The Practical Islamic Finance Podcast

These stock shorts got burned and I'm happy

• Rakaan Kayali

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These Stock Shorts got burned and I'm happy


In this episode, we will cover:

  • The current status of Bitcoin.
  • A new addition to the PIF portfolios is performing well.
  • Important news about 140,000 Bitcoin moving from the Mt. Gox account and its market impact.
  • Bitcoin ETFs support the resilience of the Bitcoin market.
  • Potential effects of an Ethereum ETF on Bitcoin.
  • The influence of interest rates and inflation on Bitcoin.
  • Market sentiment and smart money buying despite recession fears.
  • An overview of the Hims & Hers company, its recent performance, and the CEO's pro-Palestinian statement.
  • Audience Q&A on different topics.

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salam@practicalislamicfinance.com

ABOUT OUR PODCAST

Our podcast is about helping people ethically build wealth. We cover a broad range of topics including stock and crypto investing, product reviews, and general financial well-being.

DISCLAIMER

Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.

Assalamu alaikum everyone. I hope you are doing well. Today is Tuesday, May 28th and Bitcoin is hovering around 68 and change. Today I'm going to tell you about a new addition to the PIF portfolios that we made a few weeks ago. That has been doing quite well and I'm happy about it for more than one reason. I'm also going to start with a bit of news regarding coins so that if you hear it from somewhere else, you don't get concerned or panic sell. So without further ado, let's get started. Not financial advice, be sure to do your own due diligence before making any investing decisions. So the news was with regards to 140,000 Bitcoin moving from the Mount Gox basically account to another Bitcoin address for a bit of backstory here. So Mount Gox was actually in the number one exchange in the world. If you go back to 24 and it had gotten hacked numerous times and then finally got hacked where in hundreds of thousands, I believe Bitcoin were stolen and the exchange ended up going bankrupt. And so there has been attempts to retrieve the Bitcoin that was stolen and a percentage around 15% of the Bitcoin that was stolen. It has been recovered. So from a number of Bitcoin perspective, the depositors into the Mount Gox exchange will not be made whole. However, on a dollar perspective, they will be made more than whole because Bitcoin has appreciated so much from 2014 until now. So in a sense, they were forced toddlers. A lot of these Mount Gox depositors, I think on average, their buy price of Bitcoin was around $200. So they're sitting on a lot of gains. And I'm happy that their coin is returning to them. Obviously, you never like to see someone being stolen from. So I'm happy that they will at least be made whole and then some on a dollar measure. So the corollary to this is that there's 140,000 Bitcoin that was not on the market that is now sellable or will be sellable soon. They're offering these Bitcoins to their rightful owners. So this 140,000 Bitcoin will become sellable soon. And a lot of people were speculating, okay, is this 140,000 going to be on the market? All of these is going to be on the market after it's recovered by its original owners. Obviously, some some holders will huddled their Bitcoin even further. You can imagine if they were convinced with Bitcoin at $200, these people were very early adopters and they understood Bitcoin before. The majority of humanity understood Bitcoin. So in that sense, I think it's safe to assume that there are a number of these people that will. They will continue to huddle their Bitcoin, but there will also be a large number that sell, especially considering how much they are in profit on their positions. And in fact, one of the one of the indicators that we use to forecast where the price of Bitcoin is going to go is how much current holders are in profit because the more they are in profit, the more they are tempted to sell. So it's likely that a good portion of this 140,000 Bitcoin will be sold. So this will provide some pressure. This will exert some pressure on the price of Bitcoin, no doubt. However, let's put this in perspective so that we don't overreact. First off, it does seem like the market kind of shrugged its shoulders at this news that the Bitcoin price didn't really do much of anything after the news came out. So there's a lot of confidence in the depth of the Bitcoin market. And I think that is for good reason that Bitcoin ETFs have provided a lot of newfound depth to this market. So if you look at since they launched in January of this year, a number of Bitcoin mined was just over 100,000 number of Bitcoins sold by GBTC was 230,000 number of Bitcoins sold by everyone else was 182,000. Now, the number of Bitcoin bought by new ETFs was 566,000, which is four times the amount of Bitcoin, the entire 140,000 Bitcoin recovered from the Mt. Gox heist. So assuming half of the coins are eventually sold in the next two to three months, I think that Bitcoin ETFs will be able to handle that absorb it, but the market will be able to absorb that selling pressure with not too much volatility. Now, you add to this the fact that there will be an Ethereum ETF that starts trading. So there will be, I think, redistribution of some BTC ETF funds to these Ethereum ETFs. So that's also going to provide some sell pressure on BTC. So I'm not with some of the commenters who are saying, oh, this is not going to affect the price of Bitcoin at all. No, it will provide some sell pressure. However, I think this sell pressure will be overcome by the buying pressure that comes from a number of different sources, including the fact that I think inflation will start coming down in the second half of the year. And the biggest, by far, the biggest controller of public markets right now is the interest rate level. And, you know, the higher that goes, the lower risk assets go and the prospects of a decreasing interest rate will push risk assets higher and Bitcoin being one of them. Now, let's talk a bit more about that. So the smart money does seem to be buying despite recession fears. And I mentioned this a bit yesterday, which is that I think that the market will continue to go higher, so long as the number one concern is inflation. And then I think there may be a change in regime in the market when the number one concern for investors switches from inflation worries to economic worries. So when that switch happens is when I think we may get a correction. But for now, I think there's still upside ahead of us. And so if you look at the open interest ratio, which takes the number of puts and compares that to the number of calls, so puts are betting that things go down calls are betting that things go up. So when that number is at one or below one, then things are bullish, the market is bullish. And if you look at the open interest ratio, which is that red line at the bottom, you can see that, you know, when it has bottomed out, we are typically followed by a period of S&P growth. So you can see every time there was a dip similar to what we saw recently on the bottoming out, that's typically followed by a period of growth in the S&P. So the smart money has a good track record in terms of their put the call ratios. And we have seen, well, we are in this weird period where bad news is good news because the top priority for investors is what's going to happen with inflation. So US initial claims for joblessness that is has started to rise, which gives investors some indication that the economy is slowing down and the inflation rate is due to start heading downwards as well, which raises the prospects for a possible interest rate cut. So there is some substance to the optimism that we're seeing. Now, if you would like to follow our portfolios move for move and see what we're investing in when do become a PIF number. So this brings us to a position that we added to one of our PIF portfolios recently in the beginning of May. Now, this position, it's hymns and hers. That's the name of the company, the tickers hymns, H I M S. Now, we had actually been researching this company prior to this event. And we actually had our due diligence done and we're waiting for a good time to add. And lo and behold, this was something that we didn't know the CEO actually has Palestinian roots and he comes out with this tweet, basically saying moral court courage is greater than a college degree. This was after there were some calls by Israeli lobby to identify the college protesters and make it hard for them to find jobs. So he the pro Palestinian college protesters here in the United States. And so he comes out with this tweet, basically saying moral courage is greater than college degree. If you're currently protesting against the genocide of the Palestinian people and for your universities divestment from Israel, keep going. It's working. There are plenty of companies and CEOs eager to hire you regardless of university discipline. Now, on the heels of this Israeli lobby was up in arms and they were very upset. And in fact, they basically tanked the stock and actually lost 10% after this tweet. And all of the blood that came after it. And so this was our opportunity. So we added him's very shortly after this tweet. I'm the our first buyer, hence was below$12 and in a very short period of time. So just since the beginning of May, it's now north of $19. So we almost doubled our initial investment, which is great. Now, this was supported by the fact that hems and hers. Announced after we bought that they were going to provide a cheap compounded version of nova, nova, nova, nova, nova. Which is the effective compound in their weight loss drug, which Eli Lilly has a version of their own version of or is epic, probably heard of it in the news. And there's a shortage of both the nova or nova or nor disk drug as well as Eli Lilly's drug. And so there hems and hers is compound version is cheaper and it provides necessary supply in an environment where, you know, people are desperate to find this supply, because as I mentioned, there is a shortage. So the obviously the stock responded very favorably to that. And one of our shout out to Dr. Halle, the PIF member. Thank you for sharing this. One of our PIF members shared this study on our discord. And the conclusion was that semaglotide reduced the risk of clinically important kidney outcomes and death from cardiovascular causes and patients with type 2 diabetes and chronic kidney disease. Now, important to note that this study was funded by nova nor disk. So considering I am not an MD, I cannot really verify the veracity of these claims and you should take them with a grain of salt, considering it's funded by someone or a company with a vested interest in saying these things. But it does appear that there are some, perhaps some additional benefits to this compound. And more if we take a step back and look at hems and hers as a story and sort of OG PIF listeners and members will remember this or when I spoke about Teladoc, we made some money with it, but then we ended up closing our position there. The idea behind that was to digitize and move online and make a lot simpler, the medical care in the United States. And I think hems and hers has an opportunity to do this. Certainly their execution has been quite good. Now, one of the reasons for the recent uptick in the price of the stock has been the shorts, people who are betting against the stock getting burned, which brought a lot of glee to myself because I think a lot of the shorts and the short percentage did increase after the CEO made those comments. We're purposely trying to tank the stock and to punish the company. And so it's a good feeling to see those people get burned by their evil intentions. So, yeah, that was something good. So, if you do want to become a PIF member and follow our binds when we make them and not weeks later, then and follow all of our buys themselves and do become a PIF member, people who follow dollar per dollar, the hems in her investment will have already made up for their yearly subscription. So, I do think it's a good investment. Obviously, I can't guarantee returns in the future, but we do do like really in depth due diligence on the positions that we take. And I think it saves investors a lot of time and effort that they would have to do themselves otherwise. And I think it's very useful to be part of a community of people that are thinking like you have the same priorities that is building wealth, but in a hell of a conscious way. So, do check it out. And now we'll go to super computer. Do you know about Zoya App? Yes, I'm familiar. Do we have anything like that for cryptocurrency? Well, we do have our own ratings on PIF. So, just go to practicalassignmentclinins.com and those ratings are free to see. So, check those out. Is it possible to see a Dogecoin ETF? I do think it's possible. I think it's actually, dare I say, probable to see a Dogecoin ETF on account that Bitcoin ETF was approved. And Dogecoin is a fork of Litecoin, which is a fork of Bitcoin. Basically, it's the same code base. So, whatever you consider Bitcoin to be whatever the SEC deemed Bitcoin to be, Dogecoin is that same thing. There's only a few lines of code difference. So, I think it makes a lot of sense, perhaps, if there is increase in demand for a Doge, someone will find it logical to make a Dogecoin ETF. But I do think that's coming. So, do you think Tesla can have its NVIDIA moment this year or in a few years? It's tough to say it's possible that it happens this year, but it's tough to say. Regarding iron, do you think it's best practice to scale out in case management gets itchy fingers and start diluting selling? Yes, I do think that it's good to stagger your way out of a position. So, for example, last week we did take some profits and I do plan on taking more profits as we sort of step up in our evaluation. Thanks, Lushad. Really appreciate it. And all the insightful comments that you help us with both on Discord and here. So, thank you so much. Thank you so much. It's my pleasure. When the price reaches your goal, do you sell everything? This is a good question. So, actually, I never really buy or sell in one fell swoop unless something abnormal happens, but typically I stagger my way in, stagger my way out. That's typically how I do things. So, when I have a sell above price on our watch list, I'm not saying that when we get to this price, I'm going to sell everything. Rather, when we get to this price, I'm going to start the process of unwinding my position. Do you do monthly subscriptions? No, just annual. Aside from iron, what other Bitcoin miner do you like? Actually, I spent today looking at Bitcoin miners and each one of them I tried to summarize with a single sentence. But I do like to read everything about a company and listen to their CEO and listen to their earnings calls when available. So, yeah, I'm going through them right now. And I've actually found one that might be interested in. So, maybe I'll share that with PIF members soon. But this changes all the time. So, as the price changes for these Bitcoin miners and these Bitcoin miners are very volatile. As the price changes, these considerations change. So, the most attractive miner sometimes differs. So, we obviously have a spreadsheet that we constantly update to keep track of these things. And when the difference becomes large enough, we'll make a move on one. So, yeah, Angela, good things to come. And we're also looking at a lot of different opportunities. So, my priority when I wake up in the morning is to make sure the main thing remains the main thing. And the main thing for me is researching companies. So, I like to focus on that. And hopefully, find you guys the diamonds in the rough inshaAllah. So, if you do appreciate our efforts and we do have a team, if you do appreciate our efforts, do leave a like, leave a comment. We really appreciate that. Until next time, make sure to take care of yourself. Salaamu alaykum and peace be upon you all.