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mYCharts - April 15, 2019

“Some Losses Hurt Worse Than Others”


“Some losses hurt worse than others”

A private investor, director, author, social media personality, and former hedge fund manager — Jeff Macke is a lot of things.

While he admits the “social media personality” moniker was somewhat of an accident, Jeff has taken his stature as an investing thought leader (he previously spent time as a CNBC contributor and Yahoo! Finance host) to a new level on Twitter. (go follow Jeff Macke)

Jeff has a knack for creating insightful charts then adding animations he draws himself to tell a digestible, impactful, and unique story. In Jeff’s own words, “The best charts tell a quick story that people understand on a few different levels.” The chart above shows a week of price action for Lyft Inc (LYFT) following their IPO.

The story Jeff is trying to tell? “Some losses hurt worse than others. Leaping into a bad IPO and getting burned causes a special kind of pain and regret you only feel when you should have known better.”

“I think in narratives so technical levels by themselves don’t tell me a lot. Everyone on Wall St knows LYFT was $72 on the IPO. Similarly, that level doesn’t tell me much. But I’ve been doing this long enough to have been burned before. While there’s no magic to $72 itself, the insight is knowing just how painful for investors being below that level really is. The $72 mark matters for LYFT because every second shares are below $72, investors who bought there or higher are reminded they’re being burned. The only way to stop it is selling. LYFT can’t stay under that level for long or it’s going to have an endless supply at $72 every time it gets back above water.

“There’s always a point to the goofy picture. In this case, the takeaway is ‘traders have a strong, visceral aversion to staying long LYFT below the sucker IPO price.”

That’s exactly how Jeff makes his Twitter feed so engaging: his charts tell a story rooted in facts and data, but his illustrations layer in an additional dimension of commentary that’s funny, ironic, or in this case, jarring.

You might recall that Lyft initially priced its IPO at a $62–68 range, and it was actually oversubscribed. Lyft took this as a sign it could command a higher price, and bumped up its IPO price to $72 per share. It has missed a couple turns since then. With so many big tech IPO’s set to hit the market this year, many of which operate at a loss just like Lyft, perhaps investors and the companies themselves will heed Jeff’s warnings about how share prices align with investors’ appetites.

No one wants to price their shares too low and leave money on the table, but joining Lyft at the bottom of the lake is similarly undesirable.

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How Jeff uses YCharts:

“I’ve been using YCharts for more than 4 years. It’s my go-to site to stay abreast of markets and do essential fundamental as well as technical research. YCharts has a clean, intuitive feel. I can find what I need fast in one spot.

“My time is money, and YCharts’ interface minimizes the amount of time I spend looking for the data I need. The charts are also an ideal platform for being able to create visual representations of trends in the data I want to highlight. I understand things visually, and YCharts connects data and charts better than the other sites.”

Jeff’s Expert Tip:

“Dumb people try to sound smart. Smart people are willing to look dumb if it means being understood. There’s a reason Tweets with a well-made graphic get hundreds of times the engagement of even the loftiest, most in-depth text-only idea. Your audience understands picture stories — accounting is a different matter. I’d love to see not just more charts but more annotations on everything because they help cut through the BS… GIFs (like the animated image you see above) are even better.

“There’s a lot of very smart people hiding out there on social media. If you want to reach them, tell your story with words and visuals. It proves you’ve done your homework, at the very least.”

Visit ycharts.com to create your own story.

Jeff Macke | @JeffMacke

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