EPS Destruction in Spain

This article talks about so many things but the main point is the EPS (earning per share) destruction happened in IBEX (major Spanish market) between 2008 and 2018.

I want to keep this image, because some people tell me, why you do not invest more in Spanish companies? The picture below is a good answer.

BPS (Beneficio por acción) = EPS

How to Assess a Real Estate Investment Trust (REIT)

When you analyze REITs traditional metrics such as earnings-per-share (EPS) and price-to-earnings (P/E) do not apply.

Funds from Operations (FFO)

For most businesses, depreciation is an acceptable non-cash charge that allocates the cost of an investment made in a prior period. But REIT’s behavior is different because property often appreciates its value. This affects the Net income in a negative way.

By this reason it’s better to use funds from operations (FFO) for REITs.

In the quarterly reports you can find FFO along with net income.

FFO weaknesses

It does not deduct for capital expenditures required to maintain the existing portfolio of properties. Real estate holdings must be maintained (painted, repaired…) so FFO is not quite the true residual cash flow remaining after all expenses and expenditures.

What can we do? Use Adjusted FFO (AFFO)  it is a more precise measure of residual cash flow available to shareholders.

FFO is a Non‐GAAP Financial Measures

You can find in the financial reports of REIT companies this disclaimer:

FFO and AFFO are non‐GAAP financial measures within the meaning of the rules of the SEC. The Company considers FFO and AFFO to be important supplemental measures of its operating performance and believes FFO is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP units and LTIP units, excluding gains (or losses) from sales of property and
extraordinary items, less preferred stock dividends, plus real estate‐related depreciation and amortization (excluding amortization of deferred financing costs and above‐market lease amortization expense), and after adjustments for unconsolidated partnerships and joint ventures. Because FFO excludes real estate‐related depreciation and amortization (other than amortization of deferred financing costs and above market lease amortization expense), the Company believes that FFO provides a performance measure that, when compared period‐over‐period, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development
activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income or loss.

FFO and AFFO for Global Medical REIT Inc. (GMRE)

 

Un paseo por Wall Street

Este libro escrito por Burton G Malkiel es uno de los clásicos de la inversión en renta variable.

Yo he leído la novena edición y que viene con adaptaciones a los últimos años y reflexiones sobre como cambia el mercado.

Todo el mundo alaba este libro, pero a mi, por lo que sea no me ha encantado. Hay demasiados pensamientos y descartes para tratar de convencerte de que hay que indexarse.

La última parte donde sugiere caminos dependiendo de que se quiera hacer si me resultó algo más interesante, pero muy escueta y sin ir al detalle.

El paso “hágalo usted mismo”

Viene dividido en 4 consejos que son:

  1. Limite la compra de acciones a aquellas empresas que parecen capaces de mantener unos aumentos de beneficios por encima de la media al menos durante 5 años.
  2. No pague nunca por un título más de lo que se pueda justificar razonablemente mediante una base sólida de valor.
  3. Resulta de ayuda comprar acciones que tengan historias de crecimiento previsto con las que los inversores puedan construir castillos en el aire.
  4. Haga el menor número de transacciones posibles.

Inconsistencias

Durante el libro Burton se contradice a si mismo varias veces. Por ejemplo en una parte del libro menciona varias frases generalistas clásicas, despreciando ese tipo de chisme y comentario, como el

“manten los ganadores, vende los perdedores”

Después menciona esta misma frase arropando el mensaje que hay detrás de ella.

 

DIX and GEX indicators

Two specific indicators, the Dix and the Gex, have been born from the investigations of SqueezeMetrics. They serve to monitor the behavior of short orders in the Dark Pools, which gives us an idea of the bullish sentiment of the real market:

https://squeezemetrics.com/monitor/dix?

These indicators are the way to get our analysis to incorporate the indications obtained in high frequency trading. For me they are a complement.

They are not easy to follow and extract conclusions right away, but sometimes they help. Specially to try to identify divergences. Below an example between GEX and S&P.

The Dark Index (DIX)

The DIX is simply the aggregated dark pool indicators of the S&P 500 Index. It is, therefore, a measure of market sentiment from the point of view of dark liquidity—a largely unexplored source of information. For the sake of utility, the DIX uses dollar-weighted trading volume to compute the ratio of dark pool buying to dark pool selling.

Since DIX tends to rise into corrections, we are left to believe that it reflects
a broad willingness of investors to accumulate S&P 500 component stocks at
lowered valuations, and that a decrease correspond to
sell trend on the dark pools.

  • When DIX is high, it means ppl are silently buying.
  • When DIX is low, it means they are selling.

The Gamma exposure (gex)

  • When GEX is a high number, it acts as a brake on market price.
  • When GEX is low (including negative), it acts as an accelerator.

Both indexes are updated by 6:00pm ET except when market data is delayed.

Reviewing the indexes during 2020

I’m doing from time to time a revision of the indexes to see if this is something I can add to my decision making process. The benefit of doing it, is that I can observe better the behavior.

Last update (13/10/2020):

DIX values are similar to the values taken in March (below 37%).

GEX: in the last week, the highest values in GEX means that the major buyers are using the “break” and the purchases are slowing down.

How can I analyze data from dark pools related to specific markets or company?

Both Finra and BATS / CBOE publish total and short volume data on a daily basis in the dark pools.

Where can I find some of these pools?

Well there are some independent companies that offer these services, as:

And the major banks provide these services too: JP Morgan, Goldman Sachs, BNP Paribas, Nomura, Credit Suisse, Wells Fargo….

Siete semanas

Dicen que la vida te puede cambiar en un segundo, a mi me cambió en siete semanas.
Siete semanas de darse uno cuenta que nada volverá a ser igual,
siete semanas de asimilación,
siete semanas con mil cosas por expresar, pero no saber por donde empezar,
siete semanas para disfrutar de cada minuto que tuve con ella,
siete semanas para llorar el día que pronto iba a llegar,
siete semanas de aceptación,
siete semanas que han acabado y que yo mentalmente aún no he abandonado,
siete semanas para revisar todos los valores que ella me quiso inculcar,
siete semanas para recibir mucha ayuda de vosotros, y que necesitamos para nuestro otro foco.
Y sin tiempo para parar, las cosas han de continuar,
porque no podemos de dejar de disfrutar de cada cosa que la vida nos da.

Mi primera onda de Elliot

Mi primera onda de Elliot que finalmente no cumple una de las tres normas de Elliot:

Las tres normas

  • 1ª norma: En un ciclo completo la onda 2 no puede retroceder a la 1 en su totalidad.
  • 2ª norma: En un ciclo completo la onda 3 nunca será la de menor recorrido entre las impulsivas (1 y 5).
  • 3ª norma: En un ciclo completo la onda 4 nunca tendrá como mínimo de cierre un precio inferior al del máximo de cierre marcado en la onda 1.

En la gráfica superior correspondiente al S&P de 2019.

  • Norma 1ª -> se cumple
  • Norma 2ª -> se cumple
  • Norma 3ª -> NO se cumple

Sigo aprendiendo sobre ondas de Elliot y sobre los detalles que hay que tener en cuenta en los comportamientos del mercado. Ahora el foco es:

  • Diferenciación de la compra por mano fuerte y compradores pequeños.
  • Identificación de volúmenes.