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banyon
06-05-2009, 09:42 PM
Seems like there have been several comments on what people are investing in, or want to stay away from and there are a lot of people in this forum with some savvy and interest in the topic.

So, what is in your portfolio? GM Stock? Gold or silver junk coins? Hog Bellies?

What do you think about other people's picks? How are they doing over time?
Any advice?

I'll start with the first post below:

Mr. Kotter
06-05-2009, 09:43 PM
Walmart. I've made a killing since 1989. It's almost made teaching....affordable as a profession.

banyon
06-05-2009, 09:50 PM
My investments currently consist of:

40% IRA - Mutual Fund with ING - Global/International Stock Fund

60%- Stock/Options

StatOil (STO)(Norwegian Oil Co. ) 20%
Honda (HMC) - 18%
AIG - 20%
Talisman (TLM) Canadian Energy Co - 10%
Suncor (SU) Canadian Energy - 6%
Dow Chemical (DOW) - 5%
Office Depot (ODP) - 4%
Nexen (NXY) (Canadian Energy) - 3.8%
GlaxoSmithKline (GSK) - 2.5%
GM $1 Puts (Jul/Sept)- 4%
Freddie Mac - 2%
Aig sold Calls (Aug) 2%


Critique or comment

banyon
06-05-2009, 09:51 PM
Walmart. I've made a killing since 1989. It's almost made teaching....affordable as a profession.

That's it? All the eggs in 1 basket?

Mr. Kotter
06-06-2009, 12:09 AM
That's it? All the eggs in 1 basket?

What do ya expect? I'm Sam Walton's illegitimate son. My ma worked a strip club in NW Arkansas back in the day; apparently he liked her lap dances. One thing led to another....

banyon
06-06-2009, 12:19 PM
nobody else wants to play?

eazyb81
06-06-2009, 12:35 PM
Walmart. I've made a killing since 1989. It's almost made teaching....affordable as a profession.

Nice entry-point for WMT right now, but I actually like TMT more going forward now that the Ackman drama has died down. Use the uncertainty over the future of managed care to your advantage by getting in on the big insurers before reform; AET looks nice after their dip last week due to cutting 2Q guidance. Their pricing has routinely been off-cycle compared to their competitors, so i'm not worried about them. HC reform will bring 50M new lives to the managed care industry. Their costs will go down and it will end up being a net positive for the industry. My favorite pick right now is ECLP; CERN gets more attention and they are a great company as well, but insiders say ECLP is better equipped to handle the influx of new customers after the HITECH Act. That's all for now.

Saul Good
06-06-2009, 01:08 PM
My investments currently consist of:

40% IRA - Mutual Fund with ING - Global/International Stock Fund

60%- Stock/Options

StatOil (STO)(Norwegian Oil Co. ) 20%
Honda (HMC) - 18%
AIG - 20%
Talisman (TLM) Canadian Energy Co - 10%
Suncor (SU) Canadian Energy - 6%
Dow Chemical (DOW) - 5%
Office Depot (ODP) - 4%
Nexen (NXY) (Canadian Energy) - 3.8%
GlaxoSmithKline (GSK) - 2.5%
GM $1 Puts (Jul/Sept)- 4%
Freddie Mac - 2%
Aig sold Calls (Aug) 2%


Critique or comment

What was your method in determining where to place your chips?

banyon
06-06-2009, 01:21 PM
What was your method in determining where to place your chips?

STO, TLM, NXY, SU: These are all inflation/dollar plays. They are solid energy companies, but I think that with the dollar going in the crapper and oil inevitable to rise, I think I will see a good appreciation because of the commodity jump, as well as a currency/inflation kicker to boost it up more.

HMC (Honda) and GM puts:

I bought this because I believe GM and Chrysler suck. The GM puts are a direct bankruptcy play, which should pan out as soon as the shares are wiped out, and I expect Honda and Nissan to be in the best place to pick up the market share that GM and Chrsyler are giving up.

AIG is guaranteed not to go bankrupt, and I have a covered call reinvestment strategy so that if it stays stagnant for a good while (which I expect it to), I will be able to collect compounded gains.

ODP I just thought was dramatically undervalued and not going to go under, it's a long play. I also forgot to list Q (Qwest), which I think is undervalued because it will be bought up soon by Verizon or AT&T since our DOJ doesn't care about monopolies anymore. When it gets bought, I expect it to rise. It has a decent dividend yield too.

DOW I also thought was undervalued. I bought it at $9, so it has doubled. I think with its agricultural strength, it will be a decent commodity play too. It got beat up too much in the Rohm/Haas merger.

GSK was a pig flu play, but I've hung onto it. It hasn't really moved much either way for me.

I bought FRE a while back wen it was worth next to nothing. I just don't have any good reason to sell it, but I don't really like holding it either. I'll continue to sell calls against it.

Do you have a strategy or anything in?

Saul Good
06-06-2009, 01:35 PM
Do you have a strategy or anything in?

I don't yet. I sold out about 18 months ago, and I'm trying to pick my spot to return. When I do, it will likely be in the form of straddle options for some of the stocks that I think are incorrectly valued.

My theory is that a lot of companies are either worth substantially more than what they are being sold for or that they are worth nothing. I'm not smart enough to know which, but a straddle option would cover both bases.

banyon
06-06-2009, 02:01 PM
I don't yet. I sold out about 18 months ago, and I'm trying to pick my spot to return. When I do, it will likely be in the form of straddle options for some of the stocks that I think are incorrectly valued.

My theory is that a lot of companies are either worth substantially more than what they are being sold for or that they are worth nothing. I'm not smart enough to know which, but a straddle option would cover both bases.

You timed the out well, but timing that straddle sounds tricky. It might be easier just to earn interest and wait until the double dip hits, if that's what you think is going down, and then buy heavy.

Similarly, in my IRA, I had pure bonds until the crash, assuming that it was imminent, then I shifted to the Global/international mix.

Saul Good
06-06-2009, 10:33 PM
You timed the out well, but timing that straddle sounds tricky. It might be easier just to earn interest and wait until the double dip hits, if that's what you think is going down, and then buy heavy.

Similarly, in my IRA, I had pure bonds until the crash, assuming that it was imminent, then I shifted to the Global/international mix.

You're actually giving more credit than I deserve in terms of the timing. I didn't time anything. I just happened to have enough money to pay off everything I owed except for my house, so I did it. It looks pretty brilliant, but it was about as intelligent as picking the correct powerball numbers.

Timing a straddle is tricky, but the potential payoff is so high that you can afford to lose for a while if you're sure enough that it's going to hit.

Back when Firestone was having their issues several years back, their stock price went into the toilet. That was when I first started really pondering the notion that they were either going to go bankrupt or recoup most of their losses. It seemed pretty obvious to me, and it was a good bet in retrospect. Our economy right now is loaded with similar scenarios.

I'm really more interested in real estate at the moment. I'm mulling over a few ideas on how to capitalize on the $8,000 rebate for first-time home buyers. I've purchased multiple homes in the past, so I don't qualify, but I think that there may be a few loopholes.

I read the following on the IRS website:
"For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase."

What if a first-time home buyer purchases a house and immediately sells it to me with an agreement that I would lease it back to them for 3 years? Wouldn't the house still qualify as their primary residence if they stay there for the duration of the lease? Even if that wouldn't work, could I still construct a purchase agreement for 3 years down the road?

I really haven't put in the time to dig into the logistics of it, but I'm in a pretty good position right now, and it seems like there is a lot of value to be had. Real estate has fallen a long way, and it may have a further to go yet, but they aren't making any more of it, and population continues to increase. The math seems self-evident.

Saul Good
06-06-2009, 10:34 PM
Similarly, in my IRA, I had pure bonds until the crash, assuming that it was imminent, then I shifted to the Global/international mix.

Do you use an adviser, or do you play your own suspicions?

Silock
06-06-2009, 10:40 PM
My portfolio:

BP
NAT
FSLR
AAPL
RIMM
DUK
ONNN
STAR
TER
TKLC
Also, about 25% cash

Silock
06-06-2009, 10:48 PM
My investments currently consist of:

40% IRA - Mutual Fund with ING - Global/International Stock Fund

60%- Stock/Options

StatOil (STO)(Norwegian Oil Co. ) 20%
Honda (HMC) - 18%
AIG - 20%
Talisman (TLM) Canadian Energy Co - 10%
Suncor (SU) Canadian Energy - 6%
Dow Chemical (DOW) - 5%
Office Depot (ODP) - 4%
Nexen (NXY) (Canadian Energy) - 3.8%
GlaxoSmithKline (GSK) - 2.5%
GM $1 Puts (Jul/Sept)- 4%
Freddie Mac - 2%
Aig sold Calls (Aug) 2%


Critique or comment

Looks like you're a bit heavy in the auto/oil industry. As linked as those two are, I'd be a bit worried that a single event could take out a significant portion of your portfolio. AIG -- I dunno... I don't believe I'd have that much money as a percentage in it. Of course, I don't know where you bought it, though. At these levels, it's not a bad speculation play.

Saul Good
06-06-2009, 10:54 PM
AIG -- I dunno... I don't believe I'd have that much money as a percentage in it. Of course, I don't know where you bought it, though. At these levels, it's not a bad speculation play.

What difference does it make where he bought it? It's either the correct play now or it's not, right?

There real question is, would he buy it again at this price if he didn't already own it. If the answer is no, sell.

Silock
06-06-2009, 11:17 PM
What difference does it make where he bought it? It's either the correct play now or it's not, right?

There real question is, would he buy it again at this price if he didn't already own it. If the answer is no, sell.

Not necessarily. If it's an investment, it's different than a speculative trading opportunity.

At $1, it's a great place to speculate, but I wouldn't plan on owning it for any length of time here. Looking back, it should have been sold back in June or August of last year. If that isn't the case, then there's almost no reason to sell it now because you've lost almost the entire thing already. There's not much downside left to it. If you're just getting in at these levels, then there is a LOT more downside.

Does that make sense? If you invest $1000 at $1, there's more potential downside than if you had already invested $1000 at $50 and have already lost most of the value of the stock already. As a percentage of your investment, there's a lot more left to lose if you get in now. If you get in now and it goes down to $0.75, then you've lost 25%. If you were already in from $50, then another few cents loss is really a "Well, who gives a shit at this point?"

Saul Good
06-07-2009, 08:42 AM
Does that make sense? If you invest $1000 at $1, there's more potential downside than if you had already invested $1000 at $50 and have already lost most of the value of the stock already. As a percentage of your investment, there's a lot more left to lose if you get in now. If you get in now and it goes down to $0.75, then you've lost 25%. If you were already in from $50, then another few cents loss is really a "Well, who gives a shit at this point?"

No, I can't say that that makes any sense at all. Either it's a good deal at it's current price, or it's not. What you paid for a stock has no bearing whatsoever on it's current value.

It's like the times that I've shopped for cars. The dealer always wants to tell me that he can't sell the car for a certain price because that's more than he paid for it. I don't give two sharts about what he paid. I only care what it's worth to me.

banyon
06-07-2009, 10:17 AM
What difference does it make where he bought it? It's either the correct play now or it's not, right?

There real question is, would he buy it again at this price if he didn't already own it. If the answer is no, sell.

FTR my cost basis on it is $1.91.

Silock
06-07-2009, 12:53 PM
No, I can't say that that makes any sense at all. Either it's a good deal at it's current price, or it's not. What you paid for a stock has no bearing whatsoever on it's current value.

It's like the times that I've shopped for cars. The dealer always wants to tell me that he can't sell the car for a certain price because that's more than he paid for it. I don't give two sharts about what he paid. I only care what it's worth to me.

It depends on what you're buying it FOR. As an investment, no, it's not a good deal. As a trade, it could be, as it's a great speculative play. If you're just going to trade it, then it's worth what someone will pay for it in the short-term and the long-term doesn't matter.

I'm not suggesting that what you paid for it reflects its current value. I'm simply saying that if you've already taken hundreds of percent on a loss and are willing to stick it out, one or two more percent of your total investment lost is no big deal. If you bought AIG a couple of years ago and rode it all the way down, you only have a few bucks left anyway. You should have sold before, but since you didn't, there's no reason to bail now. There's more upside at that point to staying than there is to getting out. But for new investors, there are a lot of signs pointing to "Stay away." And if you're trading it, then it's perfectly fine to gamble on it and get in, because you know it's a huge risk and aren't looking to stay in it for a long time.

Silock
06-09-2009, 12:01 AM
Bought some more AAPL on the day's lows yesterday. Made a quick $500, even though the stock closed down.

Silock
06-10-2009, 03:44 PM
This market is making it more and more difficult for me to get out. There's just no reason to do so right now. Everything I have keeps going up . . .

banyon
06-10-2009, 03:52 PM
This market is making it more and more difficult for me to get out. There's just no reason to do so right now. Everything I have keeps going up . . .

I am thinking about pulling back for a bit. I think there is a big down day ahead pretty soon, based on new mortgage defaults and ccard defaults.

KC native
06-10-2009, 03:53 PM
I have to toe a fine line when speaking about investment specifics online due to my registration so don't expect any specific recommendations. I will give out current positions (because primarily in my small trading account I use range bound option's trades which have been getting me killed recently)and critiques but I could lose my job if my compliance dept didn't like something I posted.

That being said this recent rally has been entirely due to multiple expansion. Right now the S&P is way overvalued. If you believe earnings are going to be about $75 and with a 12-13 P/E then the market is fairly valued. The problem is earnings are way below $75 and will be headed lower. There is no data out there that suggests we will see a second half recovery despite how the data is being spun. I think the market is rallying on the idea that the credit crisis is over and that we will see a recovery in the second half of this year. My gut feeling is that once the financials' equity raises are done we will see the market come back down on the realization that yes things are better but no they aren't goo.

Stewie
06-10-2009, 04:16 PM
You're betting/investing against algorithms. Buying the dollar today (algorithms/TA) because Russia doesn't want them is absolute insanity. Yeah, the dollar went up. Won't last.

I'm short the dollar in several different ways. I wouldn't buy an individual stock today if my life depended on it.

Edit: The bond auction today was sad. Tomorrow's 30-year auction will say alot about where we're going.

Chief Henry
06-10-2009, 04:32 PM
You're betting/investing against algorithms. Buying the dollar today (algorithms/TA) because Russia doesn't want them is absolute insanity. Yeah, the dollar went up. Won't last.

I'm short the dollar in several different ways. I wouldn't buy an individual stock today if my life depended on it.

Edit: The bond auction today was sad. Tomorrow's 30-year auction will say alot about where we're going.

THIS

Calcountry
06-10-2009, 05:27 PM
I am generally paranoid by nature, so, most of my retirement was in stuff like Kelloggs, General Mills, Exxon, Valero,

I have a pittance in Copart and Netgear right now, and about 10% of my total portfolio is in a couple of mutal funds. The rest, about 85% is in cash and has remained that way since the Wednesday before the second vote on the TARP.

I recently halved my position in Treasury Bonds and Gold.

Calcountry
06-10-2009, 05:29 PM
I am thinking about pulling back for a bit. I think there is a big down day ahead pretty soon, based on new mortgage defaults and ccard defaults.Pulling back? Bail the fug out before it is too late.

The bond market is getting slaughtered these days. You need only listen to Rick Santelli to know the natives are restless dude, they can't take any more of Obama's fix.

Calcountry
06-10-2009, 05:31 PM
Looks like you're a bit heavy in the auto/oil industry. As linked as those two are, I'd be a bit worried that a single event could take out a significant portion of your portfolio. AIG -- I dunno... I don't believe I'd have that much money as a percentage in it. Of course, I don't know where you bought it, though. At these levels, it's not a bad speculation play.That's what I was thinking.

Too much energy.

banyon
06-10-2009, 06:04 PM
Pulling back? Bail the fug out before it is too late.

The bond market is getting slaughtered these days. You need only listen to Rick Santelli to know the natives are restless dude, they can't take any more of Obama's fix.

Most of my stocks are inflation plays, so that attitude would just play to my hand I would think.

Silock
06-10-2009, 06:13 PM
Pulling back? Bail the fug out before it is too late.

The bond market is getting slaughtered these days. You need only listen to Rick Santelli to know the natives are restless dude, they can't take any more of Obama's fix.

Rick Santelli is a fucking blowhard.

That being said, there are still some stocks worth owning. You just have to be in the right sectors. My oil and semi stocks are going nuts. Of course, that's pretty much all I have left.

KC native
06-11-2009, 12:06 PM
Thought this was interesting...



http://www.nakedcapitalism.com/2009/06/on-endless-bid-for-oil.html
Are we seeing a rerun of early 2008 in diminished form, as least as far as oil prices are concerned? Reader Michael sent along an article by Dan Dicker that contends that oil prices are well ahead of their fundamentals, and that, as before, the oil bulls are taking considerable cheer from Goldman's boosterism. A key element that Dicker highlights that too often goes comparatively unnoticed is the small size of the oil market, Hence sudden influxes of funds can have a price impact.

Now some readers will pooh-pooh that notion, saying that prices that are "too high" should lead to hoarding. Well, unlike last time around, there are abundant signs of that, with oil in storage at virtually unprecedented levels, Moreover, regulators are increasingly accepting the view that prices in futures markets can and do drive the physical market. From Dow Jones Newswires:

Until recently, the U.S. Commodity Futures Trading Commission had more limited oversight authority over contracts traded electronically on exempt commercial markets such as IntercontinentalExchange Inc. (ICE). But when energy prices rose to record highs last year, lawmakers expressed fears that traders were affecting prices by using exempt commercial markets to bypass speculative position limits imposed on similar types of energy futures contracts traded on exchanges...’We were told to look at significant price discovery contracts and we have been doing that,’ acting CFTC Chairman Michael Dunn said Wednesday, noting that preliminary reports suggest ‘it was much larger than we originally thought’ and that staff was ‘surprised’ by the preliminary findings.


Notice the key expression, "significant price discovery." Most economists believe that price discovery takes place in physical markets only. Yet as credit default swaps have shown, supposed derivative markets can not only be the preferred vehicle for price discovery, but actually drive prices of the supposed "underlying."

Now to Dicker via The Street:

Oil has been rallying because of the weakness of the dollar and because of the specter of impending inflation...

Yet in the last several sessions, the dollar has found some amazing strength, and gold, the best proxy for inflation, has come down quite a bit. So what is going on with oil?...

It's the endless bid.

Goldman Sachs recently revised its oil targets for 2009 and 2010, raising its $52 target price for the near three months to $75. It gets worse, according to Goldman. Year-end targets for the crude barrel in 2009 were revised up to $85 and a $95 target was set for 2010. How do they come up with these figures?

Goldman analysts cite increased demand. Yet there is absolutely no sign that demand is increasing, quite the contrary. Goldman argues that oil is rallying on expectations of increased demand along with similar expectations of recovering economies in the second half of '09 and into 2010. Even if this gargantuan leap of faith were true, why isn't natural gas, a perfectly wonderful and plentiful energy source, rallying as well? Why is it languishing at a mere $4s/mmBTU, while crude streaks ever higher?

And how do those Goldman oil analysts even create these mythical target prices?...

The endless bid is what I've begun to call the incessant, unrelenting and often unreasonable desire of investors to have exposure to oil.....there is a renewed interest in having oil as a part of every investor's portfolio.

The oil market is a delicate market. Even more importantly, it is a relatively puny market....the entire notional value of crude oil traded on the Nymex is a little under $100 billion.

That sounds like a lot. But not if you consider that the notional value (market capitalization) of even one oil company like Chevron(CVX Quote) is 40% more. The market cap for Exxon Mobil(XOM Quote) is 3.5 times more. Intuitively, we can expect that even a relatively little amount of new investment interest in oil futures is going to have a huge impact on the price.

That's the endless bid.

We saw the endless bid fuel the run-up in oil to $147 in July 2008.

We saw the endless bid withdraw just as quickly in late 2008 and through February of 2009 with a resultant low of $32 a barrel.

And now, it's baaack .. and makes any estimate of a target price for oil a total shot in the dark, a complete guess, practically unrelated to any economic forecasts or supply/demand estimates.


Before you decide to run out and go short, bear in mind that some technicians think that black gold could run further. While I must note that technical analysis has about as good a reputation as astrology in respectable circles, I have also observed that a lot of investors use it as an input in decisions, and it allegedly works better for commodities than for stocks. That is a long-winded way of saying that if enough people utilize it, it can become a self-fulfilling prophecy.

Nevertheless, consider this chart from Bespoke Investment (hat tip FT Alphaville):

http://alphaville.ftdata.co.uk/lib/inc/getfile/7196.jpg

Silock
06-11-2009, 02:07 PM
USO, baby. USO.

Calcountry
06-11-2009, 07:19 PM
Most of my stocks are inflation plays, so that attitude would just play to my hand I would think.Good, I wish you all the success in the world. :thumb:

banyon
06-12-2009, 08:33 PM
GMGMQ Owners and Buyers -- READ THIS!
All 21 messages in discussion


Subject:

http://finance.google.com/group/google.finance.14194/browse_thread/thread/31cad337b21e2511

John Smithlian View profile
(3 users) More options Jun 11, 12:20 pm

From: John Smithlian <loganfl...@gmail.com>
Date: Thu, 11 Jun 2009 12:20:54 -0700 (PDT)
Local: Thurs, Jun 11 2009 12:20 pm
Subject: GMGMQ Owners and Buyers -- READ THIS!
Reply | Reply to author | Forward | Print | Individual message | Report this message | Find messages by this author
If you've seen the recent announcement from GM management regarding
the value of your GMGMQ shares, here's something for you to consider
as you ponder what to do with your investment in GMGMQ:

1. You see, when GM emerges from bankruptcy as the "New GM", it will
no longer be a publicly-traded company -- it will be a privately-held
company with no stock traded on any exchange anywhere in the world.
The private owners of the New GM will be the U.S. Government, the
Canadian Government, the UAW, and some former GM bondholders. These
private owners will own 100% of the New GM. Unfortunately, there won't
be any shares for you to own of the New GM; at least, that's the way
it will be for a few years.


2. Thus, as a current owner or buyer of GMGMQ, you do not own nor have
any rights to ownership in the New GM at all. Instead, you own a share
in the "Old GM" which, as you know, filed for bankruptcy on June 1.
See, that's why the ticker symbol for GM changed from GM to GMGMQ --
the Q at the end of the new ticker symbol lets you and the rest of the
world know that the stock is of a company in bankruptcy. That's very
handy, isn't it?


3. When a company is in bankruptcy, the future of the company is
solely dependent on one person and one person alone: the federal
bankruptcy judge. What he or she says, goes. In the vast majority of
Chapter 11 bankruptcy cases, a brand spanking new company is created
and the old company is killed just as the new company emerges from
bankruptcy as a bright, new company. See, what happens is, the
bankruptcy judge nullifies or cancels all shares of the old company
just as the new company emerges.


What does this mean for you, the current or prospective owner of
GMGMQ?


This means that the very second that the bankruptcy judge allows the
new company to emerge from bankruptcy as a brand new company, the
GMGMQ shares you own (you own the "Old GM", you with me?) will
instantly and immediately be worth $0.00 and will be canceled and
removed from the public stock exchange, the OTC, forever. Thus, the
shares of GMGMQ that you own will be worth $0.00 as soon as the
bankruptcy judge in the GM case approves of the reorganization plan
put together by the Obama Administration that creates the "New GM" as
described in #1 above.


Remember, as soon as the judge makes his or her decision, your GMGMQ
shares will immediately and instantly be worth $0.00. You will not get
any of your money back from GM, the judge, or anyone else. You will
have $0.00 for your investment in GMGMQ. That is what your brokerage
statement will show: GMGMQ = $0.00.


So, wow, that doesn't sound too good does it? Well, there's one simple
thing you can do to ensure that this does not happen to you:


1. Call up your broker or get online and log into your brokerage
account
2. Tell your broker or use your computer mouse to sell your GMGMQ
shares at the CURRENT MARKET PRICE.
3. By selling your GMGMQ shares at the CURRENT MARKET PRICE, you
should be able to get more than $0.00 for your GMGMQ shares. That's a
good thing, right?


The key to being successful here is: you want to beat the judge to the
punch. If you are too slow, the judge may declare your GMGMQ shares
worthless before you've had a chance to sell your GMGMQ shares at the
CURRENT MARKET PRICE for more than $0.00.


So, if you will allow me to do so, I'd like to make a small
suggestion: Why not call your broker or get to your brokerage account
RIGHT NOW and sell your GMGMQ shares as soon as humanly possible?


I think if you'll take my suggestion, you'll be pleased with your
results. After all, any result is better than $0.00, right?


Best wishes to you, and happy investing!


John

Silock
06-12-2009, 10:12 PM
Anybody even thinking of touching GM (or thought about it in the past 3 months) = bad idea

banyon
06-15-2009, 08:54 PM
Bad day, week, or month ahead?

Silock
06-15-2009, 10:36 PM
Bad week, IMO, depending on the sector. I'm guessing there will be a couple more days of panic selling and then it will level off again. I don't think we'll be revisiting the Dow 6000 levels. Charts and fundamentals don't support that right now, but they do say we're a bit overbought ATM.

Remember, though, volume today was really light. That's a good sign that there isn't a lot of commitment to bearish tendencies.

KC native
06-16-2009, 01:24 AM
GMGMQ Owners and Buyers -- READ THIS!
All 21 messages in discussion


Subject:

http://finance.google.com/group/google.finance.14194/browse_thread/thread/31cad337b21e2511

John Smithlian View profile
(3 users) More options Jun 11, 12:20 pm

From: John Smithlian <loganfl...@gmail.com>
Date: Thu, 11 Jun 2009 12:20:54 -0700 (PDT)
Local: Thurs, Jun 11 2009 12:20 pm
Subject: GMGMQ Owners and Buyers -- READ THIS!
Reply | Reply to author | Forward | Print | Individual message | Report this message | Find messages by this author
If you've seen the recent announcement from GM management regarding
the value of your GMGMQ shares, here's something for you to consider
as you ponder what to do with your investment in GMGMQ:

1. You see, when GM emerges from bankruptcy as the "New GM", it will
no longer be a publicly-traded company -- it will be a privately-held
company with no stock traded on any exchange anywhere in the world.
The private owners of the New GM will be the U.S. Government, the
Canadian Government, the UAW, and some former GM bondholders. These
private owners will own 100% of the New GM. Unfortunately, there won't
be any shares for you to own of the New GM; at least, that's the way
it will be for a few years.


2. Thus, as a current owner or buyer of GMGMQ, you do not own nor have
any rights to ownership in the New GM at all. Instead, you own a share
in the "Old GM" which, as you know, filed for bankruptcy on June 1.
See, that's why the ticker symbol for GM changed from GM to GMGMQ --
the Q at the end of the new ticker symbol lets you and the rest of the
world know that the stock is of a company in bankruptcy. That's very
handy, isn't it?


3. When a company is in bankruptcy, the future of the company is
solely dependent on one person and one person alone: the federal
bankruptcy judge. What he or she says, goes. In the vast majority of
Chapter 11 bankruptcy cases, a brand spanking new company is created
and the old company is killed just as the new company emerges from
bankruptcy as a bright, new company. See, what happens is, the
bankruptcy judge nullifies or cancels all shares of the old company
just as the new company emerges.


What does this mean for you, the current or prospective owner of
GMGMQ?


This means that the very second that the bankruptcy judge allows the
new company to emerge from bankruptcy as a brand new company, the
GMGMQ shares you own (you own the "Old GM", you with me?) will
instantly and immediately be worth $0.00 and will be canceled and
removed from the public stock exchange, the OTC, forever. Thus, the
shares of GMGMQ that you own will be worth $0.00 as soon as the
bankruptcy judge in the GM case approves of the reorganization plan
put together by the Obama Administration that creates the "New GM" as
described in #1 above.


Remember, as soon as the judge makes his or her decision, your GMGMQ
shares will immediately and instantly be worth $0.00. You will not get
any of your money back from GM, the judge, or anyone else. You will
have $0.00 for your investment in GMGMQ. That is what your brokerage
statement will show: GMGMQ = $0.00.


So, wow, that doesn't sound too good does it? Well, there's one simple
thing you can do to ensure that this does not happen to you:


1. Call up your broker or get online and log into your brokerage
account
2. Tell your broker or use your computer mouse to sell your GMGMQ
shares at the CURRENT MARKET PRICE.
3. By selling your GMGMQ shares at the CURRENT MARKET PRICE, you
should be able to get more than $0.00 for your GMGMQ shares. That's a
good thing, right?


The key to being successful here is: you want to beat the judge to the
punch. If you are too slow, the judge may declare your GMGMQ shares
worthless before you've had a chance to sell your GMGMQ shares at the
CURRENT MARKET PRICE for more than $0.00.


So, if you will allow me to do so, I'd like to make a small
suggestion: Why not call your broker or get to your brokerage account
RIGHT NOW and sell your GMGMQ shares as soon as humanly possible?


I think if you'll take my suggestion, you'll be pleased with your
results. After all, any result is better than $0.00, right?


Best wishes to you, and happy investing!


John

This happens with all bankrupt companies. They come out of bankruptcy and issue new shares and the old shareholders get fucked. Delta airlines is another big one I can think of. I would have never believed that people would actually buy these shares but I worked at a discount broker and saw this shit first hand. Never ever buy a stock with a Q at the end of their ticker.

KC native
06-16-2009, 01:29 AM
Bad week, IMO, depending on the sector. I'm guessing there will be a couple more days of panic selling and then it will level off again. I don't think we'll be revisiting the Dow 6000 levels. Charts and fundamentals don't support that right now, but they do say we're a bit overbought ATM.

Remember, though, volume today was really light. That's a good sign that there isn't a lot of commitment to bearish tendencies.

What? the fundamentals are horrible and will continue to be horrible for awhile. We have another foreclosure wave looming and when you factor in externalities (things we can't control) it's an even more grim view.

Technicals don't support much lower right now (IMO) but we're in an environment where technicals can be misleading. We rally on low volume and then when we get a decent volume day we get a decent sell off. Mark my words, once the banks and IB's (GS etc even though they are technically banks) get their equity raises out of the way we will see a substantial sell off (I could be wrong but that's my gut feeling). The manipulation going on right now doesn't bode well for the near term in the equity markets.

Edit: I'm wine drunk so if I wasn't clear just ask.

Silock
06-16-2009, 03:24 AM
What? the fundamentals are horrible and will continue to be horrible for awhile. We have another foreclosure wave looming and when you factor in externalities (things we can't control) it's an even more grim view.

Technicals don't support much lower right now (IMO) but we're in an environment where technicals can be misleading. We rally on low volume and then when we get a decent volume day we get a decent sell off. Mark my words, once the banks and IB's (GS etc even though they are technically banks) get their equity raises out of the way we will see a substantial sell off (I could be wrong but that's my gut feeling). The manipulation going on right now doesn't bode well for the near term in the equity markets.

Edit: I'm wine drunk so if I wasn't clear just ask.

I didn't say the fundamentals weren't bad -- I said they don't support Dow 6000 *right now*. Obviously, that could change. It depends on the sector, like I said. If you're invested where the fundamentals are good, there's not a problem (companies doing work in China, Chinese ETFs/stocks, companies like Apple, semiconductors, tankers, etc.). There are plenty of good places to invest right now.

And today's sell-off was light volume.

Silock
06-16-2009, 08:09 PM
Roller coaster go down!

Bailing at the top is fun. I'm not totally out, but I'm getting there. Still playing with the house's money.

KC native
06-17-2009, 02:16 PM
Another good column from Hussman

http://hussmanfunds.com/wmc/wmc090615.htm

June 15, 2009

The Outlook is Not Up, But Very Widely Sideways

John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Reprint Policy

Valuation Update: We estimate that the S&P 500 is currently priced to deliver total returns over the next decade in the range of 6.5-9.0%, centered at an expected total return of about 7.8% annually. Stocks are modestly overvalued here, except on metrics that assume a permanent recovery to 2007's record profit margins (which were about 50% above the historical norm).

On normalized profit margins, sustainable S&P 500 earnings are slightly above $60 on the index. That's certainly higher than the 7 bucks of net earnings that companies in the index have reported over the past 52 weeks, but unfortunately, even at current prices, the S&P 500 is near 16 times normalized earnings.

You can get that basic figure a lot of ways. Currently, book value on the S&P 500 is slightly above $500. Outside of the past 15 years, when the economy was building up to a debt crisis, the typical return on equity for the S&P 500 has historically ranged between about 10-12%. While a higher debt load raises return on equity in good times, it also leads more quickly to bankruptcy in bad times, as we've observed, and will continue to observe. The deleveraging pressure on the U.S. and global economy here is likely to be associated with a normalization in return-on-equity just as we're observing a normalization in profit margins (return on revenue, so to speak). Applying the higher end of historical return on equity to current book value, and assuming that we don't see major further writedowns in book value for the index, we again get a normalized earnings figure close to about $60. The higher earnings figures (over $80) that we observed in 2007 were based on profit margins and returns on equity far above the historical norm, and were also bolstered by unusual contributions from financials and commodity-driven companies.

Presently, the price-to-book ratio on the S&P 500 is about 1.9. If you think about the 1974 and 1982 lows, we observed price/book ratios at about 0.8, while price-to-normalized earnings multiples were at about 7. So the S&P 500 would have to drop by about 60% to match the best valuations that we've seen during the past 40 years. Investors shouldn't kid themselves that stocks are cheap – in the sense of being priced to deliver outstanding long-term returns – just because we've observed a wicked decline. We're not even close.

At the March lows, the S&P 500 was priced to deliver long-term returns in the 10-12% range. Certainly not bad, but only modestly above the norm on a historical basis, in an economy that faced (and still threatens to suffer) difficulties well outside the norm. While that might have been the final low, and we can't rule out further market gains, I still believe that it is a mistake to rule out eventual “revulsion.” I don't think that we need to match valuations that existed at the 1974 or 1982 lows, but at a multiple of 16 times our current estimate for normalized earnings, suffice it to say that the market is not cheap.

What we've seen in recent weeks has been a recovery of between 25-33% of the losses that the market has suffered since its 2007 peak, putting the S&P 500 up about 6% year-to-date in total return, with the Dow up about 2%. While that sort of recovery, in this event, has implied a significant gain given the extent of the prior losses, the rebound relative to the loss is not unusual (though not easily predictable either, since such rebounds can abruptly fail early or late into the bounce). I continue to believe that it is a mistake to treat the recent advance as if it has significant information content about the economy. We are observing only smaller negatives (and even those may only be a reprieve based on a temporary lull in the mortgage reset schedule).

Until now, “less bad than expected” has been enough for investors. As a friend of mine quoted last week from a song by The Doors, “I've been down for so long, it feels like up to me.” At this point, however, stocks are priced to require an economic recovery. That is a difficult bet, in my view, because as I noted last week, economic expansions are emphatically not driven by a “consumer recovery.” They are invariably driven by swings in gross domestic investment – capital spending, autos, housing, factories, and other outlays that are heavily reliant on debt financing. That's why housing starts have such a strong correlation with GDP growth.

It is a very hard sell to expect a sustained recovery in debt-financed gross investment in an economy under strong deleveraging pressure. That's particularly true since the U.S. itself has not financed a penny of the growth in U.S. gross domestic investment in more than a decade – all of the growth has been financed by foreign capital inflows via a massive current account deficit. With government spending now drawing on those foreign savings to defend bank bondholders from losses, and a continuing need to shrink the current account deficit in the years ahead, gross domestic investment is likely to continue to be squeezed. We are in the midst of – and will continue to require – perhaps the largest adjustment in U.S. personal, corporate and government balance sheets that we will see in our lifetimes. This will be a very long slog. The outlook is not up, but very widely sideways.

It's nice to see consumer confidence rebound from its abysmal lows, but consumer confidence can largely be predicted from past changes in the stock market and inflation. A nice rally in stocks, coupled with soft inflation figures, has been helpful. But consumer confidence is not a useful predictive indicator of even consumer spending. Consumption is a very large, but also very stable part of GDP, and it is not the source of major variance. Indeed, except during the past year, we've never seen nominal consumer spending decline year-over-year even in recessions. The “permanent income hypothesis” of Modigliani and Friedman holds up very well in the data – investors simply do not significantly shift their consumption based on short-term fluctuations in income.

That said, it's a very negative signal that we've observed a decline in consumer spending over the past year – again – it's never happened before. The fact that it has in this instance suggests that consumers are anticipating a largely permanent downward adjustment in their overall spending ability. The lack of opportunity for continued mortgage equity withdrawals (a major source of consumer spending in recent years) explains part of that. The loss of investment and home values is another.

In typical recessions, unemployment tends to be a lagging indicator, and the employment figures themselves tend to move up and down roughly in concert with the overall economy. In the current downturn, however, the unusually high debt burden and precariousness of mortgages among households creates a dynamic that we don't usually observe. In the current cycle, as Ray Dalio of Bridgewater has correctly (in my view) pointed out, unemployment is likely to be a leading indicator of the economy. In an overleveraged economy, job losses can be expected to be followed by further delinquencies and mortgage foreclosures. While I don't expect that this will cause a violent feedback loop, I do believe that it is glib to assume that the employment markets and the U.S. economy are on a one-way track to improvement.

We've seen a nice but predictably temporary lull in the mortgage reset schedule. We've seen a nice, typical recovery of just under a third of the market's prior losses. We've seen a nice easing from the frantic pace of job losses earlier this year. All of those have been pleasant, but it is a mistake to draw information from them. There is very little information content in mean reversion following extreme moves.

Cash, Liquidity, and New Stock Issuance

I continue to be astounded by the bad analysis, misleading reporting and non-equilibrium thinking in the discussion of the bailouts, new stock issuance by financial companies, and other forms of “liquidity.” This seems like a good time to review some concepts relating to “money flow” and equilibrium in order to clarify what is going on here. The upshot is that there is not a bunch of new money “looking for a home.” Rather, we've observed a reallocation of risks from the private sector to the government, with the amount of purchasing power in the economy unchanged.

First, note that when the government issues Treasuries to finance the bailout of financial companies, somebody has to buy the Treasuries. The Treasury's spending is not “new” money, but is instead a redistribution. Think about it (drawing it out with pen and paper can help). In aggregate, if the government issues a trillion dollars of Treasury debt to finance bailouts, a trillion dollars of cash is taken out of the hands of the buyers of those Treasuries, and a trillion dollars of cash goes into the hands of the banks, who issue some sort of obligation (mostly preferred stock) to the government in return. So on the government's balance sheet, it has a trillion dollars of new debt as a liability, and a trillion dollars of bank stock (which may very well become worthless down the road, but is booked as an asset initially). On the private sector's balance sheet, there is a new trillion dollar asset (the Treasury bonds), and a new trillion dollar liability (the securities issued by the banks to the government). There has been a reallocation of risk, but emphatically, there is no more cash than there was before. All that is happened is that the holders of cash may have changed.

I say “may” have changed, because at present, the largest purchasers of Treasury securities have been financial companies. In effect, no net cash has been spent or received. If you add all the transactions up, the cash nets out, leaving us with a pure asset swap. The banks have a bunch of new Treasury securities on their books, and they have issued a bunch of preferred stock to the government to pay for it. They can't do any lending with that until they get somebody else to buy the Treasuries in return for cash that already exists.

Contrast this situation with what the Fed has done. The Fed has gone out and purchased commercial mortgage-backed securities from the banks, and has given them cash (in the form of bank reserves). On the Fed's balance sheet, there are new assets – the mortgage securities – and new liabilities – the cash (which is an obligation of the Fed, as is written right there at the top of the pieces of paper in your wallet). The mortgage payments previously owed to banks are now owed to the Fed, who holds those mortgage securities. Imagine the Fed holds those securities permanently, and all the mortgages are in fact paid off. Then the assets on the Fed's books (those mortgage securities) would decline as the securities are retired, and the Fed's liabilities (U.S. currency) would also decline – assuming that the Fed holds onto the payments and takes the dollars out of circulation. In actuality, these transactions are not permanent, but are repos, so banks aren't counting on that cash being actually useable for new long-term loans - they are using it as stopgap liquidity. Meanwhile however, there is a significant risk to having such a large volume of government liabilities outstanding, because it may very well cause a deterioration in the value of those liabilities over time (i.e. inflation).

On the bank balance sheets, there are fewer mortgage securities as a result of the Fed's intervention, but more cash reserves in their place. If the banks were willing to take the risk to lend this cash out, and there were borrowers with economic projects that they thought were promising enough to borrow money on the obligation of paying it back, we would get new lending and new economic projects. That is not happening, because the banks were overleveraged to begin with, and are using the cash as a cushion against further losses. Private borrowers are also generally averse to new debt and are trying to deleverage. So for now, we have very little inflationary pressure, but also very little new lending, as a result of Fed interventions.

Aside from inflation risks over the medium term (say 4-10 years out), the government's intervention will ultimately be costly to the extent that the securities it has taken from the private sector (bank equity in the case of the Treasury, commercial mortgage-backed securities in the case of the Fed) turn out to be worthless. In my view, this is a significant risk that has been understated by both the Fed and the Treasury. Time will tell.

In recent weeks, we've observed an enormous amount of new stock issuance, rivaling only the spikes that we observed at the market peaks of 2000 and 2007. Financial companies in particular are using the funds received from private investors to pay back the Treasury. Again, think in terms of balance sheets. On the bank's ledger, there is new stock being issued to private investors in return for cash. That cash then goes to the Treasury, and the stock that was issued to the Treasury is retired. In the end, there is no more cash at the banks than there was before, but instead of the Treasury owning stock, new private investors own it. From the Treasury's perspective, it now has less bank stock, but a return of the cash. The Treasury could retire the debt it incurred, but is currently fighting to hold onto that cash for further bailouts at its discretion.

My difficulty with the recent wave of issuance is that it has largely been based on misleading disclosures, not least being the government's “stress tests” that I've discussed previously. To issue stock on such assurances is like issuing stock on the basis of a fraudulent offering document. Yes, it is a free market, and investors can buy newly issued stock if they like, but my impression is that investors buying this newly issued stock have been misled about the health of the underlying institutions.

Overall then, the proper way to think of all of these bailouts and stock issues is not that new purchasing power is being created, but that ownership of existing assets and liabilities has changed in a way that reallocates risk from the private sector to the government. There is not a bunch of money "looking for a home." The overall effect of the bailouts has been to put Treasury securities and temporary bank reserves in the hands of the financial companies, in return for preferred stock and temporary repos of commercial mortgage backed securities. Let those corporate securities fail however, and that's when we have a real money creation problem, because the government will have created liabilities that it cannot buy back in using the assets it took in when it created them. That's a huge risk here.

Meanwhile, apart from the new issuance discussed above (which has, in effect, swapped bank stock out of the hands of the Treasury and into the hands of private investors), I am perplexed that people who hold themselves out as investment professionals continue to talk about “money going into stocks” as if the dollar that a buyer brings into the market doesn't go right back out in the hands of the seller.

As I noted in the March 12, 2007 comment (The Money Flow Myth and the Liquidity Trap),

“We should be very clear that there is no such thing as money going into or out of a secondary market. When stocks are issued in an IPO, or bonds are floated to investors, companies receive funds from investors and, in return, give investors pieces of paper called stocks and bonds, as evidence of the investors' claim on some future stream of cash. This is a “primary market” transaction.

“Once those pieces of paper are issued, they are traded between investors in the “secondary market.” When we talk about the stock market, we're talking almost exclusively about the secondary market, because new issues make up a very small part of total activity.

“Dear Wall Street analysts and financial reporters – when investors purchase a stock in the secondary market, the dollars that buyers bring “into” the market are immediately taken “out of” the market in the hands of the sellers. It is an exchange. This is why the place it happens is called a “stock exchange.” The stock market is not an air balloon into which money goes in or out and expands or contracts that balloon. Nor is it a water balloon that is expanded by pouring in “liquidity.” Prices are not driven by the amount of money that buyers “put in” or sellers “take out” (as those dollar amounts are identical). Prices are determined by the relative eagerness of the buyer versus the seller.

“If a dentist in Poughkeepsie is willing to pay up 10 cents to buy a single share of General Electric, the total market value of General Electric increases by over $1 billion (GE has 10.28 billion shares outstanding - do the math). In this way, market capitalization can be created and destroyed out of thin air and on the smallest of trading volumes. So you'd better be sure that the there is a sound and fairly reliable stream of expected cash flows backing up the value of the securities you're buying.

“Cash does not ever find a “home” in a secondary market. Every time you hear the phrase “investors are putting money into…” or “investors are taking money out of …” or “money is flowing out of … and into …,” it is a signal that the speaker is unable to distinguish a secondary market from a primary one.

“As I used to teach my students, if Mickey sells his money market fund to buy stocks from Ricky, the money market fund has to sell some of its T-bills or commercial paper to Nicky, whose cash goes to Mickey, who uses the cash to buy stocks from Ricky. In the end, the cash that was held by Nicky is now held by Ricky, the money market securities that were held by Mickey are now held by Nicky, and the stock that was held by Ricky is now held by Mickey. There may have been some change in the relative prices between cash, money market securities and stocks, depending on which of the three was most eager, but there is precisely the same amount of “cash on the sidelines” after that set of transactions as there was before it.

“I'm similarly convinced that Wall Street has no idea what it's talking about when it uses the word “liquidity.” While using the phrase “global liquidity” lends a further element of worldly sophistication, Wall Street still hasn't the slightest idea what it's talking about. The phenomenon that's being called “liquidity” is nothing more than a combination of fiscal irresponsibility and risk blindness, and will ultimately prove itself to be the time-bomb that it is when investors begin to “re-price” that risk.

All of that is as true now as it was at the time in 2007, when the S&P 500 was above 1400. Investors hoping to ride a “wave of liquidity” may eventually discover that the wave leads to a plunge over the falls.

KC native
06-17-2009, 02:17 PM
part 2

Market Climate

As of last week, the Market Climate for stocks was characterized by modest overvaluation, with stocks priced to deliver somewhat sub-par long-term returns, and mixed market action – with breadth the most favorable, and interest rate behavior the most unfavorable within that set of measures. The Strategic Growth Fund is fully hedged here, not because we are forecasting steep market losses (though we would not rule them out) but because the average return-to-risk profile of stocks has not historically been adequate under similar conditions. Moreover, if anything, economic fundamentals are far worse than other periods where we've observed similar valuations and market action, which strongly suggests that investors have gotten well ahead of themselves. On an individual stock basis, we also don't observe broad undervaluation. There are certainly pockets of what I view as strong values, which are where we've focused our individual stock selections, but the overall market is not cheap on an aggregate basis or on the basis of stock-by-stock analysis. The idea that stocks are attractive on a valuation basis is an illusion borne of the depth of the decline they suffered after being steeply overvalued, not a reality based on prices being currently reasonable in relation to the likely stream of cash flows from the underlying companies.

There have been, and there will be, better valuations and better market action on which to base significant risk taking in expectation of sustainable long-term returns. On a historical basis, current conditions would be mediocre even in a normal economy, and again, in the context of current economic fundamentals, they are a speculation – because even their mediocrity relies on economic fundamentals normalizing. I don't trust that proposition.

KC native
06-17-2009, 02:25 PM
And Ritholz on securitization

http://www.ritholtz.com/blog/2009/06/warranty-fix-for-mortgage-securitization/
Warranty Fix for Mortgage Securitization Problems
Email this post Print this post
By Barry Ritholtz - June 17th, 2009, 7:20AM

This is not nearly as wonky as it sounds — see if you can follow the thought process to the end.

I continue to be surprised at the general criticism and misunderstanding of the securitization process. Some have blamed the repackaging of these debt instruments as an underlying cause of the housing boom and collapse. By extension, goes the thinking, we therefore should blame Fannie Mae (and Freddie Mac) for the collapse.

There are several problems with this explanation:

1) Fannie Mae has been securitizing mortgages for nearly three quarters of a century; If after 70 years of well functioning securitizations, how did this process suddenly cause a collapse? The short answer is it didn’t, something else was the cause;

2) Many parts of the globe where there is no Fannie Mae — from the UK to Spain to South Korea to Australia — had their own boom and bust. Where there is little or no securitization, but the same boom/bust cycle took place, there must obviously be another explanation for the root cause; As I made clear in Bailout Nation, it was ultra-low rates and an abdication of lending standards that were the causes — not securitization;

3) Securitization has, like all systems, a GIGO problem — garbage in, garbage out.

There have been several attempts to address this last issue. One of the fixes proposed is to require originators who sell mortgages to Wall Street securitizers to retain a portion of the mortgages:

“Lenders would be required to retain at least 5 percent of the risk of losses on each package of loan pieces, known as an asset-backed security. The employees and contractors who originate loans would be paid gradually, and they could get less if borrowers started to default.”

I don’t have a problem with that approach, but I would point out an even more egregious GIGO flaw in the securitization process: The absurd default warranties that the mortgages underwriters used. when selling these debt instruments to WallStreet. This is one of the ways we concentrated, rather than disbursed lending risks.

Let’s go to a book excerpt comparing the old securitization model with the 2002-07 version:

“This was very different from the way traditional banks operated. To your local banker, a mortgage is a reliable and secured for m of lending. With few notable exceptions, lending standards by banks had always been rigorous. When a traditional depository bank originated a mortgage, it assumed it would hold on to the loan for the full 15- or 30-year term; depository banks felt no compulsion to resell them. Guarding against default over the life of that loan was the key to not only being profitable, but staying in business.

That wasn’t how the newfangled lend-to-securitize originators worked. In one of many examples of misplaced compensation schemes we have seen, they were paid on the volume, not the quality, of their loans. Besides, they didn’t need to find a buyer who was a good risk for 30 years—they needed only to find someone who wouldn’t default before the securitization process was complete. Thus, they had very different standards from the traditional lenders. The sellers of these mortgages made warranties to the Wall Street buyers of this paper that the borrowers would not default for 90 days—enough time for the loans to be sold off and repackaged as residential mortgage-backed securities (RMBSs).

This was a radical change in lending standards.”

- Bailout Nation, The Machinery of Subprime,

Sure, we can make the originators retain 5% of what they have underwritten, but I have a simpler idea is to simply require a warranty that is mor ein line with the term of the loan.

A default warranty of 3 or 6 months on 30 year mortgages is utterly absurd; Instead, we should mandate a 5 year warranty on 15 year mortgages, and a 7-10 year warranty on 30 years. This way, we align the interest of the underwriter with the securitizer and the ultimate buyer of that structured product.

Garbage in, garbage out problem fixed!

>

Previously:
Paul Krugman is Wrong About Securitization (March 28th, 2009)
http://www.ritholtz.com/blog/2009/03/krugman-is-wrong-about-securitization/

Can There Be Market Solutions With No Real Markets? (March 30th, 2009)
http://www.ritholtz.com/blog/2009/03/can-there-be-market-solutions-with-no-real-markets/

Sources:
Regulatory Revamp Targets Securities at Heart of Crisis
Sellers of Mortgage Loans to Share In Losses Under White House Plan
Binyamin Appelbaum
Washington Post June 16, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/15/AR2009061502523.html
Understanding the Securitization of Subprime Mortgage Credit
Adam B. Ashcraft, Til Schuermann, Staff Report no. 318
Federal Reserve Bank of New York, March 2008
http://www.newyorkfed.org/research/staff_reports/sr318.pdf
Securitisation and financial stability
Hyun Song Shin
18 March 2009
http://www.voxeu.org/index.php?q=node/3287

Silock
06-17-2009, 03:04 PM
Long read, but worth it. I agree that we're in a holding pattern of sorts right now, but who knows what will happen in the next month. This market is crazy right now.

KC native
06-17-2009, 03:07 PM
Long read, but worth it. I agree that we're in a holding pattern of sorts right now, but who knows what will happen in the next month. This market is crazy right now.

ROFL Long? That's nothing. Since I understand derivatives and have an ability to spot suspect phrases in contracts I get stuck reading 40 page reports and contracts all the time.

Seriously though you should bookmark Hussman's site. He has a new comment up every Monday (pretty impressive).

Silock
06-17-2009, 03:14 PM
ROFL Long? That's nothing. Since I understand derivatives and have an ability to spot suspect phrases in contracts I get stuck reading 40 page reports and contracts all the time.

Seriously though you should bookmark Hussman's site. He has a new comment up every Monday (pretty impressive).

It's long for a message board post, not in the grand scheme of things. I wasn't comparing it to War and Peace or anything. :D

KC native
06-19-2009, 02:22 PM
Another great Yves piece

http://www.nakedcapitalism.com/2009/06/credit-card-squeeze-hits-small.html

Credit Card Squeeze Hits Small Businesses
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We've written off and on since late last year that the continuing cutbacks in credit cards would hurt small businesses, which have been the biggest source of job creation in the US for quite a stretch.

The importance of credit cards as a source of funding to small companies has gone largely unnoticed in the wider world, yet is well know to experts on entrepreneurship. Indeed, Amar Bhide, in his landmark The Origin and Growth of New Businesses, pointed out that, contrary to popular mythology, venture capital played a trivial role in forming new businesses. Personal savings, loans or investments from friends and family, and credit card borrowings were the most important sources.

And before readers chide supposedly foolish owners for paying interest, consider: using credit cards includes the astute use of float, which can give companies six or seven weeks of free money. And in better days, card companies offered products targeted to small business owners with favorable rates, often from 9% to 14% (and also offered them even cheaper "life of the balance" deals, now a distant memory). With interest tax deducible, this was a viable source of funds, particularly for companies that faced short-term financing needs, such seasonal sales patterns.

As we noted, American Express, first to target small businesses, halted its credit line programs as of early 2009 (regular corporate ards for small businesses are still in effect). Advanta, which focused solely on this market, has found itself saddled with a heap of bad debt (default rates of 20%) and has stopped extending new credit as of early June.

This New York Times is largely anecdotal, but does provide some useful data on the importance of credit cards to small businesses. The story fails to note, however, that small business credit cards are personally guaranteed by the owners, and the size of the individual credit limits means that banks rely on very simple metrics to make credit decisions. Thus they have been cutting exposures based on factors, such as declines in local real estate markets, that may have nothing to do with the health of a particular business. From the New York Times:

A crackdown on credit limits by card companies is squeezing the nation’s 27 million small businesses, exacerbating the problems brought on by a stagnant economy.....the financial crisis has dealt them a one-two punch, as big banks cut the credit card lines that many entrepreneurs were forced to lean on when a once-abundant supply of loans dried up.

As of April, 59 percent of America’s small firms relied on credit cards to help finance their day-to-day operations, up from 44 percent at the end of last year, according to the National Small Business Association.

The number of small-business owners who depend on a credit card to buy items as varied as paper clips and heavy equipment has climbed steadily over the years, from just 16 percent in 1993. Today, that group makes up 11 percent of the revenue for Visa and MasterCard, from 3 percent in 1998, according to David Robertson, who publishes The Nilson Report on the credit card industry.

But credit card terms have worsened sharply with the recession: three-quarters of small business said they have seen a large cut in limits over the last six months. That would not be so bad if other forms of credit were easily accessible. But banks and credit card companies, which opened their coffers when the economy was flourishing, are now pulling back from nearly everything that hints of risk.

“I’m a business in a bad time that wants to expand,” said Mr. [Louis] Licata, who added that he had been unable to get loans at Cleveland’s banks since the recession set in. Recently, the limit on three of the credit cards he uses for his law firm was slashed by a total of $60,000, he said, dousing plans to enlarge his business.

....small businesses were not included in the credit card reform legislation signed into law last month by President Obama, which limits excessive fees and interest rate increases on existing balances starting next year. A bipartisan coalition of senators is seeking to extend the legislation to small business...

Bankers say that credit card companies have no choice but to reduce credit to small businesses. Credit card delinquency among small-business owners is more than 12 percent, roughly two percentage points higher than credit card charge-offs among consumers...

Where small businesses had traditionally relied on bank loans, personal savings or relatives to help pay for their operations, credit cards provided additional flexibility and ease. Low introductory offers and rewards programs were icing on the cake....

Now, small businesses “are really having to scramble because often they don’t have the kind of flexibility they had before,” said Todd McCracken, president of the National Small Business Association. Further, credit scores of small businesses have been hurt as banks cut credit limits, making it even harder to get other types of credit...

Mrs.[Jeannie] Macone, the owner of the business in Florida selling equestrian-themed trinkets and home décor to retail outlets, said she had to retool her business in part because the credit lines on her cards were suddenly slashed, even though she maintained she paid her bills on time. Traditionally, she has relied on her credit cards to purchase inventory, which she then paid off as her customers settled their accounts.

But last fall, Ms. Macone, who took out a credit card with Advanta, opened her bill to find the company had raised her interest rate above 30 percent. A short time later, Advanta reduced her spending limit from $30,000 to $5,000. “When you have a business, it’s like, ‘$5,000? Please, what good is that?’ ”...

Ms. Macone said she has had to lay off three part-time workers who used to assemble orders for shipment in her warehouse, and cut the hours of two other employees. “I’m the warehouse help now — my husband and I,” she said. “I’m back out there picking orders. I haven’t picked orders in 10 years.”


The Wall Street Journal today discusses in a more general fashion credit card cutbacks and customer unhappiness. What is interesting about the piece is the subtext that customers believed they had a right to keep the same terms as long as they held up their end of the deal. That of course is NOT what that teeny print in the card agreement says; it reserves the right to change the deal at any time. Nor does the story bother pointing out the obvious (except by inference), that this sort of clamoring (as opposed to objections to terms that are borderline predatory) is very likely to go nowhere.

From the Wall Street Journal:

When Fred Wilharm decided to ditch his credit cards, he reached for the chainsaw.

The real-estate investor from Franklin, Tenn., sliced, drilled and shredded his credit cards in his YouTube video "The Tennessee Credit Card Massacre." Mr. Wilharm says he had just paid off $3,000 in credit-card debt after the card issuers jacked up his interest rates, and that making the video helped him deal with his anger.

His only regret about the video: "Explosives would have been nice."....

That's provoking a backlash. Mr. Wilharm is one of at least several dozen people who have posted an online video of a "plasectomy," a term credited to Dave Ramsey, a radio talk-show host with Fox Business News. Some depict cards being chopped with scissors, shredded in blenders or chewed by lawnmowers. Others show cards set on fire, or doused with liquid nitrogen and then shattered with a hammer....

"We have work to do," Ken Clayton, senior vice president of card policy for the American Bankers Association says. "We certainly hear the outcry from the public and policymakers that we need to get our house in order."


I guarantee the first line of defense will be a PR campaign.

banyon
07-15-2009, 03:12 PM
New positions:

Sold July GM puts (today) at a slight loss.

Bought:

TLK @2% of portfolio, BUKS @4% of portfolio, added to TLM, now 21% of portfolio, sold AIG after (grr) reverse split at $17.5 (down to $10-14 now) probably moderate loss on that fiasco.

Silock
07-15-2009, 05:21 PM
99.99% in cash right now.

Saul Good
07-15-2009, 05:26 PM
99.99% in cash right now.

.01% in powerball?

banyon
07-15-2009, 05:53 PM
99.99% in cash right now.

Not worried about the inflation (likely understated) report that came out today?

BucEyedPea
07-15-2009, 06:21 PM
99.99% in cash right now.

Pretty much myself. I took it out of stocks after 2000 and held since. I lost little compared to others. But I have bags of junk silver for survival if needed. A bunch of gold and other silver coins. Canadian mineral rights. A small apartment complex. My kid has blue chip stock since age 3 courtesy of grammy. WalMart is one.

Silock
07-15-2009, 06:31 PM
.01% in powerball?

Not exactly. Some of my tech investments more than doubled, so I took out what I invested in them and am letting the profits run as they may.

Silock
07-15-2009, 06:31 PM
Not worried about the inflation (likely understated) report that came out today?

No, because I'm not planning on staying in cash forever. Just until a few more things shake out. There's plenty of time to get back into the market and make a ton of money, even if it goes up 1000 points in the next month.

banyon
07-19-2009, 10:56 AM
http://static.seekingalpha.com/uploads/2009/7/19/98115-124798066743671-John-Lounsbury.jpg

Stewie
07-19-2009, 02:23 PM
The first week of November is huge in regards to the economy. It will separate the men from the boys. Good luck.

banyon
07-23-2009, 11:14 AM
Dow up pretty big today almost 2% so far.

HonestChieffan
07-23-2009, 12:34 PM
Its a function of the polls. As Obummer gets weaker the market reponds. Need to give this a name, write a book and get it sold quick.

Calcountry
07-23-2009, 12:39 PM
Its a function of the polls. As Obummer gets weaker the market reponds. Need to give this a name, write a book and get it sold quick.You think this pop is a result of a sigh of relief, that at least the foo has been slowed?

The "cheerleaders" on CNBC were reporting better than expected housing data.

My take, is the govt is re inflating the housing bubble, they have no other choice.

BigRedChief
07-23-2009, 12:51 PM
For shtsprayer
:cuss: Rich people!
/BRC

KC native
07-23-2009, 01:04 PM
Dow up pretty big today almost 2% so far.

Yup, on not much improvement. Theses recent better than expected earnings for financials are garbage. Goldman got $13 Billion from AIG. Their high frequency trading (as well as others HFT) led to big gains which aren't sustainable and beginning to be questioned. All in all I see this setting up like '07. There's really no justifiable reason for the market to be taking off like this but it is what it is.

KC native
07-23-2009, 01:06 PM
from bigpicture but not his work

http://www.ritholtz.com/blog/2009/07/not-many-stocks-powering-the-rally/
Not many stocks powering the rally
Email this post Print this post
By Michael Panzner - July 23rd, 2009, 11:00AM

Although the U.S. equity market has had an impressive run since the July 7th lows, what many investors might find less-than-reassuring is how narrow the advance has been.

In the Nasdaq-100 index, for example, one stock, Apple, accounts for nearly one-fifth of the 11-percent gain. It has also pulled much more than its already hefty weight in the index. Otherwise, just nine stocks are responsible for more than half the move in the technology-laden bellwether.

While that doesn’t mean the rally can’t carry on, it’s another reason to be cautious on reading too much into the advance we’ve seen so far.

>
Symbol Name 7/7/2009 Close 7/22/2009 Close Net Change in Points Net Change in % % of Overall Move in NDX % Weight in NDX Cumulative % of Overall Move

NDX Nasdaq 100 Stock Indx 1404.78 1565.00 160.22 11.41%

AAPL Apple Inc 135.40 156.74 21.34 15.76% 18.35% 13.97% 18.35%
QCOM Qualcomm Inc 43.68 48.45 4.77 10.92% 6.58% 6.83% 24.93%
MSFT Microsoft Corp 22.53 24.80 2.27 10.08% 4.81% 5.36%
CSCO Cisco Systems Inc 18.24 21.45 3.21 17.60% 4.57% 3.16%
INTC Intel Corp 16.25 19.14 2.89 17.78% 3.91% 2.65%
GOOG Google Inc-Cl A 396.63 427.69 31.06 7.83% 3.15% 4.44%
SBUX Starbucks Corp 12.97 17.39 4.42 34.08% 3.13% 1.23%
RIMM Research In Motion 66.36 73.50 7.14 10.76% 2.80% 2.93%
AMZN Amazon.Com Inc 75.63 88.79 13.16 17.40% 2.59% 1.80% 49.88%

http://www.ritholtz.com/blog/wp-content/uploads/2009/07/ndxbyconstituent.jpg

KC native
07-23-2009, 01:14 PM
Also, Rosenberg (formerly of Merrill now at Gluskin Shelf) throws some water on the green shoots theory. Sorry it's a pdf but it's a good one to read. You have to have an institutional investor type of email addy to sign up for his commentary but I will post some of these when they have exceptional points such as today.

banyon
08-02-2009, 05:39 PM
The first week of November is huge in regards to the economy. It will separate the men from the boys. Good luck.

Stewie, what were you contemplating here? I am curious.

Silock
08-02-2009, 11:38 PM
Cash, inverse ETFs or gold maybe.

I'm 100% in cash now.

Saul Good
08-05-2009, 01:05 PM
Dipping my toes back in...
So far today:

Bought 100 shares of GM @ $13.89 at opening.
Sold covered call on 100 shares (1 call) for December 14th with a strike price of $14.00 for $1.39 per share.

GE currently at $13.98 as of 1:00 Central

banyon
08-05-2009, 01:16 PM
Dipping my toes back in...
So far today:

Bought 100 shares of GM @ $13.89 at opening.
Sold covered call on 100 shares (1 call) for December 14th with a strike price of $14.00 for $1.39 per share.

GE currently at $13.98 as of 1:00 Central

That was a buy-write then for @ $12.50?

I like that play, but I think the IPO may take a big dip at some point. You may wind up selling another CC in December to get back in the green.

Hopefully it will work for you though.

I did a buy-write today on AXL and then it went up 48%. Haven't been called yet though. If I were the other guy, I think I would pull the trigger.

Saul Good
08-05-2009, 01:19 PM
Do you do a lot of these? What/who do you use?

banyon
08-05-2009, 01:34 PM
Do you do a lot of these? What/who do you use?

I use TradeKing. They are $4.95 per trade + 0.65 per option contract.

Currently, if I am "trading" a stock and not really "investing" then I will write covered calls because I feel there's going to be a pretty sideways market for a while and that's the best strategy I know to profit in such an environment.

I like their interface it's not too junked up and I can get to what I want to.

I think their stock screener could be a little better, but the customer service seems knowledgeable always answers quickly and trades are executed swiftly.

I think if you're into numbers and stock charting, thinkorswim is probably the best thing going, but it's $9 a trade IIRC. There are a couple of cheaper trading sites, sogotrade is $3 a trade, but I don't think it's been around to be very reliable yet and their interface is just too crappy. If you are going to trade any pennies though, then tradeking jacks on a per stock charge that can really cut into your profit and loss. Might be worth it to trade pennies (if that's your thing) on sogo or even TD America which doesn't surcharge pennies AFAIK.

if you want a referral for TK, let me know and I get a few bucks I think. I'll split it with you if you want 50/50.

Saul Good
08-05-2009, 01:37 PM
I use TradeKing. They are $4.95 per trade + 0.65 per option contract.

I like their interface it's not too junked up and I can get to what I want to.

I think their stock screener could be a little better, but the customer service seems knowledgeable always answers quickly and trades are executed swiftly.

I think if you're into numbers and stock charting, thinkorswim is probably the best thing going, but it's $9 a trade IIRC. There are a couple of cheaper trading sites, sogotrade is $3 a trade, but I don't think it's been around to be very reliable yet and their interface is just too crappy. If you are going to trade any pennies though, then tradeking jacks on a per stock charge that can really cut into your profit and loss. Might be worth it to trade pennies (if that's your thing) on sogo or even TD America which doesn't surcharge pennies AFAIK.

if you want a referral for TK, let me know and I get a few bucks I think. I'll split it with you if you want 50/50.
Cool. I'm using Ameritrade right now. I've got 500 free trades. After that, I might take you up. I don't plan on being very heavy for now. This is more of something to piddle around with. The commission is a bigger concern to me than the charts.

Just did a buy-write on Sprint @ $4.01 per share. Sold the option at a strike price of $4.00 for $0.20 with an expiration of August 21st.

KC native
08-12-2009, 11:11 AM
http://www.thestreet.com/story/10569021/1/kass-a-summary-of-my-bearishness.html


Kass: A Summary of My Bearishness
Doug Kass
08/10/09 - 12:00 PM EDT
This blog post originally appeared on RealMoney Silver on Aug. 10 at 7:40 a.m. EDT.

Let me summarize my market thoughts, as expressed on RealMoney Silver over the past two weeks.

As I see it, the bull market argument is that the U.S. is exiting the recession just like the many that preceded the current one. Consequently, corporate profits will exceed consensus forecasts in tandem with:

* the resumption of revenue growth;

* the record fiscal and monetary stimulation;

* an export-led Asian recovery; and

* the operating leverage associated with productivity gains achieved through draconian cost cuts and influenced by the benefits of wage deflation.

The bulls further argue in favor of Say's Law of Production (i.e., business drives consumer incomes and spending) and that the high-tax health and energy bills introduced by the President have been recently set back (as the Blue Dog Democrats and the liberal leadership are already battling).

The bear market argument that I have now embraced is that we are seeing nothing more than a second derivative recovery and that, owing to a temporary replenishment of inventories, the economy is only getting less worse (or getting better from a depressed level). The ingredients for a durable and self-sustaining recovery are missing as an economic double-dip grows more likely in a climate of corporate cost cuts, elevated jobless rates, wage deflation and continued pressure on personal consumption expenditures. Bears, such as myself, reject Say's Law of Production and view weakening consumer incomes and spending as a poor foundation and as inadequate drivers to improving business activity into 2010.

The economic downturn of 2007-2009 has already been different this time in scope and duration. For example, unlike the other post-depressions/recessions of the last century, we have already witnessed two consecutive quarterly drops in nominal GDP. As well, the 20-month-old recession has resulted in a near 4% drop in real GDP vs. drops of between 2.5% and 3.0% in the mid 1970s and early 1980s recessions. The U.S. economy came out quickly from those prior downturns, with recoveries to new peaks in economic activity taking only three or four quarters.

My view is that it will continue to be different this time as the typical self-sustaining economic recovery of the past will not be repeated for 10 important reasons.

1. Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.

2. Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.

3. The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.

4. The credit aftershock will continue to haunt the economy.

5. The effect of the Fed's monetarist experiment and its impact on investing and spending still remain uncertain.

6. While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.

7. Commercial real estate has only begun to enter a cyclical downturn.

8. While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.

9. Municipalities have historically provided economic stability -- no more.

10. Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.

"The balance of financial terror ... is a situation where we [in the U.S.] rely on the cost to others of not financing our current account deficit as assurance that financing will continue."

-- Lawrence Summers

Among the non-traditional headwinds listed above, a burgeoning fiscal deficit and the financial instability of our state and local municipalities are among two of the most significant challenges that face consumers, corporations and investors. Though the bulls generally agree with the presence of these intermediate-term challenges (especially the spiraling deficit and a nervous U.S. dollar stalemate), they generally dismiss them both over the short term, favoring the belief that the current upside surprises in earnings will dominate the market landscape in influence. I would argue that the aforementioned challenges are ever more predictable in consequence and will serve as a governor to further gains in market valuations.

An avalanche of spending by the public sector is now following an avalanche of spending by the private sector. In essence, we are (perhaps necessarily) fighting the slowdown with the same sort of incendiary kerosene that put us into the mess.

Profligate spending comes at a cost, a cost that we will experience sooner than later. It is only a matter of time before policy makers address the financing of this accumulated debt and the great reflation experiment of 2009 by raising taxes significantly. We have already witnessed the start of what is likely to become an avalanche of changing tax policy. New York City imposed its first sales tax increase in 35 years (rising from 8.375% to 8.875%), and, on the same day, the state of New Jersey imposed an additional tax hike on wholesale liquor distributors' sales of liquor and wine, which is sure to be passed on to the consumer. In Oakland, Calif., even the "high life" is being taxed as the city has recently passed a tax on marijuana sales and the state of California appears to be close in following Oakland's example.

This is just the start of a nascent and broad trend toward much higher taxes, a growth-impeding and P/E-diminishing secular development.

The market optimism that we are now experiencing in the expectation of a clean handoff of the baton of stimulation from the consumer (2000-2006) to the government (2008-????) might be more short-lived than many believe, as the price of stimulation, regardless of whether it's source is the private or public sector, holds the promise of being more of a growth-retardant. With the debt super-cycle continuing apace (but in a public sector context), the fragility and inherently unstable "balance of financial terror" argues for a not-so-benign and extremely volatile stock market future.

Unquestionably, the animal spirits have been in full force as shorts are scrambling to cover and many more are joining the ever more vocal and growing bullish chorus. But to me, the margin of safety is becoming ever more thin as the enemy of the rational buyer -- namely, optimism -- reaches new heights.

In summary, since a self-sustaining economic recovery appears doubtful, I do not believe that we have started a new bull market. Rather, it is more than likely that economic growth will disappoint in late 2009/early 2010 as the domestic economy confronts many of the emerging secular challenges discussed above.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.

At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.

KC native
08-12-2009, 11:13 AM
Some more of Rosie

Saul Good
08-12-2009, 06:45 PM
Sold 7 covered call options today (700 shares) of DFG for $0.45/share. Options expire 8/21/09 with a strike price of $0.45. Earned $315 total premium.

Stock price was $24.75 at the time of the sale and closed at $23.97. Timing was good, but maybe I should have just sold it outright.

banyon
08-12-2009, 06:55 PM
Sold 7 covered call options today (700 shares) of DFG for $0.45/share. Options expire 8/21/09 with a strike price of $0.45. Earned $315 total premium.

Stock price was $24.75 at the time of the sale and closed at $23.97. Timing was good, but maybe I should have just sold it outright.

Looks like its had a good run since July, just a guess, but it seems to be losing steam, I think you'll make it past expiration.

Saul Good
08-12-2009, 07:03 PM
Looks like its had a good run since July, just a guess, but it seems to be losing steam, I think you'll make it past expiration.

It seems like everyone has set triggers at $25. It's hit $25 several times and then immediately plunges. I think people caught on and lowered their triggers to $24.75 because that was where the plunge was today.

I'm pretty bullish on it long term, but the short term pattern has been so predictable that I think there is money to be made on both sides.

I think I'll just stick to selling calls with short expiration dates and see how much premium I can milk. I'll make sure that the strike price is high enough that I'll be happy taking the profits. As long as I can make enough premium to hedge against a moderate drop in price, it's a win.

How are your investments doing as of late?

banyon
08-12-2009, 08:39 PM
It seems like everyone has set triggers at $25. It's hit $25 several times and then immediately plunges. I think people caught on and lowered their triggers to $24.75 because that was where the plunge was today.

I'm pretty bullish on it long term, but the short term pattern has been so predictable that I think there is money to be made on both sides.

I think I'll just stick to selling calls with short expiration dates and see how much premium I can milk. I'll make sure that the strike price is high enough that I'll be happy taking the profits. As long as I can make enough premium to hedge against a moderate drop in price, it's a win.

I don't know much about that stock other than the chart i looked at, but I like your strategy in what I think willbe a sideways market.

How are your investments doing as of late?

Pretty well. My HMC had a good bump after the cash for clunkers data came back, and I bought ACAD and AXL, both of which shot through the roof last week. I too though have CC's on them, so my upside is limited. My longwait on FRE seems to have finally paid off. I'm about ready to cash that in.

Saul Good
08-13-2009, 07:43 PM
I don't know much about that stock other than the chart i looked at, but I like your strategy in what I think willbe a sideways market.



Pretty well. My HMC had a good bump after the cash for clunkers data came back, and I bought ACAD and AXL, both of which shot through the roof last week. I too though have CC's on them, so my upside is limited. My longwait on FRE seems to have finally paid off. I'm about ready to cash that in.

What did you buy AXL at? FRE is an interesting candidate for a straddle. I would guess that it either drops like a stone or takes off like a rocket in the next 6 months. I'm not smart enough to know which, but I don't think it's a $1.45 stock.

Saul Good
08-26-2009, 06:15 PM
Options on DFG expired without striking.
Sold 7 covered calls expiring on Oct 17th for $0.85 each. Strike price is $25.00. Current stock price is $23.08.

banyon
08-26-2009, 06:22 PM
What did you buy AXL at? FRE is an interesting candidate for a straddle. I would guess that it either drops like a stone or takes off like a rocket in the next 6 months. I'm not smart enough to know which, but I don't think it's a $1.45 stock.

AXL was at $2.40 when I bought it, but my calls were at $2.50. They will likely be excercised, but there was a giant ratio of premium to stock value of about 38% or so.

On the FRE, I would be scared to run a straddle, it's been all over the place. I think it's likely to come back down though, so a split-strike butterfly that leans on the low side would be the play i would run with pure options on it. As it is, since I own it outright, I sold more covered calls on it.

Saul Good
08-26-2009, 06:25 PM
AXL was at $2.40 when I bought it, but my calls were at $2.50. They will likely be excercised, but there was a giant ratio of premium to stock value of about 38% or so.

On the FRE, I would be scared to run a straddle, it's been all over the place. I think it's likely to come back down though, so a split-strike butterfly that leans on the low side would be the play i would run with pure options on it. As it is, since I own it outright, I sold more covered calls on it.

38% is huge, but you've got to have the stomach for something with that much volatility.

The entire reason that I would straddle FRE is the fact that it's been all over the place. It's a stock that I don't think is likely to stay near it's current price in the long-term. If it goes way up, you win. If it goes way down, you win.

banyon
08-26-2009, 06:40 PM
38% is huge, but you've got to have the stomach for something with that much volatility.

The entire reason that I would straddle FRE is the fact that it's been all over the place. It's a stock that I don't think is likely to stay near it's current price in the long-term. If it goes way up, you win. If it goes way down, you win.

You're right. It might be a good play, maybe 60 or 90 days?

Saul Good
08-26-2009, 07:04 PM
A $2.50 straddle expiring on Jan 16th could be purchased for $1.50. Do you think it moves below $1.00 or above $4.00 by then?

Saul Good
08-27-2009, 08:24 PM
FRE up 11% today. Hope you didn't get out a couple of weeks ago.

banyon
08-28-2009, 08:04 AM
FRE up 11% today. Hope you didn't get out a couple of weeks ago.

Nope. I doubled down. :D

Saul Good
08-28-2009, 06:18 PM
Nope. I doubled down. :D

Good call. I'm giving serious consideration to picking up some myself. I'm hoping that GE will go up enough to encourage an early exercise of covered call I sold. It's in the money already, but it's not high enough for someone to exercise it yet.

If/when it is exercised, I may put the profits into FRE. I think it's a big risk, but it seems worth the potential for the huge reward. I just wish I'd bought in at $0.50.

Saul Good
09-15-2009, 09:11 PM
Nope. I doubled down. :D

Not much movement lately. Still bullish?

banyon
09-29-2009, 06:18 PM
LOL, Cramer in the lightning round called Dryships (DRYS) the "kansas city chiefs of the shipping business".

Saul Good
10-06-2009, 07:55 PM
Bought 700 shares of FRE at $1.81.

banyon
10-07-2009, 09:50 AM
Bought 700 shares of FRE at $1.81.

Straight?

Saul Good
10-07-2009, 05:29 PM
Straight?

Yep. I bought this one purely for the upside. Hedging would have defeated the purpose.

Still holding yours?

banyon
10-07-2009, 05:32 PM
Yep. I bought this one purely for the upside. Hedging would have defeated the purpose.

Still holding yours?

Yeah. I've got a stagnant view though. I'm going to ride it for all the Covered calls I can and keep reinvesting those proceeds until it breaks.

Saul Good
10-07-2009, 05:43 PM
Yeah. I've got a stagnant view though. I'm going to ride it for all the Covered calls I can and keep reinvesting those proceeds until it breaks.

How many shares do you have? It seems like the transaction fees would eat most of your profits considering how small the premiums are.

banyon
10-07-2009, 06:57 PM
How many shares do you have? It seems like the transaction fees would eat most of your profits considering how small the premiums are.

About the same as you. I find the premiums as a pct of the stock price pretty damn good lately actually.

I sold my last set of CC's with 10-17 expiration with a $2 strike for an average of .22 a piece including transaction costs, which at the time of sale was 11% of the underlying stock. If I can make 11% every 45 days, I'll take it every time.

Saul Good
10-07-2009, 07:41 PM
About the same as you. I find the premiums as a pct of the stock price pretty damn good lately actually.

I sold my last set of CC's with 10-17 expiration with a $2 strike for an average of .22 a piece including transaction costs, which at the time of sale was 11% of the underlying stock. If I can make 11% every 45 days, I'll take it every time.

That math doesn't seem to add up. The price of the stock at the time would have been $2.00 exactly in order for $0.22 to equate to 11%, and that doesn't figure in any transaction fees.

Did you sell a cc that was already in the money?

banyon
10-08-2009, 09:34 AM
That math doesn't seem to add up. The price of the stock at the time would have been $2.00 exactly in order for $0.22 to equate to 11%, and that doesn't figure in any transaction fees.

Did you sell a cc that was already in the money?

Yes, the price was $1.95. How does the math not add up? The cc was selling for .27. My cost with transaction fees made it a credit of .22 ($6 in transaction fees). That seems to add up to me. it was definitely an OTM call.

Calcountry
10-08-2009, 11:58 AM
Well, the commodity market is on fire. Gold new record high, corn is going off, wheat up, copper up, etc.

Dollar tanking. :hmmm: Who would have thunk it? I mean, it's not like Obama came in and dropped a trillion dollars into the game on week one of his admin?

The dude is not stupid, he knew what this would do to the economy, and he doesn't care. He wants more dependent people to need him to give them health care, free money, etc.

USSA all the way! Not God bless America, God BLEEP America!

Obama gonna change it, mmmm mmmm mmmm.

banyon
10-08-2009, 02:30 PM
Well, the commodity market is on fire. Gold new record high, corn is going off, wheat up, copper up, etc.

Dollar tanking. :hmmm: Who would have thunk it? I mean, it's not like Obama came in and dropped a trillion dollars into the game on week one of his admin?

The dude is not stupid, he knew what this would do to the economy, and he doesn't care. He wants more dependent people to need him to give them health care, free money, etc.

USSA all the way! Not God bless America, God BLEEP America!

Obama gonna change it, mmmm mmmm mmmm.

Partisan lunacy aside,

Are you buying copper? How?

petegz28
10-08-2009, 02:35 PM
Partisan lunacy aside,

Are you buying copper? How?

Copper stocks?

banyon
10-08-2009, 02:39 PM
Copper stocks?

:shake: Not "how do you invest in copper", but "how do you think the best way to invest in copper would be"?

Understand now Pete?

petegz28
10-08-2009, 02:46 PM
:shake: Not "how do you invest in copper", but "how do you think the best way to invest in copper would be"?

Understand now Pete?

Copper stocks??

And banyon, don't be a dumbass. You asked how he was buying copper? Not, what is the best way?

The best way is to buy futures of course. Dur...

banyon
10-08-2009, 02:50 PM
Copper stocks??

And banyon, don't be a dumbass. You asked how he was buying copper? Not, what is the best way?

The best way is to buy futures of course. Dur...

Yes, how. Like which equities specifically. You're the one being a dumbass.

I'm not going to carry contango on copper when there are easier ways to do it without.

petegz28
10-08-2009, 02:53 PM
Yes, how. Like which equities specifically. You're the one being a dumbass.

I'm not going to carry contango on copper when there are easier ways to do it without.

Ok, keepo changing your tune, dickhead....this is what you said..

Originally Posted by banyon
Partisan lunacy aside,

Are you buying copper? How?

You have sense changed that to mean "what is the best way?" and now too "what specific securities?"


dumbass

Do you even know what the contango on copper futures is? You can buy stocks and avoid the contango. But then you take on all the other stuff that goes along with stocks, earnings, etc, etc. If you want something that moves based mostly on the price of copper by futures. Or buy options on the futures.

banyon
10-08-2009, 02:56 PM
Ok, keepo changing your tune, dickhead....this is what you said..



You hve conse changed that to mean "what is the best way?" and now too "what specific securities?"


dumbass

Did you not notice that this entire thread has been about specific investment strategies? Are you not able to recognize a pretty obvious context here?

petegz28
10-08-2009, 02:58 PM
Did you not notice that this entire thread has been about specific investment strategies? Are you not able to recognize a pretty obvious context here?

I said copper stocks. Stocks is a strategy. Keep spinning your tune, it is fun watching you squirm. :D

Did you ask which stocks? No, You asked "how?". Meaning any number of answers could be correct, stocks, futures, options, etc, etc.

banyon
10-08-2009, 02:59 PM
Do you even know what the contango on copper futures is? You can buy stocks and avoid the contango. But then you take on all the other stuff that goes along with stocks, earnings, etc, etc. If you want something that moves based mostly on the price of copper by futures. Or buy options on the futures.


I'm not comfortable about straight options without being pretty certain about the timing. But as you don't have a specific stock recommendation apparently, I don't think I require any more of your rather basic investment information.

petegz28
10-08-2009, 03:01 PM
I'm not comfortable about straight options without being pretty certain about the timing. But as you don't have a specific stock recommendation apparently, I don't think I require any more of your rather basic investment information.

Never claimed to have a specific stock. Truthfully if you really wanted to invest in copper then buy the futures and buy a put on the futures. It isn't that complicated.

Or, by the futures and buy an out of the money put and sell an out of the money call.

Saul Good
10-08-2009, 04:40 PM
Yes, the price was $1.95. How does the math not add up? The cc was selling for .27. My cost with transaction fees made it a credit of .22 ($6 in transaction fees). That seems to add up to me. it was definitely an OTM call.

I don't know what I was looking at. I think I was looking at it as if it was .22 before you took the transaction fees into account.

banyon
10-08-2009, 10:26 PM
I don't know what I was looking at. I think I was looking at it as if it was .22 before you took the transaction fees into account.

No big thing.

I guess we'll get to see how our respective FRE bets play out in a couple of months. Hopefully we both wind up in the black.

Saul Good
10-09-2009, 09:18 AM
No big thing. I guess we'll get to see how our respective FRE bets play out in a couple of months. Hopefully we both wind up in the black.I like your position. If I could have gotten that much premium, I'd have sold the calls, too.

Saul Good
10-19-2009, 09:49 PM
Options on DFG expired without striking.
Sold 7 covered calls expiring on Oct 17th for $0.85 each. Strike price is $25.00. Current stock price is $23.08.

Options on DGE expired without striking. Sold 7 covered calls expiring on Nov 20th for $0.95 each. Strike price is $25.00. Current stock price is $23.40. I've been able to milk $2.25 in premium since early August for $1,575 in total premium. The price has ranged from a high of $24.61 to a low of $20.89. (The price dropped from the high to the low in 2 days due to a deal with Barclays to dilute and sell at $21.00 in order to raise capital. Wish I could have somehow known that was coming.)

Either way, I've locked in 11% of the value of the stock over the course of 3.5 months (early August through November 20th.) I feel pretty good about that in a sideways market given that this is my largest single holding. Will probably keep riding it in order to milk as much premium as possible, but I also wouldn't cry if it struck. At that point, I'd probably pull back out of the market and knock out a nice chunk of my mortgage.

banyon
10-20-2009, 10:43 AM
FRE getting hammered, huh?

Ride it out though. I'm glad I sold those calls now.

Saul Good
12-02-2009, 09:13 PM
Options on DGE expired without striking. Sold 7 covered calls expiring on Nov 20th for $0.95 each. Strike price is $25.00. Current stock price is $23.40. I've been able to milk $2.25 in premium since early August for $1,575 in total premium. The price has ranged from a high of $24.61 to a low of $20.89. (The price dropped from the high to the low in 2 days due to a deal with Barclays to dilute and sell at $21.00 in order to raise capital. Wish I could have somehow known that was coming.)

Either way, I've locked in 11% of the value of the stock over the course of 3.5 months (early August through November 20th.) I feel pretty good about that in a sideways market given that this is my largest single holding. Will probably keep riding it in order to milk as much premium as possible, but I also wouldn't cry if it struck. At that point, I'd probably pull back out of the market and knock out a nice chunk of my mortgage.

Previous calls on DFG expired without striking. Sold 7 covered calls today expiring on Jan 15th for $1.20 each. Strike price is $22.50. Current stock price is $22.37.

Basically been a sideways stock with a pretty decent premium on the calls. I've now taken $3.45 per share in premiums. First move was in August, and the current position expires in mid-January. 15.4% return so far over the course of 5 months.

Saul Good
12-09-2009, 08:40 PM
Sold S at $4.15. Purchased on 8/5 for $4.01. I'm going to watch it for a while. If it gets back down below $3.50, I'll probably buy it back.

Silock
12-09-2009, 08:47 PM
AMZN here. This quarter is going to be HUGE for them.

Saul Good
12-10-2009, 05:51 PM
AMZN here. This quarter is going to be HUGE for them.

Don't you think that it's already priced into the stock? The holidays are at the same time every year.

Silock
12-10-2009, 11:10 PM
Don't you think that it's already priced into the stock? The holidays are at the same time every year.

Nope. And while the holidays may be at the same time, shopping through Amazon increased by a large margin. That doesn't necessarily mean that the stock price will go up, but they will have a great quarter.

banyon
12-11-2009, 09:32 AM
Sold S at $4.15. Purchased on 8/5 for $4.01. I'm going to watch it for a while. If it gets back down below $3.50, I'll probably buy it back.

That sounds like a good strategy. I considered playing around with S, but don't trust it enough. I think it will trend as you are predicting though.

Saul Good
12-11-2009, 10:06 AM
That sounds like a good strategy. I considered playing around with S, but don't trust it enough. I think it will trend as you are predicting though.

It's been bouncing back and forth between $3.50 and $4.00. No sense in fighting a trend, I figure.

Saul Good
12-22-2009, 07:18 PM
My covered call on GE was exercised. Strike price was $14.00.

petegz28
12-22-2009, 07:51 PM
It's been bouncing back and forth between $3.50 and $4.00. No sense in fighting a trend, I figure.

Sprint is not going to have good 4Q info. They may have negligable net adds but they will probably loose more post-paid customers in 09 than they did in 08. Plus Palm sales have sucked. And don't be surprised if Palm leaves Sprint altogether leaving basically HTC as Sprint's main line of phones.

Saul Good
12-22-2009, 08:03 PM
Sprint is not going to have good 4Q info. They may have negligable net adds but they will probably loose more post-paid customers in 09 than they did in 08. Plus Palm sales have sucked. And don't be surprised if Palm leaves Sprint altogether leaving basically HTC as Sprint's main line of phones.

Once I heard that they let you go, I sold. It was a bad call on their part. They can't see the forest through the tree.

petegz28
12-22-2009, 08:08 PM
Once I heard that they let you go, I sold. It was a bad call on their part. They can't see the forest through the tree.

ROFL

:thumb:

HonestChieffan
12-23-2009, 09:20 AM
After my last week visit to the Sprint store I wish to all hell I didnt have to do business with them.

On the other hand it helps me relate to many people who voted for Obama. Only they have a 4 year no get out contrct for bad service.

petegz28
12-23-2009, 06:35 PM
Stay tuned next week. Sounds like some big news is coming out of Sprint and it doesn't look to be very good.

petegz28
12-28-2009, 09:33 AM
The SEC sent an inquiry to Sprint requesting information on its dealings with Clearwire. Specifically, they want to know if Sprint intentionally engineered the Clearwire deal in a way so they would not have to report Clearwire results on Sprint’s financial statements. Though a majority owner of Clearwire, Sprint technically does not have boardroom control (they have 6 of 13 permanent board members and they appoint an “independent” member). By structuring the deal in such a way, they do not need to report Clearwire losses.

Ironically, it’s Clearwire members who apparently instigated the inquiry (speculation). It is no secret that there are clear differences between Sprint and CLWR board members, and CLWR is frustrated that Sprint is dominating the decision making. (sound familiar? See Sprint Nextel- partnership of equals).

Sprint execs are hustling to come up with a solution to avoid an official investigation. The SEC will want Sprint to restate its financial reports to show Clearwire losses, something Sprint is doing everything to avoid. One option would be for Sprint to “buy” Clearwire (not sure how this would work, since they already own 56% of the company). Another option is for Sprint to write down the $3-4 billion of Clearwire assets in the hope the SEC will accept this as a satisfactory resolution. Either option has huge, if not fatal risks.

KC native
12-28-2009, 10:02 AM
The SEC sent an inquiry to Sprint requesting information on its dealings with Clearwire. Specifically, they want to know if Sprint intentionally engineered the Clearwire deal in a way so they would not have to report Clearwire results on Sprint’s financial statements. Though a majority owner of Clearwire, Sprint technically does not have boardroom control (they have 6 of 13 permanent board members and they appoint an “independent” member). By structuring the deal in such a way, they do not need to report Clearwire losses.

Ironically, it’s Clearwire members who apparently instigated the inquiry (speculation). It is no secret that there are clear differences between Sprint and CLWR board members, and CLWR is frustrated that Sprint is dominating the decision making. (sound familiar? See Sprint Nextel- partnership of equals).

Sprint execs are hustling to come up with a solution to avoid an official investigation. The SEC will want Sprint to restate its financial reports to show Clearwire losses, something Sprint is doing everything to avoid. One option would be for Sprint to “buy” Clearwire (not sure how this would work, since they already own 56% of the company). Another option is for Sprint to write down the $3-4 billion of Clearwire assets in the hope the SEC will accept this as a satisfactory resolution. Either option has huge, if not fatal risks.

Awesome, major red flag if any company does this. It's the whole "we don't have control so we don't have to consolidate" nonsense. I'm surprised Sprint's auditors signed off on this as companies usually only try this if they have much less of an ownership %.

petegz28
12-28-2009, 10:16 AM
Awesome, major red flag if any company does this. It's the whole "we don't have control so we don't have to consolidate" nonsense. I'm surprised Sprint's auditors signed off on this as companies usually only try this if they have much less of an ownership %.

I find it funny that a company who owns 56% of another company claims they have no control. That is some fuzzy fucking math right there.

KC native
12-28-2009, 10:32 AM
I find it funny that a company who owns 56% of another company claims they have no control. That is some fuzzy ****ing math right there.

Yea, the problem is there isn't a brightline (and justifiably so). Usually when a company owns more than 40% they are consolidated on the financial statements because there is an assumed "control" factor. Sprint saying that they don't have control while being able to nominate about half the board doesn't pass the smell test.

Do you know who their auditor is?

petegz28
12-28-2009, 01:42 PM
Yea, the problem is there isn't a brightline (and justifiably so). Usually when a company owns more than 40% they are consolidated on the financial statements because there is an assumed "control" factor. Sprint saying that they don't have control while being able to nominate about half the board doesn't pass the smell test.

Do you know who their auditor is?

No, I don't.

banyon
03-18-2010, 11:27 PM
New positions:

BUKS (Dodge City Casino)

No one knows about this penny stock. They were an aviation company, but the casino has doubled their revenue (http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_B/threadview?m=te&bn=40409&tid=228&mid=228&tof=2&frt=2#228) in the most recent report. once people figure this out, this could go from .40 to 4.00.

DHI

best of the homebuilders. They are beaten down. remember it's buy low, right?

TLAB
Best growth smartphone bandwidth play. Just instituted dividend, a confident sign.

FNFG

Good regional bank with room to grow and buy up other bad banks and gain market share. ok but not great dividend.

petegz28
03-18-2010, 11:29 PM
New positions:

BUKS (Dodge City Casino)

No one knows about this penny stock. They were an aviation company, but the casino has doubled their revenue (http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_B/threadview?m=te&bn=40409&tid=228&mid=228&tof=2&frt=2#228) in the most recent report. once people figure this out, this could go from .40 to 4.00.

DHI

best of the homebuilders. They are beaten down. remember it's buy low, right?

TLAB
Best growth smartphone bandwidth play. Just instituted dividend, a confident sign.

FNFG

Good regional bank with room to grow and buy up other bad banks and gain market share. ok but not great dividend.

Thanks for the info

banyon
03-23-2010, 10:33 AM
Anyone make any money on the Health Care stocks? I was too risk averse to gain from the uncertainty. I should've heeded Buffet's adage.

By the tone around here, they were supposed to go in the toilet, what happened?

Also, I am buying Oracle Jun 28 Calls ahead of their March 25 earnings. Mike Khou sounded pretty confident and the numbers look good.

HonestChieffan
03-23-2010, 10:35 AM
Looking hard at LLY

banyon
03-23-2010, 10:43 AM
Looking hard at LLY

That is one I have on my radar too. The yield is great, and with this bill out of the way, it ought to be clear sailing for a while I would think.

HonestChieffan
03-23-2010, 10:43 AM
great dividend history. at this price its a good buy

banyon
05-05-2010, 02:27 PM
A litte risky, but I bought BP at $47.90, thinking it was oversold.

I am going to capture the dividend today and exit after it gets back maybe another buck or two.

Saul Good
05-05-2010, 07:39 PM
A litte risky, but I bought BP at $47.90, thinking it was oversold.

I am going to capture the dividend today and exit after it gets back maybe another buck or two.

I like that play.

petegz28
05-05-2010, 08:50 PM
A litte risky, but I bought BP at $47.90, thinking it was oversold.

I am going to capture the dividend today and exit after it gets back maybe another buck or two.

It is oversold. Resistance is at $52.00. Looks like it hit it today and bounced off.

Silock
05-05-2010, 11:31 PM
I wanted to invest in BP, but I have no more money to play with ATM. It's all tied up in other investments but for about $1k.

banyon
05-06-2010, 08:07 PM
Sold the BP at $51 before the craziness this afternoon hit. Dividend collected, mission accomplished (barely).

Silock
05-06-2010, 08:12 PM
Heh... I bet it goes up quite a bit tomorrow.

petegz28
05-06-2010, 08:20 PM
Heh... I bet it goes up quite a bit tomorrow.

Market is probably going to be down tomorrow from all the margin calls that will result from today.

Silock
05-06-2010, 11:49 PM
Maybe. You never know.

petegz28
05-06-2010, 11:51 PM
Maybe. You never know.

Futures are up slightly right now. I would expect if we get a good employment report we will see some recovery buying but then some selling into the close.

banyon
05-07-2010, 09:31 AM
Heh... I bet it goes up quite a bit tomorrow.

Down to $48.18.

I wouldn't buy it back now. It will languish with all the uncertainty about liability I think (like Goldman).

I just knew there would be an initial resistance and a bounce.

RedNFeisty
05-07-2010, 09:37 AM
I am really thinking of investing come July. Any advice for a beginner? I have been watching Mad Money on CNBC also, Krammer (sp) cracks me up and I can understand what he is saying instead of it being Greek to me...lol...I won't have but a grand or so to start with.

KC native
05-07-2010, 04:50 PM
I am really thinking of investing come July. Any advice for a beginner? I have been watching Mad Money on CNBC also, Krammer (sp) cracks me up and I can understand what he is saying instead of it being Greek to me...lol...I won't have but a grand or so to start with.

Don't do what Cramer says. You will lose money. The guy is good for giving insight into wall street practices but other than that he is worthless.

banyon
05-07-2010, 05:06 PM
Don't do what Cramer says. You will lose money. The guy is good for giving insight into wall street practices but other than that he is worthless.

I disagree with this assessment.

While I don't take his views on any particular stock very seriously, his show has pretty useful information on general trends, particularly with the CEO interviews he gets. (the "Lightning Round", in particular, is patently silly, many times he is just making a hazardous guess).

The book "Getting Back to Even" is a pretty good guide for novices. I like Seeking Alpha though for more detailed info.

Cramer is kind of like Wikipedia. He's a useful starting point, but you wouldn't want to use it as your final and authoritative source.

Silock
05-07-2010, 05:10 PM
Seeking Alpha is filled with a ton of alarmist bullshit. There doesn't seem to be any middle ground. Everyone is either a permabull or a permabear.

Don't get me wrong -- I still read the site. You just have to take everything with a grain of salt. Same with Cramer. He makes good calls and bad, just like everyone else.

No one here is perfect with their investing.

KC native
05-07-2010, 05:10 PM
I disagree with this assessment.

While I don't take his views on any particular stock very seriously, his show has pretty useful information on general trends, particularly with the CEO interviews he gets. (the "Lightning Round", in particular, is patently silly, many times he is just making a hazardous guess).

The book "Getting Back to Even" is a pretty good guide for novices. I like Seeking Alpha though for more detailed info.

Cramer is kind of like Wikipedia. He's a useful starting point, but you wouldn't want to use it as your final and authoritative source.

I disagree with this. Cramer's interviews are softball slow pitch crap. The conference calls with analysts and CEOs/CFOs who know the businesses well are by far more informative.

Like I said, he's great for bringing an understanding (if you don't have one) of how wall street works and their practices but outside of that he's worthless.

I will say I haven't read his books because by the time I was really interested in investing I was past his level of commentary.

banyon
05-26-2010, 01:07 PM
So, is anybody wiped out?

I am down about 12-14%. I didn't get out while the getting was good, but i think we're ready for the reversal now and I bought some oil companies (SU and STO) (not BP) at the bottom.

petegz28
05-26-2010, 01:47 PM
So, is anybody wiped out?

I am down about 12-14%. I didn't get out while the getting was good, but i think we're ready for the reversal now and I bought some oil companies (SU and STO) (not BP) at the bottom.

Wiped out? No. I actually took what little profit I had left on TLAB today.

banyon
05-26-2010, 02:08 PM
Wiped out? No. I actually took what little profit I had left on TLAB today.

Today?

Dang, I was actually hoping for a pullback to buy more. I think it is set to bust out. Even on these big down days for tech, TLAB hasn't seen much of a decline.

petegz28
05-26-2010, 03:22 PM
Today?

Dang, I was actually hoping for a pullback to buy more. I think it is set to bust out. Even on these big down days for tech, TLAB hasn't seen much of a decline.

It looks like it is putting in a channel. I will wait for a breakout. OR for the market to turn.

I'm not liking the charts on the market right now. However today may have been an indicator of some consolidation to begin. But longer term, weekly and monthly charts, we are looking like there is some more down side ahead.

Silock
05-26-2010, 05:33 PM
But longer term, weekly and monthly charts, we are looking like there is some more down side ahead.

It's been like that for a LOOOOOOOONG time, but that didn't stop it from going back up.

This market is so crazy. It's even more impossible to predict than usual.

HonestChieffan
05-26-2010, 05:45 PM
If you are going to Europe this summer looks like buying euros may be smart now.

petegz28
05-26-2010, 08:19 PM
It's been like that for a LOOOOOOOONG time, but that didn't stop it from going back up.

This market is so crazy. It's even more impossible to predict than usual.

Just wait...this summer is going to very choppy. Moreso than usual I am suspecting. Summers are always more volatile cause there are less people trading.

And a bunch of people right now are wishing they sold in May and went away, as the saying goes.

petegz28
05-26-2010, 08:22 PM
If you are going to Europe this summer looks like buying euros may be smart now.

I'm not much on currencies, but I am expecting the Euro to keep going down against the $ right now.

alnorth
05-26-2010, 10:44 PM
So, is anybody wiped out?

I am down about 12-14%. I didn't get out while the getting was good, but i think we're ready for the reversal now and I bought some oil companies (SU and STO) (not BP) at the bottom.

I'm hoping the market craters. I'm young and would love to buy a ton of shares cheap from solid profitable companies. (ie I'm a hard-core buy-and-holder) Bring on the blue-light special on stocks. I want panic, I want shouting, I want people jumping off buildings, sell it all because I'm buying!

alnorth
05-26-2010, 10:50 PM
I am really thinking of investing come July. Any advice for a beginner? I have been watching Mad Money on CNBC also, Krammer (sp) cracks me up and I can understand what he is saying instead of it being Greek to me...lol...I won't have but a grand or so to start with.

my 2 pennies. Unless you are a pro or have way too much time on your hands dont try to play the game.

Buy! sell! The market's too high, I'll short the market! It'stoolowI'mgettingbackinohwaititblippeduptoohightimetosell! Why am I paying so much in transaction fees? Oh wait, time to buy again! weee!

Warren Buffett is right. Buy solid dependable companies who pay decent dividends, and then hold on to them. Unless something horrible happens to that company, don't pay so much attention to the news. Think about using mutual funds (mostly value funds) to easily get diversified into hundreds of stocks if you want less risk. If you are young, a down year is good news, it means stocks are on sale and you get to buy on the cheap because you have plenty of time to wait for them to come back, unlike the older folks who have to be careful. I'm in my early 30's and personally loving the carnage. When I lost like 35-40% in my 401k last year, while my idiot co-workers were going to cash I upped my contribution because I saw it as a huge stock sale. They were all out when the market came back. Since I dont need the money for 30+ years anyway, I really don't worry about the swings.

I don't buy anything unless I intend to own the stock for 25+ years. If you dont understand what they do, how they make money, or how they will still be relevant in 25 years, forget it. (obviously if something drastic happens I'll re-evaluate what I have, but going in my intention is the long, long, long haul.)

petegz28
05-26-2010, 11:03 PM
my 2 pennies. Unless you are a pro or have way too much time on your hands dont try to play the game.

Buy! sell! The market's too high, I'll short the market! It'stoolowI'mgettingbackinohwaititblippeduptoohightimetosell! Why am I paying so much in transaction fees? Oh wait, time to buy again! weee!

Warren Buffett is right. Buy solid dependable companies who pay decent dividends, and then hold on to them. Unless something horrible happens to that company, don't pay so much attention to the news. Think about using mutual funds (mostly value funds) to easily get diversified into hundreds of stocks if you want less risk. If you are young, a down year is good news, it means stocks are on sale and you get to buy on the cheap because you have plenty of time to wait for them to come back, unlike the older folks who have to be careful. I'm in my early 30's and personally loving the carnage. When I lost like 35-40% in my 401k last year, while my idiot co-workers were going to cash I upped my contribution because I saw it as a huge stock sale. They were all out when the market came back. Since I dont need the money for 30+ years anyway, I really don't worry about the swings.

I don't buy anything unless I intend to own the stock for 25+ years. If you dont understand what they do, how they make money, or how they will still be relevant in 25 years, forget it. (obviously if something drastic happens I'll re-evaluate what I have, but going in my intention is the long, long, long haul.)

This is good advice. One of the biggest problems I see with new investors is they have a trader's mentality. Investing is generaly boring. No constant buying and selling like you see on TV. All of my investments are in mutual funds. I will trade stocks and options but my long term investments will always be in mutual funds.

alnorth
05-26-2010, 11:08 PM
This is good advice. One of the biggest problems I see with new investors is they have a trader's mentality. Investing is generaly boring. No constant buying and selling like you see on TV. All of my investments are in mutual funds. I will trade stocks and options but my long term investments will always be in mutual funds.

I might have been a bit too harsh on "traders". I was thinking of amateurs. There are people who aren't necessarily wall street guys and who actually are good at it. It's not completely random. If you spend a LOT of time and a LOT of energy on it, you can figure out some pricing anomaly that most of the world doesnt see yet and take advantage.

Its not for me though. It looks boring, you are wrong a lot, so like being a professional blackjack card-counter you got to spend a ton of time and withstand the volatility to make a little money in the long run. Sounds like a part-time job that doesn't pay much per hour to me. I respect those who actually can do it well without losing everything, but I prefer to spend my free time on vacations, video games, and with friends.

I'll just dump my 401k money on the 9 mutual funds I got in my 401k, and my play money on the same old 5 or 6 boring dividend-paying stocks I've been buying for a while.

Silock
09-21-2010, 01:41 AM
So, how's everyone doing?

AAPL and AMZN are killing it for me right now.

banyon
09-26-2010, 09:40 PM
So, how's everyone doing?

AAPL and AMZN are killing it for me right now.

Man I'm gunshy about AAPL. The market cap is so large now.

But everything is up, so I am good.

I like some new etf's, and I normally don't like ETF's at all.

SCIF, BRAQ, and ECON

All emerging market consumer based etfs.

Assuming the fees aren't stupid, then it's a great area for expansion and there aren't a lot of good ADR's to seize the opportunity yet.

banyon
12-27-2010, 09:22 PM
I sense a big pullback to start the year.

The Shanghai and the Chinese interest rate hike leading the way I think.

What's everyone else into?

I sold 1/2 into cash for right now. Keeping some long term energy dividend stocks like TOT, STO.

Saul Good
12-27-2010, 09:33 PM
I sense a big pullback to start the year.

The Shanghai and the Chinese interest rate hike leading the way I think.

What's everyone else into?

I sold 1/2 into cash for right now. Keeping some long term energy dividend stocks like TOT, STO.

I sold everything about 3 months ago. I left some money on the table, but I'm okay with taking those profits. I just have an uneasy feeling that the numbers we've been seeing aren't "real".

petegz28
12-27-2010, 09:35 PM
I sense a big pullback to start the year.

The Shanghai and the Chinese interest rate hike leading the way I think.

What's everyone else into?

I sold 1/2 into cash for right now. Keeping some long term energy dividend stocks like TOT, STO.

I'm getting a little nervous too. The A\D line is not confirming the latest breakout in the market.

banyon
12-27-2010, 09:36 PM
I sold everything about 3 months ago. I left some money on the table, but I'm okay with taking those profits. I just have an uneasy feeling that the numbers we've been seeing aren't "real".

probably not a bad move.

I've been hearing the phrase 'recession fatigue" thrown around a lot to explain the last rally, and I think it's as accurate as anything else I've heard.

Saul Good
12-28-2010, 02:32 PM
probably not a bad move.

I've been hearing the phrase 'recession fatigue" thrown around a lot to explain the last rally, and I think it's as accurate as anything else I've heard.

I haven't heard that term, but it seems like a valid concept.

Stewie
12-28-2010, 02:51 PM
QE2 focuses money, just like QE1 did.

Crude oil is lagging far behind, that's why you're hearing $5 gasoline in a year. Here are projections for QE2, based on QE1.

Crude Oil..........+80%................$158
HUI (Gold miners = gold leverage)................+75%.................998
S&P500.............+62%................1969
DOW................+59%...............17951
Silver Metal (silver miners are rocketing).............+45%.................$40
Gold...............+29%...............$1819

"They" said QE2 was $600 billion. What a joke. It's $1.1 trillion and going to rise.

banyon
09-10-2011, 08:46 AM
So where are people?

Cash?
Gold?
Treasuries?
Emerging?

I'm about 60% Treasuries and have been since April which has been a nice bump.

The rest is in Emerging or a couple of strategic put spreads.