Philip Davis's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/6284/comments http://seekingalpha.com/article/1442661/comments?source=feed#comment-18959881 18959881 Fri, 17 May 2013 16:05:37 -0400 http://seekingalpha.com/article/1442661/comments?source=feed#comment-18959801 18959801
This is not about TSLA, which is a great company and will continue to grow - this is simply a warning that the current valuation is too high and likely to correct so I'd like people not to get burned wishing for $100+ when it may not come for a long, long time. I wasn't saying this a month ago, when it was 50% lower than it is now - but I am saying it here and, frankly, I'm done now as our Members got the message and moved on to other fields as we've been in this thing since the $30s.

I was very public in my love of them and I just want to make sure the people who followed me in know I am out (and don't tell anyone, but I'm long on AAPL).

Have a great weekend,

- Phil]]> Fri, 17 May 2013 16:04:11 -0400
This is not about TSLA, which is a great company and will continue to grow - this is simply a warning that the current valuation is too high and likely to correct so I'd like people not to get burned wishing for $100+ when it may not come for a long, long time. I wasn't saying this a month ago, when it was 50% lower than it is now - but I am saying it here and, frankly, I'm done now as our Members got the message and moved on to other fields as we've been in this thing since the $30s.

I was very public in my love of them and I just want to make sure the people who followed me in know I am out (and don't tell anyone, but I'm long on AAPL).

Have a great weekend,

- Phil]]> http://seekingalpha.com/article/1442661/comments?source=feed#comment-18941421 18941421 http://read.bi/106TBRA

"UPDATE: A sharp reader points out that something else is also going on here, namely that Tesla is using the capital it raises in the deal to pay off its government debt--and that that debt requires Musk to maintain more than 65% ownership of Tesla. By putting some money where his mouth is, Musk is arguably increasing investor confidence in Tesla, which will make it easier for the company to raise capital at a high price. And by paying off the government debt, Musk is also "unlocking" his stake in the company, which can now be sold. So that actually reduces Musk's risk somewhat."]]> Fri, 17 May 2013 10:04:26 -0400 http://read.bi/106TBRA

"UPDATE: A sharp reader points out that something else is also going on here, namely that Tesla is using the capital it raises in the deal to pay off its government debt--and that that debt requires Musk to maintain more than 65% ownership of Tesla. By putting some money where his mouth is, Musk is arguably increasing investor confidence in Tesla, which will make it easier for the company to raise capital at a high price. And by paying off the government debt, Musk is also "unlocking" his stake in the company, which can now be sold. So that actually reduces Musk's risk somewhat."]]> http://seekingalpha.com/article/1442661/comments?source=feed#comment-18936071 18936071
So, if his proclamation that he would buy 1M shares for $100M boosted the stock by just $5 - then the 1M new shares were net free. Nice work if you can get it! ]]> Fri, 17 May 2013 08:23:15 -0400
So, if his proclamation that he would buy 1M shares for $100M boosted the stock by just $5 - then the 1M new shares were net free. Nice work if you can get it! ]]> http://seekingalpha.com/article/1442661/comments?source=feed#comment-18934841 18934841
Long-term, the thing that got me to go bullish on them last year was taking a good look at the car as it was laid open in the showroom. The design is pretty similar to any toy electric car - it's a base with a battery and wheels and a top part that snaps on. That's a fantastic design and probably will have far less reliability issues than most cars.

I agree on the battery, millions and millions of computers and phones are sold with similar systems and only a handful ever have defects and TSLA has safeties in place that those guys don't bother with.]]> Fri, 17 May 2013 07:42:17 -0400
Long-term, the thing that got me to go bullish on them last year was taking a good look at the car as it was laid open in the showroom. The design is pretty similar to any toy electric car - it's a base with a battery and wheels and a top part that snaps on. That's a fantastic design and probably will have far less reliability issues than most cars.

I agree on the battery, millions and millions of computers and phones are sold with similar systems and only a handful ever have defects and TSLA has safeties in place that those guys don't bother with.]]> http://seekingalpha.com/article/1442661/comments?source=feed#comment-18933191 18933191
We set up a trade on TSLA on Jan 15th to lay out about net $7,500 on a spread with the anticipation that, by Jan 2015, we'd net $60,000. The long spread was a 2015 $30/42 bull call spread and we sold $23 puts to pay for it and a few short calls that expired right on target in March ($34). That trade was up 589% on Tuesday!

http://bit.ly/V815GN

TSLA did not "discover" anything this quarter and they only made a profit because of tax credits that wind down at the end of this year. We loved the company at $30 and that trade set-up was very bullish - but this is silly.

I'm thrilled TSLA is doing well and congratulations to all who have been in them with us but we're done here and, if you don't want to take your profits off the table, at least consider taking some of your gains and buying some protective puts or, as I noted, we flipped a very small portion of our gains into an $85/115 bull call spread for $7 and, if the stock goes up $30, we can add a $115/145 bull call spread for $7 and I'd rather give up $7 out of each $30 they go higher than risk the gains we've already accumulated.

Just something to consider, even for the mega-bulls. ]]> Fri, 17 May 2013 05:17:33 -0400
We set up a trade on TSLA on Jan 15th to lay out about net $7,500 on a spread with the anticipation that, by Jan 2015, we'd net $60,000. The long spread was a 2015 $30/42 bull call spread and we sold $23 puts to pay for it and a few short calls that expired right on target in March ($34). That trade was up 589% on Tuesday!

http://bit.ly/V815GN

TSLA did not "discover" anything this quarter and they only made a profit because of tax credits that wind down at the end of this year. We loved the company at $30 and that trade set-up was very bullish - but this is silly.

I'm thrilled TSLA is doing well and congratulations to all who have been in them with us but we're done here and, if you don't want to take your profits off the table, at least consider taking some of your gains and buying some protective puts or, as I noted, we flipped a very small portion of our gains into an $85/115 bull call spread for $7 and, if the stock goes up $30, we can add a $115/145 bull call spread for $7 and I'd rather give up $7 out of each $30 they go higher than risk the gains we've already accumulated.

Just something to consider, even for the mega-bulls. ]]> http://seekingalpha.com/article/1442661/comments?source=feed#comment-18932161 18932161
While we were long on TSLA, we took the money and ran at $85 - not having the "vision" to see them worth this much, this soon. Now we're essentially short - taking advantage of the very cheap 2015 $85/115 bull call spread ($7) and selling short-term calls against it (the June $90s are an insane $10).

We discussed this play on TV Tuesday: http://bit.ly/12uDNeg

TSLA has done everything we thought they would do and more as far as turning things positive this year but, as you note, even with that, this is a silly valuation at $10Bn. Selling stock to suckers is a very wise move at this point but, like 1999 - they still could double or triple as there's no shortage of money at the moment. But it won't change what they're really worth and, eventually, they're likely to be back at $60 again. ]]> Fri, 17 May 2013 03:23:14 -0400
While we were long on TSLA, we took the money and ran at $85 - not having the "vision" to see them worth this much, this soon. Now we're essentially short - taking advantage of the very cheap 2015 $85/115 bull call spread ($7) and selling short-term calls against it (the June $90s are an insane $10).

We discussed this play on TV Tuesday: http://bit.ly/12uDNeg

TSLA has done everything we thought they would do and more as far as turning things positive this year but, as you note, even with that, this is a silly valuation at $10Bn. Selling stock to suckers is a very wise move at this point but, like 1999 - they still could double or triple as there's no shortage of money at the moment. But it won't change what they're really worth and, eventually, they're likely to be back at $60 again. ]]> http://seekingalpha.com/article/1427911/comments?source=feed#comment-18909001 18909001 http://seekingalpha.co...]]> Thu, 16 May 2013 14:30:39 -0400 http://seekingalpha.co...]]> http://seekingalpha.com/article/1427911/comments?source=feed#comment-18870671 18870671
The point of these articles is to teach you to use these kinds of set-ups to lower your entry point. Had you sold the $5 puts and calls for $2 when you bought the stock for $6.20, your net would have been $4.20 and, if assigned, 2x at net $4.60 - 25% better off than you are now.]]> Wed, 15 May 2013 17:58:17 -0400
The point of these articles is to teach you to use these kinds of set-ups to lower your entry point. Had you sold the $5 puts and calls for $2 when you bought the stock for $6.20, your net would have been $4.20 and, if assigned, 2x at net $4.60 - 25% better off than you are now.]]> http://seekingalpha.com/article/1433121/comments?source=feed#comment-18838341 18838341 Wed, 15 May 2013 04:33:53 -0400 http://seekingalpha.com/article/1430221/comments?source=feed#comment-18772151 18772151 Mon, 13 May 2013 14:06:37 -0400 http://seekingalpha.com/article/1427911/comments?source=feed#comment-18768431 18768431
In any event, in no way, shape or form are these short-term posiitons. The idea is to own a long-term income-producing asset, not to speculate on the short-term price of gold. ]]> Mon, 13 May 2013 12:41:21 -0400
In any event, in no way, shape or form are these short-term posiitons. The idea is to own a long-term income-producing asset, not to speculate on the short-term price of gold. ]]> http://seekingalpha.com/article/1427911/comments?source=feed#comment-18754241 18754241
The hold-up is nothing more than a shakedown, which is very typical for miners and, in the current environment with the US cracking down - it's more difficult than usual to hand over briefcases full of cash to take care of them.

Patient investors are very likely to be rewarded and the "loss" of that mine is already baked into the 50% drop in the stock since last year. ]]> Mon, 13 May 2013 07:30:47 -0400
The hold-up is nothing more than a shakedown, which is very typical for miners and, in the current environment with the US cracking down - it's more difficult than usual to hand over briefcases full of cash to take care of them.

Patient investors are very likely to be rewarded and the "loss" of that mine is already baked into the 50% drop in the stock since last year. ]]> http://seekingalpha.com/article/1427911/comments?source=feed#comment-18754131 18754131 Mon, 13 May 2013 07:26:11 -0400 http://seekingalpha.com/article/1423741/comments?source=feed#comment-18706211 18706211
Now we're buying houses for $300,000 and I know it sounds like a lot but a decade of inflation like we had in the 70s later and we'll be selling them for $1.5M and PRESTO! everyone has $1.2M for their retirement account.

That's how the country inflates it's way out of trouble (and don't forget the Government gets their cut of the gains and realtors make fees, etc.) - if you apply that gain to our $16Tn debt and $16Tn GDP, our GDP can zoom up to $60Tn or so and, as long as we keep the debt around double, then we halve our debt to GDP ration and everything is great again until we screw it all up for the next generation.

That's the plan - I don't blame Bernanke, I don't think there's a better way to save the economy than inflating our way our of trouble. It's tricky of course and could go horribly wrong but it's exactly what we did 40 years ago when Nixon took us off the gold standard.

Now we're going off the rational supply of money standard - same effect. ]]> Sat, 11 May 2013 08:20:02 -0400
Now we're buying houses for $300,000 and I know it sounds like a lot but a decade of inflation like we had in the 70s later and we'll be selling them for $1.5M and PRESTO! everyone has $1.2M for their retirement account.

That's how the country inflates it's way out of trouble (and don't forget the Government gets their cut of the gains and realtors make fees, etc.) - if you apply that gain to our $16Tn debt and $16Tn GDP, our GDP can zoom up to $60Tn or so and, as long as we keep the debt around double, then we halve our debt to GDP ration and everything is great again until we screw it all up for the next generation.

That's the plan - I don't blame Bernanke, I don't think there's a better way to save the economy than inflating our way our of trouble. It's tricky of course and could go horribly wrong but it's exactly what we did 40 years ago when Nixon took us off the gold standard.

Now we're going off the rational supply of money standard - same effect. ]]> http://seekingalpha.com/article/1423741/comments?source=feed#comment-18706101 18706101
At our recent seminar in Atlantic City, we had a presentation of using strategies to scale into stocks over time AND (and this is very important) reduce the basis by selling calls against the stocks. It's simple, it's effective and we have a portfolio specific to that strategy on our site along with people who discuss it on-line every day.

If not our site, I strongly suggest reading books or joining another site that teaches options SELLING (not buying) strategies.

As a quick example, CIM is a stock we really like and they pay an 11% dividend (.36) at $3.31. You are right to worry about a downturn and we've been in the stock since $2.50 so it's gone up a lot BUT you can buy CIM stock and sell the 2015 $3 calls for .40 and sell the $2.50 puts for .25.

That puts you into the stock at an effective net on cash at $2.66 and the short puts obligate you to buy more if the stock is below $2.50 for $2.50. As long as you REALLY want to buy more at $2.50 (24% off the current price) there's not a lot of risk to that set-up.

Meanwhile, if the stock never goes down, you still own 1x on the original purchase and you collect you .36 dividend against the $2.66, which is now 13.5% annually and, if CIM is over $3 in Jan 2015 and you don't roll the position to a longer date, you will get called away for $3 with an additional .34 profit - another 13%.

So that's an average of 20% per year for 2 years if CIM simply doesn't fall 10% from where it is now.

This is what we do at PSW - we prefer sensible, long-term investing with an eye towards drawing a good income over time. The other stuff is just for fun - as most plays like the one above are "set and forget" so we amuse ourselves by taking carve-outs of small portfolios we play more aggressively. Sometimes - as noted above - those small portfolios do very, very well and that's fine.

Never forget that the the bulk of your trading should be more cautious, sensible trades that build wealth over time. It sounds like you get that - the next step is learning how to use what you already have to your advantage. It's what we call "Being the House and not the Gambler". ]]> Sat, 11 May 2013 08:12:40 -0400
At our recent seminar in Atlantic City, we had a presentation of using strategies to scale into stocks over time AND (and this is very important) reduce the basis by selling calls against the stocks. It's simple, it's effective and we have a portfolio specific to that strategy on our site along with people who discuss it on-line every day.

If not our site, I strongly suggest reading books or joining another site that teaches options SELLING (not buying) strategies.

As a quick example, CIM is a stock we really like and they pay an 11% dividend (.36) at $3.31. You are right to worry about a downturn and we've been in the stock since $2.50 so it's gone up a lot BUT you can buy CIM stock and sell the 2015 $3 calls for .40 and sell the $2.50 puts for .25.

That puts you into the stock at an effective net on cash at $2.66 and the short puts obligate you to buy more if the stock is below $2.50 for $2.50. As long as you REALLY want to buy more at $2.50 (24% off the current price) there's not a lot of risk to that set-up.

Meanwhile, if the stock never goes down, you still own 1x on the original purchase and you collect you .36 dividend against the $2.66, which is now 13.5% annually and, if CIM is over $3 in Jan 2015 and you don't roll the position to a longer date, you will get called away for $3 with an additional .34 profit - another 13%.

So that's an average of 20% per year for 2 years if CIM simply doesn't fall 10% from where it is now.

This is what we do at PSW - we prefer sensible, long-term investing with an eye towards drawing a good income over time. The other stuff is just for fun - as most plays like the one above are "set and forget" so we amuse ourselves by taking carve-outs of small portfolios we play more aggressively. Sometimes - as noted above - those small portfolios do very, very well and that's fine.

Never forget that the the bulk of your trading should be more cautious, sensible trades that build wealth over time. It sounds like you get that - the next step is learning how to use what you already have to your advantage. It's what we call "Being the House and not the Gambler". ]]> http://seekingalpha.com/article/1405291/comments?source=feed#comment-18544571 18544571 Tue, 07 May 2013 13:47:31 -0400 http://seekingalpha.com/article/1398861/comments?source=feed#comment-18415961 18415961 Fri, 03 May 2013 15:02:05 -0400 http://seekingalpha.com/article/1398861/comments?source=feed#comment-18406941 18406941 Fri, 03 May 2013 11:59:52 -0400 http://seekingalpha.com/article/1389031/comments?source=feed#comment-18394221 18394221
Did you see my quote in Stock World Weekly from last week (when AAPL was testing $390):

http://bit.ly/13RqlB9

"“We’ll see what holds on AAPL today but the
math is inescapable. It is trading at $380 Bn. It
has $145 Bn, and it will make another $35 Bn by
the end of 2013 ($180 Bn in cash, total). In 2014
and 2015 it will make another $100 Bn ($280 Bn
in cash). Over that period, it will pay out $40 Bn
in dividends (10% of the stock over 3 years) and
buy back $60 Bn worth of the stock (15.7%) which
will make $50 a share on 1 Bn shares more like
$58 a share on 850M shares. That’s assuming it
ONLY grows revenues 3-4% a year for 3 years.
“That’s all I’m going to say on the subject – you
have a chance to buy this stock for $394. Maybe it
will get cheaper, maybe it won’t. Either way, math
is math and, over time, all of Cramer’s screaming
and yelling is not going to make a bit of difference.
Let’s buy the May $410 calls for $5.75 in the
$25K portfolio.”

======================...

Not a bad trade for a $99 annual newsletter!

http://bit.ly/15m95Q

Those $410s are $35 already but we're done with them as we covered AAPL (1/4) on yesterday's pop and cashed out the short-term bull plays. Can't be too greedy...]]> Fri, 03 May 2013 07:21:23 -0400
Did you see my quote in Stock World Weekly from last week (when AAPL was testing $390):

http://bit.ly/13RqlB9

"“We’ll see what holds on AAPL today but the
math is inescapable. It is trading at $380 Bn. It
has $145 Bn, and it will make another $35 Bn by
the end of 2013 ($180 Bn in cash, total). In 2014
and 2015 it will make another $100 Bn ($280 Bn
in cash). Over that period, it will pay out $40 Bn
in dividends (10% of the stock over 3 years) and
buy back $60 Bn worth of the stock (15.7%) which
will make $50 a share on 1 Bn shares more like
$58 a share on 850M shares. That’s assuming it
ONLY grows revenues 3-4% a year for 3 years.
“That’s all I’m going to say on the subject – you
have a chance to buy this stock for $394. Maybe it
will get cheaper, maybe it won’t. Either way, math
is math and, over time, all of Cramer’s screaming
and yelling is not going to make a bit of difference.
Let’s buy the May $410 calls for $5.75 in the
$25K portfolio.”

======================...

Not a bad trade for a $99 annual newsletter!

http://bit.ly/15m95Q

Those $410s are $35 already but we're done with them as we covered AAPL (1/4) on yesterday's pop and cashed out the short-term bull plays. Can't be too greedy...]]> http://seekingalpha.com/article/1355901/comments?source=feed#comment-17937991 17937991
Don't complain to me, complain to them - you ultimately pay their bills by starting at all these ads (our site is ad-free for paying Members).

They also haven't approved this morning's post (too political?) and they didn't approve my post telling people to short Bitcoin at $240...

I am trying to provide some free content to you guys but it won't happen if you just sit there hoping (not a valid investing strategy) for it to magically come back.

8) ]]> Mon, 22 Apr 2013 13:03:42 -0400
Don't complain to me, complain to them - you ultimately pay their bills by starting at all these ads (our site is ad-free for paying Members).

They also haven't approved this morning's post (too political?) and they didn't approve my post telling people to short Bitcoin at $240...

I am trying to provide some free content to you guys but it won't happen if you just sit there hoping (not a valid investing strategy) for it to magically come back.

8) ]]> http://seekingalpha.com/article/1355901/comments?source=feed#comment-17882381 17882381
It's no stock of the decade but, at $16.39, it's pretty much priced for bankruptcy and, like F, you can sell 2015 $13 puts for $2.35 to net in at $10.65, which is 35% below the current price.

If they are on the mend (and it's not about earnings on 4/30, which will be negative, it's about guidance), then $10.65 is a silly price moving forward and they have very low expectations - another thing we love in a stock going into earnings. ]]> Sat, 20 Apr 2013 18:44:08 -0400
It's no stock of the decade but, at $16.39, it's pretty much priced for bankruptcy and, like F, you can sell 2015 $13 puts for $2.35 to net in at $10.65, which is 35% below the current price.

If they are on the mend (and it's not about earnings on 4/30, which will be negative, it's about guidance), then $10.65 is a silly price moving forward and they have very low expectations - another thing we love in a stock going into earnings. ]]> http://seekingalpha.com/article/1355901/comments?source=feed#comment-17881831 17881831
Now, instead of working on part two - I'm responding to inane criticisms from people who are not only too cheap to subscribe to a proper service - but rude enough to complain about what they get for free. It's stunning, I know...

As to my advice for top 1%'ers. If you could see what's coming, you'd be preparing too. If you have no money to move around - then you have nothing to worry about.

If you are in the bottom 99%, your country is being stolen from you and your class (lower) is being subjugated and your treasury is being looted and your fellow citizens (who can't get out) will be left holding the bill. By all means - complain about the guy who's willing to point out the crime and do nothing about the criminals who commit it.

You are the perfect sheep.]]> Sat, 20 Apr 2013 18:15:45 -0400
Now, instead of working on part two - I'm responding to inane criticisms from people who are not only too cheap to subscribe to a proper service - but rude enough to complain about what they get for free. It's stunning, I know...

As to my advice for top 1%'ers. If you could see what's coming, you'd be preparing too. If you have no money to move around - then you have nothing to worry about.

If you are in the bottom 99%, your country is being stolen from you and your class (lower) is being subjugated and your treasury is being looted and your fellow citizens (who can't get out) will be left holding the bill. By all means - complain about the guy who's willing to point out the crime and do nothing about the criminals who commit it.

You are the perfect sheep.]]> http://seekingalpha.com/article/1355901/comments?source=feed#comment-17881631 17881631
Although, come to think of it, if you see I replied to your comment and click over to see what I said - then I've got you anyway.... SUCKER!!!

8) ]]> Sat, 20 Apr 2013 18:06:51 -0400
Although, come to think of it, if you see I replied to your comment and click over to see what I said - then I've got you anyway.... SUCKER!!!

8) ]]> http://seekingalpha.com/article/1355901/comments?source=feed#comment-17881571 17881571 Sat, 20 Apr 2013 18:04:42 -0400 http://seekingalpha.com/article/1355901/comments?source=feed#comment-17881551 17881551 Sat, 20 Apr 2013 18:03:30 -0400 http://seekingalpha.com/article/1355901/comments?source=feed#comment-17881541 17881541 Sat, 20 Apr 2013 18:02:59 -0400 http://seekingalpha.com/article/1340381/comments?source=feed#comment-17774291 17774291
As with X above - if you just buy a stock - of course you can get burned but, if you hedge with options, you can mitigate even 33% drops like AAPL is having - as long as you are patient and learn how to manage your trades - which is the whole point of what we teach people. ]]> Thu, 18 Apr 2013 05:04:37 -0400
As with X above - if you just buy a stock - of course you can get burned but, if you hedge with options, you can mitigate even 33% drops like AAPL is having - as long as you are patient and learn how to manage your trades - which is the whole point of what we teach people. ]]> http://seekingalpha.com/article/1340381/comments?source=feed#comment-17774261 17774261 Thu, 18 Apr 2013 05:01:25 -0400 http://seekingalpha.com/article/1340381/comments?source=feed#comment-17681491 17681491 Tue, 16 Apr 2013 06:35:50 -0400