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OfflinegeokillsA
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STOCKS - An Intro Tutorial & Ongoing Discussion * 7
    #7827359 - 01/03/08 02:56 PM (13 years, 1 month ago)


Note:  If you are looking for current stock recommendations, please refer to my most recent posts at the end of this thread.
This first post will serve as a stock market primer for beginners, which I will add to as I continue to learn new things.



Geo's Stock Market Primer


I started this topic in January of 2008 when the S&P sat perched upon high in the 1400's, from which we have since fallen some 50% at our worst and then witnessed a substantial recovery with one of the best stock market performances in history following the late 2008 crash.  Though the markets continue to be plagued by uncertainty, there are lucrative investment opportunities for those of you with the stomach, perspective and diligence to personally allocate your assets and faithfully manage your risk for the potential of great reward.

Many have been told that "buying and holding" is the only way to win in the stock market, but due to recent world market developments, this conventional wisdom no longer holds the same level of truth as it once did.  Given how volatile the market has become, it can definitely pay off to take a more active approach to your investments.  You must continually manage your risk by understanding your own tolerance for capital loss, and thereby creating a discipline for yourself that allows you to define your risk (or maximum loss) before entering any investment.  By preparing yourself for a tolerable downside and clearly defining that level where your investment thesis will be proven wrong, you will be able to cut your losers quickly while allowing the upside to take care of itself.

New investors often seek out penny stocks (stocks priced at $1 or less per share) because they figure that they can own a whole bunch of shares and the darn thing only needs to move a few cents in order to achieve a good return.  However, it is important to understand that losses can compound just as quickly as gains, and that penny stocks are inherently risky because they are not very liquid and will often trade solely on hype.  Generally speaking, low dollar stocks are low dollar stocks for a reason.  “Cheap” does not equate to the price per share when it comes to the real value (and potential reward) behind any given stock.

The dollar price of a stock is largely irrelevant; it is the Price to Earnings (PE) multiple that must be used to evaluate whether or not a stock is cheap within the context of the company’s underlying stability, growth and future earnings potential.  The PE multiple is the relationship of a company's individual share price divided by that company’s real (current) or expected (future) earnings per share.  The Price to Earnings Growth (PEG) multiple can also be useful to find the best relative value among the stocks of growing companies.  It is generally understood that a growth stock with a PEG of 1 is fairly valued.  Therefore, stocks with a PEG less than 1 may be considered cheap, and those with a PEG greater than 1 may be expensive.  PE and PEG are most instructive for companies that are profitable and growing, and certain stocks such as REITS or other high dividend stocks will have to be judged on different metrics. With experience, you will come to understand which situations or stocks should be judged by which metrics.

Stocks are a tricky game that can frustrate even the brightest of minds.  The stock market attempts to be anticipatory and forward looking, but it is not a perfect pricing mechanism and often does not react to obvious reason.  It is susceptible to manipulation based upon a number of factors including not only macroeconomic and company specific data, but also human psychology and technical analysis of the price action.  It will take some time to understand how these themes play together.  Once you do, you will be able to hold a higher degree of confidence in your investments, in order to avoid large losses and/or being shaken out of what could ultimately have proven to be a big winning position in the longer run.

So forget about the hype.  You don't need stock picks, you need an understanding of what the market reacts to, and you need to take the time to stay in sync with its cyclical nature.  If you aren't able to do that, you should forget about individual stock picking and will instead do much better by simply investing in a diversified ETF or mutual fund that mimics the S&P 500; or a combination of a few funds that include exposure to the S&P 500, growth sectors, growth regions, and/or a basket of dividend paying stocks.

If you have a limited amount of capital to work with (or if you want market exposure without having to do any homework!), consider investing in a low-fee S&P 500 Index Fund (such as the Vanguard 500 - VFINX).  Exchange traded funds such as SPY and DVY are also good choices for hands off market exposure.  This will leave you with a diversified portfolio that mimics the overall market benchmark.  Using this strategy, you won't have to worry about underperforming the market, and since the average 20-year market return has beaten any other asset class for the better part of the past century, this is not just a convenient way to gain market exposure, but a fairly sound investment strategy.  Doubly so, when you consider that the majority of individual investors as well as actively managed mutual funds in fact fail to beat the average market return!

To those of you craving a little more risk for the potential of great reward, you may want to focus on a specific basket of stocks.  If you'd like to do this but don't have the time to pick and keep up on the individual stocks yourself, you might consider investing in an actively managed mutual fund.  There are countless managed funds out there, but for this example let's consider the CGM Focus Fund - CGMFX.  This fund returned over 79% in 2007, a year where the average market returned about 4%.  Unfortunately, when the commodity value of oil crashed in 2008, it led shares of the then-heavily-oil-weighted CGMFX down a delirious 63% in November from a high set as recently as the prior summer season.

As evidenced, an actively managed mutual fund like CGMFX may be able to produce fantastic returns by using a sector specific strategy when that sector is in favor, but also carries significantly more downside risk when compared to the diversification offered through an S&P 500 index fund, since the specific sector(s) the fund is focusing on may fall out of favor faster than the aggregate market.  Even so, having your money actively managed by an experienced and high quality manager may be appropriate for the risk-tolerant (typically younger) investor who won't panic when taking hard hits to their portfolio over the short term.  But because a managed fund is only as good as its manager, you'll need to make sure that the fund manager hasn't left or been replaced.  If you do decide to invest in an actively managed fund, I would strongly advise spreading your capital among at least a few different funds that focus on different sectors or regions of the world economy.




"That all sounds groovy, but I want to pick my own stocks!"


Actively trading individual stocks can be a fun, exciting and profitable experience; but it will require your regular attention and discipline.  Ideally, you should have at least $10,000 of capital to work with, as having less will make it more difficult to scale into and out of positions incrementally while maintaining a diversified portfolio.  You should begin by observing the market for at least a few months.  Setup an account with a discount online brokerage (typically charging $5 - $10 per trade) such as TDAmeritrade, E*Trade, Charles Schwab, ScotTrade, Fidelity, TradeStation, or Interactive Brokers.

Create a model portfolio or watch list before you start playing with your own money.  Remember that limiting your downside is the most important thing you can do for yourself.  If you close a losing position for an 8% loss, you only have to make an 8.7% return to break even on your next trade.  But if you close a position for a 50% loss, you'd have to make a 100% return on your next trade just to break even!  How about an 80% loss?  You'd need to make a practically unobtainable 400% return just to break even.  This should help to illustrate the incredible importance of cutting losing positions early and focusing on risk management.

Your individual trading strategy will be just that, an individual strategy.  There is no strategy that will suit all investors.  If it were that easy, we'd all be rich!  You must weigh your level of capital commitment (how much money can you comfortably set aside for investing and for how long?), the amount of time and interest you have in actively managing your money, as well as your risk tolerance (how much day to day fluctuation in portfolio value can you stomach without panicking?).

Some of these questions you probably won't have a reliable answer for immediately, so I would suggest that once you allocate some capital for investing, do yourself a favor and sit on a good portion of it.  Start by investing only a portion of your available investment capital for several months before you fully commit yourself.  During this time, you will build your understanding of investing and learn more about your own personal psychology with respect to your individual investor profile.  It's easy to have a few trades go well, think you're a genius and harbor thoughts like "wow I can't believe how fast I'm going to be a millionaire!", and then pile all your money into something that ultimately might break your account - believe me, I've been there!

Unless you are unbelievably lucky, trading over any appreciable length of time is not easy.  It takes commitment and stringent discipline to perform well over the span of a lifetime.  You'll also notice that your trading style is likely to change several times over.  While you are young, you will likely find yourself taking on greater risk than as you grow older.  You'll also deal with periods of emotional confusion and frustration where you may become paralyzed, panicky or (on the flip side) overconfident as a result of the interplay between fear and greed.

In order to become a successful investor, you must learn the fundamentally cyclical nature of investing.  Stocks do not tend to go up or down in a straight line.  There are periods of buying, and subsequent periods of selling in even the strongest of stocks.  Watch the market, teach yourself how the market tends to react to events both geopolitical and financial.  Once you feel comfortably in sync with the market, start to place your bets.  Equally as important as understanding the cyclical nature of trading is to understand your own emotions.  How often I've let a good trade go bad because of my own gut wrenching emotions that constantly attempt to justify the world in front of me to my favor.  News flash: The world doesn't always work in one's favor and you simply aren't as smart as you might think you are.  One key to being a good investor is to quickly acknowledge when your thesis is wrong (don't attempt to rationalize a sudden change in your thesis in order to keep yourself in any given investment), simply get out and await the next opportunity.

This is your money.  You've worked hard for it and you must respect it.  Money that you do not respect will be money that is no longer yours.  Always remember that those who last in this game focus a lot more on the downside risk (how much money could I lose?), rather than on the upside potential (how much money am I going to make?).  Protect your capital, guard it, know how much you stand to lose before you ever enter a trade.  Risk management is the only reliable way to survive in this market.  If you can effectively manage your risk and stay involved, the upside will take care of itself.  Now that I've hammered that point home, allow me to present to you some broad guidelines that will help make you a better investor.


Diversification.  Don't keep all of your eggs in one basket!  This will help protect you from painfully steep losses whenever a specific sector falls out of favor.  Ideally, you should own at least 4 or 5 stocks for companies in different sectors in order to distribute your risk across different areas of the economy.  Even if you know that one sector is absolutely on fire, you should still keep some of your money spread around in case that hot sector falls out of favor - momentum stocks often fall even faster than they had risen!  Diversification is one very important part of effective risk management, but there is a practical limit for the individual investor; Try not to get involved with more than 10 stocks if you are only a part-time trader, as doing so will make it difficult to stay up to date on the news and price action that affects each of your positions, which is absolutely necessary in order to make timely decisions and avoid costly mistakes.  Likewise, don't buy stocks in a sour sector just to be diversified; concentrate your focus on sectors that are working.


An example of a Well Diversified Portfolio:
  • Gold/Mineral/Mining - Freeport McMoran Copper & Gold (FCX)
  • Oil/Energy - Transocean (RIG)
  • Agricultural - Monsanto (MON)
  • Consumer Staples - Proctor & Gamble (PG)
  • Telecommunications - Verizon (VZ)
  • Technology - Riverbed (RVBD)
  • Healthcare - Humana (HUM)
  • Defence - Raytheon (RTN)
  • Retail - Walmart (WMT)
  • Financial - JP Morgan (JPM)


Do your Homework.  Expect to spend at least one hour per week per stock that you own; keeping up to date on the price action, general news, press releases, earnings reports, etc.  The market moves fast and you need to stay on top of it if you want to make some serious money.  If you don't have the time to do this, hand your money over to an actively managed mutual fund or index fund, where you can still reap the rewards of one of the most lucrative asset classes without the stress and time requirement of managing your own money.  You cannot skimp on this if you want consistent returns!  When a company reports earnings or a major news release hits the wire, you need to digest the news in a timely manner and make a decision whether to buy, sell, or hold.  This includes redefining your risk (maximum loss) and/or protecting profits by raising your sell stop for example.

Only own stocks that you can understand.  Can you wrap your head around what a company actually does to make money?  Don't buy into hype!  Develop a solid thesis for why you believe the company or sector you are investing in will do better than expected in the future, as well as what could potentially go wrong to cause the company to produce weaker than expected results.  If you don't know how a company makes its money, you won't know how to react to breaking news.  Make sure you can understand what it is that your company does, and recognize the downside risk. 

Understand a stock's risk/reward ratio before you buy.  How much upside versus downside can you expect if you were to buy in at the given price level?  Identify areas of support and resistance on both the daily and weekly price charts for each stock you are following.  Remember that support and resistance isn’t always a horizontal line on the chart.  Often, support is found on various “key” moving averages such as the 20, 50 and 200 day moving averages. 

The weekly chart is your decision time frame, the daily and intraday charts are your action time frames.  A stock is a longer term buy candidate when its weekly chart shows a strong uptrend.  Once you recognize a strong stock, you should zoom in to the daily chart in order to identify the shorter-term support levels, which will ultimately become your buy levels.  Unless you are planning to flip the stock as a day trader, zoom back out once you have built your position.  This will help you to retain perspective, in order to prevent you from being shaken out of a good position amidst short-term jiggles in the market that could freak you out even though the longer term trend remains intact.

Position Size.  Maybe there's a stock that has reported great earnings and jumped 10%, blowing past your ideal buy level.  You understand that stocks ebb and flow and that you should try not to chase strength, but you don't want to be left behind either!  In situations like these, buy just a little bit to get involved, and keep your position size small enough so that if the stock were to pull back to an identifiable level of support, it won’t hurt you or cause you to panic.  If you get the pull back, you can plan to add to the position and effectively lower your average cost basis.  If you don’t get the pull back, well at least you are still making some money with the small position you do have.  Staying involved will help keep you in tune with the market and aware of opportunities as they are developing.  Managing position size is a form of risk management that keeps you involved.  You don't need to (and generally shouldn’t) buy or sell your position all at once.

Do not buy (or sell) all at once.  No one can reliably and repeatedly time the precise top and bottom in a stock's trajectory.  Therefore, it is often advisable to scale into positions over time.  Take advantage of unexpected/overdone weakness to add to your winning positions, and likewise use exaggerated strength to book some profits.  I have found the use of sell stops to be a tremendous asset in helping to define my risk when entering a trade as well as to protect profits on winning positions.  It is not uncommon for me to have two or three sell stop levels for each stock position I’m holding, and will adjust these levels according to the prevailing price action on at least a weekly basis.  In this way, I am managing my risk by taking some of it off of the table whenever support levels are violated on the stocks I own.

Don't buy the best house in a bad neighborhood.  At least half of a stock's movement comes as a result of the performance of the sector within which it resides.  If a sector is doing well, it will tend to lift the stocks of most companies operating in that sector (a rising tide lifts all boats).  The inverse also holds true.  This is one reason why it is important to have a clear understanding of the company behind the stock that you own, and why you should avoid sectors that are out of favor.  If a sector is falling off of a cliff, even the best company in that sector is going to be under massive amounts of selling pressure.  The only time where it may be appropriate to invest in the "best house in a bad neighborhood", is if you believe that a turnaround is imminent based upon a specific variable such as pending political legislation or where we msy find ourselves in the current economic cycle.  So far as I’m concerned, it is far preferable to miss the early part of the move by waiting for signs of strength before entering a position.  This allows you to set a stop loss just below that sign of strength, effectively defining your risk while allowing you to catch the majority of major moves.

Don't fight the trend.  Just as humans can be completely irrational, so can the market.  Human psychology cannot be ignored or separated from how the market works.  No matter how strongly you may feel about the direction a stock should be going, discipline will trump conviction always!  You might have several reasons for why a stock should be going up, but if that stock is being sold down on heavy volume, it doesn't really matter what you think because you are losing your money.  Keep an eye on the trend of the individual stocks you own, their sectors and the market as a whole.  Use weekly charts to identify longer term trends and try not to overthink this rule.  The market often operates in extremes, so even if you think a stock or sector has fallen as far as it will go, prepare for it to fall even further.  Likewise as they rise, they will often overshoot to the upside.  Therefore, make an effort to trade in and out of your positions incrementally, setting and adjusting stop levels in accordance with the prevailing price action.

Volume tells truth.  Volume is the number of shares traded over a specific time period.  It is an excellent indicator of the validity behind a stock's movement.  High volume (greater than the 10 day average for the issue observed), will help to validate the direction of the trend.  Likewise, one should not place the same level of faith in the movement of a stock on low volume.  This is why the holiday season or shortened trading weeks tend to experience higher volatility (erratic price action).  Simply stated, there are not as many market participants on these days, and therefore smaller amounts of money can have a greater influence on the movement of individual stocks due to the overall lowered liquidity.  This in turn can lead to the manipulation of certain stocks, which can reverse quickly once the big players are back in business and the volume picks up again.

Learn how to read a balance sheet.  Every company trading on a major US exchange provides public financial documents such as their balance sheet, which will provide valuable information regarding the health of the company in question.  Avoid companies that are loaded down with debt.  Look for companies that have consistent or growing earnings & revenue, low debt with respect to cash, and good cash flow.  Many online brokers will conveniently display these key data points for you, but you can also find what you need at the Securities & Exchange website.  I highly recommend that you study How to Read a Balance Sheet, making sure to follow the "More on reading a balance sheet" links, as that's where the meat of the information is located.

Don't turn a trade into an investment. If you buy a stock for a specific catalyst (anticipating a new product announcement, takeover, merger approval, drug approval, positive government action, etc), don't turn that trade into an investment by holding onto it if your catalyst does not come to fruition.  Learn to recognize which trades you are entering for short-term catalysts and which investments you are holding for their long term potential.  There are of course confluences where short-term and long-term objectives are not mutually exclusive.  But nine times out of ten, you should stick with your original game plan and don't be afraid to sell at a loss if things are not playing out the way that you had anticipated.  There is no sense in hoping that a stock will come back up, not all stocks will recover and some will even go to $0.  Limit your losses by cashing out if your catalyst or thesis fails to materialize.

Always keep cash on hand!  This is one of the biggest and most common mistakes made by new investors (I learned this the hard way!).  If you keep all of your cash committed, you are basically saying that you don't believe that the market can drop for any reason at this point in time.  With no cash on the sidelines, you will not be able to take advantage of buying your favorite stocks on sale when the market has a bad day/week/month.  So keep at least 10% of your portfolio (the money you have immediately available for investing) in cash, so that you can put it to work when there are unexpected drops in your favorite stocks.  If the market has taken an unusually strong advance, start booking some profits because there will eventually be a pullback.  In a sideways or down-trending (bear) market, keeping even higher levels of cash on hand is important so that you don't get washed out amidst the grinding volatility and overall choppy negative price action.  You want to have that cash on hand in order to take advantage of rapid spikes downwards, also known as capitulation.  You also want that cash on hand to put to work when low risk trades with clearly defined support present themselves.  The disciplined use of sell stops will allow you to build up your cash position automatically whenever the market starts getting dicey, since you will be selling the stocks in your portfolio that are breaking support, thereby replenishing your cash reserves in wait for the next opportunity.

Dividends.  A company that pays a dividend is giving you a specified cash payment for each share of the company that you own, typically distributed directly to you four times a year (once each quarter).  If a company has a safe dividend, it could make a fantastic long-term investment as you not only receive cash flow and income on a regular basis through the dividend, but you may also capture additional upside that comes from the underlying stock's capital appreciation - in a sense, you are getting paid to wait for further upside!  Since a dividend is paid as a specific cash amount, let’s say $1 annually for a $10 stock, the dividend yield will increase as the stock's share price goes down.  That $10 stock yields 10% annually ($1/$10), but if the share price drops to $8, the yield is now 12.5% annually ($1/$8).  Since the yield rises as the share price falls, dividends act as a cushion on the downside by attracting more buyers as the stock gets cheaper and the dividend yield grows larger.  When the market has a serious swoon, buying the stocks of companies who have consistently paid high dividends can result in a HUGE payoff over time; with the peace of mind that even if the stock price isn't appreciating, you will still receive viable cash flow.

Dividend safety.  Of course, you need to make sure that a company will continue to be able to pay its dividend, as not all dividends are to be trusted!  This can be done by reviewing three key factors that may indicate when a dividend is at risk of being cut or eliminated.  It is not necessarily any single rule that will determine a dividend's absolute safety, but these three elements taken together will give you a high level of confidence in the safety of a dividend (or lack thereof):
  • Earnings - Earnings should ideally be at least two times the amount of the dividend payout.  If a company consistently has earnings per share (EPS) that are two times or more than the per share dividend payout, you know that they should have no trouble covering the payout even during troubled times.  Note that certain partnerships such as Real Estate Investment Trusts (REITS) are required to pay out the majority of their earnings to shareholders every year, and that therefore the "two times rule" will not apply to these holdings.

  • Cash Flow - If the earnings metric doesn't quite work out, a company could get around it by having ample cash flow; higher than its reported income.  But pay attention to where the cash comes from and make sure that it is not coming from delayed debt or early receipts as those are not sustainable sources for funding a dividend over the longer term.

  • Balance Sheet - Be very cautious when a company's balance sheet shows more debt than cash.


I am not a professional, but I have been at this for several years now and I feel that I am getting a better handle on it
with each additional day of experience.  It is not easy, but it is viable, and can even teach you a great deal about
yourself and your own emotional tendencies throughout the process!  By following the advice I've laid out in this guide,
staying involved and focusing on risk management, you can make some serious money in the stock market.

Just remember...

  • Be patient and opportunistic; never attempt to force a trade.

  • Trade the market that is in front of you, not the market that you wish or hope were in front of you!

  • Always define your risk (maximum loss) before opening a new position, and adhere to that discipline.

  • Learn to manage risk through the religious use of position sizing and stop loss management.

  • Learn to differentiate between your longer term positions and your short-term trading positions.

  • Discipline trumps conviction.

  • Hope is NOT a strategy.

  • Don't be afraid to take a loss as soon as your original thesis for a specific trade is proven wrong.

  • Don't be afraid to give your winners room to run, but continually redefine stop loss levels to protect profit.

  • Don't rely on one resource; Gather information and data from multiple sources.

  • Read some books: Jim Cramer's Real Money, John Bollinger's Bollinger on Bollinger Bands


I will use the remainder of this thread to post commentary on some of the stocks I am watching and moves I am making with my own money.  So please follow along and give me some feedback, ask questions, share your ideas.  I welcome any suggestions or concerns you may have about any statements I may make.  Give me your contrary opinions… It is through constructive criticism and subsequent analysis that we can all become better investors.  Also realize that this thread was started years ago, so fast forward to the most recent posts for relevant stock discussion and market analysis.















Original Post:



Happy New Year everyone.  As anyone who has held even a tepid ear to the goings on of the world economy and the US stock market in particular, you know that there is a lot of uncertainty in the air, which has resulted in some wild volatility (up and down movement) in the markets.  Oil is at $100, gold is over $850, domestic residential housing is in the pits, consumer sentiment is down as a direct result of the housing and credit related problems, and banks are struggling to maintain capital as they realize a good lot of their investments are practically worthless (they just can't sell them).

With that in mind, and considering the potential for continued volatility and widespread economic recession (indeed certain sectors such as housing and financials are already in recession), medical related companies are a good place to keep your capital working for you, with limited downside risk even as sales of discretionary retail items may be falling off a cliff. I think we can all relate to the simple fact that people still need their drugs!

Medical stocks are defensive. Therefore, I will present three ideas for the avid investor to consider in 2008 (and a bonus speculative pick for you risk takers).
  • St. Jude Medical (STJ) - Currently Trading @ $40.25 / share

    Develops, manufactures, and distributes cardiovascular medical devices.  The principle products produced are tachycardia implantable  cardioverter defibrillator systems (ICDs) and bradycardia pacemaker systems (pacemakers); mechanical and tissue heart valves and valve repair products; neurostimulation devices; closure devices, guidewires, hemostasis introducers and other interventional cardiology products, and electrophysiology (EP) introducers and catheters, advanced cardiac mapping and navigation systems and ablation systems.



  • Schering-Plough Corp (SGP) - Currently Trading @ $26.70 / share

    A global science-based health care company with prescription, consumer and animal health products.  Schering-Plough has three segments: Prescription Pharmaceuticals, Consumer Health Care and Animal Health. The Prescription Pharmaceuticals segment discovers, develops, manufactures and markets human pharmaceutical products. The Consumer Health Care segment develops, manufactures and markets over-the-counter (OTC), foot care and sun care products. The Animal Health segment discovers, develops, manufactures and markets animal health products. In November 2007, the Company completes acquisition of Organon BioSciences N.V. from Akzo Nobel N.V.  This acquisition should help SGP generate above-average earnings growth over the coming year.



  • CVS Caremark (CVS) - Currently Trading @ $36.50

    Operates in the retail drugstore industry in the United States. As of December 30, 2006, the Company operated 6,202 retail and specialty pharmacy stores in 43 states and the District of Columbia. The Company operates in two segments: Retail Pharmacy and Pharmacy Benefit Management (PBM). The Company sells prescription drugs and an assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, seasonal merchandise, greeting cards and convenience foods, through its CVS/pharmacy retail stores. The PBM business provides a range of prescription benefit management services to managed care and other organizations. In March 2007, CVS Corporation completed the acquisition of Caremark Rx Inc. The combined company is named CVS/Caremark Corporation.

    This one is special, as numbers came out this morning that have showed lower than expected "same store sales growth" - which is the key metric in evaluating companies that operate retail stores.  It has been particularly hard hit on the news, as soft numbers also came out for Walgreen and Rite Aid... and CVS is down over 7% this afternoon.  The best news here, is the Caremark Pharmacy Benefit Management acquisition, which should set it apart from the other retail drug stores.  As more drugs come off patent and generic equivalents are made available, CVS Caremark will make higher profits on the sales of those generics than they would have made for the name brand drugs.  Here is the research that caught my attention:
    "Despite a slow start to the flu season, [CVS] will very likely see strong
    demand on the retail side in this area over the next couple of months.  More
    and more prescriptions are also moving over to generic alternatives, which
    carry higher margins for CVS.  Finally, slower retail sales will not affect
    the secular growth of the company's pharmacy benefits management arm,
    Caremark.  And rather than paying 25 times expected 2008 earnings for
    similar businesses like Express Scripts (ESRX) and Medco Health (MHS), we
    can get the same business embedded in CVS Caremark at 16 times next year's
    expected profits."


For those interested in taking on a lot more risk (with potentially fantastic reward), I would look into First Solar (FSLR).  This is I believe the only company that builds solar modules without the use of silicon, and therefore is not at the mercy of the commodity price for silicon wafers.  Additionally, it has great visibility in terms of future contracts, and a lot of room to grow on top of what it has already booked in its backlog (secured future contracts).  If FSLR drops back to $250 (currently trading at $267.50), I'll initiate a position of 25% of what I intend to ultimately invest in the name, with a time horizon of 1 - 3 years.  Given its astronomical run over the last year, I would start picking away at it slowly, hoping that it comes down even more so that you can get a better price.




Disclosures:
Initiated a 30% position in shares of SGP last month at $26.71.
Initiated a 50% position in shares of STJ for my Roth IRA retirement account last week at $40.65.
Initiated a 50% position in shares of CVS today at $36.50.




Here's hoping 2008 will be a profitable year for you and yours! :beer:


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··∙   long live the shroomery  ∙··
...π╥ ╥π...


Edited by geokills (03/09/11 01:06 PM)


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OfflineThe_Ghost
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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827392 - 01/03/08 03:06 PM (13 years, 1 month ago)


Hmm...


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827405 - 01/03/08 03:08 PM (13 years, 1 month ago)

A quick tip from me

GERON CORP (NasdaqGM:GERN) - currently $5.58

The own loads of patents on stem cell technologies. Great potential long term, plus they would also benefit a little in the short term from a Democrat win in the election


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Baeosistine]
    #7827421 - 01/03/08 03:14 PM (13 years, 1 month ago)

As the magical man Jim Cramer would say: Tips are for Waiters!

Ironic, as that's pretty much what I'm giving you all. But what I'm really doing here is attempting to document or journal my own personal investments, so that I can review the decisions I've made over time, and see if my thesis is proven true, or where I went wrong. Everyone should invest for themselves and only after having done their own due diligence and research. If someone is giving you a "stock tip", it's probably not any good and here's why. Either the person already owns the stock and is trying to convince others to buy or sell in order to move the stock to their benefit, or if the tip is actually a legitimate one, it is probably based on insider information which if you trade on it, can land you heavy fines and lots of trouble with the SEC. Therefore, save the tips for the waiters!

I'm making this thread (and any subsequent ones) for my own personal evaluation, and hopefully to get some other people directly involved with their finances and interested in investing (as one thing's for sure, investing is a key factor to most fortunes made today). Don't just go and buy something because someone tells you to. Listen to their ideas, but do your own fact checking and research. Most of all, do what makes you feel most comfortable, and only invest in what you can personally understand.

On that note, Geron (GERN) is incredibly speculative (i.e. risky). I personally wouldn't touch it with a ten foot pole. The company has no earnings, has been hit or miss on its earnings/loss estimates in the past, and the future estimates are for increasing losses! It hasn't done much for four years and is currently trading at its 52-week low. While it is true, that should some miraculous turnaround occur and this company suddenly becomes profitable it will make you rich... it is a general rule of thumb that I refuse to invest in companies that are not currently turning a profit. On the upside, it looks like Geron is paying down its debt quite substantially, while increasing its cash and short term investments. This is a very positive sign, but this one still carries more risk than I'm willing to accept.


--------------------

--------------------
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...π╥ ╥π...


Edited by geokills (01/03/08 03:21 PM)


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InvisibleCowgold
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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827437 - 01/03/08 03:17 PM (13 years, 1 month ago)

I like your pics. Here's a few of my own.

I've been watching a few domestic energy companies specificly because the high fuel prices. $100 oil will continue to rise as the World's economy continues to grow. This higher fuel cost has benefited domestic energy companies heavily invested in existing plays that were previously too costly to produce. As the world's demand grows, we will depend more and more on domestic resources.

Here are some of the businesses that will benefit from such a scenario.

Sandridge Energy (SD) $33.99

Headquartered in Oklahoma City, Oklahoma, SandRidge Energy, Inc. is a rapidly growing independent natural gas and oil company concentrating in exploration, development and production activities.

Our focus is to expand reserves and production in the West Texas Overthrust (WTO), an area located in Pecos and Terrell counties in West Texas. The WTO is a natural gas prone geological province encompassing 1.3 million acres which includes the Piñon Field prospect. SandRidge also has significant operated leasehold positions in the Cotton Valley Trend in East Texas, the Gulf Coast area, the Piceance Basin, as well as other non-core operating areas.

Chesapeake Energy (CHK) 40.72

Chesapeake Energy Corporation (Chesapeake) is an independent producer of natural gas in the United States, and owns interests in approximately 34,600 producing oil and natural gas wells that are producing approximately 1.7 billion cubic feet equivalent (bcfe) per day, 92% of which is natural gas. The Company?s operations are located in the Mid-Continent region, which includes Oklahoma, Arkansas, southwestern Kansas and the Texas Panhandle; the Forth Worth Basin in north-central Texas; the Appalachian Basin, principally in West Virginia, eastern Kentucky, eastern Ohio and southern New York; the Permian and Delaware Basins of West Texas and eastern New Mexico; the Ark-La-Tex area of East Texas and northern Louisiana; and the South Texas and Texas Gulf Coast regions. In July 2007, the Company announced the acquisition of Kerr-McGee Tower from Anadarko Petroleum Corporation and subsequent sale of tower to SandRidge Energy, Inc.


XTO Energy (XTO) 54.03

XTO Energy Inc. and its subsidiaries are engaged in the acquisition, development, exploitation and exploration of producing oil and gas properties, and in the production, processing, marketing and transportation of oil and natural gas. Its estimated proved reserves at December 31, 2006 were 6.94 Trillion cubic feet (Tcf) of natural gas, 53 million Barrels (Bbls) of natural gas liquids and 214.4 million Bbls of oil. During the year ended December 31, 2006, its average daily production was 1.186 Bcf of gas, 11,854 Bbls of natural gas liquids and 45,041 Bbls of oil. As of December 31, 2006, the Company owned interests in 20,743 gross (10,812.3 net) producing wells. In February 2006, the Company acquired proved and un-proved properties in East Texas and Mississippi from Total E&P USA, Inc. In June 2006, the Company acquired Peak Energy Resources, Inc., which operated gas-producing properties and owned un-proved properties in the Barnett Shale in the Fort Worth Basin


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold]
    #7827447 - 01/03/08 03:19 PM (13 years, 1 month ago)

energy companies, aint no where to go but up from here buddy

good picks


--------------------
Admin Edit: Your signiture is inappropriate and has been removed.  Do not harass other members in your signiture.  Also refrain from posting links to scat pornography.  If I see anything like that here again, you will be banned.


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827450 - 01/03/08 03:20 PM (13 years, 1 month ago)

Quote:

geokills said:
Do your own DD




:grin:


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold]
    #7827460 - 01/03/08 03:23 PM (13 years, 1 month ago)

I am wary of all this push for gold.
sure everyone needs 5% in their portfolio, but even the lamest person knows that you buy low sell high.
gold did this 20+ years ago, and people started gobbling up gold, then it burst and people are still holding onto their gold waiting to break even.
everything works on a sine wave. this year gold will probably plummet and then that is the right time to buy. fuck this 850 an oz shit.


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: SneezingPenis]
    #7827465 - 01/03/08 03:24 PM (13 years, 1 month ago)

Quote:

YawningAnus said:
buy low sell high.





I've always thought that Buy High, Sell Low would be a great name for something.


--------------------
Acid doesn't give you truths; it builds machines that push the envelope of perception. Whatever revelations came to me then have dissolved like skywriting. All I really know is that those few years saddled me with a faith in the redemptive potential of the imagination which, however flat, stale and unprofitable the world seems to me now, I cannot for the life of me shake.

-Erik Davis


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: OneMoreRobot3021]
    #7827486 - 01/03/08 03:30 PM (13 years, 1 month ago)

I've never done that.  :crazy:


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold]
    #7827491 - 01/03/08 03:32 PM (13 years, 1 month ago)

A comedy movie about stock market hijinx.


--------------------
Acid doesn't give you truths; it builds machines that push the envelope of perception. Whatever revelations came to me then have dissolved like skywriting. All I really know is that those few years saddled me with a faith in the redemptive potential of the imagination which, however flat, stale and unprofitable the world seems to me now, I cannot for the life of me shake.

-Erik Davis


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: OneMoreRobot3021]
    #7827496 - 01/03/08 03:33 PM (13 years, 1 month ago)

Would it be irony if it was a bust?


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold]
    #7827499 - 01/03/08 03:33 PM (13 years, 1 month ago)

Dude, it could be a drug related comedy about two stoners that get involved in the stock market. Get it? Buy High, Sell Low!


--------------------
Acid doesn't give you truths; it builds machines that push the envelope of perception. Whatever revelations came to me then have dissolved like skywriting. All I really know is that those few years saddled me with a faith in the redemptive potential of the imagination which, however flat, stale and unprofitable the world seems to me now, I cannot for the life of me shake.

-Erik Davis


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: OneMoreRobot3021]
    #7827506 - 01/03/08 03:36 PM (13 years, 1 month ago)

Get Dave Chapelle on the phone, STAT.


--------------------
After one comes, through contact with it's administrators, no longer to cherish greatly the law as a remedy in abuses, then the bottle becomes a sovereign means of direct action.  If you cannot throw it at least you can always drink out of it.  - Ernest Hemingway

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He who learns must suffer. And even in our sleep pain that cannot forget falls drop by drop upon the heart, and in our own despair, against our will, comes wisdom to us by the awful grace of God.  - Aeschylus


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: Cowgold]
    #7827514 - 01/03/08 03:37 PM (13 years, 1 month ago)

I was a Chesapeake (CHK) holder a couple of years ago when it was trading around $34 / share (and when I was very new to investing). It was hoped that natural gas prices would be on the rise, but at that specific moment in time I was stuck with a flat-liner for a few months. New to investing and lacking the disciplines I've developed over time, I cut that one off and in all honestly, believe it was the right decision at the time.

Given the current environment, I agree that natural gas stocks are coming into greater favor, and your thesis about investing in domestic energy appears to be a sound one. XTO is a stock I have watched for quite a while, it has been growing its natural gas production and is only partially hedged, meaning that it will benefit by a large margin compared to its competitors, should natural gas prices remain strong and increase. The reason I haven't bought any myself, is that I already hold a full investment in the oil/energy sector by way of Transocean (RIG).

Personally, I feel that Transocean is best situated to benefit from higher oil prices and here's why. Oil is becoming harder and harder to find, its use in today's world seems to have no end in sight, and this is of course resulting in rapid price increases for the commodity. Now that oil is so much more profitable for the companies which produce it, they can re-invest that money to seek out harder-to-find resources, particularly in the deepwater offshore regions. This is where Transocean comes in. It is the largest deepwater driller, and as rigs are not easy nor quick to be built, it will hold its strong position in the deepwater markets for quite some time. As oil prices go up and more companies need to tap deeper wells in order to secure solid production, the day-rates (rental rates) for its rigs increase as well. The icing on the cake is that Transocean just merged last year with Global SantaFe, one of its largest competitors. This has the combined company well poised to take advantage of continuing higher oil prices. They also have great visibility, with a backlog (secured contracts) that are booked for many years out.


--------------------

--------------------
··∙   long live the shroomery  ∙··
...π╥ ╥π...


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827519 - 01/03/08 03:38 PM (13 years, 1 month ago)

But what about my movie idea? Can we stay on-topic here? :wink:


--------------------
Acid doesn't give you truths; it builds machines that push the envelope of perception. Whatever revelations came to me then have dissolved like skywriting. All I really know is that those few years saddled me with a faith in the redemptive potential of the imagination which, however flat, stale and unprofitable the world seems to me now, I cannot for the life of me shake.

-Erik Davis


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: SneezingPenis]
    #7827524 - 01/03/08 03:40 PM (13 years, 1 month ago)

Quote:

YawningAnus said:

I am wary of all this push for gold.



I don't see anyone pushing gold in this thread... though I do agree, that you should have at least part of your assets invested in gold, a gold ETF, or a gold mining company as a hedge against a weakening dollar. It may not make you rich, but it is a form of insurance in the event of the worst case scenario. Do you stop paying your car insurance just because you haven't had an accident in years and therefore your insurance investment hasn't paid off? Probably not. You want it to be there when the shit hits the fan!


--------------------

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...π╥ ╥π...


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OfflinegeokillsA
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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: OneMoreRobot3021]
    #7827526 - 01/03/08 03:40 PM (13 years, 1 month ago)

I refuse to invest in your movie making conspiracies! :toomuchacid:


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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: OneMoreRobot3021]
    #7827537 - 01/03/08 03:42 PM (13 years, 1 month ago)

Dude!




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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: geokills]
    #7827544 - 01/03/08 03:45 PM (13 years, 1 month ago)

Quote:

geokills said:
I was a Chesapeake (CHK) holder a couple of years ago when it was trading around $34 / share (and when I was very new to investing). It was hoped that natural gas prices would be on the rise, but at that specific moment in time I was stuck with a flat-liner for a few months. New to investing and lacking the disciplines I've developed over time, I cut that one off and in all honestly, believe it was the right decision at the time.

Given the current environment, I agree that natural gas stocks are coming into greater favor, and your thesis about investing in domestic energy appears to be a sound one. XTO is a stock I have watched for quite a while, it has been growing its natural gas production and is only partially hedged, meaning that it will benefit by a large margin compared to its competitors, should natural gas prices remain strong and increase. The reason I haven't bought any myself, is that I already hold a full investment in the oil/energy sector by way of Transocean (RIG).

Personally, I feel that Transocean is best situated to benefit from higher oil prices and here's why. Oil is becoming harder and harder to find, its use in today's world seems to have no end in sight, and this is of course resulting in rapid price increases for the commodity. Now that oil is so much more profitable for the companies which produce it, they can re-invest that money to seek out harder-to-find resources, particularly in the deepwater offshore regions. This is where Transocean comes in. It is the largest deepwater driller, and as rigs are not easy nor quick to be built, it will hold its strong position in the deepwater markets for quite some time. As oil prices go up and more companies need to tap deeper wells in order to secure solid production, the day-rates (rental rates) for its rigs increase as well. The icing on the cake is that Transocean just merged last year with Global SantaFe, one of its largest competitors. This has the combined company well poised to take advantage of continuing higher oil prices. They also have great visibility, with a backlog (secured contracts) that are booked for many years out.





Thanks!


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