US Stocks

[steveadl]

i would be careful here, not careful because of the underlying company, but careful in that you understand 'why' your stock is moving.

At the moment 'growth' is in favour. This means that the growth funds are the ones attracting the money, and where do they invest it: in growth stocks.

So what happens to those growth stocks: momentum is applied to momentum.
In traders terms: strength begets strength.

So going back to our fund managers: they show good performance, so where does the new money flow to: growth style fund managers, what do the fund managers do: add to their growth positions, what happens to the underlying stocks: their share price grows.

So the key for those with growth stocks:
(a) either treat it as a trading position and go with the flow with stop losses
(b) focus on the underlying growth in intrinsic value, the growth in intrinsic value will be the 'protection' in the event that the market pyschology changes course. ie one will have a good estimate of what the real underlying worth of the growth stock is.

Just a heads up.

On another note i am building up a data base of potential companies to short in the future.
If the stock you are refering to is Amazon, this is one of the stocks in the data base.

No not Amazon, WFMI. They are still experiencing measured but high growth with plenty of room for further expansion - and they're being quite disciplined with it as well, not trying to open another hundred locations per year, remaining cautious in UK until they see better signs etc. They've also recently reinstated their dividend which could also have had a small impact on positive sentiment.

I haven't compared PE now to when I bought in, but could also be it's similar or only a bit higher after their subsequent rises in quarterly earnings.

I fully expect them to drop back again, but to be honest my US portfolio is pretty much set and forget now (barring unforeseen exceptions to individual stocks stories) and I'm focusing on my next area of investment. Not interested in trying to time in and out, I'm in WFMI for the next 20yrs in theory. I am however hoping they initiate a DRP before too many more dividends.

 

[intrigued]

ASX option contract size

"On May 2 ASX will be reducing the standard contract size from 1,000 to 100 shares per contract making options more accessible to more people."

Should help liquidity, and hopefully increase the number of market makers.

 

[Edmond Dantes]

Sold my RIMM (maker of blackberry device) shares yesterday. lost 15%.

- Company lowered its fiscal Q1 forecast
- I should've made the move earlier, since I don't like the company direction
- I doubt existing BB users will like to get a new BB phone when their contract expires. Highly unlikely.
- Android is gaining market rapidly, punishing BB for its lack of innovation. They've been advertising the playbook for a while but where is it...? meanwhile, apple and others are releasing devices.
- They must update their software platform.
- Phones: archaic. BB just release the Bold with touchscreen, but it's nothing to be excited about.


Lessons learned. Time to move on...

 

[steveadl]

Don't follow RIM myself, but from what I've read in passing - I'd agree with your take on them. Not a stock I'd be looking at getting into any time soon.

Mine are still tracking fairly well, AKAM seems to be the dog of my bunch at the moment. Thinking my next move (prob. not for a while) will be another set and forget blue chip with a DRP like KO. But not entirely sure as I hold PEP already, and have a preference for their business over KO. Ah well, plenty of time to decide!

 

[Sunfish]

Just writing a post on peak oil and it reminded me that the tar-sands companies are going to enjoy increasing demand for their product while nat gas (major cost input) is still in a glut.

 

[Intrinsic_Value]

Sold my RIMM (maker of blackberry device) shares yesterday. lost 15%.

- Company lowered its fiscal Q1 forecast
- I should've made the move earlier, since I don't like the company direction
- I doubt existing BB users will like to get a new BB phone when their contract expires. Highly unlikely.
- Android is gaining market rapidly, punishing BB for its lack of innovation. They've been advertising the playbook for a while but where is it...? meanwhile, apple and others are releasing devices.
- They must update their software platform.
- Phones: archaic. BB just release the Bold with touchscreen, but it's nothing to be excited about.


Lessons learned. Time to move on...

Hell we all have some of those, but it looks, based on your reasoning that you did the exact right thing, exit, walk away with 85% of the position capital intact and live to fight another day.

 

[Intrinsic_Value]

Recently added intel and getting ready to pull the trigger on Apple.

 

[Edmond Dantes]

Hell we all have some of those, but it looks, based on your reasoning that you did the exact right thing, exit, walk away with 85% of the position capital intact and live to fight another day.

agree... at least the syndrome of buying more because it is "cheaper" is no longer with me! you gotta learn to get out and forget about it.

Recently added intel and getting ready to pull the trigger on Apple

apple is what keeps me motivated lol, because I bought it a while ago.. I'm leaning towards coca cola or pepsi.. wanted coca cola for a while, but will do investigation now that I have some spare cash.

 

[Edmond Dantes]

Visa (V) down 12.7 % today,
Mastercard 10.3%.

This is because "Federal Reserve laid out a pair of proposals on capping debit card fees, a key source of revenue."

http://www.forbes.com/2010/12/16/br...-mastercard-oracle-rimm.html?partner=yahootix

Wish i had more money to buy more of these two successful companies...

I posted this on 17-12-2010, 08:40 AM. I managed to find some pocket money and bought more. Not much though.

Today, 06/05/2011 "Visa's Profit Climbs 24%; Stock-Buyback Is Planned ".

http://online.wsj.com/article/SB10001424052748703992704576305613962720574.html?ru=yahoo&mod=yahoo_hs

going strong... but It's actually gone down today (pretty much all stocks), because of:

"Commodities fall puts financial markets on edge"...

http://finance.yahoo.com/news/Commo...tml?x=0&sec=topStories&pos=main&asset=&ccode=

perhaps a good opportunity to use my capital that I released as part of my RIMM sell to buy something now that most of stocks have gone down...hmmm....

Coke or Pepsi..hmm.. need more time to think...

 

[Intrinsic_Value]

I posted this on 17-12-2010, 08:40 AM. I managed to find some pocket money and bought more. Not much though.

Today, 06/05/2011 "Visa's Profit Climbs 24%; Stock-Buyback Is Planned ".

http://online.wsj.com/article/SB10001424052748703992704576305613962720574.html?ru=yahoo&mod=yahoo_hs

going strong... but It's actually gone down today (pretty much all stocks), because of:

"Commodities fall puts financial markets on edge"...

http://finance.yahoo.com/news/Commo...tml?x=0&sec=topStories&pos=main&asset=&ccode=

perhaps a good opportunity to use my capital that I released as part of my RIMM sell to buy something now that most of stocks have gone down...hmmm....

Coke or Pepsi..hmm.. need more time to think...

One of the problems i have consistently faced is the currency relationship vs stock relationship especially when using AU$ as the financing currency.

AU$ is a risky currency, so if global trade is 'risk on' then AU$ goes up, but so does US stocks, and conversely.

To overcome this i recently have been buying just US$, not always a US stock.
This hopefully will enable me to obtain better entry prices on stocks without having to worry about currency translation. I have done this with the currency exchange at $1.06-$1.10 on a dollar cost average basis (ie buy some currency every day when it was in this range). Acquired $250,000 US dollars doing this with an average conversion rate of around $1.085.

 

[Intrinsic_Value]

I posted this on 17-12-2010, 08:40 AM. I managed to find some pocket money and bought more. Not much though.

Today, 06/05/2011 "Visa's Profit Climbs 24%; Stock-Buyback Is Planned ".

http://online.wsj.com/article/SB10001424052748703992704576305613962720574.html?ru=yahoo&mod=yahoo_hs

going strong... but It's actually gone down today (pretty much all stocks), because of:

"Commodities fall puts financial markets on edge"...

http://finance.yahoo.com/news/Commo...tml?x=0&sec=topStories&pos=main&asset=&ccode=

perhaps a good opportunity to use my capital that I released as part of my RIMM sell to buy something now that most of stocks have gone down...hmmm....

Coke or Pepsi..hmm.. need more time to think...

after you gave us the intial heads up before i took a position in the stock somewhere in the high 60's (but at a much lower currency conversion rate).
EPS guidance for Sep11: 4.87, Sep12: 5.63
If visa has a pull back i will increase my position.

 

[Edmond Dantes]

Recently added intel and getting ready to pull the trigger on Apple.

I'm interested to know your reasoning behind picking Intel. From what I've read and studied (specially buffet techniques), he's not keen on buying companies that rely a lot on R&D and technology, and Intel fits perfectly with this criteria. The money spent on R&D is considerably high and could well be treated as a risk knowing how fast technology changes.

 

[Corey Batt]

Intel is the IT hardware hegemon. I think this there defining edge which provides counterbalance to the risk of R&D hit and miss. That with the continuous uptrend of chip usage, I can understand why from a Funnymental view they would be worthy of looking over the financials.

 

[shuggy]

AU$ is a risky currency, so if global trade is 'risk on' then AU$ goes up, but so does US stocks, and conversely.

To overcome this i recently have been buying just US$, not always a US stock.
This hopefully will enable me to obtain better entry prices on stocks without having to worry about currency translation. I have done this with the currency exchange at $1.06-$1.10 on a dollar cost average basis (ie buy some currency every day when it was in this range). Acquired $250,000 US dollars doing this with an average conversion rate of around $1.085.

Nice x-rate rate you averaged into but how did you "buy" your US$?
Was it done through a bank acc similar to this from HSBC, or are there different/better ways to do it?

http://www.hsbc.com.au/1/2/personal/savings/multi-currency

HSBC Multi Currency Account

HSBC's Multi Currency Account offers customers an option of having a single or combination of foreign currency savings accounts, under one single account number.

Main features of the Multi Currency Account

* Flexibility for the customer to switch from currency to currency in order to take advantage of movements in exchange rates.
* Earn favourable rates of interest on the various currencies where the balance is above the required minimum balance.
* Up to a maximum of 9 foreign currency accounts available.
* Easy to keep track of all transactions, since the customer receives one consolidated statement of account.

 

[steveadl]

<Off on a tangent here >

If I do put some more money in over the next few months, seriously considering putting some of it towards direct exposure to the Brazillian market.

At this early stage I've looked at some of the ETF's including EWZ & FBZ, but I do like the idea of some more direct exposure such as BRFS. Vale is good as well, but then I may as well just put money into BHP for similar exposure with added dividend and tax benefits.

 

[Intrinsic_Value]

I'm interested to know your reasoning behind picking Intel. From what I've read and studied (specially buffet techniques), he's not keen on buying companies that rely a lot on R&D and technology, and Intel fits perfectly with this criteria. The money spent on R&D is considerably high and could well be treated as a risk knowing how fast technology changes.

Firstly let me state that Buffett prefers to take concentrated positions, his skill set is much higher than mine (obviously), so he can afford to.

I subscribe to basic Buffett tenancies, but i prefer a scatter gun approach, ie smaller positions in a greater number of stocks. This provides a higher level of insurance in case i am incorrect in any individual share.

Inregards to Intel specifically, i agree that technology stocks are inherently risky because of technological redundance (as opposed to say coke or Mc Donalds, low risk of product redundance).

However there are a few tech companies that have shown an enduring economic moat. This can be seen via looking at past earnings for a long duration (say 10 years). Several factors that highlight an enduring economic moat for intel:
(a) good ROE. A company that can show a good level of ROE over multiple years implies some form of endurance.
(b) rising free cash flow per share over time.
(c) rising dividends over time, only companies with someform of economic moat will be able to raise dividends consistently over time.
(d) rising sales over time (this in itself is not important, but in combination with (a) to (c) its important.

There are other factors as well, but basically one is trying to use financial figures to confirm a 'story' or paint a picture. The more factors the higher the probability of economic endurance.

 

[Intrinsic_Value]

Nice x-rate rate you averaged into but how did you "buy" your US$?
Was it done through a bank acc similar to this from HSBC, or are there different/better ways to do it?

http://www.hsbc.com.au/1/2/personal/savings/multi-currency

HSBC Multi Currency Account

HSBC's Multi Currency Account offers customers an option of having a single or combination of foreign currency savings accounts, under one single account number.

.

Yes something like this. except my account aggregates everything, stock, currency, commodities (if i wanted) and margin loans.

I dont know what the spread is with hsbc, thats something you will need to check out.


Also i wish to point out that a 1.085 average exchange rate, might look good now, but there is no guarantee that the exchange rate wont go higher in the short term (short term being for me a 1-2yr view point).

 

[Intrinsic_Value]

yeah you could well be correct Aaron, when the street thinks a company has gone ex grown or even worse will potentially go through a period of profit decline the street can absolutely hammer the stock.

Look at Microsoft got down to a PE of nearly 10 from memory, H&R Block got down to a PE of 9 when i picked it up.

So there is still significant downside risk to CSCO, on forecast earnings of say $1.5 and a PE of 10 thats $15. Still 20% downside from current prices and thats assuming they hit $1.50, if they don't the potential downside is greater.

Thats why i purchased a smaller allocation than usual. It gets me into the stock, but with plenty of breathing space to adjust in the future.

I will be running with potential stop losses as well on this position.
Why only potential? because if the price declines then i will need to focus on whether to activate the stop loss or hold/buy depending on the information at the time.

Re Cisco some good brief reading for anyone interested:
http://everythinggold.blogspot.com/2011/03/cisco-csco-at-crossroads-of-its-history.html

http://wallstcheatsheet.com/trading/corporate-profit-margins-are-about-to-look-like-this.html
(this link applies to the market as a whole and is a BIG RISK)

http://www.thestreet.com/story/11053636/1/cisco-chart-shows-broken-stock.html
This is a good post that i think Aaron is referring to.

Exited CSCO on 1.7% loss, not happy with the attack on margins. At current prices CSCO is probably a reasonable long term investment, but the thought that keeps naggling me is what are the sustainable profits at a lower margin level.

 

[Edmond Dantes]

Read today about the LinkedIn IPO.... and it sent shivers to my spine.. It doubled in value to something like 9 billion..

The stock market now values LinkedIn at $8.9 billion, which amounts to 36 times the revenue it brought in last year from such things as premium subscriptions and job search services. If you want to look at a more conventional measure of value, its price-earnings ratio is north of 1,300.

Google, by comparison, trades for about six times revenue and 20 times earnings.

http://www.stltoday.com/business/co...cle_0209d527-3a2a-57cc-8aec-d4710d0efbc0.html

another dot com bubble example...?

I've added it to my "watch list", but not to buy it, but to see how bad it drops..

 

[Intrinsic_Value]

Read today about the LinkedIn IPO.... and it sent shivers to my spine.. It doubled in value to something like 9 billion..

The stock market now values LinkedIn at $8.9 billion, which amounts to 36 times the revenue it brought in last year from such things as premium subscriptions and job search services. If you want to look at a more conventional measure of value, its price-earnings ratio is north of 1,300.

Google, by comparison, trades for about six times revenue and 20 times earnings.

http://www.stltoday.com/business/co...cle_0209d527-3a2a-57cc-8aec-d4710d0efbc0.html

another dot com bubble example...?

yeah its a set up.
Jim Cramer covered this yesterday:
http://video.cnbc.com/gallery/?video=3000023038

But its a dangerous stock to short because there is very limited supply (only a small fraction of the total company was listed, then rest will be 'dribbled' out.
This is a favourite game of wall street.

But the key is to know whether one is investing or trading. As an investment it is a no go. As a trade who knows?