Land of Milk an...'s  Instablog

Land of Milk and Honey
Send Message
Individual investor. Generally using index Mutual Funds or ETFs. Trying to diversify more (foreign in particular). Pick up tips & concepts, & learn more. I'm at alpha to keep a finger on the current moods & predictions... and so I notice up coming big financial news events before... More
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #19 152 comments
    Apr 20, 2014 8:36 PM

    I've set up this blog ...as a community place to share our investing ideas. Hopefully so we all gain more ALPHA!! It's a great way for my contacts to talk to each other at the same time, not just to me :).

    .

    All topics welcome. Investing, stocks, bonds, commodities, economy, politics about economy, and social (so we know who we're talking with). Please invite other investors! Stop by once in a while, or hang out all the time. Please post your questions, make a joke, or share your insights with us!!

    .

    My money has done well since I started this blog... so I'm hoping it adds value for everyone!

    .

    Only rules of the road are not to insult others, so state your view but don't call others names or put them down. Every view is valuable, if only to convince you, you are right!

    .

    This is Chapter #19. As the instablog gets long, I'll create a new blog & post a link at the end of the comments. Here's a link to the prior, #18: seekingalpha.com/instablog/11150861-land...

    .

    Links

    Regular poster Fear & Greed has instablogs outlining his ideas which are great! -- also SA articles!:

    seekingalpha.com/user/706857/instablog

    Regular poster User7 has instablogs with a specialty in CEFs & loves when ideas are shared!: seekingalpha.com/user/7415181/instablog

    Interesting Times has a fun Portfolio Challenge:
    seekingalpha.com/instablog/5038891-inter...-8

    Also his regular instablog: seekingalpha.com/instablog/5038891-inter...-50 It's more oriented to precious metals, & economic concerns (worries) than mine.

    As for the regular posters, you'll get to know us, if you hang around!!.

    Disclosure: I am long IWM, DIA, SPY, QQQ, MU, LINE, CVX, PSEC, TCAP.

    Additional disclosure: ...and more...

Back To Land of Milk and Honey's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (152)
Track new comments
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » Hi All!

     

    A few subsectors came up that haven't been talked about much... defense, Commodities... any other areas that'd you'd like to hear what others have researched?...

     

    Spring time bring any seasonality to stocks? (HD), Lowes, Auto sales?
    20 Apr 2014, 08:40 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » Welcome to newcomers, we've moved onto Chapter #20:
    http://seekingalpha.co...

     

    So you can bring topics forward to there -- or post here if it makes more sense inline.
    See you around!
    24 Apr 2014, 10:01 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    A quick change of pace---- and things to consider

     

    http://bit.ly/1fdWqb2
    20 Apr 2014, 09:59 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    Anyone have any stocks they currently think offer exceptional value?
    21 Apr 2014, 09:09 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Yair,

     

    we have a diverse group here -- & that is a good thing :)

     

    so it seems "value" (lets leave the word exceptional out) may have different meaning to diff people..

     

    I still like (MU) -- it was a $22 stock that i believe has the potential to be a $30 stock

     

    I posted an update on my blog here
    http://seekingalpha.co...

     

    if anyone wants to 'push back " on that selection -- please take your thoughts over to my blog...

     

    I believe u can find value in the offshore drillers that have solid balance sheets and great dividends,, their "side" of the oil industry wont stay depressed forever..

     

    The banks - some regionals and the "big boys" are inexpensive on a book value and PE basis .....

     

    These aren't "trades" ..
    21 Apr 2014, 09:54 AM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    Thanks, when I look for value I'm looking for something I believe is terribly mis priced.

     

    I generally build my portfolio on a small number of large positions, therefore I have to be sure of every position and have a serious margin of safety, and of course I will mess up.
    21 Apr 2014, 11:02 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - Y

     

    Rambus caught my attention today - down a lot on soft guidance even though it beat earnings and revenue. I don't even know what they do:
    http://seekingalpha.co...
    21 Apr 2014, 06:24 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    "Sniff Sniff"

     

    http://bit.ly/1mrPxYT

     

    Note the word "secular"

     

    CHK, BIR.TO, POU.TO, PDS, new YTD highs today, ECA just off YTD highs

     

    http://bit.ly/1mrQ1yb

     

    A secular reason to short gold.

     

    The other longer than one hour trade theme, starting to work well.
    21 Apr 2014, 10:12 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Macro: There are long term secular forces that will support natural gas demand. Possibly the most important will be the use of gas turbines to provide baseload generation in the place of coal. Historically, gas turbines were used only sparingly to meet peak demand. They would be started to meet peak demand during a hot summer day and then shut off. Now, utility companies are building base load generating facilities with the new generation turbines, and those turbines will provide power 24/7 burning a lot of gas.

     

    GE Launches Breakthrough Natural Gas Turbine for Baseload and Fast Rampin
    http://bit.ly/QBaFAz

     

    Immelt: Natural Gas Being Viewed as Baseload Fuel

     

    http://bloom.bg/QBaFAB-Xn~MpdcASVaWZfegLvkh0...

     

    A significant number of coal plants are being shuttered since it would not be cost effective to install pollution controls to meet EPA emissions requirements. Just as an example, the Fisk and Crawford coal stations in Chicago were shut down in 2012.

     

    http://ti.me/QBaFAD
    21 Apr 2014, 07:48 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    SG,

     

    That is extremely interesting. The second link is broken, I'd like to read it too if you can provide a other link.

     

    M
    21 Apr 2014, 08:03 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Sometimes links will never work. If you drag and drop this line into a Google search

     

    Immelt: Natural Gas Being Viewed as Baseload Fuel

     

    It will take you to a 14 minutes Video at Bloomberg.

     

    I identified this cycle in a December 2012 post. I will just drag and drop that discussion:

     

    (1) Super Cycle for Gas Demand Emerging: When playing super cycles, I could care less what happens to a stock next year or the year after. Instead I am looking way out into the future. No one will be able to time when, or even whether, natural gas demand will cause a substantial non-temporary rise in price. I do not know, nor does anyone else who is not a divine being. I am going to admit up front that the Lord has not given me any guidance on this one, possibly draining the well of divine stock advice after sending me a sign about reinvesting the GE dividends. Stocks, Bonds & Politics: GE (introductory section near snapshot of GE buys)

     

    The article in a UK trade journal intrigued the LB so it proceeded to read it: GE bets on 25-year gas super-cycle - Gas to Power Journal UK The main guy at GE Power was predicting a 25 year natural gas super cycle. LB is always interested in super cycles, such as the one recently discussed in connection with the parabolic rise of middle class consumers in emerging markets or the super cycle that led to the long term bull market starting in 1982. The next article read had the following title and was even more intriguing: Gas-fired CCPPs will dominate US power market – Siemens VP product sales - Gas to Power Journal UK That guy was saying that the competitive advantage of large coal fired plants was being eroded by the economics of low cost gas generation.

     

    Back in the day when LB knew something about energy production from natural gas turbines, approximately 30 years ago, gas fired turbines were used by electric utilities over short term cycles to meet peak demand (e.g. the hottest part of a summer day). When that demand fell off, they would be turned off. The power cost from those units was high cost. Power produced by large coal and nuclear units was much cheaper, due to economies of scale, and those units were used to provide what is known as the base load requirements. Base Load and Peaking Power; SmartPlanet Those units would be running 24/7 except when shutdown for periodic maintenance. The guy from Siemens was saying that the cost advantage of coal generation was eroding in favor of the natural gas fired units. Coal units are only used to meet base load. So will the natural gas fired units be the new base load, running 24/7, burning up all of that natural gas to produce energy instead of coal?

     

    It just appears to me that there may be no other choice. Nuclear plants take an incredibly long time to build, and utilities are not exactly beating down the door to build new ones in the U.S.

     

    Yet, the Obama administration has clearly embarked on an environmental policy to shut down a significant number of coal generating stations by making it uneconomical to retrofit those plants with pollution devices to meet new clean air standards promulgated by the EPA.

     

    I am not going to repeat my discussion about those EPA rules, contained in the comment section of this seekingalpha article: Seeking Alpha The author of that article was recommending an Illinois Basin coal producer, so I took issue with that recommendation based on what was happening with the EPA.

     

    In my capacity as an investor, it is irrelevant whether I agree or disagree with the EPA policy. The relevant consideration starts with a very simple question that trial lawyers always want to know: "what are the facts". Once an investor has a grip on the relevant facts, the issue then is simply how to respond. Knowing about the direction and potential impacts of EPA's new emissions rules, which have already resulted in plant shutdowns, I would not be in the market for a coal stock. The product is in abundance and the demand is about to fall.

     

    I suspect that the estimate made by a consultant group will be close to what will happen. America is about to lose 20% of its coal fired generation, though the matter is still being litigated and anything is still possible. I discuss those legal issues in the comment section to the aforementioned SA article.

     

    I have also started to discuss long term super cycles, natural gas and coal in the comment section to this Seeking Alpha article.

     

    I will cite the following here:

     

    Reuters Article Containing Consultant Estimate of 20% Closure Rate: Reuters

     

    EPA Explanation of its Cross Border Emission Rules: Basic Information | Air Transport | US EPA

     

    A three judge panel of the U.S. Appellate Court for the District of Columbia Court of Appeals affirmed the EPA's greenhouse gas rules. About a week ago, the full Circuit voted to deny a petition for a rehearing en banc, filed by industry groups, of that decision. Unless the Supreme Court grants a petition for review and later reverses the Appellate Court's decision, those EPA rules will become the law of the land.

     

    Interview with Obama in 2008 relating to his views about coal: YouTube

     

    An article in the New York Law journal, written by a Columbia law professor, describes pending EPA regulations and how they could negatively impact electric utilities operating when and if adopted by the EPA. A link will not work. If you are interested, it can be found using these search words: obama reelection EPA regulations Gerrard. The selection would be the PDF version available at the Arnold and Porter website."

     

    Some of the journal sites will not work anymore since a paid subscription is required:

     

    This is one of the links cited in the above comment:

     

    UPDATE 1-US rules seen shutting 20 pct of coal power capacity

     

    http://reut.rs/TO60Ix
    21 Apr 2014, 08:24 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Macro: If you really want to dig into this topic, and see what is happening now, use the google phrase "natural gas power CCPP"

     

    This is an example of a new 880MW natural gas power plant that will supply 1/2 of Calgary's power needs:

     

    http://bit.ly/QBgDRR

     

    Even large coal plants will not have that large of a nameplate capacity.
    21 Apr 2014, 08:39 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    SG,

     

    Thank you for the information. I have a reasonable understanding of the EPA environment and the effects this is having on utilities operational decisions.

     

    We have new gas-fired plants here in Ontario, as a decision was made to close all coal plants. Perhaps I am not as focused as I should be, on the environmental perception of coal.

     

    What is new, is I have believed that at current and higher prices for natural gas, coal still held a cost advantage, even while conforming to EPA regs.

     

    Therefore your comments on new baseline power turbines are interesting in how they affect any cost advantage.

     

    My thesis had been more structured to other areas, specifically the economy, supply and increasing gas exports.

     

    Your line of thought is interesting, of course basing on EPA policy is always subject to future political risk to some degree.

     

    Hence I do have a most positon in (TCK) as well, I don't think it will hurt me.

     

    You understand I'm wrecking my day trader reputation at this moment -- (for the benefit of others ).
    21 Apr 2014, 08:51 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Yair,

     

    I'll also add the (AAPL) and the large caps techs -- many will argue they are value traps -- i don't see it that way..
    21 Apr 2014, 10:30 AM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    I don't believe I have any advantage in a company such as apple, the chance that I would know more about this company then the consensus of the market is small.

     

    I personally think apple died with Jobs, its in a highly competitive low margin business, its getting attacked from all sides.

     

    Anyone who looks at my Nexus 5 and realizes I paid $380 for it and not $650 or more, starts to wonder if they should switch.

     

    I want another (HPQ) at ~$12.5 I'm pretty sure intra day it was at ~$11.5 that was a steal.
    21 Apr 2014, 11:04 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Yair

     

    in my view (MU) has a "chance" to be an "(HPQ) like" situation..
    21 Apr 2014, 11:46 AM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    You believe it will rally to $60? Please note if you say yes you will give me a lot of homework!
    21 Apr 2014, 12:17 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    How about --- $22- $40 as a possibility?
    21 Apr 2014, 12:19 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » FG, Y

     

    (MU)'s past $22. You mean $32-40?

     

    Yair - it looks compelling as a turn around story that's proving itself based on my digging. A number of market changes and management actions to support it. It's a very high barrier business, so the competition is obvious. I'm newer at judging numbers themselves, but the concepts for buying in seem strong.

     

    Downside - it's had a long run up so may consolidate. And it used to be a commodity trading stock, and still gets those swings.

     

    On product -- I liked (SNDK) a lot on hands on quality tests on drive sticks and SDcards (when buying for several people) and went out of my way to pay more for it (very unusual for me). For (MU) I wouldn't know what had MU inside or if they did at the time a few years ago. With Solid State Drives coming into mainstream... that'd be a strong positive factor for the whole sector.
    21 Apr 2014, 12:40 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    LMH,
    i've been suggesting (MU) for quite some time .. & i'm in at that level..

     

    http://seekingalpha.co...

     

    Investors had another chance to get in under 22 last week ...

     

    If my first target ($30) comes to fruition its approx. 35% upside .. IF the story continues maybe more ..
    
    :)
    21 Apr 2014, 12:59 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - FG,

     

    I'm in (MU) at $24.14. With it skyrocketing off (SNDK)'s positive sector report around $25, I'm happier :).

     

    I have a sell stop at $25.38 (4-5% gain), near it's prior top, and will buy back in lower if it triggers. Or will move the stop up, as the stock climbs... And a stop at $24.19 break even, just in case..
    21 Apr 2014, 01:07 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » -

     

    Stopped out of (MU) at 25.20 for 4.4% gain. Doesn't look like much when it's on 4k, umm.

     

    My original pre-thought-out stop point of 25.38 was essentially the high, better to stick with those... I'll wait for a down day and buy back in. This could well be a short term high for this run off (SNDK)'s earnings report since that's topping out.
    21 Apr 2014, 06:22 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    (ESV) selling off again; as the sector led by quality names like (HAL) and (PDS) remain on fire.
    21 Apr 2014, 11:00 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    ....While stocks like $HLF grind higher, confounding the doubters awaiting the next state AG investigation or rumor from Bill's friends
    21 Apr 2014, 11:47 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    This #frustratedbear pressing on gold (GLD) shorts; patiently waiting for the big break; confirmed below (GLD) basis 123.25
    21 Apr 2014, 01:00 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » M,

     

    Gold is heading down -- I missed paying attention.

     

    There's no frustrated bears on this site -- it's good to retire such terms :).
    21 Apr 2014, 01:03 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    L;

     

    Frustrated Gold not dropping faster, will have to be patient, LOL. Short Silver too.
    21 Apr 2014, 01:05 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Latest update to my call writing portfolio

     

    http://seekingalpha.co...
    21 Apr 2014, 03:26 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Bankrate's latest survey :

     

    "As part of the monthly index survey, Americans were asked their opinion on the best way to invest money they wouldn't need for 10 years.

     

    The top answers were cash investments, such as certificates of deposit and savings accounts, and real estate, which, added together, get the thumbs-up from nearly half of Americans. Precious metals were tops for 16 percent, while stocks and bonds, traditionally thought of as the backbone of a well-performing portfolio, lagged behind at 14 percent and 8 percent, respectively. "

     

    I have 2 comments, First -- what are these people thinking of ?

     

    Second, the bull market is alive and well, as the masses have not embraced this equity market at all..
    21 Apr 2014, 03:46 PM Reply Like
  • User 7415181
    , contributor
    Comments (1025) | Send Message
     
    "First -- what are these people thinking of ?"

     

    Probably 2008. One of my mentors put her retirement on hold after moving to Atlanta from SF a year or two prior and got a mortgage for a house. 401k's and such evaporated and their new house was underwater in short order.

     

    I was declined for a job at the hospital I did my clinical hours in in early 2009 when I got my license - an older veteran nurse was chosen instead, I assume in a similar position to my mentor. I've run into a number of nurses since who worked well past when they planned to retire.

     

    As far as real estate being one of the top picks, I guess folks have selectively short memories of what happened. I do not know if my mentor sold off funds in her 401k or whatever. I do know that her and her husband talked to a lawyer and walked away from their mortgage and started renting the last time I talked to her.

     

    "Second, the bull market is alive and well, as the masses have not embraced this equity market at all.."

     

    Don't know. I've had a couple of co-workers and family members ask me for stock advice over the last year (as if I know what I'm doing). I will get worried that there's a crash coming when they start telling me about their awesome stocks.
    21 Apr 2014, 04:03 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    F & G: I am not aware of a single individual who is ebullient now. I am certainly devoid of that emotion.

     

    Fidelity does a good service for their investors by computing their performance returns and allowing them to easily compare the results with both a bond index and the S & P 500 over several time periods.

     

    Active investors will often fall far short of those benchmarks, as noted in numerous studies including a recent one summarized in this Marketwatch article:

     

    "Did the bull market happen without you? Here’s why"
    http://on.mktw.net/1mw...

     

    Given the historical returns from active management noted in that study, the average investor's return from risk assets over an extended period would actually not be that much different from the CD and savings account return. The average return is just 2.3%, below the average inflation rate.

     

    American households probably have over $10 trillion parked in assets that pay them practically zero. Over $7.2T is currently sitting in savings accounts earning just about zilch and losing ground to inflation every day, even before taxes which simply adds insult to injury.

     

    Total Savings Deposits at all Depository Institutions
    http://bit.ly/14m4T7W

     

    Fidelity estimated that it would take $220,000 for a couple, aged 65 and retiring in 2013, to pay medical expenses alone and that is not going to get any better. How are most households going to pay that one expense? Medicare premiums are likely to go much higher in years to come too.

     

    What are people thinking?

     

    I agree with USER that many are just fearful and traumatized after experiencing two 50% plunges since 2000. Even for experienced Stock Jocks, who expect those events to happen, it was painful to have two occur within the same decade. We went from October 1974 to mid-2000 without having a single 45% bear decline.

     

    A large number of households fear losing money more than anything else, and have not yet come to a realization that the greatest risk for them is a refusal to take risks. Fear is their dominant emotion, and a huge number of rationalizations are used and created to justify an unwillingness to experience that fear. One such tribe, known as The Hussman True Believers, will quote at length his many sayings of doom and destruction, as if it was the holy scripture, given to Hussman while observing that burning bush.

     

    And, for those willing to take risks, many will have an unjustified confidence in their abilities and will fall each year farther behind a simple low cost ETF portfolio. Rather than buying in March 2009, they sold out of stocks in October 2008, or possibly bought into the Nasdaq bubble in the late 1990s and sold when the inevitable crash happened in 2000-2002.

     

    21 Apr 2014, 07:32 PM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    S:

     

    I'm ebullient that people aren't ebullient.
    21 Apr 2014, 08:45 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » T,

     

    :) LOL.
    21 Apr 2014, 08:49 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    Works for me, and I have come that belief as well, as it relates to the broader public.

     

    Certainly earlier in the year, the investor community Was kind of ebullient ---esp. On social media and the like -- but the much larger public has never gotten there.
    21 Apr 2014, 08:59 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Tack: Never have been ebullient, I neglected to mention. I am unable to be ebullient, psychologically impossible to be so, it is a Left Brain condition, even with the prospect of no one else being ebullient about stocks or bonds, or anything else.
    21 Apr 2014, 10:00 PM Reply Like
  • extremebanker
    , contributor
    Comments (2123) | Send Message
     
    South:

     

    I just posted on another thread why I use moving averages and relative strength to help manage my portfolio. TO HELP MANAGE RISK, REDUCE VOLATILITY AND REDUCE PORTFOLIO DECLINES. It really has nothing to do with trying to improve performance although it does over a long period of time. The poor retail buy and hold investor hits a bear market that cuts values by 50% and they bail. They have no interest in coming back.
    21 Apr 2014, 07:45 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Since I have been investing for a long time, I know that there will be prolonged periods when the S & P 500 will suffer an annualized loss, with dividends reinvested and adjusted for inflation. The worst period involved a long term secular bear market for both bonds and stocks lasting from 1/1/1966 to the summer of 1982, when the S & P 500 lost 1%+ per year, with dividends reinvested and adjusted for inflation and bonds were widow makers.

     

    I use this site to calculate S & P 500 returns adjusted for inflation:

     

    http://bit.ly/vFOfUm

     

    The period between 2000 to March 2009 was closer to a real 6+% annualized loss with dividends reinvested.

     

    Passive investors will accept those results, but I simply can not do it. Sixteen years or ten years is a long time in an investor's life to lose money through risk investments. Most folks do not have that long to accumulate enough for retirement given the expenses associated with raising a family and their incomes.

     

    Something needs to be done in an effort to mitigate the negative returns inherent in long term secular bear markets that will be generated through passive investing.

     

    The clearest Get of Dodge time for stocks in my lifetime was in 1999. Insanity does not adequately describe what happened in the late 1990s. For a total return conservative investor, 1999 was a gift, sell to those who had lost any semblance of pricing discipline.

     

    Sometimes, I ask a passive investor who owns DG stocks whether they would have sold KO in 1998 at $42, split adjusted, more than the current price, or GE at $57 in 2000 or about 33 times the current estimated 2014 earnings. Amazingly, they say no.

     

    That person could have sold KO at $40 and bought back twice as many shares with the proceeds in just 4 years, and that will not change their answer either. Just too hard to time the market is one reason given, and the income generation is another. But what about 400 shares generating more income than 200 shares. No matter.

     

    It does not change their answer if I tell them that KO was selling at over 50 times trailing 12 month earnings or over 60 times when some unique gains are excluded.

     

    The 50% decline in 2000-2002 could have been avoided by those exercising a small amount of common sense and refusing to succumb to group think about eyeballs and other asinine valuation measures.

     

    The 2008 decline was far harder to foresee. I saw the rot but did not fully appreciate the potential devastation. In that kind of situation, having some signal to lighten up will be helpful. Simply reducing the stock allocation when the S & P 500 fell 5% below its 200 day SMA, a line that anyone can draw at YF or Marketwatch, and keeping the powder dry until the S & P 500 moved back above the line, would have saved investors a lot of damage while capturing most of the subsequent upswing. My VIX Asset Allocation model also gave a sell signal in 2007.
    21 Apr 2014, 08:15 PM Reply Like
  • extremebanker
    , contributor
    Comments (2123) | Send Message
     
    South:

     

    Here here. Cheers on your comment! I have difficulty convincing people that risk management is very important in determining long term returns.
    22 Apr 2014, 09:17 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    South,

     

    your comment

     

    "I am not aware of a single individual who is ebullient now. I am certainly devoid of that emotion."

     

    I do agree with that statement - and can add that many other money managers , investors in my circle , also feel that way..

     

    In part because of what u have stated regarding 2008 , and because we have been around much too long and now realize its ok to be satisfied----- but not "giddy" about the market..

     

    And u know what -- that is a good thing ....

     

    The point being--- the general public has not embraced the market and so the comparisons to the over exuberance of days gone by are exaggerated & disingenuous.
    21 Apr 2014, 07:48 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    This thread about those willing to accept meager returns rather than taking risks in the stock market reminded me of an article from last year by Tim McAleenan and my response.

     

    http://seekingalpha.co...

     

    We are all active investors and watch the economic data and other metrics like the credit market carefully, but as sentient beings it's impossible to fully erase the experience that was so unexpected. I doubt I will ever be able to. I find myself in a constant struggle between "everything looks OK" and "the world is so complicated I don't know what is lurking beneath the surface that could reverse the trend".

     

    And if this is happening with me, when this is pretty much my full time job and knowing I am more knowledgeable than most, I'm not surprised so many Americans are shunning stocks.
    21 Apr 2014, 11:29 PM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    DD:

     

    And, the exclusion of more emotionally-driven investors altogether, along with more cautious, wall-of-worry investing by participants, along with steady, but not overheated, growth, explains the consistent low-volatility rise in markets. And, absent major economic or geopolitical changes, it's likely to continue this way if and until some over-abundance of enthusiasm returns.
    22 Apr 2014, 07:05 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Agreed. My analytical side will continue to be in a constant battle with my emotional side. Luckily the analytical side has been winning, but it hasn't been easy. I have more cash than I probably should, but still a large stock position - the combination works for me. I'm making money but can still sleep at night.
    22 Apr 2014, 10:39 AM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    So....

     

    If the stock market was closed for the next ten years, and you had $100,000 to put in just 1 company, and it had to be purchased tomorrow what would you buy?
    22 Apr 2014, 07:24 AM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    Just knee-jerk, off the top of my head, without lengthy pondering or research: (PG)
    22 Apr 2014, 07:36 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » Yair

     

    That's a great question. I hope everyone puts their idea into the mix.
    22 Apr 2014, 08:17 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Yair: Personally, I would feel comfortable only with a consumer stable stock and my favorite large cap drug stock which is Novartis.

     

    You would be looking for a company whose earnings are not likely to disappoint and who may be able to increase earnings even in severe recessions. You would want a company that is both financially strong and whose business is not cyclical.

     

    General Mills, which I own, has paid a dividend without reduction for 115 years:

     

    GIS Dividend History:
    http://bit.ly/TTlbQB

     

    On a split adjusted basis, the shares were at $3.5 in mid-1983.

     

    http://yhoo.it/1a1ieoL;range=my

     

    I last bought GIS shares at $35.53 (1/5/11 Post). When I became trustee of my late father's testamentary trust, it was one of the first stocks that I bought.

     

    I last bought NVS shares at $76.72 last December.

     

    Scroll to Item # 1

     

    http://bit.ly/1cIkQrJ

     

    NVS Dividend History at NVS Website:
    http://bit.ly/18dgQQ2

     

    I just received the annual dividend.

     

    NVS is moving up this morning based on a mega deal with GSK.

     

    http://bit.ly/1po6ZlB

     

    If I was prone to speculation, and I am not, I might consider Forest City that has some interesting real estate projects in development.

     

    The long term chart is a bit frightful:
    http://bit.ly/1po6ZlD

     

    The company had the peddle to the metal going into the recent Near Depression which was not good or helpful to the stock price and the price has not really recovered that much since 2010.
    22 Apr 2014, 08:27 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    "explains the low volatility rise in markets".

     

    It's difficult to argue with this statement. I continued to be surprised the length of time folks were scarred by the 2008 experience. I suppose my personal perspective is so different from average folks, I have to work to relate to theirs.

     

    I started in an equity futures pit in 1998, immediately prior to the Asian financial crisis, followed by the 1999 boom and bust.

     

    One of my greatest challenges as an investor, has been the multi-year transition to a longer term, lower volatility environment and style of investing. Every year I am seeing better results thankfully.

     

    Most people I worked with in the pits, have never made the transition, and many have had to return to a traditional career. I wonder if that is DD's experience too.

     

    In hindsight looking back, it took a long, long time for folks to come back after the 2000/2001 bust. I remember years like 2003-5 being pretty dead too from a volatility perspective.

     

    I expect we will continue to repeat these boom and bust cycles.
    22 Apr 2014, 07:26 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Macro: It takes a long time for humans to adjust to catastrophic market events. Unfortunately, by the time many become comfortable again, the market has risen substantially and has consequently become more susceptible to another shake out period of varying severities. The market is not as "safe" now as it was in March 2009.

     

    The VXO volatility index closed at 150.19 on 10/19/1987 and at 140 on 10/20/87. Thereafter there were two more closes over 100.

     

    http://yhoo.it/1po5lAg

     

    VXO is the volatility index for the S & P 100 options:

     

    http://bit.ly/1po5iV3

     

    That index is less volatile than the S & P 500. Those volatility numbers were worse than anything in the VIX after Lehman's failure.

     

    It took several years before the market could mount a steady advance, starting in 1991 after scaring people so deeply and shaking their confidence in stocks.

     

    Humans do not like volatility. You might as well throw snakes in their bed while sleeping. It makes people uncomfortable and anxious. Many will just flee from it to perceived security.

     

    Persistent movement below 20, what I call a Stable VIX Pattern, has historically been associated with multi-year up moves. When there is a burst out of that pattern into the high 20s lasting for several days, then the market has just become far riskier and more volatile, and that riskier period has lasted for a long time historically.

     

    There was such a rise in August 2007 (Trigger Event in my Model), which formed what I call the Unstable Vix Pattern, that was followed by similar bursts in November 2007 and January 2008 after brief recoveries in the VIX to below 20. Trigger Events are sell signals.

     

    Prior August 2007, there was a Trigger Event in October 1997 which was also followed by a brief return to below 20 in the VIX early in 1998. An investor selling then the S & P 500 could have bought back in November 2003 at the same level, as the Stable VIX Pattern formed after six years.

     

    Sure, there was a lot of fun in between, like the parabolic rise in 1999 that was never confirmed by the VIX movement which remained at elevated levels, and then a 50% plunge in 2000-2002. Some investors do not like those roller coaster rides.
    22 Apr 2014, 08:01 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    "Some investors do not like those roller coaster rides."

     

    I suppose not. I'd be lying if I said it wasn't a lot of fun in 1999 - 2000, early in my career, with the volatility. I am Canadian, started in a Canadian equity futures pit.

     

    Many years ago I saw the writing on the wall, and committed to a multi-year study of the American markets, culture, companies, politics, and economy, a study which is ongoing to this day.

     

    In my investing activities, I became an American, as the Canadian markets are both too thin and too narrow. To my knowledge, I am the only professional trader from my circle, who did this. I now arguably understand the US issues, better than what's happening right here.

     

    Investing is a lifelong commitment to study.
    22 Apr 2014, 08:18 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Macro - TCK reported worse than expected eps on a combination of lower prices received and higher costs from weather which impacted both energy and transportation costs. No news on the dividend yet, but I wouldn't be surprised if it was reduced. Their conference call starts 1.5 hours after the market opens. I reduced my position by 20% in the pre-market @21.62. With a decent cash position and p/b @ 65% I'll hold the remainder at least until I hear the conference call.
    22 Apr 2014, 08:55 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    DD --

     

    Thanks. It's a small position for me, Like to see how it responds to this.
    22 Apr 2014, 09:00 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Well, it's up! Surprises me given the press release, but perhaps the "whisper number" was lower. I did get out of a bit more just now, up 30 cents, and now will definitely wait until the conference call. Still own 1500 shares.
    22 Apr 2014, 09:57 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    No surprises so far on the CC. They are about 15 mins into the Q&A. One question about the dividend. Mgmt said it was up to the Board but they have a good cash position. In the past couple years the FH div announcement came the same date as earnings; the LH div about 3 weeks later.
    22 Apr 2014, 11:49 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    CC over. I didn't hear anything particularly bullish but the stock is making new highs on the day. Volume is light but I'm still breathing a sigh of relief. The chart wasn't looking very good and before the CC I had visions of a test of the lows made in March.

     

    The chart is still in never never land so until it takes out the recent highs I won't be comfortable.

     

    Great mgmt, great long term prospects, but the prices they are receiving continue to go down for both copper and iron ore.
    22 Apr 2014, 12:21 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    D,

     

    Encouraging response. Perhaps much of the current scenario has been discounted.
    22 Apr 2014, 10:37 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    Some changes today on this 6th straight up day. I covered every short put I had on the "MOMO" stocks, worked out very nicely;

     

    Sold out of (HLF) in the mid 58's, but kept my short puts, and have put shorts back out in (YELP) (LNKD) (NFLX) (P) against my longer term energy and dividend exposure. Just going with my trader instincts, on tech here.
    22 Apr 2014, 10:57 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Energy -- a sector that is under owned by investment managers, looks prime to start playing catch up

     

    http://bit.ly/1jvpSKA

     

    and a stock in the oil service sector that may participate in this move

     

    http://seekingalpha.co...
    22 Apr 2014, 11:04 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    Why is (LMT) down on good earnings/guidance?
    22 Apr 2014, 11:29 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    JBT,
    interesting---- a "beat" and a "raise",,

     

    conf call just started at 11:00 - I believe that is when it turned -- maybe just a knee jerk reaction to some commentary.
    22 Apr 2014, 11:39 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    True enough. Someone on the CC (CFO?) said they may have a hard time maintaining margins @ 13% going forward.

     

    Otherwise, good report & guidance.
    22 Apr 2014, 02:30 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Yair, that is a very tough question, to choose just one stock.

     

    For me, my top 2 performers since last year are (NOC) and (MCK). So I'd have to flip a coin to choose one of them.

     

    Today, (ICPT) is on fire. (GILD) (CELG) (TSLA) even (FB) all going higher today.

     

    We are close to establishing a new all time high on the DOW.
    22 Apr 2014, 12:03 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    I would never put $100,000 into just one stock. At least 10, so that the risk is spread and balance it across sectors.

     

    So my top 10 would be (MCK) (NOC) (BUD) (KMB) (FB) (UNP) (LO) (COP) (LVS) (JNJ)

     

    Even choosing 10 is tough for me. IMO you need 20 stocks just to have a starter selection. Choosing too few really lowers the potential of your portfolio. So (PTY) (NLY) (BX) (KKR) (TCAP) (OHI) (HCP) (FL) (M) (V) (MCD) (WAG) (LMT) (MMM) (UTX) (DNKN) (GILD) (CELG) (SSYS) (HON) (MSFT) & so many more would be on my "must own" list. There's just too many good companies, and some speculative stocks to own less than say 40. I like the REITs, etc. extra dividend income.
    22 Apr 2014, 12:13 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - BSF

     

    Yair's point was to based on his earlier question -- to look for a deep value stock to buy NOW.

     

    So do any you would jump into with full commitment right NOW for a 10 year purchase?

     

    For instance, I wouldn't get into (PTY) or (tcap) at this time and price as my single most heavy weighted 10 year purchase for value and growth. Anything in your list that is a must-buy-now for long term?

     

    -----------

     

    In other words, it's was a creative way to ask a screening question -- not about how to set up one's portfolio.
    22 Apr 2014, 12:30 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    It is funny how differently we see things!!

     

    To me choosing too many lowers my potential.
    22 Apr 2014, 01:07 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    So Macro, that's very interesting that you saw the traders fizzle out, unless they moved into value (DGI?) stocks.

     

    I'm seeing it with my own portfolio. Owning quality dividend stocks is the best way to get rich slowly. Over time, your portfolio keeps increasing your income thru dividends which you can re-invest as you see fit. Even without making any retirement contributions for the last 5 years, I've managed to increase the value of our retirement portfolios by over 50%.

     

    For those youngsters out there, if you can do at least 12% a year in gains, your portfolio should double every 5 years. The best way to do this is not with speculative stocks, but with solid blue ribbon stocks that pay dividends.

     

    Speculative stocks are limited to 5% of my total portfolios. It's those quality stocks that have given me the best gains, (MCK) and (NOC) are my 2 best picks.

     

    Even with the slow start this year, I am anticipating over 10% in gains this year and possibly as high as 20%.

     

    Taking some profits back during the market highs, and buying on the dips is working for me. I half my (MCK) and (LMT) near their tops, and then bought them back cheaper. Buying the beaten down mo-mo stocks is just now starting to bring in profits.

     

    It is hard to do, but never selling is actually a very good strategy. But only if you buy quality stocks, with dividend growth. After 30+ years, you can really have some life changing gains.
    22 Apr 2014, 12:25 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    going back 5 years from 2014 is 2009. Actually forgot that we made contributions until about 2011. Since 2009, the low in my investments, I am actually up about 300%. This is because it really went down in 2009....very scary. We had just rolled over my husband's 401k in late 2008, and by March of 2009 it had lost almost 50% of it's value. I had slowly invested it into mutual funds & bonds, not wanting to risk individual stock picks. My husband was screaming at me to sell back then. It took a lot of effort to convince him that was not a good idea. He finally believed me when I reminded him about my dad (he passed away in 1990) & how he always bought when the market tanked. Today, my husband never questions my decisions. Just hope I can keep on getting good results.

     

    One of the biggest mistakes I made was staying in mutual funds & bonds too long. Since transitioning all our money into stocks, Reits, etc. - my own picks - I've done even better. SA has really helped me to find excellent investments, and get better at investing.

     

    Another mistake was snoozing thru the years when I should have been investing every last penny! Instead, we just made 401k and IRA contributions into mutual funds during our working years. Plus, it really took educating myself here on SA about DGI stocks before my investments really took off, and I gained confidence in my stock picks.

     

    Back in 2009 when the market was tanking, I paid off our home mortgage. Now if I had just bought 10 good stocks instead, I'm sure that $400,000 would have at least tripled. Looking back, I've made plenty of mistakes. Now is the time to keep making good investment decisions.
    22 Apr 2014, 12:43 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    BSK,

     

    That's great, good for you.
    22 Apr 2014, 10:35 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Yair: Like BlueSky, I would never put $100,000 into one stock. For the last decade, I have had a $10,000 limit for the securities of one company. That limit will be raised over time based on the entire investable asset portfolio value and taking into consideration the twin goals of capital preservation and income generation.

     

    I am a stickler for my Left Brain's risk rules. I would consequently have no choice but to buy securities from 10 different companies using $100,000.

     

    For me, it is simply important to avoid a significant hit when and if I am wrong about a company.

     

    The amount that I will invest in each company is based on a risk/reward analysis, with my primary goals being income generation, preservation of capital and capital appreciation being in last place in this trilogy. I am several years out of my accumulation phase as an investor.

     

    Sometimes, I will hit that limit with the common stock (KO), or a combination of common and preferred stocks from the same company, or just bonds which was the case with Citigroup in 2010 when I bought what amounted to ten $1,000 "principal protected" senior unsecured notes whose coupons were tied to the performance of some index or to gold. All of those mature in 2014. Some of those notes have paid me anywhere from 15% to 30% in an annual interest payment while guaranteeing a 3% minimum. I will attempt to invest in securities throughout the capital structure on an opportunistic basis.

     

    In 2008-2009, an investor could have generated returns of 200% to 400% investing in exchange traded bonds and preferred stocks.
    22 Apr 2014, 12:37 PM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    S, YG, others:

     

    Better to talk in percentage terms, as $100K for some may be their entire portfolio, while for others, it's 1% or less.

     

    My rule is never more than 5% in a single holding, and usually 1.5-3.0%
    22 Apr 2014, 01:17 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Tack: I would have nothing over 1% at the time of purchase, but some common stock positions will eventually go over that number. I have probably never been in a 1.5% to 3% range since 2005 or so and may not hit the lower part of that range even with the largest stock positions going forward. During my younger days, I would go into those ranges, but that will not happen now under any circumstances.
    22 Apr 2014, 02:06 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Tack, this is how I ended up with roughly 60 separate investments. I get nervous when I have too much wrapped up in any one holding. Right now, (PTY) and (PSEC) are my largest positions. Eventually, I'll find some more things to invest in. I believe in doing things slowly, using market dips to get in at better prices.

     

    It sounds like a lot to manage, but most of my picks are really top quality. Like (JNJ) etc. that will likely be in my portfolio for decades.

     

    As I get older, the total value is not nearly important as the dividend income. And I'm getting more conservative as time goes on. Despite my recent (TSLA) etc. investments, which are speculative.

     

    Actually, I would have been far better off sticking with my conservative plays. A walk on the wild side is rarely worth it. But it does make life more interesting. Before this, (KKD) was my most speculative position, and it made $.
    22 Apr 2014, 07:46 PM Reply Like
  • extremebanker
    , contributor
    Comments (2123) | Send Message
     
    South:

     

    The problem I have with your limits is when you hit a winner it will become a larger part of your portfolio. We had more than a million profit in Wachovia until 2008. We lost most of that but it would have been taxable anyway. We have recouped those losses since then and are moving to new highs.

     

    I think you should let your winners run and cut your losers short.

     

    it usually takes over ten years to fully capture a real winner.
    22 Apr 2014, 09:27 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Extreme: I am more willing to allow common stocks to run as I become more mellow and hopefully wiser. Still, even after acquiring a small dosage of patience, I sold some good stocks too early that were bought at the most opportune times in March-April 2009 while fortunately hanging on to others. I was not blessed with much patience and have only acquired some through considerable effort. My Left Brain is a natural trader.

     

    Cutting losers short is more difficult for me since I understand that stocks display a wide and normal volatility, and I play it by chopping orders frequently into small pieces. It would not be unusual to see, for no rational reason, a 10% drop in a stock.

     

    While COP did not fall 10% after I bought 50 shares at $68.87 last January, I did pick up the other 50 shares at $63.38 in February:
    http://bit.ly/MG7fdZ

     

    I would have gladly picked up the other lot at a greater than 10% lower price than the first purchase and would have bought more than another 50 shares at $60.

     

    I do this all of the time. I have stocks where I have bought and sold several times and currently own only the lowest costs shares ever purchased, buying in small lots, averaging down frequently after greater than 10% declines, selling on a surge above the first higher cost lot buy, buying shares back on a decline below the second buy, and then selling the second lot on another surge. It is a natural trading strategy, sometimes based on a clearly defined channel movement, that plays natural volatility that has no clearly discernible cause, except possibly some institutional sellers deciding they wish to move out of one sector, e.g. regional banks, into another hotter sector.

     

    I posted my YTD returns in 4 Fidelity accounts and the 5 year cumulative returns in my last blog.
    http://bit.ly/1tjvWhn

     

    +224.47% 5 year cumulative in an IRA
    All 4 accounts up between 4.17% to 6.91% Year to Date through 3/31/14.

     

    So I manage okay, but could admittedly do better with more patience. Perhaps in 20 years, I will have an average amount of patience.
    22 Apr 2014, 10:30 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Extreme: The limit only encompasses out of pocket open market purchases, and does not require a sell to bring the position back under the limit, nor does the limit include reinvested dividend. The $10,000 limit is actual cash used to make open market purchases only.
    22 Apr 2014, 11:05 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    My pick today would be (KOF)
    22 Apr 2014, 01:10 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Yair: What about country and currency risk? Mexico just implemented a soda tax. Maybe that is priced into the stock now, maybe not, but what about the next adverse government act?

     

    http://bit.ly/1poyOtY

     

    The MXN/USD currency conversion will flow through into the price of the KOF priced in USDs. Fortunately, for the owners of KOF, the Mexican Peso has held up much better than many emerging market currencies, but the overall weakness has caused KOF to underperform the ordinary shares priced in Pesos by about 5% over the past year.

     

    KOF vs. MX:KOFL

     

    http://bit.ly/1poyNq1

     

    I do have a very wide dispersal (over 400+ securities) and a focus on income generation.

     

    Over the years, I have built up that generation into an almost daily flow on business days that can be then aggregated and deployed into whatever income generating security looks good at the time. That opportunistic buy might be just about anything: a Canadian REIT bought in Toronto, an equity preferred stock, a senior exchange traded bond, a common stock, a leveraged bond CEF, a $1,000 par value junk bond in the bond market, etc.

     

    Cash flow is invested no matter what and that helped me recover more quickly in 2008-2009. Many of the securities bought with cash flow during that last catastrophic decline went up tremendously and did so or a relatively brief period (1 to 2 years generally, sometimes quicker)

     

    Besides controlling and limiting risk through a diversified portfolio including many different types of securities, this approach is also predicated on something that I know to be true. I will make mistakes and sometimes those mistakes may be related to a security selection, sometimes caused by events that could not have been reasonably anticipated by an informed investor, or to a huge macro event that causes a catastrophic bear market.

     

    I am frequently surprised by securities that do really well and others that are pedestrian in their performance.

     

    How many experienced long term and informed investors were hit in 2008? There were days in October 2008 when just about everything that I owned was getting smashed. I recall one day, when the DJIA was down over 600 points from a much lower level than now of course, and I had one green arrow, the currency ETF for the SWISS FRANC. I am probably recalling October 9, 2009. I was buying some securities that day.

     

    DJIA:
    10/3/08: 10,325.
    10/10/08: 8,451
    Down: 18.15%

     

    Fortunately, I had cash flow from interest and dividends that allowed me to buy when others were selling without having to sell something that was way down to buy something else that had been crushed or even without having to dip into my cash allocation for stock buys, which wasn't done until April 2009, after using the proceeds from investment grade bond sales in February that had held up during the carnage.

     

    One thing is certain about the future. You will not be able predict it with anything approaching reliability and certainty. Another thing for certain is that there will be long term secular bull and bear markets, more 10% to 20% corrections than most can remember over a lifespan, innumerable dips of 5% to 10% that become a big blur after a few decades, catastrophic and relatively fast declines of 45% or more, and market crashes like the recent flash crash and the October 19,1987 crash which was something to behold. And, even the most informed and careful investors will be continually surprised, positively and negatively, by the stocks that they own.
    22 Apr 2014, 02:00 PM Reply Like
  • memshu
    , contributor
    Comments (622) | Send Message
     
    southgent
    MXN has held up better than other EM currencies because economy is seen tied to US economy and because oil market liberalization can be expected to raise prices of mexican assets... many people have been in the long MXN trade these last 12 months... the temper tantrum and generalized EM sell off has not helped but those seem to have worn off now so maybe MXN can finally perform
    23 Apr 2014, 07:59 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - memshu - Welcome to the blog!

     

    Good points!
    23 Apr 2014, 08:06 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Mem: There is an article in Barron's from March that discusses those reforms and the Mexican stock market. The reform that ends Pemex's monopoly on oil production may not generate any new investments until 2016 according to JP Morgan.

     

    http://on.barrons.com/...

     

    As noted in that article Mexico's productivity has been flat for 30 years, with GDP per capita growing only 1.3% annually.

     

    The soda tax is just the kind of government measure that hurts the economy.

     

    A Barron's blog noted on 4/22 that Mexico's fixed investment contracted by 1.7% last year.

     

    http://on.barrons.com/...
    23 Apr 2014, 08:36 AM Reply Like
  • memshu
    , contributor
    Comments (622) | Send Message
     
    SG

     

    markets tend to anticipate so a change in mood is possible before 2016 - having said that... i dont have a bet on MXN at present - i did have a small bet on MXNJPY last year which was the only part of my JPY short trade that didnt work out :( there are some MXN denominated bonds that i am trying to buy, but that for the yield and hope that MXN won't tank rather than any hope of MXN pick up

     

    my only EM currency-related bet right now are some BRL denominated bonds of US financial houses - the currency might fall a little from here, but you get an 11% yield to cover you if it does; if it doesn't you keep the 11%

     

    if i understand the soda tax correctly, at least part of the consideration was the obesity epidemic which is one of the worst in the world!
    23 Apr 2014, 11:39 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    MEM: There is a tendency to blame colas for obesity, as if nothing else contributed to the problem such as diet and exercise.

     

    Why not impose a "fat tax"? I am in favor of that tax, even though I would have to pay my fair share. A fat tax would be more fair, singling out nothing in particular and providing an incentive to lose weight caused by whatever sin is committed by the individual who is not taking responsibility for their own health decisions.

     

    My fat tax could be assessed by the United Nations so that it would be a worldwide tax, with those in "well off" nations paying a $50 per year fine for each point over the "normal weight" BMI index. And if the offender comes back with a higher BMI the next year, then the fine would double and so on.

     

    You can calculate your fine under this proposal with this calculator:

     

    http://1.usa.gov/1iLvP9P

     

    I calculated my own fine at $250, but that excess is all muscle of course.
    23 Apr 2014, 11:54 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    SG,

     

    A 'fat tax' would disproportionally affect minorities and low-income folk, or so the bleating goes.
    23 Apr 2014, 12:32 PM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    Why don't we each just have a Government overseer living in our homes to tell us how many breaths to take, when to eat or use the toilet, or whether any other human endeavor we might imagine is advisable, or even permitted, by our do-gooder gods?
    23 Apr 2014, 12:48 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    Tack,

     

    That might work. It would create a lot of job openings, too. Perhaps they can spoon-feed me my organic mush, as well.
    23 Apr 2014, 12:52 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    I see no one is calculating their fine other than me, so we will probably need government oversight to insure fairness and compliance.

     

    The jobs would go to those currently unemployed, pay anywhere from $100,000 to $200,000 per year, with the specific salary within that range determined by a person's prior experience at nagging, plus of course early retirement at age 50 with full benefits, thereby killing two birds with one stone, which is always a good idea or so I am told by those who know about such things.

     

    Why bother to hold individual's accountable for their own actions? It is my understanding that freedom from responsibility is enshrined somewhere in the Constitution or at least must be given the current environment, maybe it can be found in one of the late Justice Douglas' "penumbras"

     

    23 Apr 2014, 01:05 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    SG,

     

    I fall on the high side of normal (23.5). Could we have tax rebates for each point we lower our number by? :)
    23 Apr 2014, 01:10 PM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    John: No you would just get a merit badge, just like the Boy Scouts.

     

    I will just figure out another way to tax you for any shortcomings. Do you smoke (cigarettes) or drink more than 1 beer or its equivalent in hard liquor per week, fail to lower the toilet seat or pick up after yourself?
    23 Apr 2014, 01:20 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    Ick. When you put it that way, I'd have to budget for a massive tax increase. :(

     

    Potential investment ideas under your proposal: (WTW), (HRB), (GSK), (PFE)...
    23 Apr 2014, 02:08 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Please note the implied vol for the May monthly IBB call is 30% with the xlv around 11 for the weekly calls that expire Friday. Amgn, gild, celg, biib and alxn - about 30% of the IBB report between now and Thursday morning. These stocks comprise 15% of the xlv. It looks like you get a much bigger bang for your buck in the xlv options than ibb.

     

    Last week on I bought the xlv 56.50 weekly calls and they have since quadrupled. I rolled them up into the xlv 58.50 calls that expire this Friday just in case the biotech stocks disappoint.
    22 Apr 2014, 01:18 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    I'm sorry if I wasn't clear, the idea is a thought exercise I don't think anyone should pick 1 horse.

     

    So I'll try again if you had to put all of your money 100% of your earthly possessions at current prices which stock would you pick?

     

    My pick is either (KOF) or (ISRG)
    22 Apr 2014, 01:25 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    My choice BRKB - Diversified with half the price/book of the S&P. It shouldn't be surprising it's my biggest position.
    22 Apr 2014, 01:40 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    When I was asked the question last year my reply was BRK with 20% leverage.
    22 Apr 2014, 01:56 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Great minds... :)

     

    But I don't believe in using leverage for stocks.
    22 Apr 2014, 02:41 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    (ISRG) just reported a bad quarter and is falling. Last year, there were a number of lawsuits because the doctors using the device were causing internal burns in patients. Ever since that news came out, the stock went down.

     

    Looks like it will be awhile before it starts recovering. Perhaps patients are afraid of going into surgery if that machine is used.

     

    I know I would be.
    22 Apr 2014, 07:49 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    I was so happy the market didn't like the results :) I am get a chance to pick up shares at 300-350...

     

    This is a monopoly, this company is revolutionary...

     

    Take the time to read the independant studies regarding the efficacy of regular surgeries vs robotic.

     

    BSF...
    I saw you are holding JNJ, what do you think is cheaper, (ISRG) at 25x earnings or (JNJ) at 20x?
    23 Apr 2014, 03:47 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Yair, I go for the company that has quality products. (JNJ) is boring but dependable. Maybe it is a good idea to watch (ISRG) to see if it stops falling, and has some better products in its pipeline...then buy it. But I think there are better companies to invest in.

     

    Lawsuits always scare investors away. Wow, just looked at the chart. 550 to 380 in less than a month is real scary.

     

    I've learned a few lessons that unfortunately took a few decades to sink in. Back in my 30's, I bought a lot of junk stocks (during the dot com craze with tech). Lost a lot of money. More than I'm willing to lose now. So switching to quality has helped me to 1) not lose my initial investment 2) make money, although slowly....the key is to "get wealthy slowly."

     

    If I was doing just the stuff I'm doing now, back in my 30's I'm pretty sure I'd have at least $1 million more. Maybe $2 million.

     

    Sadly, my husband & I were very busy working during our 20's, 30's, 40's and didn't pay enough attention to investing. Other than our 401k plans. Even worse, and this is really sad, my husband had half his 401k plan in company stock. He worked at Bell Labs, which later became Lucent.

     

    At one point, in our early 40's he had a ton of stock options. Which expired mostly worthless. Would you believe he was given those stock options to keep him from leaving the company? They were trying to match what other companies were offering him. So instead of being one of the original employees of Broadcom, he stayed with Lucent. He had offers from other companies, but Broadcom was the big one.

     

    What a big mistake that was. But life goes on, you just keep working. No good comes from looking back, except to learn that there are better ways to invest your money so that you have a nice retirement : )
    23 Apr 2014, 01:08 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Yair, I should ask my husband's nephew what they are using in the NYC hospital where he is doing his surgical residency about (ISRG).

     

    I remember reading somewhere that the main problem with the ISRG da Vinci product is that the whole room had to be devoted to it. A better product is being developed that can be wheeled into the surgery room. This is better for the hospital, to be able to move it. So hospitals are waiting for the new device, and not buying the old one. Plus it's a huge cost for the hospital.

     

    It could be a very good investment for you, hope so : )
    23 Apr 2014, 01:16 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    BSF....
    I would appreciate that, I went to tour the hospitals in Israel which bought the older model, I was unbelievably impressed.

     

    I agree with you, there is no point in holding a the stock of a bad company for the long run...

     

    The thing is what truly matters in terms of value investing is your rate of return on your investment. Now if someone bought (KO) a great company by all means in 1998 they could have paid a high of $43.5 or a low of ~$28 per share, the original would still be down on his capital and would have the small profit of the dividends reinvested, the guy who bought at the low would have made a small consistent albeit not great return of ~5-7% per year.

     

    It is important to understand what potential rate of return you will get from a company, yes (JNJ) is a great company, your money is probably safe in the long term and maybe since I understand you are near retirement it is a good holding, now (JNJ) is not priced as (KO) was in 1998, but all dividend paying blue chips seemed to have been bid up to fairly expensive levels.

     

    Lets look at (WAG) it trades at a PE of ~24 of course this is a good company in 2011 it was priced well, you were guaranteed a reasonable rate of return of the years so long as nothing catastrophic happened. But today at this price, the company hasn't grown earnings or revenue since 2011 and its future looks okay at best, should it really command such a premium what will todays investors rate of return be on this stock 10 years from now?
    23 Apr 2014, 01:51 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Yair, are you in the medical field? The nephew loves surgery. He says visually, nothing gets to him, but sometimes the smells are pretty bad. My son likes to ask him questions like "what is the worst thing you ever had to do" etc. Sadly, the worst hospital is in the Bronx. So sometimes, they send doctors over there. Lots of gunshots. He's at one of the larger Manhattan hospitals.

     

    Agree with you, the price you pay for a stock is very important & many DGI blue ribbon stocks are at premiums. Some always are. I bought (KMB) last year when it dipped, but it was still expensive. Normally I buy just a few shares, maybe even just 10, and then average in over time. My trades are free, thru Merrill Lynch Edge.

     

    Now I'm not allowing myself to trade as much. Only buying on big down days. Every month, money is coming in from dividends. But I do like maintaining some cash, so if a really good opportunity comes up I'm ready.

     

    With the growing number of retirees here in the US, drug companies, healthcare Reits (like (OHI) and (HCP) ) make sense to invest in. I like the biotech's too, especially when they tanked awhile back. (GILD) has done very well for me & will be a long term hold as long as it makes sense.

     

    That's another reason I had to look for beaten up stocks, as my usual DGI stocks are too high to buy right now. Plus, I've already got extensive holdings.

     

    For me, it's been profitable to buy into a stock slowly. I did this with (FL) (IBM) (M) and others, buying more whenever the stocks dipped last year. The gains are very good now.

     

    Imagine, I really only started last March of 2013 picking stocks. Before that, mutual funds & bonds comprised my biggest holdings. The people who bought the great companies 20 or 30 years ago are very well off today.
    23 Apr 2014, 03:52 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Yair,

     

    my first thought on your exercise was to go for a consumer name -- since it was one stock, and go for the safe play

     

    I changed my mind and so my pick would be (GOOG) , maybe they will rule the world one day -- LOL
    22 Apr 2014, 01:38 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (952) | Send Message
     
    (GOOG) I like this pick as well, of course price is an issue, but if there is one company that I believe will eventually break the trillion dollar market cap it is them.
    22 Apr 2014, 01:57 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » Y,

     

    I had a Russell Completeness Index tracing fund in my 401k, that always seemed to do very well, over easily 15 years time. It's a combo mid/small cap. I swore I'd seen something in Vang that tracks it... I couldn't find it the other day... So that's where I'd go.

     

    The other for 10 years, is (TAN). I have to look at it more, but I expect solar panel use to grow exponentially in that time or 15 years. I wouldn't want to pick a single company.
    22 Apr 2014, 10:52 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    I am firmly convicted that if one is looking to reduce or hedge risk for the intermediate term, you won't find a better opportunity than today -- which is why I did it, taking profits and hedging risk by shorting these momo names.

     

    Market grinding higher but all 4 of my momo shorts have decidedly turned here. I think it'll be that kind of year
    22 Apr 2014, 01:43 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    M - the macd on the daily S&P just crossed (as it did on the Naz and Russell), so technically the market looks better, so I'm not lightening yet. However, considering the number of reports over the next few days and the fact the weekly options are dirt cheap I did buy some weekly spy puts even before I read your comment - just in case.
    22 Apr 2014, 02:05 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    D;

     

    Like before, my hedge/reduce comments are more basis high PE/ QQQ / IWM type stuff. EG; (LNKD) is turning red here, already $3.00 ITM on that short. I am still substantially net long.
    22 Apr 2014, 02:23 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    I could be wrong but I think this time if the high p/e stuff falls off the S&P will take more of a hit as well - although probably holding up better. But vol is substantially higher for the qqq/iwm puts - more than 50% higher - and I didn't want to pay that price. Worst comes to worst I lose less than 10% of what it looks like I'll make today.
    22 Apr 2014, 02:56 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    D,

     

    Maybe, I'm not sure. I'm not turning bear by any means.

     

    Just lightning and taking modest tactical short positions in what I see as a few vunerable names, that's all. Core long stuff I'm leaving alone.
    22 Apr 2014, 10:29 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    I'm not turning into a "bear" either - I actually added to my portfolio early in the day (both brkb and vtr) - but I'm mindful of the fact the S&P is back near its high, we're coming into a weak seasonality period and I still think the S&P is a bit overpriced.
    23 Apr 2014, 01:25 AM Reply Like
  • User 7415181
    , contributor
    Comments (1025) | Send Message
     
    Hello to all! This is somewhat off the general topic.

     

    My taxable account (cefs and preferreds) has done quite well this year compared to a flat-line last year. My 401k (US stocks currently) has flatlined this year but did quite well last year. Which has got me to thinking about some things recently. Mainly assets that don't correlate to stocks / bonds / real estate / commodities.

     

    I don't know anything about real estate. At least not enough to where I would invest in it. I kind of view a home as someplace you live in, not a monetary investment looking for a monetary gain.

     

    Commodities is similar to me compared to real-estate. But I can follow trends in both, so cefs and such I'm willing to look at.

     

    So, what else is there to invest in that doesn't have much correlation with fixed income or equities?

     

    Has anyone on this board had any experience regarding peer-to-peer lending? Using Lending Club or Prosper?

     

    I've read a bit about it over the last month or so and am giving some thought to a small amount of money in it. Main reason would be diversification in a type of short duration fixed income that's not related to the general stock/bond markets.

     

    If anyone bothers to respond, I'd like to leave morals and ethics out of the discussion one way or the other. Actually, that's not quite true. I'll put down some of my sociopathic reasoning at the end.

     

    -Cons that I see off hand-

     

    High rate of defaults. I noticed that both companies try to use a S&P type system of ratings and that the "A" loans have a > 2% default rate. Not exactly muni bond quality. Or even an unrated - preferred - that - pays - dividends - on - the - common - stock - quality.

     

    Loans to indiviuals. Cuts both ways, though. Con is that an individual doesn't have the resources that a company would. Nor do you have access to how either lending company screens people for loan approval.

     

    Populist appeal and thus may be trendy. Again, cuts both ways. Whole system could go belly-up the next time there's a recession and job layoffs. And remember the "Occupy Wall-Street" folks and how well that worked out.

     

    The main company makes a boo-boo and the feds or a state clamps down and your account goes up in smoke.

     

    Unless in an IRA of some sort, ordinary taxes apply.

     

    No liquidity. None. There are secondary markets for these loans, but who would want to buy an unsecured loan from an individual who's late on payments?

     

    From what I've read, large lenders have implemented computer programs to gobble up the most promising loans in seconds.

     

    -Pros that I see off hand-

     

    Both sites mention that to counteract the high default dilemma, they encourage many, many different loans with small amounts of money. So they're at least upfront about that.

     

    Loans to individuals. Cuts both ways, though. Pro is that an individual might have some motivation to pay down credit card debt and try to improve their credit score in hopes of buying a home whilst interest rates are fairly low. And the Dave Ramsey show.

     

    Populist appeal and thus may be trendy. Again, cuts both ways. Many people, especially my age or younger than me, hate banks and what loans did to them and their parents. And seem to be quite willing to make loans to strangers that they've never met or will meet (again, please no morals in any discussion - my job is to babysit people who are often old enough to be my parents that keep making stupid life decisions)

     

    Because these are loans to individuals, classic interest rate risk really doesn't apply. And these are either three or five year loans, so short duration should help.

     

    Loans for $25 a pop are possible.

     

    Interest rates can be very, very high (minus how much you lose to defaults and how much the company takes for a fee - seems to be 1% for both Prosper and Lending Club - and both make money by taking a cut from the borrower)

     

    From what I've read, large lenders have implemented computer programs to gobble up the best loans in seconds. Works both ways for those that are somewhat computer savvy.

     

    -Morals-

     

    ~Feeeeelings~

     

    You would be investing by giving money to an individual who wants to pay down a loan for a somewhat lower interest rate than what they are paying on their credit card or whatever. The bank screwed them and joyful voices must gather! They would be eternally grateful to you and you spread the good kind of karma by helping people get out of debt. You can even look at each loan individually to get a grasp if they are utilizing your enthusiastic funds to build a self-sustaining Organic Tilapia and Vegetable Farm!

     

    !!!Sodomy!!!

     

    You will be making loans at a usurous interest rate to individual people with the cold hearted objective of hoping they pay it off in the hopes of improving their credit scores and having more cash each month in the future. This does not matter to you - all you care about is getting your interest and principle back. The money must flow. Their money flow must improve. The fact that some dare to reneg on their loan agreements is enough to send the Hounds O' Hell after them.

     

    I'm still on the fence.
    22 Apr 2014, 02:46 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » User7

     

    I'd seen and looked at a site of that concept a couple years ago. Then looked at reviews... and they seemed largely positive from lenders. It really did look decent, even with the defaults counted in (using small amounts spread out.)

     

    I didn't follow up, for one because I had enough money that I couldn't do it in $50 amounts and make it worth my while. I was doing high yield checking accounts... For another because it is risky, and I can think of better ways to risk my money. At this point rates are lower, so even high returns aren't high enough to be as appealing.
    22 Apr 2014, 11:00 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    I'm not familiar with this at all, but it seems to me unless there's a lot of transparency regarding the cut taken by the house and very active surveillance by a regulated entity this type of "investment" is ripe for abuse. Personally I could never put money into something like this - it sounds like it could be a platform for a potential Ponzi scheme.

     

    I found this review interesting - just in case you missed it.
    http://bit.ly/1poShuy
    22 Apr 2014, 04:47 PM Reply Like
  • User 7415181
    , contributor
    Comments (1025) | Send Message
     
    DD,

     

    Just getting a generic google search page with your link. But I will note that the search titles seem to be mostly borrower complaints.

     

    On the other hand, when I've googled investors in these type of things over the last few weeks, the results have been fair to middling positive.

     

    And when googling How to invest in these things over the last few weeks, the results have been generic and bland. That sends up a bigger red flag to me than the other two results.

     

    All points you bring up are good ones. Both companies are registered with the SEC. Both companies charge about 1% of the interest as a fee for those who lend. Both take a cut from the borrower immediately off the top of the loan.

     

    "Investment" was/is a good way to think of it for me. The first time I read about it I was thinking ponzi scheme. This got me reconsidering:

     

    http://nyti.ms/1pp5CmE

     

    Yes, I know Google also likes special eye glass stuff, but I think they've been fairly innovative.

     

    And while rummaging around today I found that there were some SA articles on this type of thing. For what that's worth. More importantly, the comments. Some people tried it. Results mixed.

     

    Thank you for the response. Reasonable doubt is what I need when I get potentially excited about something.
    22 Apr 2014, 07:07 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    User, you scare me....lol

     

    I have taken some small risks with recently beat up stocks like (GILD) and (CELG). But they are good companies so I might end up holding them longer.

     

    (TSLA) (SCTY) (NVAX) (VALE) (ICPT) (WDAY) are keeping me on my toes. They provide me with more than enough excitement.

     

    These "speculative plays" represent less than 5% of my total holdings.

     

    I like the stodgy but quality dividend paying companies the best.

     

    Why not buy some (LMT) or (BAC)? Or try (PTY) (PSEC) for higher returns.

     

    You know why people have bad credit scores & can't get loans from a bank? Because they don't pay their bills. And they like to use bankruptcies for financial management.

     

    I'd never lend anyone $. Only my son....but then, he's my son so I feel obligated.

     

    Everybody else can go to the bank or get a second job. Or cut back on their expenses. Yep, some of these folks with bad credit have champagne tastes & beer budget wallets.
    22 Apr 2014, 07:37 PM Reply Like
  • User 7415181
    , contributor
    Comments (1025) | Send Message
     
    BSF,

     

    Hey, this is why I post. My potential idea gets slammed and that's fine. And I get nuggets of wisdom along the way like this one:

     

    "You know why people have bad credit scores & can't get loans from a bank? Because they don't pay their bills. And they like to use bankruptcies for financial management."

     

    Keeps me thinking and grounded in reality! And from making an impulsive decision.

     

    PSEC I own and plan on owning for a minute despite the impending doom in June.

     

    PTY I don't dig on and will not dig on anytime soon. Yes, I know Bill Gross and all that and I know Pimco got essentially free leverage a while back by screwing the preferred holders or whatever it was. It's still at around a 38% premium to nav. Can't buy it.

     

    "I'd never lend anyone $. Only my son....but then, he's my son so I feel obligated."

     

    I am your son. And I'm in terrible financial shape due to spending all discretionary income on guns instead of the mortgage bill. I will be sending you a pm with my personal information in short order so you can cut me a loan.

     

    :)
    22 Apr 2014, 08:00 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    haha User, scary thing is my son wants to buy a gun (he's 20) but I'm not allowing any guns in the house. When he gets his own house some day, he can do what he wants.

     

    I was a realtor for about 10 years. It was incredible how many people were able to buy homes, despite their terrible credit scores. I would try to explain why it wasn't a good idea to take a loan, pay just the interest - which was almost double what people with good credit were getting. All with no money down, cash back at closing....it was terrible. Some of them listened to me, kept renting while they repaired their credit & saved up $.

     

    I would give them a scenario showing how much better it was to rent, than buy a house with no $ down at 9% or higher....when they could get a 5.5% loan or better with a 20% down payment & good credit score. Especially if the market were to fall, and then they could lose a lot of money if they had to sell.

     

    I was sort of the "anti-realtor." Even advised many people starting in late 2005 not to buy, because the market was going to fall. It fell beyond even what I expected.

     

    How did I know the housing market would crash? Because the prices were sky high, and the inventory just kept increasing. Too much supply, too little demand = prices had to fall in order to sell a house.

     

    We went from 5 contracts on even the dumpy houses (when inventory was in short supply) to not even getting anyone to come to an open house. It happened fast. To my sellers, I told them "get out now - this market is going to crash." Those that listened to me thanked me later.

     

    You must do a cost benefit analysis, to decide whether renting or buying is better. Plus, if you are moving in less than 3 years, don't buy. IMO, the longer you keep a house the better. Like a good stock, never sell it. Keep it in the family.

     

    In my area, the market still has not recovered to 2005. Perhaps that's a good thing. It is very hard for young people just starting out to afford even a small condo still.
    22 Apr 2014, 08:42 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » -

     

    >>"And they like to use bankruptcies for financial management."

     

    I had a possible renter with a straight face tell me they would be great, because they'd just gone through bankruptcy so they couldn't again for 7 years.
    22 Apr 2014, 11:08 PM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    M - announced late tonight; tck keeping .45 dividend
    23 Apr 2014, 04:38 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    User,

     

    Can you expand on the "impending doom in June"? Thanks!
    23 Apr 2014, 10:01 AM Reply Like
  • User 7415181
    , contributor
    Comments (1025) | Send Message
     
    JBT,

     

    http://bit.ly/QEOtFK

     

    A somewhat reassuring article regarding psec in particular:

     

    http://seekingalpha.co...
    23 Apr 2014, 11:17 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    Thanks for the links. Will be interesting to see what happens. My exposure is very small, so I will hold and see how it goes.
    23 Apr 2014, 11:40 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    D;

     

    Doing much today? Thoughts?
    23 Apr 2014, 01:56 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    1st look at the overall earnings report 200 companies reported

     

    Earnings beat in line with last Q

     

    http://bit.ly/1poX4MH

     

    revenue beat lower than last Q

     

    http://bit.ly/1poX6nE
    22 Apr 2014, 05:33 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    (GILD) based on the earnings report this aft.-- Estimates were blown away ..
    http://bit.ly/1poZRp3

     

    I put my thoughts together on this story last week

     

    All biotechs are not the same -- they tossed this one away with the junk -----

     

    http://seekingalpha.co...

     

    (GILD) can go much higher..
    22 Apr 2014, 06:01 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    F&G, it's nice to see (GILD) doing so well. Glad I bought it when it was knocked down a few weeks ago. (CELG) (ICPT) (PCLN) even (GOOG) also moved higher. Keeping a cautious eye on (TSLA) and (SCTY).

     

    (SWKS) moved higher after hours, also reported good earnings. (SSYS) & (WDAY) are moving up too.

     

    My "buy the beat up stocks" idea is working so far.

     

    We are continuing to see positive signs in the economy too. With better earnings, that should help power these stocks higher.

     

    Sure hope this bounce lasts longer.
    22 Apr 2014, 07:28 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Blue

     

    buying the 'beat up " stocks that have the fundamentals to back them up has always been a great strategy..

     

    it's the contenders Vs the pretenders -- and many times they throw the contenders away :)
    22 Apr 2014, 07:32 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    I love it when that happens ; )
    22 Apr 2014, 07:39 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - Krusty - turns out WhiteWave (WWAV) has spun off from Dean foods -- so they can be bought!

     

    http://bit.ly/QExVO9

     

    They've acquired Earthbound, and Silk... both hot organic, alternative brands...

     

    (Everything I cooked off the Silk site was fantastic, which is hard to do with gluten free, egg free, dairy free desserts for a large crowd of mostly regular food eaters.)
    23 Apr 2014, 08:53 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    Amazon.com and HBO agree to multi-year HBO programming deal (329.32 )
    (NFLX, OUTR, TWX)

     

    In case anyone involved with either AMZN or NFLX. Short (NFLX)
    23 Apr 2014, 09:05 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - M

     

    Short (NFLX) sounds very accurate on that news. How would you short it exactly? (I'm trying to learn..) :)
    23 Apr 2014, 09:09 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #19 [View instapost]
    Some changes today on this 6th straight up day. I covered every short put I had on the "MOMO" stocks, worked out very nicely;

     

    Sold out of (HLF) in the mid 58's, but kept my short puts, and have put shorts back out in (YELP) (LNKD) (NFLX) (P) against my longer term energy and dividend exposure. Just going with my trader instincts, on tech here.
    Apr 22 10:57 AM |
    23 Apr 2014, 10:13 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - Macro

     

    Nope, we don't have an issue here :) !! I've deleted the escalations, and we're back to normal.

     

    Everything was handled last night, and now it's handled again... and is done... I PMed you - hopefully coherently.
    23 Apr 2014, 10:21 AM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    Adding short (GMCR) to 4 shorts from yesterday
    23 Apr 2014, 10:45 AM Reply Like
  • astarr66
    , contributor
    Comments (255) | Send Message
     
    Bought half a position (AMGN) today when it declined -5%. Best of breed in biotech sector with a decent div, big pipeline, and high DIv. Growth with low payout. Long-term hold for me......Thoughts?
    23 Apr 2014, 01:05 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    astarr-

     

    I'm biased towards (GILD) - and after the earnings beat last night - its one of my top picks

     

    Also like (CELG) , strong pipeline , best margins in the biotech industry

     

    (AMGN) is a world class biotech - with operating margins around 42% - selling @ 14 times 2014 earnings, & the div is an advantage .....

     

    All three of these companies are selling with PE's less than the market ..

     

    Plenty of value here..
    23 Apr 2014, 01:21 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    (AAPL) & (FB) higher after hours, both reported excellent quarters.

     

    market will be higher tomorrow, especially if we get some more good earnings before the bell.

     

    This week has been especially exciting for me. Lots of stocks with good earnings reports.

     

    Plus (LMT) up over $5 today. JohnInTn should be happy about that!

     

    (BA) finally reporting some good news & a higher price. Yippee!

     

    Long suffering (MAT) says it's coming out with a Barbie movie to boost sales. The stock is down now, presents a good buying opportunity.
    23 Apr 2014, 05:26 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Blue,
    loving it !!

     

    (AAPL), (FB) , (MU) , (GLD)

     

    nice week !! :)

     

    congrats on your BA -- huge quarter..
    23 Apr 2014, 05:33 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4345) | Send Message
     
    Blue,

     

    It giveths more than in it takeths away. Funny - I was down yesterday when the market was up, up today when the market was down. :)
    23 Apr 2014, 06:15 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Thanks F&G, we both must be doing good after all these nice earnings. Finally got back in the green with both (OTC:APPL) and (FB). Wish I'd bought (MU), it's going higher.

     

    Really liking (SWKS) up about 10% today. So glad I bought it, just in Feb. then again in March. Up over 17% just in 2 months? Unbelievable.

     

    I have a some other ones that balance it out for me because they go down. Puts everything in perspective.

     

    Hoping to see a bid day in the market tomorrow. Futures are up, just need to see the good earnings continue.
    23 Apr 2014, 09:47 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    I'm waiting for (MO) & (MCD) to go higher. They are a couple of my slow pokes. Just glad I'm not negative in them. Can't believe awhile back I sold my (LO). What was I thinking? If it dips, might buy some back.
    23 Apr 2014, 09:49 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    (CAT) did their job -- their earnings will help the dow ..

     

    (FB) is my "lottery ticket" , i bought when I read article after article here on SA stating Zuckerberg was a schmuck , that was 40 points ago ! -- ;)

     

    -- same with (AAPL), bought when it was trashed, many said it was going to $200 - they were right - it will be under $200------ after the 7 for 1 split ;)

     

    (MU) still looks nice here -- :) just made another new high !!

     

    Those purchases can be seen on my blog..
    24 Apr 2014, 08:38 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2901) | Send Message
     
    Chuck Carnevale's latest article, about stock valuation. Over paying for your stock is a big no no.

     

    http://seekingalpha.co...
    23 Apr 2014, 05:29 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
     
    http://seekingalpha.co...
    23 Apr 2014, 06:35 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    I mentioned this one last week and wrote about it here

     

    http://seekingalpha.co...

     

    (CAM) ----Another 'beat and 'raise", ---- from the press release this morning

     

    CAMERON ANNOUNCES FIRST QUARTER EARNINGS
    •First quarter earnings per share of $0.75, excluding charges and discontinued operations, beats by .03

     

    •Record first quarter revenues

     

    •15.2 million shares repurchased during quarter

     

    •Full year earnings guidance raised

     

    Technically -- A full fledged breakout once it clears $66 -
    24 Apr 2014, 09:02 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    Over the years, I have noticed that investors overpay for growth. Few companies have ever been able to grow fast enough to justify a current TTM P/E of 60+. Microsoft was one in its heyday but it did not start out as a mega cap company either.

     

    Chuck Carnevale's article points to a 15 P/E as a good starting point for determining fair value. A number of factors can increase or lower the fair value P/E range, including earnings growth; the reliability and consistency of growth; free cash flow and free cash flow yield; profit margins and return on equity; the P.E.G. ratio; financial stability; competitive threats and the existence or non-existence of a moat; the law of large numbers; and many more.

     

    Once the TTM P/E goes over 20, there starts to be a lot of hopium baked into the valuation.

     

    No one would argue with me that KO was overvalued at a split adjusted price of $42 in 1998, higher than the current price, and at over a 50 TTM P/E (or over 60 when excluding some extraordinary gains).

     

    As Carnevale notes, KO is selling at a premium valuation in 2014 at a lower price, with earnings increasing at a relatively slow, reliable, and steady clip since 1998.

     

    Given its size, KO and similar companies can only grow so fast, but its profits margin number of 18.22% according to YF is similar to Facebook at 19.06% with a more stable business model and a very long history of growth and successful worldwide operations. FB's operating margin is much higher than KO's 23.93%:

     

    http://yhoo.it/u6H2LN

     

    While I reinitiated a position in KO in March 2009, when the price was a split adjusted $19.36, I am not a buyer at $41 which translates into a TTM P/E of around 22.

     

    In 2013, KO had consolidated net income of $8.626B, or $1.9 per diluted share, on revenues of $46.854B.

     

    The market is excited by FB's GAAP earnings of $.25 per share. Why would I use non-GAAP for FB or similar companies and GAAP for slower growers? I would compare GAAP to GAAP.

     

    If FB has 2014 GAAP earnings of $1 per share, then the current price for this large capitalization company is 64 times forward earnings at $64 per share. How fast would FB have to grow to justify that valuation and how reasonable would be the assumption plugging in that growth rate? One can not reasonably assume that a one, two or a three year growth rate will last ten years.

     

    Possibly, FB may be able to do what most large market cap corporations have never done, which is to grow at a very high rate for a long time to justify a 60+ multiple. The odds of that happening are slim based on history.

     

    What is the possibility that FB's price being higher in ten years than now or that it will hit the growth number over the next decade that would justify its current price?

     

    FB already has a large market capitalization at somewhere near $163B, based on diluted shares and assuming a $65 price, so it is already subject to the law of large numbers. KO is near a market cap of $179B at a $40.7 price.

     

    I have a "lottery ticket" strategy and adopted it as an alternative to playing powerball. I allow my Right Brain to swing for the fences with a $300 limit per security.
    24 Apr 2014, 09:28 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    South,

     

    no argument at all on the valuation on FB, while i call it a "lottery ticket" -

     

    I also called it an "intermediate" type holding when i bought it - & i wouldn't classify as a "core holding".

     

    & I wouldn't put it in a "retiree's" portfolio now ---

     

    However after buying in at @24 and selling calls along the way .. - whats left on the table is 'house money"...

     

    & with some discipline , most of that gain will flow thru to the "bottom line" ,
    24 Apr 2014, 09:46 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    Ugly market response to the good earnings news -- a signal the market may be done going up for a while ...
    24 Apr 2014, 09:53 AM Reply Like
  • Tack
    , contributor
    Comments (16182) | Send Message
     
    F&G:

     

    More horizontal consolidation, with market running in place and earnings going higher, compressing P/E's. Perfect.
    24 Apr 2014, 10:07 AM Reply Like
  • South Gent
    , contributor
    Comments (5776) | Send Message
     
    F & G: Earnings are coming in better than my expectations given the bad weather during the first quarter and the EM issues.

     

    I suspect that a lot of selling is being driven by technicians and program trading.

     

    If you pull up a S & P 500 chart for the past three months, the market has struggled at the current level since March 2014, and 1880-1890 looks like a powerful resistance area that brings in sellers.

     

    The market will need to burst through the upper end of that range decisively in order to stop those sell programs at least for awhile (triple top?):

     

    http://on.mktw.net/1ro...
    24 Apr 2014, 10:17 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8519) | Send Message
     
    Author’s reply » - Chapter #20 is here!
    http://seekingalpha.co...
    24 Apr 2014, 10:00 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    GILD - Consider a bull call spread risk reversal in the Jan 2016 options if you have patience.

     

    I just bought the Jan 2016 80 call, sold the 92.50 call and sold the Jan 55 put for a net credit of $1.20 - ie, took in $120 per position. This was an initial position and I intend to do more if gild pulls back near $70. Worst comes to worst I'm long gild $ 54. Best case make $1300 per option spread. The reasonable options vol in the calls and fairly high put vol makes this attractive.

     

    If you do something like this, put in the order at the midpoint of each option and give them another 15 cents (5 cents per side). Make sure it's a limit order.
    24 Apr 2014, 10:38 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9815) | Send Message
     
    DD,

     

    Excellent risk/reward !!
    24 Apr 2014, 10:46 AM Reply Like
  • dancing diva
    , contributor
    Comments (2717) | Send Message
     
    Yes. I've made plays like that in the past and they (so far) have worked out very well. It's very slowwwwwwwwwwwwww money.
    24 Apr 2014, 10:59 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.