Skip to main
ArbitrageDCA
@arbitrage
If Stocks Were Boats Have you ever heard of the saying “a rising tide lifts all boats”? 👆That’s one of my favorite investing analogies, it compares the movements of the stock market to the rising and falling of river tides 🌊 and compares the movements of individual stocks to the boats that rely on those tides to stay afloat 🚤. I love the quote because when the stock market is down, it can sometimes feel like it's never going to go back up, and when the market is up, it sometimes feels as if the market will never drop. But, I have found that the temporary ups and downs don't bother me as much when I remind myself that the ups and downs are temporary. I like thinking of the stock market as a river 🌊 and I love thinking of individual stocks as different kinds of boats. I live in Virginia near the Chesapeake Bay, I have also worked as a dockhand at a local marina, so I know a thing or two about boats. Lets talk about boats 🛳 Yachts ( #bluechips ): Yachts are generally big luxury ships that are decked out with all kinds of amenities. They generally have large luxurious interiors and are built to cruise smoothly on some of the most choppy tides. Like bluechip stocks, they are big, expensive, and look good just sitting in your portfolio. Blue-chip stocks, like luxury yachts, can be affected by tides or turbulent seas but they are generally less affected by market conditions. 🚤 Speed Boats ( #GrowthStocks ): speed boats are as sexy as they are expensive. Speed boats as a category generally consist of motorboats and cigarette-style race boats, which as their name implies are built for speed, not comfort. Speed boats are generally race boats or pleasure boats, they are not built to protect you from the volatility and turbulence of a rough tide. You can take them into rough seas but like a four-wheeler or off-road Jeep, you will feel every bump, which can sometimes add to the excitement. In my opinion, growth stocks remind me of speed boats because they are fun to ride despite their lack of stability and sometimes lack of profitability. “Growth stocks are companies that increase their revenue and earnings at a faster rate than the average business in their industry or the market”. (👀Motley Fool) Growth stocks tend to get banged around when there is market volatility but most are great companies despite their lack of price stability, especially when they are speeding to new highs. ⛵️Sail boats ( #MomentumStocks ): “Momentum stocks are “stocks that have risen over the past month, and over the previous two, five, and 11 months” and are expected to continue to outperform in the future (👀 MarketWatch). I hate sailboats, they are so darn pretty to look at 🙃 but they are also a pain to operate. To me, all of the ropes and sails and their tiny motors for use when the wind isn't blowing 🤐 is a nuisance. Sailboats are also annoying because by default, they have the right of way👇 “Sailboats under sail generally have right of way over most recreational powerboats, because sailboats are assumed to have more restricted maneuverability than powerboats” (👀sailboats) In many ways, momentum stocks are the same as sailboats in my opinion. Momentum stocks generally have a low float, which means that there’s only a small amount of shares available for public trading and much like a sailboat, their movement is largely reliant on a catalyst (wind, news, guidance). Momentum stocks also suffer from liquidity issues that make it hard to get in and out of, much like the added skill needed to pilot a sailboat when compared to other boats which can be a barrier to ownership. As far as difficulty goes, an inexperienced boater would probably find canoeing or yachting slightly easier and a less physically demanding skill to acquire. When used correctly, momentum stocks and sailboats can be as fun stable and exciting as a bluechip/yacht ownership but generally speaking, some expertise or mastery may be required. 🛶 Canoes/ #pennystocks and some small-cap stocks: These are cheap stocks that are attractive to beginners, mostly because of their price and accessibility. As a person who has learned how to canoe, I do not recommend taking canoes anywhere other than a small lake, and as an investor, I do not suggest making these the bulk of your holdings unless you are an enthusiast or adrenaline junkie. Canoes are fun but they tend to tip over very often. “Tend to tip over” is an understatement when it comes to micro-cap stocks and penny stocks, these stocks are frequently the play toy of the pump and dump scammers who purposely crash stocks after tricking people into investing in them 👆Ok, that was fun, now back to my analogy. If a rising tide lifts all boats, then common sense would tell you that it’s easier to make long-term money when the whole market is down simply by waiting for the tide to rise once again. Far too often, I see investors pouring money into the market at high tide while not knowing what kind of boat they are riding in. Not knowing what condition the boat is in, all they know is “this boat floats” so it can't be that bad. Similar to how some investors buy stocks without doing any research🤩, they foolishly buy the boat because it looks good 💋. They don't hop into the neck-deep water and inspect its bow, stern, or hull. Because they failed to inspect their ship (investment), when the tide (market) eventually falls, as it always does. All of the newly purchased boats no longer look as attractive now that are dragging against the river bottom and being beat up by the tide . Now that their boats (stocks) are exposed, the boaters begin to complain about how rough the waves 🌊 are. Some are happy with their purchases and decide to wait for high tide to return, while other boaters slowly realize that the boats they purchased were damaged 💔even before they purchased them! Nobody can set sail in this climate, so everyone is ready to sell their boat 🥺! Smart money enters the chat! 🧠 Then along comes a group of smart buyers who were saving up their money for this day. Some of the buyers were previous boat owners, who sold their old boats and are ready to buy new ones. 🧾 These buyers don't just hop on the boat and take it for a sail. These buyers are savvy, now that the tide is low, they hop in the water, which is only up to their knees, and start inspecting the boats. 🏊‍♂️These buyers have done their research and took the time to inspect the boats that they are planning to buy. These buyers are buying up all kinds of boats and they seem to know if the beat-up and broken yachts are worth fixing. 🤿While they are walking around inspecting ships in knee-deep water, they even discover a few canoes that are in decent shape but were abandoned by their owners simply because they sunk during high tide. #pocketchangeinvestments https://pocketchange.investments/if-stocks-were-boats/ 👀 MarketWatch - https://www.marketwatch.com/amp/story/momentum-stocks-can-give-you-an-edge-researchers-say-11638497577 👀 MotleyFool - https://www.fool.com/investing/stock-market/types-of-stocks/growth-stocks/ 👀 Sailboats- https://support.google.com/websearch/answer/9351707?p=featured_snippets&hl=en&visit_id=637774290658070212-288016053&rd=1
52
0
Own your future.
Build your portfolio.

All of your investing.
All in one place.

Invest in stocks, treasuries, ETFs, crypto, and alternative assets on Public. Transfer your account to Public and get up to $10,000.
Sign Up
Products
Contact Us
Check the background of this firm on FINRA’s BrokerCheck.

© Copyright 2024 Public Holdings, Inc. All Rights Reserved.

Market data powered by Xignite.

All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns. You should consult your legal, tax, or financial advisors before making any financial decisions. This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy.

Stocks, ETFs, Options, Bonds.
Self-directed brokerage accounts and brokerage services for US-listed, registered securities, options, and Bonds, except for treasury securities offered through Jiko Securities, Inc., are offered to self-directed customers by Open to the Public Investing, Inc. (“Public Investing”), a registered broker-dealer and member of FINRA & SIPC. Additional information about your broker can be found by clicking here. Public Investing is a wholly-owned subsidiary of Public Holdings, Inc. (“Public Holdings”). This is not an offer, solicitation of an offer, or advice to buy or sell securities or open a brokerage account in any jurisdiction where Public Investing is not registered. Securities products offered by Public Investing are not FDIC insured. Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. Additional information can be found here.

Options.
Certain requirements must be met in order to trade options. Options can be risky and are not suitable for all investors. Options transactions are often complex, and investors can rapidly lose the entire amount of their investment or more in a short period of time. Investors should consider their investment objectives and risks carefully before investing in options. Refer to the Characteristics and Risks of Standardized Options before considering any options transaction. Supporting documentation for any claims, if applicable, will be furnished upon request. Tax considerations with options transactions are unique and investors considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy.

Options Order Flow Rebates.
If you are enrolled in our Options Order Flow Rebate Program, Public Investing will share a percentage of our estimated order flow revenue for each completed options trade as a rebate to help reduce your trading costs. Rebate rates vary monthly from $0.06-$0.18 and depend on your current and prior month’s options trading volume. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. To learn more, see our Options Rebate Program Terms & Conditions, Order Rebate FAQ and Fee Schedule.

Bonds.
“Bonds” shall refer to corporate debt securities and U.S. government securities offered on the Public platform through a self-directed brokerage account held at Public Investing and custodied at Apex Clearing. For purposes of this section, Bonds exclude treasury securities held in treasury accounts with Jiko Securities, Inc. as explained under the “ Treasury Accounts” section.

Investments in Bonds are subject to various risks including risks related to interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. The value of Bonds fluctuate and any investments sold prior to maturity may result in gain or loss of principal. In general, when interest rates go up, Bond prices typically drop, and vice versa. Bonds with higher yields or offered by issuers with lower credit ratings generally carry a higher degree of risk. All fixed income securities are subject to price change and availability, and yield is subject to change. Bond ratings, if provided, are third party opinions on the overall bond's credit worthiness at the time the rating is assigned. Ratings are not recommendations to purchase, hold, or sell securities, and they do not address the market value of securities or their suitability for investment purposes.

A Bond Account is a self-directed brokerage account with Public Investing. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The Bond Account’s yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees. A bond’s yield is a function of its market price, which can fluctuate; therefore a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule.

Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. You should evaluate each bond before investing in a Bond Account. The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions.

Fractional Bonds also carry additional risks including that they are only available on Public and cannot be transferred to other brokerages. Read more about the risks associated with fixed income and fractional bonds. See Bond Account Disclosures to learn more.

High-Yield Cash Account.
A High-Yield Cash Account is a secondary brokerage account with Public Investing. Funds in your High-Yield Cash Account are automatically deposited into partner banks (“Partner Banks”), where that cash earns interest and is eligible for FDIC insurance. See here for a list of current Partner Banks. Your Annual Percentage Yield is variable and may change at the discretion of the Partner Banks or Public Investing. Apex Clearing and Public Investing receive administrative fees for operating this program, which reduce the amount of interest paid on swept cash. Neither Public Investing nor any of its affiliates is a bank. Learn more.

Cryptocurrency.
Cryptocurrency trading, execution, and custody services are provided by Bakkt Crypto Solutions, LLC (NMLS ID 1828849) (“Bakkt”). Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrencies offered by Bakkt are not securities and are not FDIC insured or protected by SIPC. Your cryptocurrency assets are held in your Bakkt account. Bakkt is a licensed virtual currency business by the New York State Department of Financial Services and a licensed money transmitter, but is not a registered broker-dealer or a FINRA member. Your Bakkt Crypto account is separate from your brokerage account with Public Investing, which holds US-listed stocks and ETFs. Please review the Risk Disclosures before trading.

Treasury Accounts.
Investing services in treasury accounts offering 6 month US Treasury Bills on the Public platform are through Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. See JSI’s FINRA BrokerCheck and Form CRS for further information. JSI uses funds from your Treasury Account to purchase T-bills in increments of $100 “par value” (the T-bill’s value at maturity). T-bills are purchased at a discount to the par value and the T-bill’s yield represents the difference in price between the “par value” and the “discount price.” Aggregate funds in your Treasury Account in excess of the T-bill purchases will remain in your Treasury Account as cash. The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability - yield is subject to change. Past performance is not indicative of future performance. Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. See Jiko U.S. Treasuries Risk Disclosures for further details.

Investments in T-bills: Not FDIC Insured; No Bank Guarantee; May Lose Value.

Banking services and bank accounts are offered by Jiko Bank, a division of Mid-Central National Bank. JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries. None of these entities provide legal, tax, or accounting advice. You should consult your legal, tax, or financial advisors before making any financial decisions. This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy.

Commission-free trading refers to $0 commissions charged on trades of US listed registered securities placed during the US Markets Regular Trading Hours in self-directed brokerage accounts offered by Public Investing. Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Public’s Investing’s Fee Schedule to learn more.

Fractional shares are illiquid outside of Public and not transferable. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see our Fractional Share Disclosure to learn more.

Investment Plans. Investment Plans (“Plans”) shown in our marketplace are for informational purposes only and are meant as helpful starting points as you discover, research and create a Plan that meets your specific investing needs. Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency. Plans are not recommendations of a Plan overall or its individual holdings or default allocations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile. You are responsible for establishing and maintaining allocations among assets within your Plan. Plans involve continuous investments, regardless of market conditions. Diversification does not eliminate risk. See our Investment Plans Terms and Conditions and Sponsored Content and Conflicts of Interest Disclosure.

Alpha.
Alpha is an experiment brought to you by Public Holdings, Inc. (“Public”). Alpha is an AI research tool powered by GPT-4, a generative large language model. Alpha is experimental technology and may give inaccurate or inappropriate responses. Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. All Alpha output is provided “as is.” Public makes no representations or warranties with respect to the accuracy, completeness, quality, timeliness, or any other characteristic of such output. Your use of Alpha output is at your sole risk. Please independently evaluate and verify the accuracy of any such output for your own use case.

Market Data.
Quotes and other market data for Public’s product offerings are obtained from third party sources believed to be reliable, but Public makes no representation or warranty regarding the quality, accuracy, timeliness, and/or completeness of this information. Such information is time sensitive and subject to change based on market conditions and other factors. You assume full responsibility for any trading decisions you make based upon the market data provided, and Public is not liable for any loss caused directly or indirectly by your use of such information. Market data is provided solely for informational and/or educational purposes only. It is not intended as a recommendation and does not represent a solicitation or an offer to buy or sell any particular security.