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Go 49ers!

MLK weekend is becoming a sports weekend. India won 3rd deciding cricket ODI against Australia. 49ers won NFC championship to claim their rightful place in Super Bowl and KC Chiefs got their chance to appear in Super Bowl after 50 years. Overall weekend was filled with lots of sports watching. This year's Super Bowl will create history since it would be first win for 49ers after 25 years and first one for Chiefs in 50 years. Both teams have exciting, young and upcoming quarterbacks who are willing to play their own games of rushing (sometimes themselves making touchdown) and occasionally college football type hail-mary passes. It would be fun to watch the game (and advertisements and JLO/Shaikra half-time show). Of course we all in Bay Area know who is going to win. Go Niners and Make History!
Let's look at how first month of new year is shaping. First phase of trade deal between US and China is signed with all the fanfare. Same day house sent Articles of Impeachment to Senate for trial with its own fanfare. USMCA is passed in senate. Earnings are great - especially by big banks. Next two weeks would be the climax of earnings with tech heavy-weights announcing from this week. Markets are liking what's  happening in economy, earnings and interest rates. It's only 2 full weeks and markets are already up by 2-3%. The momentum would continue for another 2-3 weeks before 2020 election blues take over. DOW wants to break 30000 and S&P wants to touch 3400 before taking pause. So if you are thinking of what should one do, I would say, stay invested in index funds (SPY) and let it do the work. If you want some peace of mind after having great year in your portfolios, its ok to take some profits and keep it in cash. It all depends on individual risk/reward profile. 
For the daring souls, let's take a look at one binary high risk/reward stock: Sprint (S: $4.8)
I am sure everyone knows that T-mobile and Sprint have proposed to merge. US justice dept and FCC  have approved the merger. On other side, 13 states have brought suite against the merger arguing that it would reduce the competition and increase the prices in long-run. All depends on outcome of this trial. The terms of deal would entitle Sprint shareholders to receive .102 T-mobile shares ($8.36 base don current T-mobile stock price). That means at current prices, Sprint shares are trading at 65-70% discount to merger value. That means market players put the probability of deal going thru very low. Here is my hypothesis on why merger will go thru:
  • Combined T-Mobile and Sprint would be a much stronger competition to AT&T and Verizon
  • Combined company would have resources to invest in significant capital expenditure for 5G roll out
  • T-mobile has established itself as price carrier offering value at slightly lower prices than its two bigger competitors
  • With Google, Comcast, Dish, there is new emerging competition. It's matter of time when Amazon offers wireless plans to its prime subscribers.
  • Sprint as standalone company may not survive after 5-7 years effectively reducing competition (which is the argument states are making to oppose the deal)
So I put the odds of deal going thru at more than 65-70%. Judge presiding wants to wrap up the trial by Feb. So it's possible that one could make or lose 40-50% in next 4-6 weeks if one is willing to take the risk. That's the pick of the week for Risk/Reward Category! 
Usual disclaimer: Do your own research and then ONLY decide to invest or not. Personally I will recommend to stay with index funds.
Enjoy the Super Bowl and Go 49ers!
/Shyam


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