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DumpsterDiver

DumpsterDiver
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  • Buy An Unprofitable Company That Will Use Your Capital To Become Profitable [View article]
    Unless you're participating in IPOs or bond offerings, the company isn't really "using your capital" to do much of anything. The strategy you're describing may be a perfectly good one, but your formulation of it seems flawed. Your personal aftermarket trading doesn't provide new capital to the company; the shares don't care at that point whether you own them or somebody else does.

    (I realize there could be some exceptions to this in the aggregate, e.g. when a high share price -- which is a result of everyone's trading -- enables a company to make stock-based acquisitions and such, but the general notion that your decision to hold shares is somehow helping the company to become profitable still doesn't make any sense. That relationship works the other way 'round: You're hoping the company will make YOU profitable.)
    Aug 15 11:46 AM | Likes Like |Link to Comment
  • 3 Companies To Watch Out For In The Internet Of Things [View article]
    "All this risk is unnecessary as we can get along just fine now without these extra conveniences."

    The world at large has persistently failed to share this viewpoint for at least a dozen years now.

    A good third of humanity (me included) now walks around all day long carrying a personally-identifying, internet-connected transponder with a microphone and a camera attached to it, and the remaining two-thirds are just waiting for the day when they can finally afford one. Never underestimate how much personal security human beings will happily trade for additional convenience.

    The sum total of most people's entire thought process around these issues (if they ever think of them at all) goes roughly like this: "Wow, that's kind of creepy. Oh, well."

    All that's been lacking thus far in the IoT arena is sufficiently high convenience for a sufficiently low price. But it'll cross that inflection point sooner or later, as everything does. At which point I'm guessing we'll just slap a trial version of Norton Antivirus onto every new refrigerator or thermostat that ships and call it a day, security-wise.

    The general public will insist upon having serious firewalls in place before they'll allow the creation of highly localized datacenters teeming with their own personal information? Tell that to anybody who ever masturbated wearing a FitBit.
    Aug 14 04:08 AM | Likes Like |Link to Comment
  • GT Advanced rallies after disclosing Merlin progress [View news story]
    The new news was the certifications. Doesn't really change the potential market or customer mix for this product, but does remove a previously-unaddressed hurdle in eventually selling it to them. So it's a small positive.

    Waxing and waning excitement about how sapphire will be used in iProducts is still the primary driver of price movements for now, I suspect -- even the movements following this press release today.
    Aug 11 12:50 PM | 1 Like Like |Link to Comment
  • Short Sellers And Seeking Alpha [View article]
    sunwind,

    You are on the right track there, I think.

    If you were forced to choose one and only one tool upon which to base all your future investment decisions, I would suggest choosing the quarterly conference call transcripts that are archived here on SA. Read a couple years' worth of those in chronological order and you will learn an astonishing amount about a company. Beyond all the operational details that are illuminating in themselves, you'll get an excellent sense of how trustworthy and reliable the company's management is: Do their strategies and projections tend to pan out over time, or not? Do they spend half of every conference call explaining why their confident predictions from previous calls didn't come to pass? Does the phrase "another disappointing quarter" seem to crop up every quarter? Do they address tough questions from analysts head-on and in detail, or weasel their way around them with empty platitudes? Can they convincingly articulate what their plan is and why they believe it will succeed, and does their track record of previous statements back that up?

    If you can find a company that passes all these smell tests, it will no longer matter much what the price is doing on any given day, whether it's being manipulated upward or downward or just ebbing and flowing naturally, whether unfounded rumors are flying, or whether large moneyed entities are extracting profits from the overly hopeful or overly fearful who can be easily swayed by dubious information. All of those external noises will have a maximum lifespan of three months, because they'll either be confirmed as fact or refuted as nonsense at the end of every quarter.

    The advantage of these transcripts over annual reports is that the Q&A sessions at the end aren't canned, hence they can sometimes cast light on subjects that the company wouldn't have made any public comment on otherwise. Even if management just stonewalls and refuses to answer, that can still tell you something you wouldn't have learned in any other context.

    Meanwhile, the big guys will do whatever the big guys do. If we try to play the game on their terms, then you're right, we'll lose every time. You and I will never make money on microsecond arbitrage, or by alternately hyping and slamming a stock at regular intervals. They can, and they will. But the one advantage we have that they don't is time. We don't have to post great numbers every quarter in order to remain in charge of our own money. We don't have to justify why we're still holding or buying some momentarily-out-of-favor stock that everybody else is selling that week. We're not accountable to anyone but ourselves. Therefore, we can make a bet on a good company and simply ride it out until the world comes around. And if it actually is a good company that keeps on executing quarter after quarter, then the world will ALWAYS come around in time. Rarely as soon as we'd prefer, but often with stunning speed (and equally stunning price appreciation) when everyone finally catches on.

    And when the share price gets seriously out of whack with what the company is actually doing, we can recognize that for the opportunity it is and respond accordingly, rather than being stampeded into oblivion with the rest of the herd.
    Aug 5 05:20 AM | 1 Like Like |Link to Comment
  • Short Sellers And Seeking Alpha [View article]
    "If I feel negatively toward it, chances are I'm in the stock and if the article moves the market, I'm subject not to an opportunity loss, but a very real and immediate cash loss -- even if the article is completely wrong."

    No. No, you are not.

    There is exactly one way for you to be subject to a cash loss in a stock you own, and that is to sell your shares at a lower price than you bought them for. If market movements are subjecting you to immediate cash losses, it's because you're panic selling in response to them. So...don't do that.

    Advanced form of the obvious: And if the article that caused those downward movements is completely wrong, then buy more shares instead. Reality has a way of triumphing over rumor in the long run. Why not put it to work for you?
    Aug 5 03:29 AM | 2 Likes Like |Link to Comment
  • Short Sellers And Seeking Alpha [View article]
    "What is clear is that harsh articles on SA often cause immediate damage to price, & the thesis often does not prove out or have any real basis. Positive articles, if true, take time to prove-out, & when they do, the catalyst is often earnings or an event totally unrelated to the story."

    So you're saying you've found a mechanism whereby prices get driven to unreasonably low levels without any sound basis, then stay that way until some later, fact-based catalyst drives them up again? Hmm, sounds like the sort of thing an INTELLIGENT investor might be able to make money on.... ;)

    I'm coming to believe more and more strongly that the simplest way to tell a smart investor from a dumb one is that only the dumb ones ever complain that prices are too low.
    Aug 4 01:42 PM | Likes Like |Link to Comment
  • Short Sellers And Seeking Alpha [View article]
    "...it isn't that short sellers are great at predicting events. Its that they MAKE THEM HAPPEN by their use of media to offer timed 'predictions' that turn out to be sell cues for a lot of us who are simply tired of watching the slaughter."

    If you're aware of this, and you're still selling right on cue, then aren't you behaving pretty foolishly?

    In fact, if your "sell cues" are based on short-term price movements (the only kind of price movement that can possibly be engendered by a factually incorrect media article), then you're behaving VERY foolishly and shouldn't even call yourself an investor in the first place.

    The commenter you were responding to (and, ironically, accusing of not paying attention) has already told you exactly what the solution to this problem is. Simply put, know what conditions would have to occur in the company you've invested in -- I stress: the COMPANY, not the share price -- to convince you to sell your shares. If those conditions haven't been met, then don't sell them. Period. Then those "slaughters" you're whining about will be magically transformed into buying opportunities where you can get even more shares at a serious discount to what the company's actually worth.

    If you're one of the people who routinely sells when you ought to be buying because you got "tired of watching the slaughter" (here, let me translate that for you: "scared"), then what James said is absolutely correct: You should turn the management of your money over to someone who can be objective about these things, and let them worry about it. Otherwise, you're likely to spend a lifetime buying high and selling low.

    "Unlike hedge funds we trade slow. We get information slow. We are stuck at earnings time with painfully slow computers."

    So don't trade. Duh.

    If you're a non-multi-billionaire and your ability or inability to make money in the market hinges upon the speed of your computer, then trust me, you're doing it wrong.
    Aug 2 08:32 PM | 3 Likes Like |Link to Comment
  • The Trade That Netted Me More Than A 2,000% Return [View article]
    Please look up what "science" means. That does not meet even the loosest definition.

    No repeatable experiments, no predictability of results, no method for falsification of a theory.... Etcetera. Science looks rigorously for counterexamples to prove itself WRONG, and only considers itself provisionally right when it continues not to find them after many attempts. Picking out "success stories" and saying "See how well this works?" is not the same thing.
    Jul 31 11:23 AM | Likes Like |Link to Comment
  • S&P 1500 Most Heavily Shorted Stocks: Mid-July 2014 [View article]
    Glad to see GTAT on this list. The last time it was this heavily shorted, my shares went up 500% in a year. Hope the short sellers prove equally perspicacious this time around.
    Jul 29 04:41 AM | Likes Like |Link to Comment
  • The Trade That Netted Me More Than A 2,000% Return [View article]
    Minor amendment to the above: Buying the call options WAS gambling, and isn't something I would have done with any money I ever wanted to see again. Sorry for overlooking that point in my previous comment.

    I wish the article had specified what percentage of the author's total outlay went to shares vs. calls. If the bulk of it was in the calls, then yeah, that was unwise and he simply got lucky.
    Jul 29 04:25 AM | 1 Like Like |Link to Comment
  • The Trade That Netted Me More Than A 2,000% Return [View article]
    I think it's somewhat unfair to describe this purely as a case of getting lucky. Granted, he couldn't have known in advance whether Facebook would manage the transition to mobile ads, but the point was that he did find a way to judge the answer to that question with increasing clarity on an ongoing basis, and came to the correct conclusion about it while the market at large was still undecided. (It's implied -- I think -- that if he had logged onto Facebook every day and found that the ads he saw were intrusive and crappy, and he'd heard similar things from the other users he was polling, then he would have said "Yep, the market was right about this" and bailed.) There's a world of difference between that approach and simply closing your eyes and rolling dice. Not to say that it made his success a sure thing, but it certainly made it a surer thing than otherwise.

    The kind of in-depth research Buffett does isn't available to the vast majority of us. I give the author credit for wringing maximum value out of the more limited information that WAS accessible to him, and drawing the right conclusions from it. Frankly, that's probably a far more useful skill for most of us here to have than knowing precisely what things Buffett would do before he made a purchase. (Step 1: Have lunch with every member of the company's board of directors and ask some probing questions... Yeah, doesn't really help the rest of us much.)

    To me, this is a pretty solid textbook example of how small investors should approach things: Have a thesis about why a company's situation will be better in the future than it appears to be now; rigorously check that thesis against as many facts as you can find, whenever they become available; and until such time as your thesis is contradicted by the facts (not by the market's fears and worries, but by actual facts), just stay in and be patient and tune out the daily noise.

    Disclosure: That's how I do this, too, so I may be biased. :)
    Jul 29 03:49 AM | 5 Likes Like |Link to Comment
  • The Trade That Netted Me More Than A 2,000% Return [View article]
    $30,000 times 20 does not equal $6 million.

    Just saying.
    Jul 29 03:06 AM | 6 Likes Like |Link to Comment
  • TechPrecision appoints new President of Ranor [View news story]
    New theory: There is a positive correlation between the percentage of comments about a particular stock that contain exclamation points and the probability that said stock is going to tank in the near future.

    Noticed this about BBRY the whole way down last year, too. I may start using this metric to tell me what not to invest in.
    Jul 16 11:00 PM | Likes Like |Link to Comment
  • Second Apple Sapphire Plant Operations Emerges From GT Advanced Technologies' Amended 10-Q [View article]
    They already did it back in December. The offering was a mix of convertibles and new shares. Got quickly forgotten about once the post-dilution share price had risen significantly above the pre-dilution share price... :)
    Jun 19 09:17 AM | 1 Like Like |Link to Comment
  • FT: Errors place doubt on Piketty's theory about rising inequality [View news story]
    coolcat,

    I could have sworn I addressed that very point in the paragraph immediately preceding the one you quoted in full. Living beyond one's means (whatever one's means may be) is unquestionably A cause and perpetuator of poverty; it is not, however, THE cause. Hence my use of the words "reductive" and "over-generalizing," as opposed to "wrong." It's not wrong. It's merely incomplete. Spending less would not make all of the world's poor wealthy, although it would certainly make a lot of people (not only the very poor) wealthier than they are currently.

    Some level of spending truly is required just to subsist, though. And some incomes truly are so close to that subsistence level that any surplus is likely to get eaten whole by a non-optional, survival-level crisis outlay sooner or later, rather than just sitting there compounding uninterrupted for fifty years the way Ben Franklin counseled.

    It's not as if those born into wealth have more restrained spending habits than all the putatively-middle-class and/or poor folks who are teetering at the edge of bankruptcy; in general the precise opposite is true. But when you've had hundreds of millions of dollars busily compounding away on your behalf since birth, those self-indulgent tendencies tend not to reduce your capital to unsustainable levels quite so quickly or so easily (although people have certainly managed to pull that trick off as well).

    Suggesting that extremely wealthy people might be capable of reducing some of THEIR spending on luxuries and putting more of that money toward activities that would help to level the overall playing field with respect to access to future opportunities for wealth creation* is invariably met with howls of outrage, yet the suggestion that extremely poor people should forgo their much more minimal luxuries in order to amass more wealth is considered to be morally self-evident. Seems like a bit of fundamental attribution error at play there.

    *Note that this does NOT have to mean more taxation for more government programs, and I personally would prefer that it didn't. (Politically, I'd describe myself as more anarchist/libertarian than the "leftists" to whom you've directed several other comments on this page.) These things can be done entirely voluntarily, just as decreasing one's spending in order to increase one's personal level of savings can be done entirely voluntarily. There's a reason Warren Buffett and Bill Gates are generally better-regarded than, say, the Koch brothers, and voluntarily giving a rat's ass about others who are less well off is the greater part of that reason.
    May 25 06:09 PM | 11 Likes Like |Link to Comment
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