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richjoy403

richjoy403
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  • My Bet On Seeking Alpha's Future [View article]
    David -- Congratulations on your accomplishment. I was a SDI for some decades before stumbling upon SA in 2008. I've seen others come here with little or no equity experience (including many who came to equities from bonds when that income source dried up)--many become knowledgeable, confident, and successful investors.

    A list of competitors having such an impact would indeed be very short.

    Eli -- Thought we've exchanged only an occasional pleasant message, your fingerprints are evident on many of the changes here. Congratulations on the recognition of your accomplishments and leadership.

    I look forward to continued SA success.

    Rich
    Jul 3, 2015. 03:28 PM | 1 Like Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    >>I end up with too many positions, and have a hard time following them.<<
    __________

    h -- It could be that you are taking too small a nibble while the company is at FV, and meanwhile the market is moving the share price upward faster than you are able to fish.

    For example, if your 'full position' is $XX,XXX, and you are taking big bites (say 10% of a full position at a time), it may be taking you quite a while to assemble a full position. But if you could bite off 25% of a full position at a time (and depending upon the share price, 4 or 5 bites usual for myself), you would fill you position much quicker.

    A related possibility is your desired 'full position' may be too large in relation to your cash flow (new monies + dividends & position sales), which again means it is taking you too long to assemble a position. A 'full position' is an arbitrary amount relative to your comfort zone and cash flow. It is reasonable to consider a full position to be $X,XXX when one's total portfolio value is $XX,XXX, and to grow position size larger as the total portfolio grows larger.

    To the extent you find yourself with an excessive number of partial positions (and it's understandable monitoring time is a factor for yourself), you could identify and sell those companies representing redundancies* and poor performers. This could provide cash fill remaining positions still at FV.

    * For example, do you have both PEP and KO?...more than one rail?...more utes or staples than needed to diversify within the present constraints of your portfolio size and time for monitoring?

    [We're traveled quite far afield of Guy's article. I'm always available for conversation via an exchange of PMs.]
    Jul 3, 2015. 12:28 PM | Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    Thanks a million Paul. You're A-ok with me, and I look forward to our next conversation.
    Jul 3, 2015. 05:50 AM | 2 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    k -- Thanks, that was a very thorough response.

    I can't say the frontal lobe effort produces notably improved returns (though I hope so), but I can say passive investing is presently very much in vogue.
    Jul 2, 2015. 05:27 PM | 1 Like Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    Thank you K -- Paul has a wealth of knowledge and also my great respect...when he speaks, I listen.

    I'm certain I have benefited far from our exchanges than has he.

    Howard Marks, the legendary investor and author of "Oaktree memos", has (among many others) this wisdom to offer investors:

    >>“One of the things I most want to emphasize is how essential it is that one’s investment approach be intuitive and adaptive rather than be fixed and mechanistic.<<

    You might enjoy this (if you read it--please let me know what you think of it): http://bit.ly/1HzZEJ9

    I prefer to interpret Marks to mean there are few investing absolutes. In this case, I believe Paul and I can apply our own processes to BBL, and we may not know for a couple years (or longer) which produces the better returns when compared to POT.
    Jul 2, 2015. 03:40 PM | 2 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    I'm of the opinion my swap of BBL for POT retains my ability to profit (in other positions) if BBL's top & bottom line growth rates are greater than I expect.

    Ironically, I too formerly owned POT and sold it in 2013 for the reasons you point too.
    Jul 2, 2015. 10:10 AM | 1 Like Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    Paul -- I merely mentioned my plan to trade BBL for POT (and I certainly hope others are buying what I'm selling). This trade of one position for another meets my needs, and I neither assume nor suggest others will or should do likewise.

    The direct reply to your question: My decision is partly due to data, partly based on intuition, and largely based upon the reduced risk I foresee in POT compared to BBL (both being in the materials sector).

    Your comment and Morningstar quote puts me in the awkward position of defending my decision by attacking BHP, which I am reluctant to do.

    Here are the 1st two paragraphs of the Morningstar report from which you quoted (emphasis added):

    >>Following 30 years of decline, the world experienced a sustained increase in commodity prices to 2012. The last long-cycle uptrend, born at the end of the Great Depression, was driven by the rebuilding of Europe after the wars, and later on the rise of Japan to economic powerhouse status. The oil shocks of the 1970s were an effective death knell. The most recent rise, forged on the industrialization and urbanization of the world's most populous country [CHINA], began early in the final decade of the twentieth century, though the seeds were probably sown considerably earlier.

    China's rise from economic obscurity sustained commodity price growth into the twenty-first century. Despite now accounting for the lion's share of global consumption of many commodity staples, its per-capita use of many remains below that of industrialized nations--the difference being China's vast population. India's near-equivalent numbers portend a lagged reinvigoration of commodity price support. Yet after more than a decade of growth THE CURRENT RESOURCE BOOM IN PRICE TERMS IS ENDED.<<

    The massive amounts of ores mined by BHP Billiton and competitors to meet China's (former) impressive GDP growth also skewed BHP's top and bottom lines for years...but the probability of China continuing to fuel BHP growth is not high, and IMO recognition of that forecast lead directly to BHP's recent 'demerger'.

    I assume BPH will continue to produce positive returns through the present slow-growth period, and I'll offer no forecast of hard times for BHP. I simply foresee little probability of attractive growth opportunities for BHP in that China's massive demand for ores is in the rearview mirror, and BHP's top and bottom line growth is likely to further slow. I see no combination of world markets likely to take up the slack, and thus little price growth in ores as competitors fight for revenue.

    As you know, China played the critical role of 'world growth engine' during and immediately following the last recession. One major contributor was the construction of the world's largest electric power generator--the Three Gorges Dam project, which also required the building of entire new cities and towns to replace the 13 cities, 140 towns and 1,350 villages to be submerged beneath the rising waters of its reservoir. Thus altogether, truly massive amounts of all mined ores were required.

    I suspect we should simply agree to disagree on the future attractiveness of BBL shares in a likely continuing slow-growth world.

    OTOH, if I'm (happily) wrong about the growth that would drive improved demand for BBL's ores, I have many other companies that will also benefit (GE, DOV, EMR, rails, banks & energy among them)!

    As for POT, it too is best of breed, and under-valued. It too has its challenges. However, the world's population continues to grow, and arable land continues to contract. Thus feeding the world requires improved yields from reduced acreage--a very attractive long-term proposition for POT.

    POT may (or may not) provide total returns equal to BBL's, but IMO, it offers somewhat less risk.
    Jul 2, 2015. 09:00 AM | 2 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    h -- FAST Graphs is an excellent tool, and I do subscribe.

    As BAX's spinoff of BXLT is effective today and as I started a position in XOM today, I presently have 55 positions. I'll cull two or three by year-end. I have 10 companies on my watch list, but there is no particular importance in the number; when I run across a company that seems to fit my portfolio, I add it to the list.

    I have 5 open limit-buy orders (one to start a position in MA and the remainder to add to existing positions at prices below FV).

    I also have 10 limit-sell orders (two to begin weeding BBL and MRO from the portfolio--to be replaced with POT and XOM); and 8 to trim 5% to 8% of shares from positions growing too large or over-valued.

    As for falling knives, clearly you know no one can call a top or bottom (of course we all do it occasionally by accident). I suggest you watch the chart for the stock in which you are interested, and look for a 5% to 10% upside reversal (or a news item suggesting the sun will soon shine again). If a stock has declined 33%, from $50 to $33, a bump to $36 leaves you plenty of upside. Be aware of the common double mistake of riding a stock down from $50 to $33 (first mistake), getting religion, and promising to sell it if only it breaks even at $50! The second mistake is to sell at $50, as a stock that climbs back has mended, and almost always climbs higher.

    I bought GILD when it announced it would pay a dividend. I consider it a growth stock, and having a forward p/e of only 10, IMO it is not speculative.

    As for XOM, it is best of breed. Oil is a volatile commodity, and XOM is a far better company than MRO, which it will replace. I frankly thought I would have an opportunity to work my way out of MRO before my expected oil decline later in the summer or early fall. Frankly, I entered what I thought was a low-ball limit-buy mostly to preserve that cash allocation, and was surprised when XOM came to me--nonetheless, I'm pleased.

    XOM's FV in the high $90s. You've done your homework; your math is directionally correct--on paper it looks to be stalled in the $80s for awhile, and I will likely average down with subsequent buys as I fill out the position.

    I won't attempt to make a case for high TRs, though IMO world growth will accelerate in 2016, and oil and XOM will benefit. recover in 2016. Meantime, XOM has growing FCF, and the 32 year dividend growth streak is not in danger, and should be extended next April. You're right to label this a hunch or a speculation.
    Jul 1, 2015. 07:27 PM | 4 Likes Like |Link to Comment
  • Bloomberg: GE unit sale to Electrolux opposed by antitrust staff [View news story]
    Hmmm, if you wanted attention to your inaugural SA comment...you certainly got it.

    BTW, how does your comment on executive compensation relate to GE's pending sale of their appliance biz to Electrolux?
    Jul 1, 2015. 02:48 PM | 2 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    h -- At the risk of boring others, and repeating past comments, I'll do my best to reply:

    I haven't actually mastered anything, I'm still learning. When we think we're smarter than the market (or others), fate has a way of taking us down a peg or two. I'm not the sharpest knife in the drawer--nothing I've accomplished can't be replicated by others willing to invest the time.

    I enjoy the challenge, and I'm thinking about the economy, markets, and stocks most of the day. I don't claim a lot of 'original thinking'--only to being widely-read.

    IMO to the extent I may have an edge, it is that I routinely extend my monitoring of the economy, markets, and stocks well beyond SA (though Jeff Miller, Chuck Carnevale, and most of the professional RIAs are of consistent high quality). In addition, daily I read the WSJ and online articles at:
    MarketWatch.com,
    ReformedBroker.com,
    Briefing.com,
    JasonZweig.com,
    CrossingWallStreet.com,
    CalculatedRiskBlog.com, and
    AbnormalReturns.com.

    I too look at a FEW of the common TA measures, but mostly limit myself to the SMAs in periods of economic distress--fear is a more powerful market motivator than greed, and I want to both respect it and take advantage of it if I can. But I'm 85%-90% into FA.

    I suggest you not give up on limit-orders, the accumulated savings are substantial on the buy-side, and equally impressive when selling. Like most aspects of stock investing, it's something of an art, and thus requires trial and error when learning to use it--it'll come with experience. (Incidentally, the savings are also substantial compared to DRIPping).

    I'm sure you are investing as would a 'prudent man' (reasonably conservatively--not for maximum returns in high-risk / low-probability speculations)--you will make progress toward your goals. But progress is not linear unless you invest in government bonds or FDIC insured savings. Here's some advice from Charles E. Kirk regarding fear of the boogyman:
    http://bit.ly/1JwgUwn

    At yesterday's quarter close, the market is about 3.4% off its all-time intra-day high of May 20th. If you are ahead of the market, you're doing very well; if you lag a little, you're still doing well. Your profile says you are a DGI; I assume your goal is a growing income stream (and unlike myself, you are little concerned with total returns).

    By definition, an enduring stock portfolio is not constructed from buying the latest strong performers. Rather from picking components that work well together in meeting our goals. Diversification assists in both a smoother ride, and in staying with your portfolio when rain turns to storm.

    You asked about fishing in Canadian waters...financials are 16% of the S&P500 (the market), and banks are a large part of financials. Many of those who rode banks and insurance companies all the way down to 80+% losses in 2008-09 waited to sell at their point of maximum pain! They still blame the banks for their failure to manage their positions, and swear they will never buy a bank again.

    So what stocks will do well in a rising rate environment?...banks (they profit from the rate spread, borrowing low/lending high) and are expected to be among the strong performers when rates normalize. Insurance companies make most of their profit from investing pre-paid policy premiums in fixed income while awaiting the claims sure to come, when their investment returns improve, so will their share prices. Many growth stocks (Netflix, Apple, Disney) are largely unaffected by interest rates). I want to own strong banks. The only U.S. bank I own is WFC (a long-term holding of Warren Buffett). But the Canadian banks came through 2008/09 so well they earned their reputation as among the world's strongest. I own BNS, BMO, and TD, in recognition of their past performance and projected TRs. The reciprocal tax treaty ensuring no withholding tax on their dividends paid to my IRA is a huge bonus.

    My other Canadian holdings include ENB & TRP (midstreams oil/gas) and TU. (My other foreign holdings BBL, GSK, MDT, RDS.B, & UL.)

    FV (intrinsic value) is a moving target, and advances or declines depending upon their performance, and changes to input assumptions. For this reason, a company bought at FV can develop a 'margin of safety' over 4 or 5 years.

    I respect analysts bullish/bearish ratings, and previously mentioned M* and IQ. I also use NASDAQ.com to monitor Analysts Research (including price targets & PEG ratios), changes in Institutional Holdings, Insider Trading, and Short Interest Days To Cover. However, being aware of trends does not mean I must act upon them...

    In the main, I'm a value investor in dividend-paying stocks. Generally that means buying low risk, low p/e companies in the traditional DGI arena. Sometimes it means buying out-of-favor/beaten-up companies I believe will fix their problems, be recognized as under-valued, and return to investor grace and full valuation. When done best, I wait until the falling knife to strike bottom, and determine the dividend is unlikely to be cut--INTC, MSFT, CSCO are good examples of companies now producing abnormal total returns (a frozen dividend is not a show-stopper).

    [I don't understand the question: "That is how many stock do you follow to look for fair value?"...please expand.]

    I don't get hung up in esoteric definitions of secular/cyclical markets (and dividends lessen that distinction)--it simply doesn't factor into my investing. I invest in the market I have, not the one I'd like to have...I NEVER pay more than FV.

    p.s. My limit-buy for XOM was just executed at it's lowest price since June 2012.
    Jul 1, 2015. 01:58 PM | 3 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    Thanks Bern for your kind comment.
    Jul 1, 2015. 05:35 AM | 1 Like Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    h -- I have brokerage accounts with Fidelity, Schwab, and Vanguard.

    All 3 offer S&P IQ reports at no charge. I prefer Fidelity's as both easiest to get to and for also offering a variety of other reports. For example, Zack's reports have recently been improved and are quite good.
    Jul 1, 2015. 05:35 AM | 1 Like Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    h -- FYI, my BMO limit-buy was executed shortly before the close.
    Jun 30, 2015. 03:56 PM | 2 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    >>I don't want to be sitting here 10 years later waiting for my entry price on the stocks that I want.<<
    ____________

    Guy -- I never suggest anyone move outside their comfort zone.

    Over the years, I've found my comfort zone to be somewhat elastic...it expands a bit when the economy and corporate profits are expanding, and contracts in the opposite condition.

    Your comment suggests you have confused myself with Buy&hold2012.

    It is he who insists upon never investing until the market has declined by 20% or more...and yes, that could mean sitting on the sidelines for multiple years of waiting for such a decline.

    As for patience, it is a quality associated with successful investors (whereas impatience is not).
    Jun 30, 2015. 02:29 PM | 3 Likes Like |Link to Comment
  • Does My DGI Portfolio Look Strange To You? [View article]
    h -- There are many variations of the formula for calculating fair value. Toward that end, I do not get hung up on a number to the penny; instead I recognize FV as a range. I generally depend upon Morningstar and Capital IQ for FV; using JNJ as an example, S&P Capital IQ computes FV at $99.50, and Morningstar at $99. Given the daily volatility of share prices, I consider JNJ's FV to be about $100, +/-3%.

    I always build positions in a series of limit-buys. For example, I am presently building upon my position in BMO; Capital IQ computes FV at $72, and Morningstar at $74.

    I realize I sometimes might have done better by buying a full position in one move (because of the market's sawtooth pattern, fewer times than one might assume), but it is more important to my goal that I avoid major mistakes.

    Starting in March, I've bought BMO @$59.68, $63.24 & $61.30 (including commissions). Due to the present market turmoil (reflecting Greece/EU, China, and now Puerto Rico, and the probability of a seasonal summer decline) I've adjusted my limit-buy downward several times, and it is now $59.31.

    You're familiar with the adage "bulls make money, bears make money, pigs get slaughtered". If you limit orders represent a large spread from the market price, your probability of their being executed is minimal.

    There are many factors to consider in establishing a limit price, for example, a typical day's and week's price range, your feel for the market's direction, industry specifics (including high-yielders reaction to rising rates), and so forth. A limit-buy price 4% or 5% below the market price can produce significantly improved entry and exit prices (and the same applies to exiting a position in a series of limit-sells).

    It is my practice to make frequent adjustments to my limit orders (sometimes more than once in a market session).

    As your limit-orders are not being executed, I would consider the following choices--first, you can raise your price (assuming you are still within your FV buy range); second, you can cancel that order, and move to another company.

    Sometimes your first buy will be at your most favorable price as you build your position; and other times (such as the present), fast-moving market events produce more favorable prices. I can't control the market, so I control the price I pay, and ALWAYS stay within the FV range.

    No one knows how long a share price will remain above (or below) FV. It never pays to become fixated upon owning XYZ--there are many tasty fish in the sea, if the tuna aren't biting, move on to a halibut or a grouper (and keep the tuna on your watch list for a future opportunity).

    If I haven't addressed your central concerns, please ask again.

    Jun 30, 2015. 01:52 PM | 5 Likes Like |Link to Comment
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