Octopus Overlords

Crux wrote:Argh. I can't get it to run

I just saw this for some reason...did you ever get it to run? Well worth trying to figure out why it's not working imo. I can link you to a thread for people having probs if you're interested. I wonder what it is about it that makes it difficult to run? I didn't have a problem at all.

My stocks have been sitting in the doldrums the past week or so. I made the potential mistake(?) of buying 25 shares of XJET. I only had money to spend because PWEI was bought out a couple weeks ago, and AVCI paid a 2 buck dividend. So far, XJET is down 0.40/share, even though they reported they are increasing the number of passengers substantially.

Carpet_pissr wrote:

Crux wrote:Argh. I can't get it to run

I just saw this for some reason...did you ever get it to run? Well worth trying to figure out why it's not working imo. I can link you to a thread for people having probs if you're interested. I wonder what it is about it that makes it difficult to run? I didn't have a problem at all.

I did not. If you could send me that link that'd be awesome!

Nice run up in BHP.AX, booked a $215 profit, with a high on the day of $240 at one stage.

Thank you BHP, you've gotten my account balance close to where it was at the start of the week!

I'm sitting at a personal best. Of course, I've only been in the game for a few months. Is the market headed for a correction?

SpaceLord wrote:Is the market headed for a correction?

Of course. The question is when. Could be a long way out.

For me, today is actually better so far than yesterday. Still riding all my un-sexy positions but a few pennies are popping.

Stayed at my in-laws last week to help my wife's sister with her wedding. Her father-in-law, upon hearing that I had some Google stock, said that I should sell it to pocket the gains and then buy back in when its cheaper. Last week it was about 545/share.

Being a long-term kind of guy I just nodded my head and said "okay". Google is still going gang-busters and at last check was at $550.

Which begs the question: if a company is doing well and the fundamentals are solid, why sell the stock to "pocket the gains"?

Even if one has a magic touch and can time the market, the long-term capital gains tax is nothing to sneeze at. And God forbid you sell it within less than a year and incur short-term gains tax.

raydude wrote:
Which begs the question: if a company is doing well and the fundamentals are solid, why sell the stock to "pocket the gains"?

I think it's code for "don't be greedy." But it all depends what your objectives are for owning it in the first place.

LawBeefaroni wrote:

raydude wrote:
Which begs the question: if a company is doing well and the fundamentals are solid, why sell the stock to "pocket the gains"?

I think it's code for "don't be greedy." But it all depends what your objectives are for owning it in the first place.

But then I don't understand his follow-up statement "buy back in later when its cheaper". That implies 2 underlying assumptions:

1. It becomes cheaper later.
2. Even though it becomes cheaper later it will still have legs enough to give a good rate of return further down the road.

Even assuming that both premises are true, why not just wait and sell in the hypothetical "further down the road" date, thus saving the money that would otherwise be lost in taxes?

Who knows if Google will go on to be worth $1,000/share, a few years back I'm sure Microsoft was valued the same way as Google is now, but Microsoft isn't valued as much anymore - even tho its monopoly really hasn't diminished much (?). Who knows, the same might happen with Google?

That said I've watched it go from $505 in late June to $550 now..

If you bought in at the IPO, then any minor correction now you can absorb as you'll still be ahead.

Good luck with whatever you do.

pengo wrote:Who knows if Google will go on to be worth $1,000/share, a few years back I'm sure Microsoft was valued the same way as Google is now, but Microsoft isn't valued as much anymore - even tho its monopoly really hasn't diminished much (?). Who knows, the same might happen with Google?

Agreed. I'm not arguing for blind "buy and hold" investing at all. Valid reasons for selling my Google stock:

1. CEO changes hands and the new CEO is a former Enron exec.
2. Google's cash flow starts going down and I no longer hear news about how it plans to gain further business.
3. New company starts up and people are talking about it, saying "its the next Google".

My father-in-law did not give any valid reason other than "its expensive now. You should sell it and pocket the gains, then buy back when its cheaper". No rationale other than that $550 is "expensive".

But what is expensive? Is it the price per share? At the close on Friday, Google was trading at 47.91 P/E (price to eanings per share). Meanwhile Sony Entertainment was trading at 53.83 P/E. So it can't be that. Is it just psychological then? Is that why more people tend to buy penny stocks, because they are "cheaper" ?

raydude wrote: Is it just psychological then? Is that why more people tend to buy penny stocks, because they are "cheaper" ?

Yes, that could have been part of it. Same reason splits fire people up and $100 is a milestone.

raydude wrote:Stayed at my in-laws last week to help my wife's sister with her wedding. Her father-in-law, upon hearing that I had some Google stock, said that I should sell it to pocket the gains and then buy back in when its cheaper. Last week it was about 545/share.

Being a long-term kind of guy I just nodded my head and said "okay". Google is still going gang-busters and at last check was at $550.

Which begs the question: if a company is doing well and the fundamentals are solid, why sell the stock to "pocket the gains"?

Even if one has a magic touch and can time the market, the long-term capital gains tax is nothing to sneeze at. And God forbid you sell it within less than a year and incur short-term gains tax.

Google is trading at 50 x it's earnings per share. Ie, in 50 years the company will make back the cost of the share. Thinking of that in real terms, would you buy a company for $1 million if it earned $20k per year? It's a terrible return on your investment.

Google has many signs of being a bubble stock that will burst, and soon. Warren Buffet got out of the market when stocks were trading at 50x earnings. Each time there was a crash a year or two afterwards. Not predicting a crash, but I do think Google's bubble will burst sooner or later. It's just a question of when, and how much of a gambler you are with your money.

Crux wrote: Google is trading at 50 x it's earnings per share. Ie, in 50 years the company will make back the cost of the share. Thinking of that in real terms, would you buy a company for $1 million if it earned $20k per year? It's a terrible return on your investment.

Its a terrible return on my investment to buy a company whose earnings are fixed at 20k per year for fifty years. What kind of company doesn't try to grow and increase earnings? Which is what you are implying with that analysis. Its a terrible decision to buy a company just based on P/E as well, without knowing a thing about that company.

In this case, I think I know a thing or two about Google. Over its short history it has consistently beat analyst estimates, except for Q4 in 2005, where it missed estimates by 12.6%. Its a brand-name company in that one can't run into someone in the US who doesn't know the Google name. Heck, Google is both a verb and a noun in current slang. It bought Youtube. It has 0 debt and 3.5 Billion in the warchest. Its newest development is Google Local for Mobile, where you can download an app into your cell phone that combines maps, directions, and satellite imagery to help you find relevant info when and where you need it.

And actually, if you read my post on the first page you'll note that I bought Google in 2006 for $416, for a P/E of 40. The low estimate on EPS for 2007 is 14.52. So the P/E on my investment would be 28.6%

Google's PEG is acceptable. And that is where decision making comes into play.

The beauty is that someone can ignore Google because of it's high multiple and someone else can jump in because of it's growth projections. Both can make money.

Well, Google came in short of estimates, particularly on margins, and is sitting down about 6% right now. Looks like the CCall is positive though. Any thoughts?



Rough day for pretty much everything so far. Thank goodness for those penny stocks on days like this.

LawBeefaroni wrote: Rough day for pretty much everything so far.

Except for ISRG, my largest holding! WOOT!

From now on, I will be posting on my laptop from the pool bar of some Caribbean resort, sipping mai tai's. BAM!

Carpet_pissr wrote:

LawBeefaroni wrote: Rough day for pretty much everything so far.

Except for ISRG, my largest holding! WOOT!

From now on, I will be posting on my laptop from the pool bar of some Caribbean resort, sipping mai tai's. BAM!

Yeah, saw your CAPS.


I will be posting from a PIII 500 with a wonky mouse and a 15" CRT at my local bar drinking beer and whisky. Still finished green but mostly penny stocks on paper. Not liquid enough for my taste when my positions are equal to about 10% of the days volume.

Well, BA and SPR were a glimmer of hope at least.

LawBeefaroni wrote:Well, Google came in short of estimates, particularly on margins, and is sitting down about 6% right now. Looks like the CCall is positive though. Any thoughts?

I think google is so much more worthy than apple that I can't believe they're trading anywhere near the same multiples.

Obviously their YoY revenue growth is falling.
Quarter ending 6/30/07 vs 6/30/06 - 57%
Qe 3/31/07 vs 3/31/06 - 63%
previous 67%
previous 70%
previous 78%
79%
86%
96%
98%

Also keep in mind that the quarters than end 6/30 and 9/30 are generally weaker than 12/31 and 3/31.

That being said, it's perfectly reasonable to expect they will grow 40% by this quarter next year giving them revenue around 5.4 billion.

Margins are currently around 29%, and have actually been increasing over the last four years where it was 7.2%, 12.5%, 23.9% to the current 29%.

So, at 5.4 billion in revenue (conservative) and let's say 20% margins (VERY conservative), you're looking at 1.08B in one quarter or 3.66/share for a bad quarter. That's a forward PE of roughly 34 for a company that will likely grow 40%.

Very reasonable.

It isn't so much that I think Google is a flat out bad buy as it is I think there are better buys out there. If Google takes a hard hit at some point I'd think about getting in. But I tend to go by one of Buffet's maxims which is if you wouldn't buy the whole company at a price, don't buy a single share.

Crux wrote:It isn't so much that I think Google is a flat out bad buy as it is I think there are better buys out there. If Google takes a hard hit at some point I'd think about getting in. But I tend to go by one of Buffet's maxims which is if you wouldn't buy the whole company at a price, don't buy a single share.

Heh. If I could by the whole company I likely would

Just a couple notes. If you've been thinking about REITS but have been worried by their run up, they've had a major correction over the last several weeks. RFI (a cohen and steer's CEF) is now yielding 8% making it darn near close to a 0% downside. In addition, it's trading at a 4% discount to NAV.

Their utility and dividend funds are trading at a HUGE discount to NAV. Utilties (UTF) - 13% discount, dividend majors (DVM) - 12% discount, and REIT/utility (RTU) - 12.6% discount.

Last time RTU was dscounted like this, I bought and I have a 24% annualized return. On utilities.

Well today I bought our favorite local lawyer, FED. I just couldn't pass up what is essentially a strong company at a ridiculously low price. Now of only advertising would pick up so my newspaper acquisition would correct then I'd be a happy camper

Just bought my second position in MTH (Meritage Homes) today.

If it drops at least 15% more, I will buy another position. Great company, probably the best, in an out of favor sector. Buy when there is blood in the streets!

It will likely take years to recover, but I have years. Let's see what happens.

Guys check out this article:

http://www.marketwatch.com/News/Story/l ... C59C880%7D

Talks about setting up a "lazy portfolio" to perform well during bear and bull markets.

I'm going to give it a shot, thinking about a breakdown like as follows:

Australian Market (Managed Fund) = 30%
-VAN0002AU Vanguard Australian Shares Index Fund 30%

International Markets (Managed Fund) = 20%
-VAN0105AU Vanguard International Shares Index Fund (Hedged) 15%
-VAN0005AU Vanguard Emerging Markets Share Index Fund 5%

Bonds (Managed Funds) = 30%
-SBC0813AU UBS IF Australian Bond Fund 15%
-SBC0819AU UBS IF International Bond Fund 15%

Property (Managed Fund) = 20%
-VAN0004AU Vanguard Property Securities Index Fund 20%
= Total = 100%

Granted nothing is guarenteed, but the one I've modelled mine from has done well consistantly during bear and bull markets...If I can make 10%pa consistantly then I'll be happy.

What do you guys think about th lazy portfolios idea?

Hey Luca: Please don't stop posting, where'd you go? It took me a while to go through your post, re-read, mentally evaluate etc. Great stuff, and thanks for posting initially.

I have some very late comments, and questions:

Luca_Brasi wrote: I spend 12 hours a day reading companies’ 10Ks and research reports and talking to analysts, lawyers and managements. I study a company for at least a week before we even consider taking a position in it.

I certainly respect that...if only for the amount of time you spend on this, and the fact that you do it professionally, so I am all ears.

However, as an active Motley Fooler (which pretty much has as a mantra, we, the people CAN do better than Wall St. through educating ourselves), I have to question this to a certain extent:

Luca_Brasi wrote:"It is extremely difficult to compete against the pros and do better than them."

I can show you a list of pros who have pretty horrible track records. Not all are bad, and some are amazing, but many MANY underperform even the S&P.

then:

Luca_Brasi wrote:"You could always invest with them in a mutual fund. The problem is that almost all actively managed mutual funds suck."

I only have three funds, and the rest in stocks at this point. Would be interested in your take on:

DODBX (Dodge and Cox Balanced) 5 yr annualized return 12.44%
DODGX(Dodge and Cox Growth) 5 yr ann. rt 16.11%
MACSX(Matthews Asian Growth - Ex Japan) 5 yr ann rt 21.97%

Luca_Brasi wrote:"Most investment articles/books are worthless."

Again, asking for your opinion (if you know of the book) on the following investment book: Dhando Investor by Pabrai

In that same vein, what do you think of The Motley Fool in general, or its tenets (which is basically buy long long LONG term, and hold, almost never, if ever, sell)

Luca_Brasi wrote:"One thing to watch in this regard though is the market’s P/E multiple."

What is it currently, and where do you find that stat?


Re: your stock picking comments: If you had to choose ONLY three...fundamental statistics of a company in terms of valuation, in which to base an investment on, what would you choose? PEG? P/E? FCF? CAGR?

Luca_Brasi wrote:"I hope some people found this helpful and apologize if it was too preachy or boring!"

Yes, EXTREMELY helpful. NO, not boring at all. MORE PLEASE.

The S&P is undervalued by about 25% right now. Don't tell anyone.

Seriously, and well I guess I'm serious about the S&P I'm starting to get into this a bit. I'm a bit Bearish looking at the current situation but will be allowing some monies to enter the eb and tide of the market soon.

Crux wrote:Argh. I can't get it to run

Crux:

Try it again now, looks like they updated it:

http://darren78.homeip.net/investments/bmw/

Edit: crap. the new version doesn't work for me, but the old one did. Sonofa...

Meep. Bought FED a few days too early it seems.

BTW the program works for me now! Thanks for the update.

pengo wrote:What do you guys think about th lazy portfolios idea?

That's what I do with my 401K. About 6 funds, re-balance occasionally much like an aircraft carrier turning, very slowly. Though no idex funds and very little bonds--it's higher risk.

CAAPX
VGENX
FRSGX
FDIVX
LRSCX
FDGFX
FFFFX

LawBeefaroni wrote:

pengo wrote:What do you guys think about th lazy portfolios idea?

That's what I do with my 401K. About 6 funds, re-balance occasionally much like an aircraft carrier turning, very slowly. Though no idex funds and very little bonds--it's higher risk.

CAAPX
VGENX
FRSGX
FDIVX
LRSCX
FDGFX
FFFFX

Cool, well this is my savings not my super so not looking for high risk/return just low risk/low-stable-consistant returns... The aim is for 10%pa, which records show the markets consistantly do approx 10%pa or more. Granted, past performance is no guarentee of future performance.

I figure that if I can do 10%pa for the next 6 years (at least), by year 7 I'll have enough capital that, thru interest/dividend payments alone I'll have enough money to cover my monthly rent. To me, not having to worry about paying rent any more (and I'm not talking replacing rent with a mortgage) will be a milestone for sure. As it'll give me thust much more finanical freedom. Since in the event of a downturn in the economy/job loss I know I will always have a roof over my head and it won't be much of a struggle if all I can find is casual/part-time work.

Wow, quite the volatile market lately huh? MAKE UP YOUR MIND DAMMIT!

Nasty today. Everyone is liquidating, margins getting called. Wow.

I'm ACHing cash for discount shopping next week.

LawBeefaroni wrote:Nasty today. Everyone is liquidating, margins getting called. Wow.

I'm ACHing cash for discount shopping next week.

Is next time a key time to jump into the market? I've been watching and waiting with a little money for the right time to get in.

Austin wrote:

LawBeefaroni wrote:Nasty today. Everyone is liquidating, margins getting called. Wow.

I'm ACHing cash for discount shopping next week.

Is next time a key time to jump into the market? I've been watching and waiting with a little money for the right time to get in.

It's time to watch carefully for a clue as to when the right time will be.

These are the times I wish I had more self control, though I am getting better. Last time we saw a decent correction, I had no cash.

This time, I have cash, but already blew it all within the first coupla days of the correction!

Maybe next time I will be cool enough to wait for a few days.

Just bought:

BIDU (Baidu)
(more) MTH (Meritage Homes)
(more) KMX (Carmax)
(more) ACUS (Acusphere) SMALL amount, so stop rolling your eyes at me! I saw that!

PS: Lawbeef: Do you participate in the CAPS contests? I just happened to notice they have one now that is sponsored by a company - giving away a Wii to the wiinner (sorry, couldn't help myself there). There's another one going on that's giving away cash...I think it's up to about $2,000 now.

I purchased a little Adanac Molybdenum (AUA on the TSX) at $1.20 today to average down from (gulp) $2.50. As of right now, today's whole friggin' candlestick is outside of the bottom (20,2) Bollinger Band so I'm banking on at least a short-term reversal.

Quite a comeback. Got some EMC and more RWC this morning but really token amounts.

Carpet_pissr, yeah I do the contests when I see them. I'm in the 5000+1 or whatever it's called.

Strap in.

LawBeefaroni wrote:Strap in.

I'll be jumping in today/Monday.

Austin wrote:

LawBeefaroni wrote:Strap in.

I'll be jumping in today/Monday.

A close around +200 on the DJIA is crucial IMO. There was euphoria at the Fed move but we'll see how it plays out.

And of course, what I bought yesterday is flat (EMC) or not trading (RWC, 1,000 share volume).

SPR is pissed.