Got to check out the stock BIDU today. My investment partner Bryan Davis gave me the heads up about them this morning, so I need to do my due diligence and look into their ten year financials and see if its indeed worth investing in!
Thursday, September 6, 2012
Check it Out too!
Got to check out the stock BIDU today. My investment partner Bryan Davis gave me the heads up about them this morning, so I need to do my due diligence and look into their ten year financials and see if its indeed worth investing in!
Wednesday, September 5, 2012
Market Awareness, By Albie
The stock market is showing some positive signs this morning ,as I write, with companies boosting profits without having to hire. (At least something positive, although I would like to see a boost in hiring). What's worrying the stock market is the continuing problems in Europe and Facebook's stock price having dropped so much. Here are the details:
"Wednesday, September 5, 2012, 5:33 AM PDT
US productivity grew at 2.2 percent rate in April-June quarter, faster than previously thought." Yahoo news.
"Companies boosted profits without hiring this spring (So how did those companies make more stuff and serve more customers without hiring more workers?)
They didn't ask employees to work more hours. They asked them to work harder. And they didn't hand out raises.
The Labor Department reported Wednesday that the productivity of the U.S. workforce rose at a much faster clip than previously thought in the second quarter. Productivity – which simply measures the volume of goods and services produced per worker per hour – jumped at a 2.2 percent annual rate. That was faster than many economists had expected." MSN
"After years of speculation that the social media giant would go public, it finally did so in May, and since then its stock price has fallen 53 percent and counting, washing away more than $50 billion in market value.
Facebook's share price hit a new all-time low Tuesday, sinking below $18 for the first time, although it perked up in after-hours trading on news the company had taken steps to reassure investors and its own employees as its share price spirals downward." MSN
Wednesday, August 22, 2012
Some News And Take One on Zagg
From Yahoo News: Wednesday, August 22, 2012, 7:01 AM PDT
Congressional analysts see $1.1T federal deficit for 2012, 4th straight year exceeding $1T
AM PDT
US home sales rise 2.3 percent in July to 4.47 million, latest sign of housing recovery
So some good news for the economy in house sales but bad news concerning US debt. It seems the Dow Jones decided to react to the debt news today!
As for our investments: I am considering buying Zagg along with Bryan. Here are some of my calculations (for a real summery email me for more details!)
Zaggs 52 wk low is 6.40 & 52 wk high is 15.64. So my question is: Why is price so low right now at 7.34? Let's find out! EPS is .63 and this EPS rate has doubled 3x in the last six years, so I'm guessing that Zaggs growth rate is close to 25-30%. Plugging in all the other numbers to find Zaggs'retail price' and I come up with $37. So its half price would be $18.9. We call this its MOS or "margin of safety." So to sum up and throw Bryan some questions to answer: Bryan, I came to MOS for Zagg around 18.9?! Am I in the ballpark? I see there EPS has doubled 3x in last 6yrs! Also 52wk low is 6.40 or something close - so 7.34 is great price!
Congressional analysts see $1.1T federal deficit for 2012, 4th straight year exceeding $1T
AM PDT
US home sales rise 2.3 percent in July to 4.47 million, latest sign of housing recovery
So some good news for the economy in house sales but bad news concerning US debt. It seems the Dow Jones decided to react to the debt news today!
As for our investments: I am considering buying Zagg along with Bryan. Here are some of my calculations (for a real summery email me for more details!)
Zaggs 52 wk low is 6.40 & 52 wk high is 15.64. So my question is: Why is price so low right now at 7.34? Let's find out! EPS is .63 and this EPS rate has doubled 3x in the last six years, so I'm guessing that Zaggs growth rate is close to 25-30%. Plugging in all the other numbers to find Zaggs'retail price' and I come up with $37. So its half price would be $18.9. We call this its MOS or "margin of safety." So to sum up and throw Bryan some questions to answer: Bryan, I came to MOS for Zagg around 18.9?! Am I in the ballpark? I see there EPS has doubled 3x in last 6yrs! Also 52wk low is 6.40 or something close - so 7.34 is great price!
Friday, August 10, 2012
PCLN's DROP!: Take TWO...
Albie's Take: Bryan was right. PCLN has dropped to support levels not seen in over a year. My question to Bryan is when do you expect it to jump?
Bryan's Take: I don't know, I never know. But if I buy at the bottom, a fundamental sort of stop loss is created. All we need is a good day in the markets.
Albie: So what was the fundamental reason PCLN dropped?
Bryan: Poor guidance for Q4 and because of Europe...and they missed revenues by about .02% The thing is, I don't even consider stocks for purchase unless they are in the top .5% of all stocks in terms of fundamentals AND they've been beaten down for a stupid reason by Wall Street. There has to be blood on the streets for me to buy because that means the stock has been oversold because of fear. At the same time, the companies I buy are like cockroaches...you can't kill them and they always come back no matter what. It's just like anything in life...if you hang out with winners YOU are going to win.
Albie: Great take Bryan! Thank you.
Bryan's Take: I don't know, I never know. But if I buy at the bottom, a fundamental sort of stop loss is created. All we need is a good day in the markets.
Albie: So what was the fundamental reason PCLN dropped?
Bryan: Poor guidance for Q4 and because of Europe...and they missed revenues by about .02% The thing is, I don't even consider stocks for purchase unless they are in the top .5% of all stocks in terms of fundamentals AND they've been beaten down for a stupid reason by Wall Street. There has to be blood on the streets for me to buy because that means the stock has been oversold because of fear. At the same time, the companies I buy are like cockroaches...you can't kill them and they always come back no matter what. It's just like anything in life...if you hang out with winners YOU are going to win.
Albie: Great take Bryan! Thank you.
Take ONE: Be angry, Be VERY ANGRY!
Bryans Take:
"I just checked the balance of my 401k that I haven't contributed to in two years, but I can't withdraw unless I quit job (Otherwise I would invest it myself). Lo and behold, its exactly the same (within a few dollars) as it was two years ago! There's a moron in a tower somewhere making about half a million bucks a year getting paid to "actively manage" my portfolio. He "earns" so much because he is SUPPOSED TO outperform the overall markets (S & P 500, DOW, etc..), otherwise why would anybody in their right mind give their money to a Fund Manager right??? You could just put your money into an index fund through TD Ameritrade that mirrors the S & P 500 and get the same return as the overall market. WELLLLLLLLL.......of course he must have beaten the overall market benchmarks then....right??? WRONG. The overall market went up almost exactly 30% since two years ago today, and this Jackass (Capitalized) got me a 0% return..."
"I just checked the balance of my 401k that I haven't contributed to in two years, but I can't withdraw unless I quit job (Otherwise I would invest it myself). Lo and behold, its exactly the same (within a few dollars) as it was two years ago! There's a moron in a tower somewhere making about half a million bucks a year getting paid to "actively manage" my portfolio. He "earns" so much because he is SUPPOSED TO outperform the overall markets (S & P 500, DOW, etc..), otherwise why would anybody in their right mind give their money to a Fund Manager right??? You could just put your money into an index fund through TD Ameritrade that mirrors the S & P 500 and get the same return as the overall market. WELLLLLLLLL.......of course he must have beaten the overall market benchmarks then....right??? WRONG. The overall market went up almost exactly 30% since two years ago today, and this Jackass (Capitalized) got me a 0% return..."
Tuesday, May 29, 2012
What We Don't Learn From History… IS THAT WE DON’T LEARN FROM HISTORY!
Take One:
By Troy Flowers
WHAT WE DON’T LEARN FROM HISTORY… IS THAT WE DON’T LEARN FROM HISTORY
This profound quote is from none other than famed investor Warren Buffet. What we have here in the US is that we have not learned the dangers of trying to tamper with the bond market.
The question is what is the “bond market?” Affluent investors tend to own individual bonds. Most average investors have bonds in their portfolios via bond funds. But most really do not have an idea what bonds do. I will give you a very brief introduction to bonds - specifically government bonds.
When the government wants to fund a project but doesn't have the political courage to raise taxes on the citizens - it issues bonds (another word for debt). They basically borrow the money that it needs to pay back (eventually). There are a couple of important aspects of bonds: the bond price and bond yield. Very simply bond prices are how much you pay to purchase a bond. Bond Yields are the rate of return an investor gets from investing in a bond. They are inversely related, which means when the bond prices go up then yields go down and vice versus. Even though the stock market and the Dow often command more attention from the media, the bond market is actually many times bigger and is more vital to the ongoing operation of the public and private sector. Thus, when a country’s bond market falters then that the country can go bankrupt. The bond market debacle in Russia is an excellent example of this.
This crisis occurred in August of 1998. What were some of the the root causes? Declining Productivity and the cost of the first war in Chechyna (approximately $5.5 billion). More importantly, Russia had chronic fiscal deficit problems and artificially high fixed exchange rate. One of the key points is that they had an “artificially high fixed exchange rate.” This means that the Russians thought they had to prop up the currency or keep the value of their currency high to keep investors from taking their money elsewhere . The Russian finance minister actually hiked rates to 150%! The problem was that they had to pay interest payments at 150% to the debt holders who held Russian paper. It got so bad that the IMF and the World Bank was forced to step in and issue a $22.6 billion bailout. It was helped but the Russians did not want to abandon its support for the Ruble. The Russians then adopted a floating peg. Which meant if the Ruble fell below a certain range then the central bank would step in and buy the Ruble keeping it propped up. If the Ruble got too strong then the central bank would sell the Euro.
This resulted in an erosion crisis and investors dumped the Ruble and Russian securities. This drove the value of the Ruble down. The central bank then tried to spend its reserves to defend the Ruble but that just made matters worse and further eroded investor confidence.
Eventually, on the 13th August 1998 the Russian stock, bond and currency markets collapsed! From January to August 1998 their stock market lost 75%+ of its value.
So what does that have to do with us? A whole lot...
Our Federal Reserve is trying to do what the Russians did BUT in reverse. Instead of trying to prop up our currency, the Fed is trying to purposely devalue the US dollar ( i.e. QE 1, QE 2 and Operation Twist) by holding interest rates down. The problem is that very soon US bond investors will realize inflation is NOT 2% like the Fed wants us to believe. Right now bond yields are at a dangerous low rate of 1.7%. According to famed economist and author Peter Schiff, interest rates over the last 40 years have averaged 7%.
Investors will soon be unwilling to accept a 1.7% rate (or less) anymore and they will demand a higher rate of return for us to use their money. This means the US government will have 7% (for example) interest on +$14 Trillion dollar debt. In addition, investors who hold US paper will see the value of their bond holdings drop like a bad habit as interest rates soar. As a result, those investors will take (as Wall Street insiders like to call) a severe “haircut.” This is the problem in countries like Greece, Italy, Portugal and Spain.
In the last 13 years let us see what financial history has shown us…:
The Russians tried to manipulate the bond market in the late 90’s and it not only didn’t work they nearly went bankrupt.
The US tried to control the bond market/interest rates and artificially pushed interest rates to low levels from 2002 to 2008. We created a housing bubble that imploded in 2007-2008 and our economy nearly collapsed.
So now what’s the new solution to get our economy back on track? Drum roll please…
Drive interest rates EVEN lower?? Really?? (Scratching my head)
Didn’t Albert Einstein once say the definition of insanity is doing the same thing over and over again and expecting different results? But hey, what does Einstein know?
So what do we think will happen when this bond bubble collapses? Well, to borrow a great line from the movie 300: “This will not be over quickly. We will not enjoy this.”
By Troy Flowers
WHAT WE DON’T LEARN FROM HISTORY… IS THAT WE DON’T LEARN FROM HISTORY
This profound quote is from none other than famed investor Warren Buffet. What we have here in the US is that we have not learned the dangers of trying to tamper with the bond market.
The question is what is the “bond market?” Affluent investors tend to own individual bonds. Most average investors have bonds in their portfolios via bond funds. But most really do not have an idea what bonds do. I will give you a very brief introduction to bonds - specifically government bonds.
When the government wants to fund a project but doesn't have the political courage to raise taxes on the citizens - it issues bonds (another word for debt). They basically borrow the money that it needs to pay back (eventually). There are a couple of important aspects of bonds: the bond price and bond yield. Very simply bond prices are how much you pay to purchase a bond. Bond Yields are the rate of return an investor gets from investing in a bond. They are inversely related, which means when the bond prices go up then yields go down and vice versus. Even though the stock market and the Dow often command more attention from the media, the bond market is actually many times bigger and is more vital to the ongoing operation of the public and private sector. Thus, when a country’s bond market falters then that the country can go bankrupt. The bond market debacle in Russia is an excellent example of this.
This crisis occurred in August of 1998. What were some of the the root causes? Declining Productivity and the cost of the first war in Chechyna (approximately $5.5 billion). More importantly, Russia had chronic fiscal deficit problems and artificially high fixed exchange rate. One of the key points is that they had an “artificially high fixed exchange rate.” This means that the Russians thought they had to prop up the currency or keep the value of their currency high to keep investors from taking their money elsewhere . The Russian finance minister actually hiked rates to 150%! The problem was that they had to pay interest payments at 150% to the debt holders who held Russian paper. It got so bad that the IMF and the World Bank was forced to step in and issue a $22.6 billion bailout. It was helped but the Russians did not want to abandon its support for the Ruble. The Russians then adopted a floating peg. Which meant if the Ruble fell below a certain range then the central bank would step in and buy the Ruble keeping it propped up. If the Ruble got too strong then the central bank would sell the Euro.
This resulted in an erosion crisis and investors dumped the Ruble and Russian securities. This drove the value of the Ruble down. The central bank then tried to spend its reserves to defend the Ruble but that just made matters worse and further eroded investor confidence.
Eventually, on the 13th August 1998 the Russian stock, bond and currency markets collapsed! From January to August 1998 their stock market lost 75%+ of its value.
So what does that have to do with us? A whole lot...
Our Federal Reserve is trying to do what the Russians did BUT in reverse. Instead of trying to prop up our currency, the Fed is trying to purposely devalue the US dollar ( i.e. QE 1, QE 2 and Operation Twist) by holding interest rates down. The problem is that very soon US bond investors will realize inflation is NOT 2% like the Fed wants us to believe. Right now bond yields are at a dangerous low rate of 1.7%. According to famed economist and author Peter Schiff, interest rates over the last 40 years have averaged 7%.
Investors will soon be unwilling to accept a 1.7% rate (or less) anymore and they will demand a higher rate of return for us to use their money. This means the US government will have 7% (for example) interest on +$14 Trillion dollar debt. In addition, investors who hold US paper will see the value of their bond holdings drop like a bad habit as interest rates soar. As a result, those investors will take (as Wall Street insiders like to call) a severe “haircut.” This is the problem in countries like Greece, Italy, Portugal and Spain.
In the last 13 years let us see what financial history has shown us…:
The Russians tried to manipulate the bond market in the late 90’s and it not only didn’t work they nearly went bankrupt.
The US tried to control the bond market/interest rates and artificially pushed interest rates to low levels from 2002 to 2008. We created a housing bubble that imploded in 2007-2008 and our economy nearly collapsed.
So now what’s the new solution to get our economy back on track? Drum roll please…
Drive interest rates EVEN lower?? Really?? (Scratching my head)
Didn’t Albert Einstein once say the definition of insanity is doing the same thing over and over again and expecting different results? But hey, what does Einstein know?
So what do we think will happen when this bond bubble collapses? Well, to borrow a great line from the movie 300: “This will not be over quickly. We will not enjoy this.”
Friday, May 18, 2012
Wary of taking a Stock Position Till SPX Reaches Weekly Support
I would be wary of buying new stocks until the market has run aground on support and gives good signs of rebounding.Yes, the S&P500 is indeed on its way to the bottom of Weekly and Monthly Support as I had predicted. Still I will not take any credit for understanding what the catalyst was except that it was near Resistance and was very likely to drop soon. I believe that spring is historically a low time for the SPX from what I have heard. The data reports have seemed to generally be mixed lately. I believe the SPX will continue to drop to Weekly or Monthly support levels and then hold and rise. If you have any questions, take a look at 'My Prediction' recorded in the last two posts. It will give you a much more detailed explanation!
Subscribe to:
Posts (Atom)
Blog Directory (Added 4-2-12)
Blog Directory, Added 5-1-12
Blog Directory; Added 5-2-12
Blog Directory, Added: 5-2-12
