25,000$ buy-in within 48 minutes of finishing your last heist. If you start the heist outside this 48 minute cooldown you will have normal mode.
What does the difficulty do?

1. Hard mode raises the main targets value by 10%. a 1.000.000$ target becomes 1.100.000$ if it is done on hard mode. Notice that value of secondary target does not change.
   
2. If you get Elite challenge then you get a 100k bonus reward, as opposed to the 50k bonus that you get on Normal difficulty.
   
3. Every fingerprint hack will have one more fingerprint, and it will be slightly more difficult.
   
4. The AI and cameras will have slightly larger vision cones
   

Elite Challenge
The Elite challenge is essentially a reward for flawlessly pulling off the heist in stealth. The requirements are:

1. Under 15 minutes. Must be 14:59 or less, 15 exactly won't count.
   
2. Everyone in the heist crew must have full loot bags when the heist is finished.
   
3. You must not alert the guards
   
4. Do not quick restart the heist, you must do it first try.
   

The main Targets.
There are 4 main targets that can be had at this moment. The first number displayed is their base value, second number is with the 10% increase in hard mode. In order of value:

1. Sinsimito Tequila - 900.000/990.000
   
2. Ruby Necklace - 1.000.000/1.100.000
   
3. Bearer Bonds - 1.100.000/1.210.000
   
4. Pink Diamond - 1.300.000/1.430.000
   

There is also the panther staute. This is a special item that will likely only be available during special events. Anyone that you have seen take it so far is either using mods or hacks.

1. Panther statue - 1.900.000/2.090.000

Secondary Targets
Each secondary target gives a different pay, and some take up more or less space in your bag. The first number specified is how much a full bag of this secondary item will give, and the second number is how much of your bag one stack of this item takes up, so in the case of cash you will need 4 piles of it to reach the indicated value. From order of most to least profitable:

1. Gold. 490.000 - 75% ¹
   
2. Cocaine. 450.000 - 50%
   
3. Weed. 400.000 - 37%
   
4. Cash. 385.000 - 25%
   
5. Art. ??? - 50%. The value of art is random, it seems to be based on the specific painting but not certain. It always takes up 50% of your bag.
   

1 - The gold only spawns in the compound within rooms that require two people to use keycards at the same time, similar to the vault in the Diamond Casino heist. Therefore you need to bring at least one friend to get to the gold.
Mandatory fees

1. There will be a Fencing fee of 10%, and Pavel gets a cut of 2%. If you have 1.4 million in your bags, then expect to loose 160k in fees.

Secret safe cash
There is a safe in Mr. Rubios office that contain small amounts of money. These do not take up space in your bag, but the amount is often miniscule. The value in the safe seems completely random, but I have seen anywhere between 50.000$ to 90.000$
Cuts - is it worth it to bring a friend?
You can do the heist solo. The smallest cut that another player can take is 15%. We will run a small experiment here to see if it is actually profitable for you - the host - to bring a friend or if they are going to be leeching from you.
Gold takes up 75% of a bag, so you need to find 3 stacks of gold to fill the bags of both people. this seems simple enough, I have seen 5 bags spawn, so there could theoretically be enough gold for 3 people.
Let's do a virtual heist with one person then do another with a friend. For simplicity this will not include elite challenge bonus nor secret safe cash.- here goes:
Only you:
Main target - Bearer Bonds, 1.100.000$
Secondary targets: 2x Cocain for 450.000$
Total take: 1.550.000
10% in fencing fees and 2% in Pavel fee: -186.000$
Host gets: 1.364.000
One friend, gold secondary.
Min target: Bearer bonds, 1.100.000$
Secondary targets: 3x Gold for 980.000$
Total take: 2.080.000
12% fees: -249.600$
15% cut of friend: 310.000
Host gets: 1.520.400
One friend, Cash only secondary.
Min target: Bearer bonds, 1.100.000$
Secondary targets: 8x Cash for 770.000$
Total take: 1.870.000
12% fees: 224.400
15% cut of friend: 280.500
Host gets: 1.365.500
TL;DR:
If you bring one friend then host almost always gets more money. You will break even with cash only as secondaries, and make a loss if some bags are not full of if you get some paintings. If you pick up any cocaine or Weed then you will get more money than if you were alone.

• The negatives

People were letdown by the fact that the island is not freemode, as the heist is setup it would break the scope out. The island wouldn't be worth it to be freemode as it's not as interesting as I thought it would be.
The Cayo Perico island is small. The most prominent spots of interest is the party area, two docks, an airstrip, the main compound. The overall look of the island is rural and poor but the compound is mission revival architecture. So it's an island. In the mid tropics it's going to be covered in plants.
The plants are made out of concrete and to do the heist stealth its impossible to navigate the island. In my first scope out mission I spent the first half hour of the Cayo Perico dlc swimming around the island trying to find a way in. A thumbs down on the invisible walls and plants.
The lag is bad on the island. With so much vegetation rendering its impossible to hit a smooth framerate. The island is rendered in a freemode lobby. Often in a full lobby which makes gameplay a slide show at times. I have the one x and it's noticeable I can't imagine what it's like on base Xbox and Playstation.

• The positives

The submarine, heist, and Pavel are really cool.
Pavel. I really like Pavel instead of Lester he has a good personality and it is a big change from Lester. Lester is baller but hes burnt out and I'm glad someone else is helping us with the heist.
The Kosakta submarine is reletively cheap at a base price of 2.2 million. Fully upgraded the submarine costs an upwards of 9 million. Honestly the only upgrade worth investing in is the Sparrow and the missile upgrade. Everything else I consider not a necessity. You can also drive the sub which I was surprised by. For 10k, after heist 2k, you can fast travel to various spots of the map.
The heist. This is the best heist to have released, in my strong opinion. Sure the base heists started everything and they will remain as a legend. The Cayo perico is better than the Diamond Casino and the Doomsday Heist.
The Cayo Perico heist is solo, cheap, easy, approachable, and with a great payout two solo heists will pay for the sub and sparrow upgrade.
For what seemed days you'd play a series of heists. Friends wouldn't always be on, randoms are dumb and stupid. Doing heist setup missions were impossible. But then the diamond casino heist came out with freemode setup but you still needed people for the heist. With Cayo perico you can do everything solo and relatively quickly. It's quicker than the diamond casino.

• Summary

Even though people were let down this heist is still changing the game extremely, players can make 1.6 million in about an hour with this heist. That's crazy. Looking past the letdowns and lack of content this is really nice.
If you're new save up for the Kosakta and buy that instead of a facility or arcade.

I haven't played GTA V/Online since 2014, so things have changed a bit. It's all quite overwhelming for newcomers or returning players, especially if you get the Criminal Enterprise Starter Pack like I did.
I snagged my Motorcycle Club, my Bunker, and free vehicles, and proceeded to follow guides for making money with those businesses. I sank too much into them, to the tune of getting down to $500,000 with no profit coming in because I was getting skunked as a solo player, even in a solo public session.
The most difficult part of it all is dealing with the sharpshooter NPC's. These guys are ridiculous! So, we're aiming for non-combat jobs.
That said, here's what I recommend folks do: - Snag the Criminal Enterprise Starter Pack for the $1,000,000. - Link your Amazon/Twitch Prime account with your Rockstar Social Club account to snag another $200,000 (and another $200,000 after 4 weeks consecutive play, supposedly). - Grab a bulletproof helmet ($20,000) from a clothing store, and ensure it's always equipped. (You may skip this, as it's really not necessary, but will help if you get pinned somewhere.) - Purchase a Mini SMG ($8,900). - Purchase a Pegassi Bati 801 motorcycle ($15,000). - Play Mission Repo - Simeonics until Rank 16 (Pause Menu > Online > Jobs > Rockstar Created > Missions > Repo - Simeonics). Profit $16,170. - Once Rank 16, play the Chasers II mission (Pause Menu > Online > Jobs > Rockstar Created > Missions > Chasers II). Queue into it, select Hard, and on the next screen, select Closed so no one else joins so you don't have to wait for them. Start a timer once you load in, go grab the car, ignoring people shooting at you (they'll stop once you get close enough to the destination), and turn in the vehicle once you pass 4:00. Profit $9,480. - Repeat - Once you get to $1,500,000, see this post or watch this video to start making $240,000/hr until you reach $2,200,000.

Notes for fellow noobs

Snacks are how you regain health. Your free CEO office has an executive assistant that provides snacks for free. These can be consumed on-the-fly via the Interaction Menu at Inventory > Snacks.
Ammo can be purchased for your currently-held weapons via the Interaction menu at Inventory > Ammo.
Visit the casino once per day (real time). No matter what, it's worth the drive, even if just for a few thousand RP.
At this point in the GTA Online lifespan, your goal should be to obtain a submarine ($2,200,000) in order to do the Perico Heist. So, after grabbing your free cash, and spending some dough on the aforementioned items, you should be sitting at $1,156,100 before even starting any jobs. You're practically halfway to the submarine already...
The reason we wait for 4:00 is due to the way payout is calculated. Further reading here.

Math

I tried a bunch of things, but what boiled down to being most profitable-to-ease of completion, in order of best to okay, were: 1. Chasers II 2. Repo - Simeonics 3. San Andreas Seoul 4. Warehouse 1x Crate Pickup & Delivery
``` | Job | Avg Time to Complete | Net Profit | Avg Profit per Minute | Profit per Hour | | ------------------ | -------------------- | ---------- | --------------------- | --------------- | | Repo - Simeonics | 10:00 | $16,170.00 | $1,617.00 | $97,020.00 | | Chasers II | 6:45 | $9,480.00 | $1,404.44 | $84,266.67 | | San Andreas Seoul | 9:00 | $11,380.00 | $1,264.44 | $75,866.67 | | Warehouse 1x Crate | 8:00 | $9,000.00 | $1,125.00 | $67,500.00 |
Sample Size for each: 10 ```

Conclusions

Taking into account the costs for each warehouse, we'd have to do roughly 9 hours of solo 1x crate jobs before breaking even. However, these will come in handy with vehicle cargo if I decide to do that in the future.
While Repo - Simeonics is more profitable, it's also slightly more difficult. Taking your Bati 801 to the airport twice to grab two cars takes some time, and has more room for error, especially considering the wanted level at the beginning. That said, the only choke point is at the entrance/exit of the airport, and really isn't an issue. But it is worth noting.
Chasers II can be done in around 2:00, with 2:00 of waiting in Simeon's parking lot to turn in. This can definitely be more boring, so I am currently switching it up between Chasers II and Simeonics.
Once you're ~ Rank 40, you should be able to do some better missions, as mentioned in this post, but you should have already done the Perico Heist by then, and at that point the missions will be less than what you can make with Perico.

Testing Parameters:

Each mission was timed from the beginning of loading into the queue to loading back into free roam.
Crate jobs were timed from leaving the CEO laptop, picking up, taking to warehouse, selling and dropping off, to returning to the CEO office. Office used was Maze Bank West, while warehouses used were White Widow Garage ($360,000) and Convenience Store Lockup ($250,000).
All tests performed using PlayStation 5 with MTU set to 750. With default MTU setting, queuing into missions may be quicker, and therefore even more profitable.

Questions

Why not Sightseer?
Sightseer, the CEO/VIP Work, is definitely non-combat. However, there are so many variables here, that it's just not worth it. You're usually taken on a wild goose chase throughout the northern section of the map. You need a fast airborne vehicle for Sightseer to be worth it. But even then, you probably already have better means of income.
That said, give it a shot! Even if it takes you all 15:00 to complete, it's still $20,000 ($25,000 if completed in under 5:00, but let's not kid ourselves). This comes out to $1,333/min if done in 15:00, or $2,000/min if done in 10:00.

Changelog

12/30/2020 - Added Questions section - Added information regarding Sightseer. - Added information regarding CEO Vehicle Cargo.

Sleeping Dogs: Poker Mahjong guide

Hello! I've not seen any advice on how to win at Poker Mahjong in Sleeping Dogs, so here's a guide for anyone who might be struggling with it.
How do I access Poker Mahjong?
You can play Poker Mahjong at either of the two gambling dens located offshore to the north and south of the map. These locations are reachable by boat after completing the main story mission 'Bride to Be'.
What are the rules of the game?
Poker Mahjong in Sleeping Dogs is basically a form of video poker (see https://en.wikipedia.org/wiki/Video_poker), but played with a deck of mahjong tiles. The tiles are all of the same suit and are numbered from 1 to 6.
You play against one computer opponent (the house, or dealer). I'll refer to them as your 'opponent' for consistency.

1. You first choose how much to bet on the round, from 500 Hong Kong dollars up to 5000.
2. Both players are dealt five mahjong tiles. Tiles are numbered from 1 to 6. These tiles are called your 'hand'.
3. Your opponent always plays first. He chooses to discard any number of tiles from his hand and pushes them in front of the tiles he plans to keep - you can see from the table which ones will be discarded.
4. The above happens before you get to do anything. Then it's your first turn. You can choose to discard any of the tiles from your hand.
5. New tiles are drawn from the deck to replace all the tiles that were discarded.
6. There is a second turn of discarding and drawing new tiles.
7. Once those new tiles are added to your hand, both players' hands are evaluated, and the player with the better hand wins the round.

​

• If you win the round, you receive winnings based on the payout table.
• If you lose the round, you lose your original bet.
• If the hand is tied, you neither win money nor lose your original bet.

What are the winning hands?
The table below shows the ranks of each hand from lowest to highest, along with the payout.

HAND	PAYOUT
High card	1:1
Pair	1:1
Two Pair	1:1
Three of a Kind	2:1
Straight	2:1
Full House	3:1
Four of a Kind	4:1
Five of a Kind	5:1

Updated: Payouts are implemented oddly in the game. A payout of 1:1 means that you win an amount equal to your original bet. The best hand, Five of a Kind, pays out 5:1 which means that you can win $25000 on a bet of $5000. You don’t actually get your original bet back, though. So, for hands that give 1:1 payouts, actually you only get back your bet, you don’t earn any money for winning.
How does the game decide who wins each round?
During the evaluation of both players' hands, each component of your hand is compared against the equivalent in the other player's hand, in order of importance.

• For example, if you have a Full House, say 6's full of 2's (6,6,6,2,2) and your opponent has a Full House of 6's full of 3's (6,6,6,3,3), the sets of three are compared, then the pairs. (In this example, the opponent wins with a pair of 3's beating your pair of 2's.)
• If you both have Two Pair, the higher pairs are compared, then the lower pairs.
• If you both have Straight, the higher Straight (2,3,4,5,6) beats the lower Straight (1,2,3,4,5).

Tiles that aren't part of a winning hand aren't compared - for example, if you both have Four of a Kind 6's (6,6,6,6), the fifth tile is ignored, resulting in a tie.
I'll use 'rank' to refer to the payout table and 'strength' to refer to the numbers on the tiles that make up the hand.

• A higher-ranked hand beats a lower-ranked hand.
• If the hands are of the same rank, a higher-strength hand beats a lower-strength hand.
• It's a tie if the hands have the same rank and the specific tiles that make up the winning combination have the same strength.

The comparing of hands by strength (tile value) isn't stated clearly in the game, so it's easy to not notice this and assume that you have to outright beat your opponent's hand in rank. It also means that (if you ignore the fact you always play second) your opponent has the same chance to draw winning hands as you do. This means in the long term, you would expect to win 50% of the rounds, and with the high payouts on good hands, you can expect to win money over time rather than losing it (unlike most casino games based on chance).
Can I win Poker Mahjong consistently?
Yes! Over time, you can beat the computer player consistently. You can make about $100k per (real-world) hour of play, depending on how lucky you get. (It would be more if the controls and animations were faster.)
There's several reasons for this:

1. You can expect to win 50% of the time and lose 50% of the time, on average, before taking into account how well you and your opponent play. The payout structure means your winnings on good hands will tend to exceed your losses.
2. You get to play second, so you can respond to your opponent's final move before the hands are evaluated. This gives you a slight edge in cases where your opponent decided to stick with a 'safe' hand instead of trying to improve his hand.
3. Your opponent tends to overvalue low-strength tiles and undervalue high-strength tiles. These bad decisions can be exploited.
4. Your opponent tends to hold on to Straight or Full House hands as long as your hand can't beat them. This means you can sometimes win by getting a stronger Full House or Four of a Kind just before the end of the round.

Obviously some luck is involved, so sometimes you'll have a run where your opponent keeps getting unbeatable hands, or vice versa.
How much should I bet?
You should always bet the maximum amount ($5000). However, if you come to the table with less than $100,000 and you're unlucky during your session, you might run out of cash before your luck turns around.
(Poker Mahjong isn't the fastest way to earn money in Sleeping Dogs. If you want to make money fast, you can bet up to $100,000 a time on the cockfighting in Kennedy Town docks. You'll win $100,000 (and get your bet back) if you picked the winning bird.)
What's the general strategy?
You get to play after your opponent, so the general approach is to look at what your opponent is discarding, and then translate that information into a strategy for your own hand. Ideally, you want to get a Full House or better. Low Pairs/Two Pairs and Straights are usually not worth keeping. Also, the payouts below Full House are not worth aiming for even if you do beat your opponent with a low hand.
Now let's look at some scenarios in rough order of frequency.
1. Opponent has a low pair (1,1 to 3,3) and is discarding all other tiles.
You should aim to get Three of a Kind, Full House or Four of a Kind.
You can do this by building on a Pair of your own (if you already have one starting out), or, if you have a high tile (5 or 6 - if you have both, just keep the 6), you can discard all other tiles and hope for a 5 or 6 to appear in the draw. It'll depend on whether you already have a Pair that would beat your opponent's Pair. If your Pair is the same strength or weaker, discard it.
2. Opponent has Two Pair or you both have Two Pair.
There is a good chance that your opponent will improve their hand to Three of a Kind or Full House, so you need to aim for the same. If you have Two Pair yourself, the best way to do this is usually to keep your high Pair and discard the other three tiles. Then you can hope to build a strong Three of a Kind or better.
It's tempting to just discard the one tile that isn't part of your Two Pair, but then you lock yourself out of the possibility of Four of a Kind (which you need if your opponent gets a Full House) and you may end up matching your lower pair, giving you a weak Full House. Also, you're actually less likely to get a Three of a Kind with this play, which would be enough to win if your opponent fails to improve their hand.
The maths for the above play is estimated as follows. Assume each tile has an independent probability of being drawn of 1/6, and your Two Pair is 6,6 and 5,5. Then if you discard the single other tile, you need a 5 or 6 to get a Full House. The chance of this happening is 2/6 = 33%. If you keep the high pair and discard the other tiles, you need a 6 in any of the three new tiles to get Three of a Kind (and 2 or more would make your hand very strong). The chance of getting at least one 6 is 1-(5/6 * 5/6 * 5/6) = 42%.
3. You both have nothing, or your opponent has nothing while you have a low or mid-strength Pair.
If you have a high tile, consider discarding everything else and trying to get a good hand using the high tile - especially if your Pair is weak. Otherwise, build on your existing Pair.
4. Opponent has a Straight (1,2,3,4,5 or 2,3,4,5,6).
Straight is a weak hand and is frequently vulnerable to a Full House play. You will usually not see your opponent try to build a Straight from having four of the five tiles. It will usually happen instead at the start of the round, or randomly during the round.
Your opponent will hold on to their Straight as long as you have a weaker hand. Your play should be to build on any existing Pair or better in your hand, to aim for a Full House or Four of a Kind. Discard all tiles that don't help with this.
If you start with a Straight, don't bother keeping it. Discard everything except the high tile. Only keep a Straight if it's the last round and your Opponent has a Pair or worse going into the final draw.
5. Opponent has Three of a Kind or Full House, or better.
Most of the time you'll lose if your opponent has Four- or Five of a Kind.
You need to aim for a stronger Full House than your opponent's, if possible. If you have a 5 or 6 in your hand, keep that and discard the rest.
Or you might have a Full House, but it's weaker than your opponent's. In that case, you should discard the Pair and hope to get a Four of a Kind with your set of three.
Notes
This guide is based on a playthrough of Sleeping Dogs: Definitive Edition on Xbox One.
Comments and feedback welcome!

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I have never posted on this subreddit before though I have lurked it pretty much every day for over eight years now. I have tried my best at cutting out this toxic habit from my life and sometimes I have had some levels of success, sometimes reaching four weeks or three weeks without tapping. I have done this long enough to all of the benefits and can testify to some of their validity (though some of them are ridiculously overblown by this community and are actually just the logical consequence of placing yourself in situations you would not find yourself in otherwise but I digress) and I definitely know how much better I feel when I am not fapping, how much richer my relationships are, how much more I adore my girlfriend, how genuine my laughter is, how much more brightness there seems to be in the world.
Despite this and despite some infrequent success, I have failed in my endeavour to eliminate this horrible habit. if anything, my willpower to stop this hollowing practice has depleted completely in the wake of the pandemic. i had to look at myself today in the mirror and say that this is what true dependence looks like. not being able to go one day without masturbating is problematic. and trying my best not to thank about nofap because I seem to have no self-control is problematic. and all of the websites I mindlessly scroll (that you yourselves know) that trigger me in the first place are problematic also.
I know all of the reported science behind nofap, I know all of the benefits, I know I feel more alive when I am on a good streak, but in the last few months it's like I have lost all will to control my own behaviour. this must be sort of similar to the feeling an addict might have when he chooses a drug over real life. and then I look around and I still haven't written that novel yet, I still haven't learned that language I've always wanted to.
something I have realised as I have grown up is that the main currency underlying economic systems general is not money, it is time. time is our most valuable asset and we make conscious decisions to trade it for other things day in and day out. and pornography or like materials are sort of like slot machines in a casino you can go and put your coins or tokens (time) waiting for some sort of payout that never comes. because how can it come? as the popular nofap refrain goes, none of this is real.
I am so frustrated and exasperated by this and how my prefrontal cortex has just been ground down over time by this insidious compulsion. I have failed at this endeavour since 2012 and have very little to show for it internally. but you know what. I am going to continue trying and I am going to continue failing at it in the hopes that someday I can overcome this. having to reset a streak isn't the end of a world, and fighting an addiction takes time and effort. the world is marketed to us in a certain way that we must contend with out urges from as soon as we wake up to when we go to bed. I'm going to do my best to abstain for as long as I can, and I will be better because of it.

I've done the Heist three times now with duos, I'm pretty sure I could even do it solo now.
Make sure you have the Drainage Tunnel option unlocked by swimming behind the compound during the scope out. UPDATE: Make sure you complete the Torch Prep as well! The Torch Prep will not be available in the submarine until you scope out the Drainage Tunnel infiltration point.
If solo, trios, or quads, Make sure you have bolt cutters by the main bay.
I enter through the drainage tunnel putting me right in the compound. UPDATE: I've used the submarine and the halo jump, but I imagine any vehicle will work. If you use the sub it will give you scuba gear, so avoid the pools while you're in the compound, otherwise it will put the scuba gear back on and remove your active weapon. Once you get out of the pool you'll lose 3-5 seconds taking the gear back off.
I suggest you take out all the guys stealthfully while taking out as few cameras as possible, 1 or 2 will be necessary unless you are really patient.
If you're doing it solo you don't need to worry about the key cards or gate keys. If you are doing duos+, then one key card is held by a guard, the other is up in Rubio's office.
Once you get to Rubio's office there will be a fingerprint hack (its easy once you understand how it works) and get the files using the combination given to you in the basement, don't exit through the gate, go back into the compound, grab the secondaries in the compound (duos+), and exit through the main entrance, that causes a save-state, so if you die you don't have to start all over. If you are duos your loot bag should be full. If you are in duos, I recommend grabbing the painting first and is much gold as you can carry, don't bother with the cash.
If you haven't alerted anybody by then, make your way down to the main dock, if solo, or trios, then get the secondary loot there, grab a boat and drive away from the island. Your escape is undefined, so even if you don't make it to your designated escape route, you can leave the island in any direction.
If you are in quads, there's a good chance your loot bags won't be full, at that point you can decide whether you want to go and grab more secondaries, or leave the island while still in one piece.
If you have been caught, kill everybody and book it out the main entrance towards the main dock where you can grab a boat and GTFO. Because I was in duos I had right around 2mil each time, the one time I set the guards off on the way out I only lost 60-80k.
From what I can see you cant hold more than 800k in your loot bag, I may be wrong though.
Potential cut: 6mil
SOLO: 1.1-1.9 Mil
DUOS: 1.1-2.7Mil
TRIOS: 1.1-3.5Mil
QUADS: 1.1-4.3Mil
That Is my experience. If anybody has any good useful information there, I'm sure it would be greatly appreciated to the community. Such as:
*Better ways out of the compound
*Secondary Target values
*Any way to get the full potential 6mil? (During my scope out I had 4.2mil in Secondary targets. That left a total of 5.3mil, I was probably missing two secondary targets somewhere on the island)
*Anything I may have missed
UPDATE: For those of you wondering how the payouts compare to the Diamond Casino Heist.
The payouts for the DC heist hard modes are as followed, not including aggressive.
Cash: don't bother, reset your heist
Artwork: 2.7mil - 2mil split - 100k per 5%
Gold: 2.8-3.1mil -2.1-2.4 mil split - 105k-120k per 5%
Artwork can be done with DUOS (1mil each depending on cut) but gold has to be done with TRIOS (1.2mil 50%, 600k 25%) unless you want to leave 250k on the table. Which Gold DUOS would pay the sililar to Artwork DUOS.
Your best opportunities to make money on GTA online are going to be Cayo Perico SOLO or DUOS and Diamond Casino DUOS.
On another note: I haven't timed it yet, but it seems to take less time to do all of the Cayo Perico preps than the Diamond Casino Preps (Aside from identifying secondary contents). The Diamond Casino Heist takes 15-25 minutes when done correctly with Big Con or Silently & Sneaky while the Cayo Perico heist can be completed in 7-15 minutes SOLO and DUOS.

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Investors might have thought they'd seen it all in 2020. But the stock market action was merely a preview of what's to come in 2021.
Just to take a quick look back, the market gave everyone a scare in 2020 when it bottomed in March. But then the S&P 500 surged 67% between March 23 and year-end.
Certain stocks like Tesla (TSLA), Zoom (ZM) and Moderna (MRNA) performed even better, soaring by triple-digits.
Tesla Zoom Moderna
And now, we are going from one "year like no other" to another.
Here's what I expect the new year will bring for investors…
Prediction No. 1: The Bull Will Still Run in 2021 As 2020 has shown us, things outside your control—like a global pandemic—can render any prediction worthless.
But I have a lot of confidence in—and a lot of money riding on—this idea.
Why? Three reasons…
We have every reason to expect the Federal Reserve will keep money flowing into stocks. Their easy money policies help push people out of “safe” investments (i.e., money market funds and bonds) and into riskier assets (i.e., stocks). With the Fed pledging to keep interest rates low until 2023, bulls can look forward to a multiyear boost.
Here's something else investors can look forward to…
Congressional gridlock isn't going anywhere. With political leadership split nearly down the middle in Washington, D.C., we are in for at least two years of political gridlock. Gridlock is historically great for stocks… especially Walmart (WMT), Hewlett-Packard (HPE), and IBM (IBM).
As is this…
Markets are at all-time highs… which typically lead to more all-time highs! Since 1988, the S&P 500 returns were significantly higher on one-, three-, and five-year time horizons when the index was at all-time highs:
S&P 500 Total Returns
But while I expect the bulls to keep charging, some sectors are looking even better than others.
Prediction No. 2: Tech Will Be 2021's Top-Performing Sector Technology stocks have been on an incredible run over the last five years. In fact, it has been the best-performing sector in three of the last four years.
Forget those nattering nabobs of negativity who say the tech run is just about done. Get ready to see more outperformance in 2021.
Source Novel Investor
For one, while some tech names have had an incredible run in 2020, others have struggled... particularly in the second half of the year.
Household names like Amazon (AMZN), Facebook (FB), and Microsoft (MSFT) have well underperformed both the S&P 500 and Nasdaq since July. And smart investors will see this opportunity to buy great companies at a discount to their peers.
Amazon Facebook Microsoft
The other kicker is technology stocks are not expensive.
Compared to the dot-com bubble (when interest rates were 5X higher) the five largest US technology companies are relatively cheap:
Price to Sales Ratio
Technology companies allowed many of us to keep working from home, and biotechnology companies will help us return to normal.
That means we'll see another big year from the companies that made—and will continue to make—this possible.
The worst of the COVID-19 pandemic will soon be behind us. The coronavirus vaccine will take effect, both physically and psychologically, and the global economy will find its footing again.
Some companies are already taking that side of the bet...
Prediction No. 3: 2021 Will Be the Best Year in a Decade for Dividend Hikes 2020 was the worst year in a decade for dividend investors. In total, global companies cut their dividends by 22%.
That means 27% of all publicly traded companies slashed their dividends this year.
Global Dividends Paid
We stayed on top of these dividend cuts throughout the crisis. From cruise ships to casinos, we steered away from companies whose payouts my Dividend Sustainability Index (DSI) identified as being in danger.
But what goes down… must come up. At least when it comes to dividends.
We have already seen a few dividends return from the dead. Kohl's (KSS), TJX Companies (TJX), Marathon Oil (MRO), and Darden Restaurants (DRI) are among the first to reopen their purse strings.
Look for more where that came from… even among those that maintained and/or raised their payouts in 2020.
Why? We can use history as our guide.
In the two years after the 2008 financial crisis, we saw global dividend payouts increase 39%.
With the Fed keeping the easy money flowing… techs and biotechs getting ready for another unbelievable year… and dividend income ready to be unleashed, there's never been a better time to be an investor.
Let’s hope penaltykickerz reacts to this on his next video.

(Cross-posted here)
Say you had an edge in a casino.
Expected value of each bet: The intended odds are in the house's favor, with an expected value of return at ~95% of your original bet. However, you have a method to choose bets with a ~105% return.
Risk of each bet: The bet advisor chooses bets with the best expected value, regardless of risk. In some cases, this it will bet on a 1/20 occurrence with a payout of 1:21. In other cases, it will bet on a 1/4 occurrence with a 1:5 payout (not exact numbers, just illustrating the varying risk).
In the long term, I understand you could leverage this >100% expected return to gain value over time. In my simulations, I had the gambler bet 20% of their current holdings each bet over 25 rounds. I do see that the average value of using this strategy results in gained value. However, most of the simulated outcomes result in 0 value. Only 13% of the simulations ended up gaining value.
My question is: given a bet selector heuristic of 105% expected return with risk varying from 5% to 25% bets, how can I figure out the optimal bet amount such that the gambler is >50% likely to gain value AND maximizes the average output?
Guesses:

• It might be best to bet with some (low) percentage of your current holdings each bet
• It might be best to bet with a constant amount each time, so you're less likely to lose it all on a losing streak (you wouldn't expect exponential gains then though)
• Maybe you calibrate each bet according to the risk? I.e. higher risk bets mean you bet less. Not sure if this is warranted if the Expected Value is the same as a less risky bet.

I looked for resources about this, but I can't find anyone researching what to do WITH a minor edge over the house, just how to get a winning edge in the first place (spoiler, you can't in real life).

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Hello all, I am a graduate student in finance with a bachelor's degree in Accounting. I wrote my thesis on how macroeconomic policy affects US equity markets (equity markets = stock market). I've spent the last 3 years studying this stuff and I'd say that I am not qualified in any sense to give sound investment advice. What that should tell you is that the stock market is an extremely complex landscape and takes years to understand. Even the best of the best lose money. With that being said, this comment is for informational purposes and not to be taken as investment advice or direction.
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I originally wrote this post as a comment to another user, but thought that it may be beneficial for others to use. It's very surface level, but I think it does a good job of answering some more abstract questions that people may have about equity markets. I also think it does a good job of establishing a solid, albeit basic idea of value investing and financial analysis.
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Understand that the last ten years does not accurately represent equity markets historically. From 1925 to 1941, if you invested in the S&P 500 index, you would have seen an average annual return of less than 5% with several of those years being negative- over the next ten years. Same goes for 1960 to 1975. (Disclaimer: Before people tear me apart saying you can't invest in the S&P 500 directly, I know. I'm using it as an example.)
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We've experienced a remarkably strong bull market over the last ten years, with 20% annual returns on the S&P 500 index; however, just because we've had a strong market the last ten years does not mean it will stay that way. Consider Japan in the early 1990s. Their bull market turned into a bubble (google: financial bubble) and for the next 10 years they saw no long term growth in their equity markets. They call the 1990s in Japan, "the lost decade". So this begs the question: if there are 10, sometimes 15 year long periods where we have almost no growth, or perhaps negative returns, when, where, and why should I park my money in equities?
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The first thing I think we should understand is risk. Risk is at the heart of almost all things "investing". If you go to the casino, and place $5,000 straight at the roulette table, your payout is a massive 35:1. If your bet hits, you walk away with $180,000. But statistically, your chances of winning are less than 3%. The risk is massive. Alternatively, if you buy a 3-month US treasury bill, the payout is around .1%. Meaning you would made $5 on a $5,000 investment. Why? The risk is so low. Also, what is a 3-month US treasury bill? Let me explain.
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A US Treasury bill is a short-term government debt security. Here's how it works. You give the US government $5,000. They now owe you $5,000 PLUS interest at a future date. In this example, it's 3 months. The US government says, "Thank you! We will give you $5,005 back in three months!" In three months, they give you the money back. Ask yourself, if you had to guess the percentage likelihood of the US government collapsing in the next three months, what would it be? Pretty low, right? That's why the return is so low. The United States government has the power, means, right, and infrastructure to tax the wealthiest population on the planet. Also, they aren't going out of business anytime soon. Therefore, that $5 return on a $5,000 investment is essentially guaranteed. Check out this chart.
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All stocks sit somewhere on this line of risk and return. But, how do we know the risk and return? Great question. How do we assess the value of an asset? An asset's worth is the sum of its future cash flows discounted to today's dollars. Read that again. An asset's worth is the sum of its future cash flows discounted to today's dollars. This is what we call "Net Present Value". Here's a video over it. Here's the NPV formula.
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Let's say we have a machine that spits out one dollar every year for 5 years. What is the value of that machine assuming a 2% inflation rate every year? Let's find out! Remember our NPV formula? Let's do the math. [$1 / (1+ .02)1] + [$1 / (1+ .02)2]+ ... + [$1 / (1+ .02)5] = $4.71. In this example, inflation rate is the discount rate; however, the discount rate can be many other things. We won't go into that right now though.
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So what does this mean to you? It gives you perspective. All those price movements in the stock market are the product of huge investment banks, mutual funds, and hedge funds moving money in and out of equities in massive quantities, with those decisions backed by hundreds, if not thousands of hours of research with private data that you can't access even if you had the money too.
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One of the big ways they (big banks) make these decisions is by using the NPV formula with Net Income in the numerator to determine the value of the asset and a rate to discount the cash flows at (there are ways to do this, again, we won't go into it). Then they use more complex methods to assess risk. Other methods of valuation may be used, but again, this is one of the big ones.
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So far, we've learned that risk and reward are positively correlated and companies are valued by their earnings. But, if companies are valued by their earnings, then why do bubbles happen? Why does the market tank sometimes? Shouldn't the market accurately reflect all companies at any given time? In theory, yes. But humans are irrational creatures, and often wrong. Therefore, stock prices are not always appropriately valued.
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I am going to introduce you to two financial ratios: earnings per share (EPS) and price to earnings (P/E) ratio. NOTE: EARNINGS = NET INCOME.
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Earnings per share is the net income of a company divided by it's number of outstanding shares. EPS = Net Income / Shares Outstanding. So let's say my company has a net income of $100 for the 2020 year and there are 100 shares outstanding. That would mean that my company's EPS is $1. Let's look at a real example: Apple. Click on this link. In the top left hand corner, click on sections>financial statements>consolidated statements of operations. Find EPS. Apple's EPS is 3.31. That's pretty solid. EPS puts a companies earnings in perspective with respect to the number of shareholders it has, which allows you to compare a companies earnings to its competitors, whether they be smaller or larger.
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Next, the price to earnings ratio. This is easy to calculate. It is just the share price divided by the EPS. PE = Price / EPS. What this does is puts the price of the stock in perspective with respect to its earnings. Consider the example where my company had an EPS of $1. Let's say the price of my stock is $30 per share. That would mean my PE ratio is 30 (PE raio of 30 = $30/$1 EPS). For some perspective on the PE ratio- the average P/E ratio in the S&P 500 is 25-30. But they can be as high as 1,000 (like Tesla) or as low 4 or 5. What the PE ratio does is says, "Hey man, here's a metric to determine how justifiable the price of this stock is considering how much the company makes." Generally speaking, investing in companies that have low PE ratios tend to show higher returns. Why? Because there is more of an acceptable margin (historically) for the price to increase with respect to earnings.
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For example: Five years ago, Apple's PE ratio was around 10. Now it's 40. This means the price went up, the earnings went down, or both. Over the last 5 years, Apple's EPS has increased. Therefore, because it's PE ratio is increasing as well, this means that it's price of the stock is increasing faster than it's earnings. Reference this chart. This isn't necessarily a bad thing, it just means that the big boys like Morgan Stanley, JP Morgan, etc. think that Apple is going to do really well over the coming years as of right now. But let's say that tomorrow Apple was outed as a front for a money laundering scheme and they were going to be audited by the SEC and FBI. The price would tank. Why? Because people would be questioning if Apple would even exist as a company in the following years. They (the big boys, the government, me and you) would doubt their earnings. Rightfully so, I should add.
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What I (and many others) do is look at companies and determine:
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1. Are their earnings sound? (Is it positive? If not, will it be positive? Will the company grow? Will another company come in and do whatever this company is doing, better?) This will help you determine if the return will be solid.
2. What is the current price of the equity in relation to the earnings? (What's the PE? Is it going up? Is it going down? Why?) This will help you determine how risky is your investment.

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A solid company is generally one that has a high EPS, a low PE ratio, and is expected to grow. The reason Tesla has a PE ratio of >1,000 is because people expect it to grow. Like, they expect it to be the largest electric vehicle company by net income in the next 10-20 years AND expand into other markets like solar energy and batteries. Will they be right? I guess we'll see!
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This is the tip of the ice berg when it comes to investing. If you truly want to learn how to capture returns without exposing your investment to a large amount of risk, you are going to have to spend time learning how to do this. Here are some resources:
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• The Intelligent Investor (with Commentary) by Benjamin Graham. Read it entirely, the commentary first, then the chapters (Commentary, chapter, commentary, chapter, ...). Then read the commentary again and make notes.
• Learn how to read three financial statements: The balance sheet, the income statement, the statement of cash flows.
• Watch Martin Shkreli's investing lessons on Youtube. Specifically the first 5 or 6. Yes, he's done some bad stuff. But he really is an excellent teacher and extremely smart.

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In my opinion, experience is a great teacher. Play with a small amount of money. Throw $100 at a stock you like and see what happens to it. If it drops 10% in a day, figure out why. If it goes up 10% in a day, figure out why. If it goes up steadily over the next six months, figure out why. If it doesn't do anything- figure out why.
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I'd like to note again that these opinions do not constitute investment advice. They are my personal opinions and do not guarantee any sort of returns. This is how I personally approach the stock market. Investing in any asset carries risk and all investors should conduct their own due diligence and analysis before investing.
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"Be fearful when others are greedy; be greedy when others are fearful."
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-Warren Buffett
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Cheers