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Doug12

Doug12
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  • To Cash Or Not To Cash [View article]
    While I understand collecting the income over time rather than holding cash is a solid way to do things I still feel there are times when the market is more risky and not a good entry point.

    I want to buy and hold stocks that I got for a good price not ones that may have been fully valued or close to fully valued. I want to allocate my cash where the income and capital appreciation can be maximized, as a result I hold more cash/fixed income (cash can make a safe small return while waiting) when I feel the stock market has high valuations and wait for better entry prices.

    In Sept 2007 I could by a Canadian bank with a PE of 16 and a dividend of 3% but by Feb 2009 I could get it at a PE of 8 and a dividend of 6%. I would want to have cash to buy it and the other good deals in the market drop and then hold long term. David Tepper has a quote "sometimes the hardest thing to do is to do nothing" but sometimes can be the best move.

    I have some long holdings that I feel I got in at good prices but am building a large cash/fixed income position as I find less deals out there. I will allocate this when I find good entry prices by my valuation.
    Jun 20, 2015. 08:05 PM | 1 Like Like |Link to Comment
  • Peter Lynch On Today [View article]
    It takes time to get a 10 bagger. I know many people including myself who have sold out way too early on stocks. If you invest when values are good and dividends are high chasing stock price action is not necessary. Have to be quality companies though.
    Jun 16, 2015. 11:20 PM | 1 Like Like |Link to Comment
  • Why Cash Is King [View article]
    Hi Shaxmatist.

    There is alpha in cash during a stock market correction or crash. Alpha is merely outperforming a benchmark index.

    If you think a market is overvalued then cash or shorting is seeking alpha based on your perception of market risk.
    May 18, 2015. 11:25 PM | 2 Likes Like |Link to Comment
  • Why Cash Is King [View article]
    Thanks for the article Eric, it helps me feel good in my strategy of managing risk. As long as I feel the market valuations are higher then I will take some off the table as my assets appreciate and wait for better deals with a decent percentage of cash waiting for it. Margin is too leveraged for my risk tolerance so I need to have some dry powder for corrections and to minimize risk for downturns. Cheers
    May 18, 2015. 01:08 PM | 1 Like Like |Link to Comment
  • I'm Not Trying To Scare You, I'm Trying To Help You [View article]
    I agree that the markets are over extended so I believe there is a higher risk situation.

    Still we all know if the buy side is stronger than the sell side markets will go up. This is often attached to the emotional side of market participants and as we saw in 1999 the party can go on longer than stats and fundamentals say is reasonable.

    My best option is to be in equities, be diversified and have cash or hedges in place that could reduce losses if the dam breaks.
    Feb 15, 2015. 01:56 PM | 2 Likes Like |Link to Comment
  • Evidence Of A Market Rally From Here [View article]
    True momentum can over run quite a way as we saw in the late nineties but risk is still there.
    Dec 19, 2014. 11:36 PM | Likes Like |Link to Comment
  • The Black Bear Is Unleashed [View article]
    Thanks Eric, I have been very cautious with this market and have positioned for a bear market.

    Never know when it is going to happen but feel it has run a beyond the economic growth and figure the risk is high right now. I expect a revision to the mean or at least returning to something that resembles economic growth rather than speculative growth.

    Catalysts like energy prices dropping or international economic weakness could trigger. If not I will wait but a larger portion of fixed income assets than I normally hold. Thanks for your articles.
    Dec 17, 2014. 08:01 AM | Likes Like |Link to Comment
  • The Black Bear Is Unleashed [View article]
    Hi Eric, most of your articles appear to see you as feeling the market is overrun and I do agree and have been defensive. On Nov 23 you wrote that the It appears to be setting up as smooth sailing for stock investors as they move toward the end of 2014`. It appeared you had gone against your bearish view. Are you suprised at the late pullback?
    Dec 14, 2014. 04:20 AM | 4 Likes Like |Link to Comment
  • Evidence Of A Market Rally From Here [View article]
    This market has risen for 6 years with only 2011 being a true blip. How much further are you thinking it will go. We have the second most overrun in market cap to GDP in history. What is the valuation scale people think will cause a big change in the market value. We have a momentum party going on. how long can it last? in the 90s we thought it was a new economy but it did have a major drop. Curious.
    Dec 13, 2014. 01:21 AM | 1 Like Like |Link to Comment
  • Yes, Me Worry [View article]
    I agree with you Bret, even though we cannot time we can manage the risk in our portfolios and I feel we are at a time when many indicators would indicate to be cautious and manage one's risk in their portfolio. One of the comments before said that this type of risk management under performs the market but I do not agree.

    I mentioned in another post that Prem Watsa with Fairfax financial does manage his risk when he feels valuations have gotten too pricey. He started hedging early before the subprime crisis and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%.

    That to me is not under performing the market but the opposite. I have cash and EDV etf along with some gold to help hedge and prepare if equities go on sale.

    Managing risk does not mean all out but it does mean setting yourself up to prosper from a correction or crash. Thanks for this and all your articles.
    Aug 15, 2014. 06:56 PM | Likes Like |Link to Comment
  • Tech Bubble 2.0 - Prem Watsa's List Of Social Media Stocks To Avoid Or Short [View article]
    I think many of the social media stocks are great businesses but that seems to be baked into their prices in a way that indicates extreme speculation that the businesses can grow into the prices.

    I do not think value needs a PE of 15 on stocks like Facebook but it would be nicer at 25 or 35 (closer to their expected EPS growth in the next five years) instead of 79.

    A few people are bashing Watsa as not knowing enough about these social media stocks but he sees risk. As I have posted before:

    "Prem Watsa who manages Fairfax financial in Canada takes action with hedges when he sees overvalued markets. He started hedging early and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%. He is hedging again."

    Much of Watsa's success has been gaining during market crashes - up 11% in 2002, up 48% in 2007, and up 21% in 2008. I do think overpaying for assets can be risky and Watsa has shown most of the time he has succeeded in good returns in bad markets.

    Cheers
    Aug 6, 2014. 12:47 AM | 3 Likes Like |Link to Comment
  • Is A Stock Market Correction Imminent? [View article]
    Thanks labradoodle, I am glad it has been doing well, it does smooth out the up and down days.

    I have LT treasuries fund also and it has been to hedge any correction but I have been pleasantly surprised that it has gone up when indexes are up.

    The only thing we need to watch for is interest rate hikes. If they happen I understand it will put big downward pressure on our funds. If there is a significant correction I will sell off the fund for cash to purchase good value equities.

    All the best.
    Jul 28, 2014. 10:31 AM | Likes Like |Link to Comment
  • The Day I Sold Everything: Questions Answered [View article]
    I respect the author's decision even though it is not the same as what I am doing. We all look at the market differently with our own strategies.

    Buy and hold people ride it out, momentum people ride the wave and some people will take actions when they feel risk is high to limit it's impact on their portfolio. Each system can work if executed well.

    Prem Watsa who manages Fairfax financial in Canada takes action with hedges when he sees overvalued markets. He started hedging early and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%. He is hedging again.

    I am sure other strategies may have done well also but this shows how taking an action even too early worked for Watsa. The Author is taking an action too that may save himself and his clients capital even if it risks missing out some gains.

    Preservation of capital has a role in a portfolio.
    Jul 28, 2014. 01:07 AM | 4 Likes Like |Link to Comment
  • Is A Stock Market Correction Imminent? [View article]
    I find it interesting that currently the long term treasuries are running up since the end of last year while the S&P still goes up. Usually they run in different directions.

    To me this indicates there are some investors are nervous about valuations and are looking for safety. The long term treasuries are the only reasonable yield with low interest rates for shorter terms.

    One can never predict the herd actions of the market to predict it will fall. However they can manage their portfolio's risk when valuations get high. This can be done with some hedging like the long term treasuries and without exiting the market.
    Jul 28, 2014. 12:33 AM | 1 Like Like |Link to Comment
  • Why I Bought Amazon.com After It Dropped 10% [View article]
    It all depends on an investor's style. People do make money on what I consider very risky investments because someone else will pay more for it.

    For a value investor it is impossible to believe that any company can perform well enough to make an over 500 PE and over 25 PEG ever be justified. It is only speculation.

    To invest at this valuation is more on trading price movements and hoping others will pay a premium rather than fundamental evaluation of the company. I have never been able to do that well at predicting others investments but wish I could, would make me rich.

    All the best with it.
    Jul 28, 2014. 12:19 AM | Likes Like |Link to Comment
COMMENTS STATS
58 Comments
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