Tuesday, October 6, 2009
We're moving!
The new URL for this blog will be www.stocksforallseasons.com. I've launched a new Wordpress blog. This is the first step in a complete re-design.
Thursday, October 1, 2009
A few interesting links
Is the market going to re-test the March lows?
Jack Hough let us know Where to look for a clue on earnings .
Are the bears turning bullish?
Did the Thin White Duke cause the crash?
Everyone's talking about the New Normal.
Marc Faber is at it again.
Do you have the stones to buy value this deep?
Jack Hough let us know Where to look for a clue on earnings .
Are the bears turning bullish?
Did the Thin White Duke cause the crash?
Everyone's talking about the New Normal.
Marc Faber is at it again.
Do you have the stones to buy value this deep?
Tuesday, September 29, 2009
Are you okay with volatility? Really? You sure?
One of the things that bedevils all investors is volatility. Usually, we are trying to figure out how to take advantage of it. Investors, particularly value investors, are always claiming to not care about it. It's casually dismissed as noise. It usually is. Still, it's hard to call it noise when your portfolio drops 20%.
I hate volatility. I dread it except when I'm long and it's to the upside. I think that there are a lot out people out there who would agree with me. I expect volatility, and try to use it get lower my cost basis. I also use it to get out of positions, losing and winning ones.
I hate volatility. I dread it except when I'm long and it's to the upside. I think that there are a lot out people out there who would agree with me. I expect volatility, and try to use it get lower my cost basis. I also use it to get out of positions, losing and winning ones.
Monday, September 28, 2009
What to do when you see a list of hurting companies
The Business Insider recently posted a list of 10 big companies veering towards bankruptcy. Not surprisingly consumer discretionary companies dominate the list. Without a doubt, all of these companies have serious problems. Should you go out and short these companies? No. Absolutely not.
I'm not saying that none of these companies will file for bankruptcy, but I suspect that more will avoid that fate than suffer it. I think that a lot of these companies would make solid takeover targets. I'm pretty sure that someone would want to buy Sprint-Nextel or Interpublic Group. These companies have large customer bases and brands that have real value. While someone could let them fall into bankruptcy and then harvest the good organs, I think that doing that would cause undue harm to the brand.
So should you do with a list like this? I recommend that you use it as an opportunity to learn more about why businesses rise and fall. Try to find out what you could have noticed months ago and would've allowed you to short the stock months ago. You can also use lists like this to find good companies. Find out who these companies' competitors are. Maybe they've taken market share from the companies teetering on the brink of bankruptcy. They might be good investments.
A more speculative approach would be to examine each company and determine which one would most likely survive and then go long. The stock is probably trading at or near its 52-week low. Don't commit too much of your capital to the position, after all, this company might go bankrupt.
I'm not saying that none of these companies will file for bankruptcy, but I suspect that more will avoid that fate than suffer it. I think that a lot of these companies would make solid takeover targets. I'm pretty sure that someone would want to buy Sprint-Nextel or Interpublic Group. These companies have large customer bases and brands that have real value. While someone could let them fall into bankruptcy and then harvest the good organs, I think that doing that would cause undue harm to the brand.
So should you do with a list like this? I recommend that you use it as an opportunity to learn more about why businesses rise and fall. Try to find out what you could have noticed months ago and would've allowed you to short the stock months ago. You can also use lists like this to find good companies. Find out who these companies' competitors are. Maybe they've taken market share from the companies teetering on the brink of bankruptcy. They might be good investments.
A more speculative approach would be to examine each company and determine which one would most likely survive and then go long. The stock is probably trading at or near its 52-week low. Don't commit too much of your capital to the position, after all, this company might go bankrupt.
Friday, September 25, 2009
Revisiting E-Trade
As readers of this blog know, I've been stalking E*Trade for some time. I first wrote about this stock back in November of 2007. It looked like a baby being thrown out with the bathwater. By my reckoning, there was still a vibrant brokerage business underneath the mortgage missteps. The stock has been a lot of places since then, all of them much lower than when I first started establishing a position.
It now seems that others have rallied to my cause. There are articles all over the web that E*Trade is going to get a bid from one of it's healthier competitors like Schwab or TD Ameritrade. Why? The same reasons I outlined nearly two years ago. The brokerage business is really sound(over 2 million accounts) and growing. They are slowly but steadily reigning in the mortgage mess at E*Trade Bank. Some are predicting that by year's end, someone will buy it. I can't dictate a timeline like that, but I would have to agree. Why wouldn't you want to acquire on the cheap (people have speculated a price of $3 or $4 per share) one of the most recognizable names in online stock brokerages?
This morning, I took a position in the October 2 calls. I got in a a price of 10 cents per call. At one point this morning, it was 5 cents. At another point, they were going for 15 cents. The volume in these calls has exploded recently, so a lot of people are expecting something to happen soon.
My plan for this trade is simple. I'm going to cash out as soon as the call is in the money. That means I'm betting that within the next 3 1/2 weeks, the stock will pick up about a quarter.
Only time will tell.
It now seems that others have rallied to my cause. There are articles all over the web that E*Trade is going to get a bid from one of it's healthier competitors like Schwab or TD Ameritrade. Why? The same reasons I outlined nearly two years ago. The brokerage business is really sound(over 2 million accounts) and growing. They are slowly but steadily reigning in the mortgage mess at E*Trade Bank. Some are predicting that by year's end, someone will buy it. I can't dictate a timeline like that, but I would have to agree. Why wouldn't you want to acquire on the cheap (people have speculated a price of $3 or $4 per share) one of the most recognizable names in online stock brokerages?
This morning, I took a position in the October 2 calls. I got in a a price of 10 cents per call. At one point this morning, it was 5 cents. At another point, they were going for 15 cents. The volume in these calls has exploded recently, so a lot of people are expecting something to happen soon.
My plan for this trade is simple. I'm going to cash out as soon as the call is in the money. That means I'm betting that within the next 3 1/2 weeks, the stock will pick up about a quarter.
Only time will tell.
Thursday, September 24, 2009
Still more on CCTR
China Crescent Enterprises is like a girl I dated that hurt me, but I'm still fascinated by her. I can't help but be astonished by how cheap the company's being valued. I read the press releases and I'm leery. They're just way too positive. I am willing to miss out on a 100+ bagger here until I get a better sense of the company. I'm waiting for signs that an uplisting is afoot. What are those signs?
One, in order to list on the AMEX or NASDAQ, you need a share price of $3 and $4 respectively. So OTC companies will usually do a reverse split in order to meet those thresholds. Secondly, if the company incorporates in the U.S., that's a pretty good indicator that they're considering an uplisting. Third, are they going to be presenting at major investment conferences like Rodman & Renshaw? Once plans have been announced, follow along to make sure that the plan is executed. It's actually very rare for a stock to go from the OTC or OTCBB to one of the big exchanges. Lots of companies claim that it's going to happen, but it usually doesn't materialize.
One, in order to list on the AMEX or NASDAQ, you need a share price of $3 and $4 respectively. So OTC companies will usually do a reverse split in order to meet those thresholds. Secondly, if the company incorporates in the U.S., that's a pretty good indicator that they're considering an uplisting. Third, are they going to be presenting at major investment conferences like Rodman & Renshaw? Once plans have been announced, follow along to make sure that the plan is executed. It's actually very rare for a stock to go from the OTC or OTCBB to one of the big exchanges. Lots of companies claim that it's going to happen, but it usually doesn't materialize.
Wednesday, September 23, 2009
Invest like it's 1966
I'm currently reading F Wall Street by Joe Ponzio. I high recommend this book, especially to those who are interested in learning more about value investing. The book is dedicated to teaching readers to value the underlying business that a stock represents.
I just finished a chapter called "Invest Like It's 1966." The chapter focuses on the story of Rose, a client of Mr. Ponzio's who became widowed in 1966 and had to feed herself and put her son through medical school. She started with a $10,000 insurance check. She lived on the income from her investments, but was still able to amass a portfolio worth $1.5 million by 2008. How did she do it? Well, she had help from her brother who ran his own business. No doubt, his guidance on which stocks to buy and what prices to pay was helpful. In fact, she claims that she didn't know very much about investing. I think that it was her ignorance that was her saving grace.
Rose didn't have the Internet when she started investing. She got her prices from the newspaper the next day. She wasn't bombarded with a lot of information and noise about the stock market. There was no CNBC or Bloomberg. Instead, she focused on what was most important: safety and buying great businesses at good prices.
This is one aspect of investing with which I struggle. I don't ignore the noise as much as I should. In fact, I probably generate noise with this blog. I'm going to commit myself to paying less attention to the financial media. I think that it'll be good for my mind and my portfolio.
I just finished a chapter called "Invest Like It's 1966." The chapter focuses on the story of Rose, a client of Mr. Ponzio's who became widowed in 1966 and had to feed herself and put her son through medical school. She started with a $10,000 insurance check. She lived on the income from her investments, but was still able to amass a portfolio worth $1.5 million by 2008. How did she do it? Well, she had help from her brother who ran his own business. No doubt, his guidance on which stocks to buy and what prices to pay was helpful. In fact, she claims that she didn't know very much about investing. I think that it was her ignorance that was her saving grace.
Rose didn't have the Internet when she started investing. She got her prices from the newspaper the next day. She wasn't bombarded with a lot of information and noise about the stock market. There was no CNBC or Bloomberg. Instead, she focused on what was most important: safety and buying great businesses at good prices.
This is one aspect of investing with which I struggle. I don't ignore the noise as much as I should. In fact, I probably generate noise with this blog. I'm going to commit myself to paying less attention to the financial media. I think that it'll be good for my mind and my portfolio.
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