|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
STOCKS - An Intro Tutorial & Ongoing Discussion 8
#7827359 - 01/03/08 12:56 PM (16 years, 28 days 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!
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
Edited by geokills (03/09/11 11:06 AM)
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: CHeifM4sterDiezL] 4
#27633872 - 01/26/22 01:45 PM (2 years, 1 day ago) |
|
|
We have a real battleground in the wake of the Fed remarks, which were more or less as expected. An initial algorithmic derived pop based on the headline of an initial March rate hike, which ultimately faded and has now appeared to have found a floor. The afternoon fade kind of looks like a bear trap, but it's really too volatile to have much confidence. With the prevailing downtrend, I wouldn't bank aggressively on the expectation of further upside, and with the Euro-war wildcard still in play, it's really going to be hard to see where we land in the short to intermediate term. I closed some trading positions on the #stonks side as a result, namely SSO. I'm not intending to trade too much around crypto at this level, as I want to maintain long term exposure and I still believe this level is attractive for continued accumulation in aggregate.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
ManianFH
living in perverty



Registered: 07/06/04
Posts: 14,741
Last seen: 15 hours, 6 minutes
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 3
#26617506 - 04/21/20 11:13 AM (3 years, 9 months ago) |
|
|
Oh a reverse split happened. I was looking at the charts like WTF made this go so bananas
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 3
#26704513 - 05/29/20 12:26 PM (3 years, 7 months ago) |
|
|
I am still on the sidelines and don't trust this market. The disconnect between what is happening in the real economy versus what equities are doing is staggering. That being said, the ridiculously supportive actions taken by the Federal Reserve and the fact that a lot of people feel like this market is bogus, could in fact sustain further upside, as holdouts continually capitulate in fear of missing out. Strong markets climb a "wall of worry" so they say. It is typically when everyone is so euphoric and drunk on how invincible they feel the market may be, that it ultimately crumbles because the last holdouts have finally thrown up their hands and committed their cash, effectively top ticking the market.
Regarding your stops mick, they should be set individually depending on the support levels for each of your holdings and regularly re-evaluated (remember that you can use partial position stops at shorter-term/weaker support levels, in efforts to trade around a core position). You should be able to identify the probable areas where buyers will step in to support a stock's prevailing trend, and set your stops just below those levels. In general, you should try to limit your aggregate losses to no more than around 8%, as mathematical function results in substantially increased difficulty to gain back what you lost if you take a more significant loss than that. For example, you need an 8.7% gain to offset an 8% loss of capital vs a 33% gain to offset a 25% loss vs a 100% gain for a 50% loss, etc.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Fiery] 3
#27460628 - 09/08/21 03:28 PM (2 years, 4 months ago) |
|
|
If you're truly just setting and forgetting, the SPY is all you need. You want some yield, maybe add in a bit of NLY. You want some big cap/tech/momentum, consider any of the usual suspects (AAPL, NVDA, AMZN, TSLA). As for what "could go big in the future"... I have no edge there. Your guess is as good as mine. Thing about that is, no one really knows what's going to go big until it DOES go big. You can read all sorts of clever articles and analysis on emerging technology, but unless you're an expert in the field under discussion, you're probably not going to have a whole lotta luck identifying what truly could be a breakthrough, let alone which company(ies) will be able to execute it profitably.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: sh4d0ws] 3
#27512704 - 10/21/21 05:15 PM (2 years, 3 months ago) |
|
|
Quote:
sh4d0ws said: This thread is so dead lately. I kinda miss geo's frequent updates, really enjoyed those.
Geo are you taking a break from the daily stock activity or just not posting as much?
Yeah, I've been on break from equities. My focus has been squarely on crypto lately, my kid started preschool and ceramics class and I've just generally been too busy to commit time to trading equities in the mornings due to having to get him ready for and driven to school, etc. I also got shaken out of most of my positions in September and the market just didn't feel very friendly at the time.
Kind of just lost track of it in the fray of life to be honest, which is a tad unfortunate since October has presented some great opportunities, but my crypto portfolio has been just killing it so I'm not sweating missing out on the equity run this month. Were I trading and had a developed opinion, I would certainly be sharing it here, but frankly every time I glanced at the market, it just looked a bit too volatile for my taste, having broken some key levels and following with some fairly big up and down days, that type of trading can really chop you up if you're not careful (especially if you like to trade options as I do). Meanwhile, I do have a few January calls on COIN that I held through the September swoon which are now up around 60%, and some common stock in TSLA that's up a good 25%; wish I'd held my options on that one but alas, I got shaken out of those and never circled back.
If I start feeling some conviction and have the time to actively focus on equities, I'll surely fire up posting in here again. It's important for me to be able to share my thesis as it helps keep me on track and disciplined. Amazing how clear your mistakes can become when you are making efforts to write down your strategy and thesis as you go along. On that note, it is important to take breaks, cause trading, while it can be fun and profitable, can also be a pretty dull grind that isn't particularly fruitful for the soul. I'm sure I'll be back at it at some point though!
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
TheFakeSunRa
Bitch Splitter



Registered: 03/01/05
Posts: 16,449
Loc: Dirdy SOUF
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Gorlax] 3
#27615380 - 01/11/22 04:44 PM (2 years, 16 days ago) |
|
|
I sold KOS I bought in September at a 47% profit yesterday
-------------------- [quote]Asante said: You constantly make posts thatr fling middle school insults at people you don't like mixed in with maladjusted psychopathic comments about wanting to beat up the other poster with a crowbar. You know how shit you are, you just don't give a fuck for precisely that reason. I disendorse you.[/quote]
|
today mylove



Registered: 12/04/04
Posts: 2,473
Last seen: 2 months, 3 days
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: TheFakeSunRa] 3
#27642442 - 02/02/22 12:48 PM (1 year, 11 months ago) |
|
|
m 2c is that its real hard to know where the previous high flying tech stocks end up putting in a bottom, some of them def wont reach their previous highs, let alone snapping back. you could be averaging down only to lose more. if you're averaging down on a company you need to have a clear view of how the fundamentals of the business are improving. if not, market is going to keep punishing imo
|
TheFakeSunRa
Bitch Splitter



Registered: 03/01/05
Posts: 16,449
Loc: Dirdy SOUF
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Baby_Hitler] 3
#27654964 - 02/11/22 10:12 AM (1 year, 11 months ago) |
|
|
Just sold SMGZY
I made an 8% return in about 5 months.
It’s a good feeling to check your notes and actually follow through with a sell that made money as planned
Fuck it feels good to make money just by clicking buttons on your phone
-------------------- [quote]Asante said: You constantly make posts thatr fling middle school insults at people you don't like mixed in with maladjusted psychopathic comments about wanting to beat up the other poster with a crowbar. You know how shit you are, you just don't give a fuck for precisely that reason. I disendorse you.[/quote]
|
TheFakeSunRa
Bitch Splitter



Registered: 03/01/05
Posts: 16,449
Loc: Dirdy SOUF
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills] 3
#27711649 - 03/28/22 02:49 PM (1 year, 9 months ago) |
|
|
I made money today, motherfuckers!!!

-------------------- [quote]Asante said: You constantly make posts thatr fling middle school insults at people you don't like mixed in with maladjusted psychopathic comments about wanting to beat up the other poster with a crowbar. You know how shit you are, you just don't give a fuck for precisely that reason. I disendorse you.[/quote]
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 3
#27724594 - 04/07/22 01:22 PM (1 year, 9 months ago) |
|
|
Haha, thanks mick! I'm also happy to note that even after all these years, I've still yet to have a bad shroom trip!
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills] 3
#27750420 - 04/25/22 09:19 AM (1 year, 8 months ago) |
|
|
Just a heads up that this market is quite dangerous and probably shouldn't be approached by novice traders with real money (recommend paper trading instead). While we are at the bottom of the current range and likely ripe for a brief snapback, this is the type of volatility that will destroy active traders who don't love and/or aren't capable of handling it with extreme discipline. If anything, I would be short-biased right now, but I would NOT be shorting today, at the bottom of the current range. Frankly, it's generally best to sit out this type of tape and wait for a more directional trend to develop. If you are keen on shorting the breakdown, you need to wait for a better entry, a relief rally that stalls out at key moving averages. But remember, you don't have to trade. If the action is ugly, just wait until it cleans itself up. Don't chop yourself up.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
SudoNimh
Stranger



Registered: 04/19/22
Posts: 16
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Fiery] 3
#27773835 - 05/12/22 11:11 AM (1 year, 8 months ago) |
|
|
@Fiery
Numinus may not have been a good buy then, but it is definitely going to be soon if not now @$.34/share. I'm personally going to be picking up some shares soon but am waiting another 2 days. Psychedelic-psychiatric (psych-psych for short from here on out) treatments are the future. NW filed for proper M&A paperwork recently, sent out papers to investors yesterday regarding news, and have a meeting with industry leaders in the next two weeks at HC Wainwright Global Investment Conference. This isn't a dying stock. This is a merger/acquisition that happened in the middle of ramping up a novel startup. That seems insane to me and I'm happy that they've avoided complete collapse. I would absolutely not sell it now. The whole market is facing potential collapse so, by percent of change, Numinus Wellness has been quantifiably less affected than the S&P in the last 24h for instance.
==== My background to satisfy those who like an appeal to authority logical fallacy ====
I've worked with M.A.P.S. personally and professionally (ketamine for PTSD/mush for tobacco cessation). I was, in a previous life, in the medical field for 13 years on the highest levels of admin with the largest companies in the western world. MDs, NPs, PAs are all prescribing ketamine as a treatment for PTSD. It isn't just fringe DOs and quacks getting onboard anymore. But the accessibility and costs are the prohibitive factors here. Ketamine infusion therapies are absurdly overpriced ($~200/300 per TREATMENT, weekly if PTSD is debilitating, monthly if not). That, to most people who have to pay for their healthcare, is not feasible from a financial perspective.
This is where local compounding pharmacies can jump in and fill the gap. I am able to get a 3 month supply of sublingual lozenges(weekly dose of 300mg due to the MC1R mutation I have that creates a ~19% resistance to anesthetics and research for MAPS providers on tolerance ceilings) for about $70. Normal max dosage for non-mutants would be 200mg (starting at 50mg your first treatment). They even flavor it with things like piña colada and it's quite enjoyable. Zofran is prescribed in conjunction with ket for the nausea and you have, with only two meds and thearpy, a complete care model that is truly salvation for the traumatized. Note: Zofran will reduce the efficacy of the treatment by reducing the strength of your dissociative trip but... if you're puking the whole time, how are you focusing on healing through that time anyway...? My provider was very mixed on this balance of zofran/ket but it's an extremely minor issue when weighing pros/cons of curing depression/PTSD/suicidal ideation.
The efficacy of psychedelics to treat major mental health issues is established. It needs more research, but the results are insane already. We have combat vets at our facilities who, after 6 months of ketamine, no longer need any other prescribed medicine. One vet I spoke with said "it literally cured my PTSD. I sleep like a baby again and I never dissociate (1000 yard stare) anymore." That blew my mind. I lost a child and also held my father as he died in my arms. My parents put me in a cult when I was a child and was abused as well. I'm not saying I'm the most traumatized, but my therapist did say that I was the most complex trauma case that she has seen in her 20 years. Like the vet I spoke with before treatment, I was also ultimately able to get off of every prescription and live the healthiest life that I ever have thanks to psych-psych treatment.
Unfortunately for me, the providers I worked with for the last few years have all defected to Denver due to their progressive legislation. I don't blame them. Fortunately for the future of medicine and humanity, there is a united front from providers all across the aisle to get psych-psych treatments to be normalized. I think this may be the extremely rare financial case of getting in on an innovation/investment too early. Regulation and accessibility have been major hurdles that we are now closer to solving. It was a startup so progressive that the world has not adapted to it yet.
TL;DR - HODL that shit. Psych-psych treatments are the future; but in the now, we may be on the cusp of another major North American market collapse which lowers all ships with that recessive tide.
Biblio: NCBI article on anesthetic resistance with MC1R mutation. Misnomer in their title: they say "redheads" but MC1R is actually a melanin distribution mutation (freckles) that can affect all ethnicities, with or without red hair: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1362956/
Edited by SudoNimh (05/12/22 11:24 AM)
|
pslyke
fantasmagoric



Registered: 06/12/10
Posts: 4,094
Loc:
Last seen: 25 minutes, 57 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Fiery] 3
#27775084 - 05/13/22 04:37 AM (1 year, 8 months ago) |
|
|
TSE is the Toronto Stock Exchange, not Tokyo.
The difference in price between the OTC and TSE listing is primarily due to the difference in currency value for USD and CAD respectively.
Both of the tickers you listed are for the same company, listed on different exchanges.
-------------------- "What appears impenetrable to us does exist, manifesting itself in the deepest wisdom and the most radiant beauty" Einstein "The conservatives of 70 years ago would be outraged at what has come to pass. It embodies everything they took up arms for to defeat"Asante
|
Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
|
Re: Stock Update for November 12, 2014 [Re: katsung47] 2
#20833646 - 11/13/14 07:16 PM (9 years, 2 months ago) |
|
|
The stock market is not a zero sum game. As long as the global economy grows, stocks should grow earnings and stock price should rise.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
|
Village-idiot
Bullet Proof Hippie


Registered: 11/12/14
Posts: 149
Loc: Around the Block
Last seen: 6 years, 9 months
|
Re: Stock Update for December 3, 2008 - CELG [Re: geokills] 2
#21549604 - 04/15/15 12:54 AM (8 years, 9 months ago) |
|
|
BUY when there is blood in the streets and SELL when there is dancing in the streets
|
Ahab McBathsalts
OTD Windmill Administrator




Registered: 11/25/02
Posts: 35,107
Loc: Wind Turbine, AB
|
|
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: Stock Update for September 21, 2017 [Re: shr] 2
#24935853 - 01/23/18 10:39 AM (6 years, 6 days ago) |
|
|
Hey there shr,
While I understand and ultimately share in a belief that our general (and I mean this in a global sense) economy is built upon mountains of debt and financial manipulation that has created a tall house of cards, I also find it folly to underestimate the longevity with which our political and business elite can continue to "kick the can down the road", creating an ever more looming and disastrous future problem. I have little doubt that there will come a day of reckoning, similar if not greater in scope to what we witnessed in the 2008 unwind, but I have no edge in determining whether that day of reckoning will come next month, next year or decades from now. What I do know, is that the powers that be have a unified interest in preserving the current state of affairs, as the wealth benefit they experience is practically unparalleled. Of course, there are several scenarios that could lead to a rapid shift in tolerance from the working class masses (i.e. the bulk of the global populous), but this game is simply too fruitful for those who hold power, for the bulk of those stakeholders not to do everything they can to perpetuate it.
Money seeks yield, and with massive debt loads leading to seemingly ever-depressed interest/fixed income rates, free capital finds its way into risk assets in hopes of appreciation that will eclipse inflation. It is this cycle that continues to drive assets such as the stock market (as well as cryptocurrencies) higher. While the historic metrics of the low low VIX and high P/E ratios undoubtedly warrant caution, the lack of available alternative options for capital flow to yield a decent return, in conjunction with tax reform that will undoubtedly benefit domestic corporations (and thus the equity shares of said corporations), I would suspect that the US stock market may not see the crash so many of us have been anticipating as we continue to climb into what by conventional wisdom feels like nosebleed territory.
So to succinctly respond to your inquiry... Yes, these things bother me on a fundamental level with respect to what is generally good for humanity and the stable success of our species over a longer term time horizon. But when it comes to capital allocation, "the trend is your friend", and so long as you employ adequate risk management techniques, one has little choice but to ride the bull until they are bucked off.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 2
#26065330 - 06/21/19 09:07 AM (4 years, 7 months ago) |
|
|
I'd echo AroundTheSun's sentiments re: TSLA. If the grand vision pans out, and Tesla gets regulatory approval that would allow their fleet to run in full autonomous mode, thereby creating an income proposition for idle vehicles, the stock will be a huge winner. I think that there are worse bets you could take, and if you believe in their story, go for it (or split the difference and put half in TSLA and half in a diversified fund). They are extremely capital intensive however, and while they have a definite lead on the competition, it is true that pretty much every other major automaker sees the writing on the wall and is working on competing products. It's a battleground stock, with true believers on both the long and the short side, and you should expect that as a result, it will continue to be very volatile.
In other news... The BYND short I have on is working, and I am going to let it run into next week at least. CGC reported a wider loss than expected last night, although their total revenue rose in similar scale to the rise in their expected loss. The stock is holding at its 200 day moving average right around $40, and so long as the June 3rd low of $38 holds up, I will stick with this one. I had lightened up my exposure going into earnings (which is a good habit to get into for any large position you may hold), and decided to buy back a little bit on the drawdown this morning. I would consider adding again on a move down to $38 that finds other buyers stepping in, or a move above $42.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 4 seconds
|
Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Ahab McBathsalts] 2
#26507824 - 02/28/20 09:01 AM (3 years, 10 months ago) |
|
|
Things are getting rather sporty in the market, aren't they? I haven't had much to say here, largely because I turned in my day trading hat for my Dad hat (and it's been pretty great honestly). But with this type of dislocation, I can't help but take some notice and start preparing myself for opportunity. Anyone actively long the market should have been stopped out of their trading positions already, and as the markets become more deeply oversold, begin looking for opportunities to deploy capital for a reversion trade. Note that, so far as I'm concerned, any such reversion trades would be short term in nature.
I cannot hold any confidence in medium to longer term trades, as the vast majority of businesses have some relation to China (either buying products made there or selling products there), so the collapse in that economy will be fairly devastating to global economic activity. It is simply not knowable at this point when China will normalize, or whether the rest of the world, or to what extent, will experience similar disruptions as (in my opinion) futile attempts to contain SARS-CoV-2 are implemented. Because this virus has an apparently low mortality rate and is even asymptomatic in many carriers, containment is very unlikely. Counterintuitively, the much more deadly H5N1 virus from 1997-ish, which had a mortality rate of 60%, only took out less than 500 people precisely because it was so easy to identify carriers, or they died quickly. On that note, I suspect that the current SARS-CoV-2 will be another - I think the fifth? - not particularly deadly but nevertheless endemic virus that humans will have to live with for the foreseeable future.
Meanwhile, in the midst of the panicked attempts to stop its spread, economic activity will be severely affected, and that's why markets are in turmoil. Until this frenzy calms down, there is no rational way to gauge the severity of the economic impacts that will be incurred, and that, in conjunction with the ridiculously exuberant sentiment the markets had heading into this event, is why we are seeing the mass exodus from equities that we are.
Play it close to the vest. Cash is a position. There will very likely be a tremendous buying opportunity once the dust settles, but the dust is likely far from settled so just trade small and opportunistically, or not at all in the meanwhile. Best of luck.
PS. Sentiment indicators:- % of stocks above their 200 day moving average = 18% (The December 2018 low was 7.5%)
- % of stocks above their 40 day moving average = 4.95% (The December 2018 low was 3.55%)
- VIX @ 49 (December 28, 2018 VIX peaked at 36.20)
- Smart/Dumb Money Confidence: 0.62 / 0.31, a 31% differential. Above 40% makes for a good contrarian signal
TLDR: We are due for a bounce, and there are tepid buyers coming into the market right now, but the long term outlook is entirely unclear and I would strongly advise against holding large positions over the weekend.
--------------------
-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
|
|