Investments Trade Log

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dragoncar
Posts: 1316
Joined: Fri Oct 29, 2010 7:17 pm

Post by dragoncar »

eric, your statement "Whether one is value, growth, income oriented, or a combination of all three, a basic study of market history and periods of secular and cyclical bull and bear moves is extremely useful for putting into context the current action." would be perfect for a site like seekingalpha. You should consider contributing some articles. I agree with jerry, though, and find it highly unlikely that above-average returns can be obtained through "basic study." Of course, you didn't say that above-average returns could be obtained, just that study was "useful".
For my part, I finally capitulated and moved to a large Permanent Portfolio position. It's scary, because I'm the kind of person who sees gold as ridiculously overpriced, and stocks on sale -- common advice is to buy when there is blood in the streets, and that's what we had today.
Nevertheless, I haven't been able to find fault with the PP theory, and I've come to terms with the fact that, from a psychological point of view, I need a more stable strategy that will allow me to invest my savings regularly until FI. Re-balancing will likely be accomplished by purchasing an under-performing asset class every with my monthly cash surplus. This matches my psychological profile well, as I tend to want to buy things that are "on sale" (my latest blunder was a small position in NOK, which I still think will outperform in the coming years, but I digress).


jacob
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Post by jacob »

According to the Shiller P/E index, stocks are still not on sale. 25% further down and they'll be fairly priced. 50% further and _that_ is on sale.


dragoncar
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Post by dragoncar »

We'll have to agree to disagree about the Shiller P/E -- I prefer to use the leading 10 year P/E, which I have named Precog P/E.


jacob
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Post by jacob »

I've named it Overshoot P/E ;-P


sshawnn
Posts: 458
Joined: Tue Mar 08, 2011 8:17 pm

Post by sshawnn »

I went against logical thought today and bet on an underdog. I purchased a small stake in BAC after the news broke of the unloading by the large, popular hedge fund manager. Too big to fail? Probably. It may be a buy and hold for a long while. I also purchased shares of SYBT as they seem to keep a comfortable amount of "good" debt in house. Catching a falling knife is what I did but I still have another hand to grab the knife with.


DividendGuy
Posts: 441
Joined: Sun Dec 05, 2010 9:58 pm

Post by DividendGuy »

@sshawnn
BAC? You have more guts than I do. I wish you luck with that.
I'm leery of financials right now..but wouldn't mind WFC and USB at current levels. GE might not be bad either.
Of course, I see so many equities I'd like to purchase I can't see straight.


OurLifeInc.
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Post by OurLifeInc. »

GE has me interested too. I'd like to see a higher yield...perhaps if it were to get over 4%, I'd pull the trigger. I am looking for global businesses now...trying to stay away from domestic only for the time being.


chilly
Posts: 274
Joined: Thu Dec 23, 2010 6:03 am

Post by chilly »

GE does look pretty good. UTX has no financial component. ARCC. CWH been bombed out if you were late to REIT's and still want some.
I'm always curious about companies like ARCC that got utterly destroyed in 08' but maintained dividends. Holders as of the 3/09 quarterly payout were getting a 48% yield due to the collapsed price and consistent dividend.


OurLifeInc.
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Post by OurLifeInc. »

Is there any concern with interest rates in regards to REITs that anyone holds? I have read conflicting opinions as to what the downgrade will do to borrowing costs, whether they go up or down. As I understand REITs do better with low rates?
Any other stocks people are looking to load up on? I still like WM, and I like it even better at this price...just concerned that it is heavily tied to the US economy, which in the long run I think will be ok, but....


eric
Posts: 12
Joined: Mon Nov 29, 2010 11:36 pm

Post by eric »

This is an example of using some basic analysis to ascertain market conditions: http://stockbee.blogspot.com/ - A really great site to learn about market methodologies and psychology.
These types of sell-offs rarely lead to sustainable rallies. Rather violent bounces will occur before some degree of equilibrium is eventually established.
At this point, the market is so stretched that a snap-back is almost assured in the coming days, especially since short sellers will eventually cover, putting a bid under the market at least temporarily. The only alternative at this point is a continued crash scenario.
Since I work for a broker-dealer I wouldn't be able to write for a public site like seeking alpha. I still do much writing for myself, though.
Stocks like BAC appear dead money for many years. A company with a float that large will take years to recover, and barring serious inflation, the share price is likely to remain depressed for a long time. There is hardly a dividend and the market seems to be pricing in a capital raise, which means dilution. In a broad based liquidation caused by forced selling, there will be much more attractive stocks to come. Even WMT with reliable profit growth and a real business model has done nothing for 10 years - in part because such large float stocks take extreme demand to move higher. At least you get a 3% dividend in return.
Jerry, there are books written that discuss very notable concepts and tools that help one analyze the market under multiple timeframes. So they have been written. I agree that there is no way to predict a bottom or top, although there are ways to determine periods of higher risk and lower risk based on the underlying health of the market. There is more work involved, but a little work to avoid these periods goes a long way to preserving your capital. The books I like are Stan Weinstein's Secrets to Profiting in Bull and Bear Markets, which is dated but has very useful concepts and sells on amazon for 13 dollars. And William O'Neil has published numerous versions of How To Make Money in Stocks. Older versions can be found at a thrift store for a buck.
Best.


jerry
Posts: 36
Joined: Thu Aug 12, 2010 5:28 pm

Post by jerry »

Eric, I have seen no evidence that technical analysis works in the long run. On the contrary, all of the unimpeached research that I am aware of says it does not work. All systems occasionally work or they wouldn't be systems, but the only consistent winners seem to be the robo traders with servers located a couple of ip hops away from the exchanges. Regular investors have no chance of playing that game.
Edit: Yesterday I placed 3 lowball "bets" on mrk, ge, and intc. I picked up mrk and missed intc by 8 cents. If the market drops today I may get the intc but the ge at 15 will probably take a bit longer.


eric
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Joined: Mon Nov 29, 2010 11:36 pm

Post by eric »

That's fine. I'm not trying to convince anyone to use technical analysis. I'm merely suggesting that studying market cycles and reviewing market internals may be a useful component of analyzing more or less favorable times to risk your hard earned money. Doing so implies no prediction - just observation.
If you want to see the way a famous value investor uses such information, then check out this Jeremy Grantham article published in January:
http://www.scribd.com/doc/47607952/Jere ... 011-Letter
Just goes to show that there are few ways, all of which are imperfect, to determine some sense of underlying supply and demand in the market. A basic familiarity with such history and precedent probably doesn't hurt.
Best


jerry
Posts: 36
Joined: Thu Aug 12, 2010 5:28 pm

Post by jerry »

I agree with that. I just think that published theories can't give you a direct edge because that knowledge is already factored into the market which is essentially what EMT says.
On the other hand, if someone develops a theory that works, they would have little incentive to publish it. They would just use it and get rich.


George the original one
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Post by George the original one »

@jerry - don't give up on technical signals for the overall market. See http://www.buydonthold.com/category/blog/ for an example of using technical indicators in the real world... I've been watching the blog carefully since May 2010 and the indicators have been pretty much spot-on.


sshawnn
Posts: 458
Joined: Tue Mar 08, 2011 8:17 pm

Post by sshawnn »

@dividendguy, @eric. Appreciate your thoughts on BAC. Eric, using your comments as a framework for some research, I think your spot on with the dead money comment. It may be a long while before BAC pays a worthwhile dividend. I used todays push to dump it just minutes ago for a nice profit.


DividendGuy
Posts: 441
Joined: Sun Dec 05, 2010 9:58 pm

Post by DividendGuy »

@sshawnn
Nicely done sir.


jerry
Posts: 36
Joined: Thu Aug 12, 2010 5:28 pm

Post by jerry »

@george. I checked out buydonthold and I found limited and very short term back testing so it is hard to draw any conclusion without reading the book or watching it for a while.
I will follow it myself for a while and see how he does. I will also try and find out if he is a billionaire or at least very rich. I believe that is the best indicator of a truly successful strategy.


ExpatERE
Posts: 220
Joined: Sun Jul 10, 2011 5:49 pm

Post by ExpatERE »

Another great day in the markets eh??
I used todays drop to purchase HGIC just before close. Anyone else make any purchases today??


DividendGuy
Posts: 441
Joined: Sun Dec 05, 2010 9:58 pm

Post by DividendGuy »

@ExpatERE
Nice pickup. HGIC is trading well below my cost basis. Insurance has been getting HAMMERED.
I wouldn't mind picking up AFL at these levels.
I am still a little short on funds until the early part of next month, but I may make a stab at a buy anyway.


ExpatERE
Posts: 220
Joined: Sun Jul 10, 2011 5:49 pm

Post by ExpatERE »

DG
HGIC has been on my watch list for several months. I was anticipating they would have problems with the storms that hit in the early spring. This was revealed in their Q2 earnings report that came out Monday with the share price being hit as a result. I don't have to tell you what the rest of the week has done to the price. No way of knowing if the markets are going to go lower, but I'm happy with a YOC of 5.49%
AFL is also on my watch list. I had not been that excited about it due to the yield being just over 2% but now with it over 3% it's got my attention. Seems like the financial sector is getting hammered over the debt problems in both the US and Europe. There are a lot of bargins to be had if you can stomach the risk.


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