Let's Play Wall Street Raider - Ep4

RakeM plays Wall Street Raider and explains the fundamentals. In Episode 4, RakeM plays nine months of game time and turns $18.1B into $49.8B. For the first time, we invest in commodity trading and turn a nice profit. We also add short swaps to the bank's interest rate swaps inventory.

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Concepts covered in this episode:
Selling stocks short
Short Position Interest Rate Swaps
Commodities Trading
Interpreting Industry Supply-Demand situations

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Wall Street Raider, Copyright 1984-2014 by Roninsoft and Michael D. Jenkins. Used by permission.

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Closed Caption:

hello and welcome back to another
episode of let's play Wall Street trader
I reckon your host last time we invested
in Millennium Pharmaceuticals shadow and
started her own bank with millennium we
actually bought for different companies
merge them all together into one and
eliminated their debt and we had an
unfortunate run with millennium decided
to be grossly incompetent and stay that
way we change the management we elected
ourself the CEO and then when that
didn't work we did a restructuring and
while we were doing our interest rate
swaps toward the end of last episode we
got some good news which I'm going to
show you cuz we kinda skipped over it
during the fast forwarding through all
the interest rate swaps so we'll get to
that in just a second shooter was a
better story we bought it and eliminated
some of its debt but not all of it did
so its income has slowly been climbing
it's an industry household and personal
products and the industry is
deteriorating just a little bit but the
elimination of our debt at this high
interest rate of 11% has proved to be
profitable for us so at the end of the
episode we actually showed a small
profit we got up to 18.1 billion dollars
from our starting amount of three 13.5
billion dollar bank has pretty much
languished in Platte City
we put two billion dollars into it and
at the end of the episode we engaged in
three hundred and sixty-eight interest
rate swaps that are scheduled to begin
in the first quarter of 2019 and we're
hoping to see some income from that so
without further ado let's get to where
we stand here for so let me show you
what happened last time with millennium
receive this notice that we had an
important discovery in our R&D program
puts the earnings report in the
background so here it is still negative
but just made the just made the
discovery so last quarter obviously
would have remained negative but we're
scheduled to make $5.70 share in the
coming quarter and our management is
very capable at this point so that being
the case we need to go take a look at
the industry and see what changes we
want to make going forward to our to our
management so here we have a finally
have a positive return on capital assets
so we don't need to have quite a large
overlay on the R&D anymore and the
industry is growing at 10%
I know it's already over expanding but
at this point with our extra cash
the best thing we can do is to put
pressure on the other companies in the
industry Dr their stock prices down and
then scoop them up when they become
affordable and buy affordable I mean in
the eighty to ninety percent of stock
price to net worth reach we're gonna
slow down our R&D and change our growth
rate to 10% and let's see if there's
anybody that's right right for takeover
at this point yet but our interests are
protected return has climbed to 21% now
that we're not spending 25 percent on
our R&D
could turn that company
what I would hope to see with this large
increase in our projections is a good
return or a good good rise in our stock
price may take another quarter before we
get into the two hundred percent range
but it's nice to finally have that
turned around and going in the right
direction right so it's April 20th let's
turn the top stock ticker back on and
the next earnings report that's due up
his shadow was quitting increase the
speed to get this got a little bit
faster
over-funded sometimes $38 and we've got
a lot of cash to pay down our debt 362
this time last time it was 296 so let's
take a look and see if we want to up our
growth rate of pay down our death a lot
of good return and growth Raiders is
stagnant so you don't want to we don't
want our growth because everybody else
is over expanding the largest killer
profit margin so let's just put towards
our debt and with the interest rate at
10 percent that'll still help our bottom
line because the 300 million worth of
debt we don't have to pay interest
projection next time is 243 and we've
gone from reasonably competent to very
capable that's good to any further let's
take stock of where we are happy that
tied up and shoot 0 shorted railway and
went on its way to bankruptcy so we
should value of two billion and it's
currently worth 1.1 and we have a
billion invested or actually that's what
it's worth now let's take a look at
Millennium
very capable and we have increased
earnings expectation we have no debt
twenty seven hundred million in cash and
industries might supply demand is
decreasing one thing I notice is that
the one that's going to moes which is
center core we gave them a great credit
rating in there and now using it against
us but our bank SunTrust is their bank
so we can freeze their their lending
account the bank and then go to other
transactions and freeze unfreeze and we
can freeze their credit that will force
them to start growing at such a
ridiculous read and hopefully that will
result in a little bit better market
situation for millennium so the next
quarter or whatever it is that they have
to shell out cash for additional assets
will find themselves without any and
without any credit as well so that
should help us out a little bit thing is
we're gonna continue to keep a close eye
on this interest rate if the opportunity
comes we're gonna engage in some more
interest-rate swaps and I'm noticing
that spot crude has been climbing here's
their graph their climbing in with the
interest rates where they are I would
expect this to go down so we can look at
doing some investing in some commodities
here
and gonna go ahead and do that now so
I'm gonna go to buy sell or do this as
me and I'm gonna trade commodity futures
crude oil I'm gonna sell it so short
that don't have any right now and I'm
going to put out long words far as I can
tell you can cancel these at any time
just engaged in that 4,000 contracts
that's fine have to borrow eleven
trillion to do it
percent when you buy you said it all the
way out you only have to put in the 5%
so short is different
very often I usually buy low oil
margin deposit of 5% of the notional
value is required less than one percent
commission
know it's being based off at this price
rather than this price but still be that
huge 10,000 contracts by too much
pressure that's going to go down ok so
we've just done some commodities trading
and we want those that we want that
price per barrel to go down to make
money there the next thing is we don't
have any money to invest right now let's
look at selling something short general
industrial growth rates looking for
something with a negative here and low
numbers on the left
internet service looks that good good
and rail we've kind of tapped out there
let's look and see who is going broke
here quite a few are going broke
probably a good one for biting
probably because they got such a large
overlay on their stock price for one of
these are good we don't have to pay a
dividend invitees what's due him
trending downward
rate is 9% and they are growing well
above that
sell him short short
twenty-four billion worth
what we can do pretty much maxed out now
so during the ticker back on
so the next earnings report that comes
up is
51 cents versus last year it's coming
down
gonna go down even further quarter which
is exactly what we want to see and
earnings come out interest rate climbed
above 11 percent or to 11%
do come down for next quarter generally
does in the fourth quarter of every year
for being here right
year
another 80 cents next order by this
projection
January
March as the case may be interest rates
are going down now so that's good for us
order again
we need to make the adjustments which is
not where I would like it to be but it's
about as good as we're gonna get with
these guys like that as you can see
Centre Court has brought their group
down from 59 percent 42
has condemned know they're still the
same 25
gonna stay right where we are ready for
dinner on my
774 inequity and 23 so they come down to
like $7 a share or under
here
up again from 5100
redundant but
industry turns around in terms of supply
demand situation no point in going into
our profit margin so basically we're
just waiting for these guys to run out
of credit for we start growing ourselves
we're treating it 331 percent of our net
value so it may be time to start
thinking about an exit strategy is
working to run out of debt I think
before those guys run out of credit and
at that point our earnings per month is
gonna go down rather than let's take a
look at what we've spent which was 3648
3648 multiply times 520 and that's just
the whole thing kinds 51 8240 is what we
need to get 44 times our money out of
this thing we're not that far from it
right now so we're going up again made
62 64 projected for next quarter that
was before we
look at selling it
right now let's look at Millennium
target price
28
they have thirty million shares
outstanding
so we're not even a third of the way
there this point just turn around for
profits in the fact that these profits
are huge compared to a loss as far as
price or 230 away so when he or she go
1500
depends on expanded this race so it
keeps going fifty percent a year
gonna lose money just no way around it
by to hit continue to grow at this rate
and a credit Facebook and grow are all
gonna lose money but we're more
concerned about
so we made eight million so far
prices dropped from 148 when we first
entered
somebody we haven't checked in awhile
total of 237 till two points
21 opportunities to report I predict
will be
72 cents a share
up next we'll be right back to that
taxes for the fourth quarter for banks
as you have to pay a portion of your
taxes for the first quarter of the
following year in December or in the
fourth quarter of the previous year I
don't remember the exact rules but the
way banks work as they paid over pay
their taxes in December when they get it
back in January if they end up
overpaying remember what the rules are
for that Emmanuel I'm sure you can look
it up it might even be in the help files
just the way it is actually in some
cases when you when your back is big
enough you can create some opportunities
so you can look forward to selling it
December or buying in december is here
and then selling off in January as
back-up rings differential
this is our last earnings report were
and then next year's January report
should be about the same March should
take a huge jump from all the interest
rate swaps speaking of which interest
rate has dropped to four and a half
percent drops 24 we're gonna do some
short shorts wats good news
dropped so we're making money hand over
fist on our commodities futures here
just drops below 40 I'll start by cover
this position I'll start by for now
we're happy with what we've got
they still have a good return
10 bucks a share that's what I like to
see take a look and see if there's any
companies that are already bought
could by Regeneron now or we could wait
these guys growing at those rates should
come down because his return knows only
4.3%
152 so just $20 a share away from our
target just let this run interest rate
falls below for positive start doing
some interest rate swaps
100% you can't get options
public or private possession could only
get options if you don't hundred percent
of your
if this fall below for real wages
bankruptcy we got a hundred percent gain
on our short of there's no because
they've gone bankrupt twenty-four
billion in the other three 3.25 let's
look at real quick and then
here I will come back after this website
come down and they are growing at that
rate continue to Facebook
like that problem is the grocery
industry since 630 billion down to 22
continue to fall
what happens if it gets above thirty we
might go ahead
los $700 target they have a banner year
let's restart particular 266
earnings report I think fast forward
I see anybody else this list is climbing
active growing at 10% helping your case
decision when the next earnings report
comes out
for this quarter coming up
73 is the next projection
guessing it's going down because our
next projection is for a little bit less
our last earnings were hits 172 will
pause but otherwise we're going to fast
forward to January 4th
January 4th Graf is gonna be just crazy
12 percent down to three and a quarter
and now back up in the middle
all within the space of a year that's
just crazy right there it's very rare
for that sort of thing to happen you
just have to pay attention and make sure
that you catch it when it does happen
because look there's an opportunity we
missed at the end of 2017 probably
November time frame
interest-rate went all the way down to
close to 3% again and we didn't do any
interest rate swaps if we had we would
have been making bank always this
upswing in any case percent now and look
at the projection for
should actually tell us what we're
expecting to her interest-rate swaps for
next quarter percent so 215 billion
dollars on interest rate swaps card
income per share divided by fifty
billion 250 million earnings per share
is gonna be crazy crazy but good for
stock prices jumped the company's net
worth of the banks that were 3,000 it's
about to get crazy high
has now hit 168 and if it starts going
down again i think im gonna go ahead and
sell it right away even if it's the one
sixties better to take my profit with a
little bit of your back you know I don't
have to make my four times my money
exactly where to get most of my money
out now than to wait another quarter as
I'd like to add the money that I have
tied up in sheet 02 this seventeen
billion and do something else with it
because we've kinda maxed out what we
can make offer sheet 0 anyway
supply demand is deteriorating and I
don't see this going up any further so
we're gonna turn this back on and within
the next month gonna let this go if it's
172 great drops down to 160 and we're
just going to take it to the next
millennium is 170 we climbed back above
$10 from the estimate News projected for
next month
91
projection keeps coming in lower than
what we made but then revised estimate
goes up to 76 were trying to get the
1500 so that's halfway there
R
Shito for 170 nice profit
2.13 to 317 percent that's close enough
most likely caused by rising prices by
do as it went up at first and we didn't
have any cash to cover it at the time so
I think that's why we're negative
finally has started to drop off alone
check on our commodity oddities
and out
60 now climbing back up out of the
basement let's go ahead and cover our
commodities and get out of that before
it goes up any further if it drops after
having covered those drops amor that's
fine we'll just do a futures options and
futures in the other direction right so
we got 29 billion in cash what we
currently have in assets in stock on by
to the bank and letting them
take a look at the industry for biotech
finally come down all the way to 6% I
love to see that
has jumped back up to 17
I think we're fine right where we are
still like to see some of these stock
prices come down we can scoop some of
them up and add them to our capital
asset base but has been happening
good shape and I see no reason to change
it
yes that's it for now it's time to look
for a place to invest this go ahead and
pay our tax so total of four point four
billion let's go ahead and do that
interest-rate swaps and we will find a
place to put this twenty five billion
dollar to work so until next time guys
this is Ray come saying have a good one